MACROCHEM CORP
10.2 A&R INVESTOR RIGHTS AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>investorrightsagrmnt.txt
<DESCRIPTION>10.2 A&R INVESTOR RIGHTS AGREEMENT
<TEXT>
                                                                    Exhibit 10.2
                                                                    ------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

     This Amended and Restated Investor Rights Agreement (this "AGREEMENT") is
made and entered into as of February 10, 2006 among MacroChem Corporation, a
Delaware corporation (the "COMPANY"), and each of the purchasers executing this
Agreement and listed on SCHEDULE 1 attached hereto, as such schedule may be
supplemented pursuant to Section 7(i) below (collectively, the "PURCHASERS").

     The Company and certain of the Purchasers (such Purchasers, the "ORIGINAL
PURCHASERS") entered into an Investor Rights Agreement, dated as of December 23,
2005 (the "ORIGINAL INVESTOR RIGHTS AGREEMENT") in connection with entering into
a Preferred Stock and Warrant Purchase Agreement dated as of December 23, 2005
(the "ORIGINAL PURCHASE AGREEMENT"). On the date hereof, the Company, the
Original Purchasers and certain additional Purchasers have amended and restated
the Original Purchase Agreement (the Original Purchase Agreement, as so amended
and restated, the "PURCHASE AGREEMENT"), and, in connection therewith, the
Company and the Purchasers hereby amend and restate the Original Investor Rights
Agreement as set forth below.

     The Company and the Purchasers hereby agree as follows:

     1. DEFINITIONS.

     Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:

     "ADDITIONAL CLOSING" shall have the meaning assigned in Section 2.2(c) of
the Purchase Agreement.

     "ADVICE" shall have the meaning set forth in Section 3(m).

     "AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.

     "BLACKOUT PERIOD" shall have the meaning set forth in Section 3(n).

     "BOARD" shall have the meaning set forth in Section 3(n).

     "BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
Commonwealth of Massachusetts generally are authorized or required by law or
other government actions to close.

<PAGE>

     "COMMISSION" means the Securities and Exchange Commission.

     "COMMON STOCK" means the Company's Common Stock, par value $0.01 per share
and any securities into which such common stock may hereafter be reclassified.

     "EFFECTIVENESS PERIOD" shall have the meaning set forth in Section 2.

     "EVENT" shall have the meaning set forth in Section 7(e).

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     "FILING DATE" means the 60th day following the Additional Closing Date.

     "HOLDER" or "HOLDERS" means the holder or holders, as the case may be, from
time to time of Registrable Securities, including without limitation the
Purchasers and their assignees. For purposes of this Agreement, the holder or
holders of Preferred Stock and Warrants shall be deemed to be holders of that
number of shares of Registrable Securities into which such Preferred Stock and
Warrants are convertible at the applicable time.

     "INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).

     "INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).

     "LOSSES" shall have the meaning set forth in Section 5(a).

     "NASDAQ" shall mean The Nasdaq Stock Market.

     "PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

     "PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

     "PROSPECTUS" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.

     "REGISTRABLE SECURITIES" means (a) the Conversion Shares and the Warrant
Shares (without regard to any limitations on beneficial ownership contained in
the Certificate of Designation or Warrants and including, without limitation,
Conversion Shares and Warrant Shares issued in connection with an Additional
Closing) or other securities issued or issuable to each Purchaser or its


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transferee or designee (i) upon conversion of the Preferred Stock and/or upon
exercise of the Warrants, or (ii) upon any dividend or distribution with respect
to, any exchange for or any replacement of such Preferred Stock, Conversion
Shares, Warrants or Warrant Shares or (iii) upon any conversion, exercise or
exchange of any securities issued in connection with any such distribution,
exchange or replacement; (b) securities issued or issuable upon any stock split,
stock dividend, recapitalization or similar event with respect to the foregoing;
and (c) any other security issued as a dividend or other distribution with
respect to, in exchange for, in replacement or redemption of, or in reduction of
the liquidation value of, any of the securities referred to in the preceding
clauses; provided, however, that such securities shall cease to be Registrable
Securities when such securities have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction or
when such securities may be sold without any restriction pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company's transfer agent to such effect as described in
Section 2 of this Agreement.

     "REGISTRATION STATEMENT" means the registration statements and any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such registration
statement.

     "RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

     "RULE 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

     "RULE 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

     "SECURITIES ACT" means the Securities Act of 1933, as amended.

     "SPECIAL COUNSEL" means Wiggin and Dana LLP.

     "WARRANTS" means the Common Stock purchase warrants issued pursuant to the
Purchase Agreement, whether at the Initial Closing or an Additional Closing,
including, without limitation the Placement Agent Warrants.

     "WARRANT SHARES" means the shares of Common Stock issuable upon the
exercise of the Warrants (including the Placement Agent Warrants) issued or to
be issued to the Purchasers or their assignees or designees in connection with
the offering consummated under the Purchase Agreement.

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<PAGE>

     2. REGISTRATION. As soon as possible following the Closing Date (but not
later than the Filing Date), the Company shall prepare and file with the
Commission a "shelf" Registration Statement covering all Registrable Securities
for a secondary or resale offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (or if such form is
not available to the Company on another form appropriate for such registration
in accordance herewith). The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act not
later than one hundred and ten (110) days after the Additional Closing Date
(including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 461 promulgated under the Securities Act
within five (5) Business Days of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not be subject to further review) and to
keep such Registration Statement continuously effective under the Securities
Act, subject to Section 3(n), until such date as is the earlier of (x) the date
when all Registrable Securities covered by such Registration Statement have been
sold or (y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "EFFECTIVENESS PERIOD"). For purposes of the obligations of
the Company under this Agreement, no Registration Statement shall be considered
"effective" with respect to any Registrable Securities unless such Registration
Statement lists the Holders of such Registrable Securities as "Selling
Stockholders" and includes such other information as is required to be disclosed
with respect to such Holders to permit them to sell their Registrable Securities
pursuant to such Registration Statement, unless any such Holder is not included
as a "Selling Stockholder" pursuant to Section 3(m). Upon the initial filing
thereof, the Registration Statement shall cover at least 130% of the shares of
Common Stock for issuance upon the conversion of the Preferred Stock and 100% of
the shares of Common Stock for issuance upon the exercise of the Warrants. If
the Commission informs the Company that it will not allow the Registration
Statement to cover at least 130% of the shares of Common Stock for issuance upon
the conversion of the Preferred Stock, then the Registration Statement shall
cover the highest percentage of such Common Stock that the Commission will
allow. Such Registration Statement also shall cover, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including
Securities Act Rule 416), such indeterminate number of additional shares of
Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities.

     3. REGISTRATION PROCEDURES.

     In connection with the Company's registration obligations hereunder, the
Company shall:

     (a) Prepare and file with the Commission on or prior to the Filing Date, a
Registration Statement on Form S-3 (or if such form is not available to the
Company on another form appropriate for such registration in accordance
herewith) (which shall include a Plan of Distribution substantially in the form
of EXHIBIT A attached hereto), and cause the Registration Statement to become


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effective and remain effective as provided herein; provided, however, that not
less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such Special Counsel, and (ii) at
the request of any Holder cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of counsel to such Holders, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or the Special Counsel shall reasonably object in writing
within three (3) Business Days after their receipt thereof.

     (b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus
filed in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities for
the Effectiveness Period and to the extent any Registrable Securities are not
included in such Registration Statement for reasons other than the failure of
the Holder to comply with Section 3(m) hereof, shall prepare and file with the
Commission such amendments to the Registration Statement and such additional
Registration Statements in order to register for resale under the Securities Act
all Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; (iii) respond as promptly as
possible, and in no event later than ten (10) Business Days, to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto and as promptly as possible provide the Holders true and
complete copies of all correspondence from and to the Commission relating to the
Registration Statement, but not, without the prior written consent of the
Holders, any comments that would result in the disclosure to the Holders of
material and non-public information concerning the Company; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

     (c) Notify the Holders of Registrable Securities to be sold and the Special
Counsel as promptly as possible (A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed (but in no event in the case of this subparagraph (A), less than
three (3) Business Days prior to date of such filing); (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement; and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, and after the
effectiveness thereof: (i) of any request by the Commission or any other Federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (ii) of the


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issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (iv) if the financial statements included in the Registration
Statement become ineligible for inclusion therein or of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Without limitation to any remedies to which the Holders may be entitled under
this Agreement, if any of the events described in Section 3(c)(C)(i),
3(c)(C)(ii), 3(c)(C)(iii) or 3(c)(C)(iv) occur, the Company shall use its best
efforts to respond to and correct the event.

     (d) Use its best efforts to avoid the issuance of, or, if issued, use best
efforts to obtain the withdrawal of, (i) any order suspending the effectiveness
of the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

     (e) If requested by any Holder of Registrable Securities, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the written opinion of counsel for the Company (addressed to such
Holder), violate applicable law.

     (f) Furnish to each Holder and the Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, and all exhibits to the
extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

     (g) Promptly deliver to each Holder and the Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the Company has given notice pursuant to Section 3(c)(C) until the applicable
event is corrected.

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<PAGE>

     (h) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders and the
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any jurisdiction where it is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.

     (i) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to a Registration Statement, which certificates shall be free, to the extent
permitted by applicable law and the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any Holder may request at least two (2) Business
Days prior to any sale of Registrable Securities. In connection therewith, the
Company shall promptly after the effectiveness of the Registration Statement
cause an opinion of counsel to be delivered to and maintained with its transfer
agent, together with any other authorizations, certificates and directions
required by the transfer agent, which authorize and direct the transfer agent to
issue such Registrable Securities without legend upon sale by the Holder of such
shares of Registrable Securities under the Registration Statement.

     (j) Following the occurrence of any event contemplated by Section
3(c)(C)(iv), as promptly as possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

     (k) Cause all Registrable Securities relating to such Registration
Statement to be listed on any United States securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which similar
securities issued by the Company are then listed.

     (l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 3-month
period (or 90 days after the end of any 12-month period if such period is a


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fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.

     (m) Request each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as is
required by law or the Commission to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities of
any such Holder who fails to furnish such information within a reasonable time
prior to the filing of each Registration Statement, supplemented Prospectus
and/or amended Registration Statement.

     If the Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.

     Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(C)(c)(i), 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or
3(n), such Holder will forthwith discontinue use of the Prospectus and
disposition of such Registrable Securities under the Registration Statement
until such Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement contemplated by Section 3(j), or until it is
advised in writing (the "ADVICE") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.

     (n) If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "BOARD") reasonably determines not
to be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company's best
interest to disclose and which the Company would be required to disclose under
the Registration Statement, then the Company may postpone or suspend filing or
effectiveness of a Registration Statement for a period not to exceed 30
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 12 month period (each, a "BLACKOUT PERIOD").

     4. REGISTRATION EXPENSES.

     All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees


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and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with each
securities exchange, quotation system, market or over-the-counter bulletin board
on which Registrable Securities are required hereunder to be listed, (B) with
respect to filings required to be made with the Commission, and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of Special Counsel in connection with Blue
Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv) Securities
Act liability insurance, if the Company so desires such insurance, (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including, in
the case of an underwritten offering, the expenses of any comfort letters or
costs associated with the delivery by independent public accountants of a
comfort letter or comfort letters) and legal counsel, and (vi) fees and expenses
of the Special Counsel in connection with any Registration Statement hereunder.
In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.

     5. INDEMNIFICATION.

     (a) INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and reasonable attorneys' fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained or incorporated by reference in
the Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or amendment or supplement thereto, in the
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to


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the Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to (x) such Holder and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus or in any amendment or supplement thereto
or (y) such Holder's proposed method of distribution of Registrable Securities
as set forth in Exhibit A (or as such Holder otherwise informs the Company in
writing); or (ii) in the case of an occurrence of an event of the type described
in Section 3(c)(C)(i), 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use
by a Holder of an outdated or defective Prospectus after the delivery to the
Holder of written notice from the Company that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice contemplated in
Section 3(m). The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of an Indemnified Party (as defined in Section 5(c) to this Agreement)
and shall survive the transfer of the Registrable Securities by the Holders.

     (b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that (i) such untrue statement or omission is contained in
or omitted from any information so furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus, or in any amendment or
supplement thereto, or to the extent that such information relates to (x) such
Holder and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus, or such form
of prospectus or in any amendment or supplement thereto or (y) such Holder's
proposed method of distribution of Registrable Securities as set forth in
Exhibit A (or as such Holder otherwise informs the Company in writing) or (ii)
in the case of an occurrence of an event of the type described in Section
3(c)(C)(i), 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder
of an outdated or defective Prospectus after the delivery to the Holder of
written notice from the Company that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 3(m);
provided, however, that the indemnity agreement contained in this Section 5(b)
shall not apply to amounts paid in settlement of any Losses if such settlement
is effected without the prior written consent of the Holder, which consent shall
not be unreasonably withheld. Notwithstanding anything to the contrary contained
herein, the Holder shall be liable under this Section 5(b) for only that amount
as does not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.

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<PAGE>

     (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel in writing (with a copy to the Indemnifying
Party) that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding and does
not impose any monetary or other obligation or restriction on the Indemnified
Party.

     All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on a
monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).

                                       11
<PAGE>

     (d) CONTRIBUTION. If a claim for indemnification under Section 5(a) or 5(b)
is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying, Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be
required to contribute under this Section 5(d) for only that amount as does not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

     The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. The indemnity and contribution agreements herein are in
addition to and not in diminution or limitation of any indemnification
provisions under the Purchase Agreement.

     6. RULE 144.

     As long as any Holder owns Preferred Stock, Conversion Shares, Warrants or
Warrant Shares, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. As long as any Holder owns Preferred Stock,
Conversion Shares, Warrants or Warrant Shares, if the Company is not required to
file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will


                                       12
<PAGE>

prepare and furnish to the Holders and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell Preferred Stock, Conversion
Shares, Warrants and Warrant Shares without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act, including compliance with the provisions of the
Purchase Agreement relating to the transfer of the Preferred Stock, Conversion
Shares, Warrants and Warrant Shares. Upon the request of any Holder, the Company
shall deliver to such Holder a written certification of a duly authorized
officer as to whether it has complied with such requirements.

     7. MISCELLANEOUS.

     (a) REMEDIES. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     (b) NO INCONSISTENT AGREEMENTS. Except as otherwise disclosed in the
Purchase Agreement and the schedules thereto, neither the Company nor any of its
subsidiaries is a party to an agreement currently in effect, nor shall the
Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to the
rights of the Holders set forth herein, and are not otherwise in conflict with
the provisions of this Agreement.

     (c) NOTICE OF EFFECTIVENESS. Within two (2) Business Days after the
Registration Statement which includes the Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that the Registration Statement has
been declared effective by the Commission in the form attached hereto as EXHIBIT
B.

     (d) PIGGY-BACK REGISTRATIONS. If at any time when there is not an effective
Registration Statement covering all of the Registrable Securities, the Company
shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the


                                       13
<PAGE>

Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or its then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within seven (7) Business Days after receipt of such
notice, any such Holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Holder), the
Company will cause the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holder, to
the extent required to permit the disposition of the Registrable Securities so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 7(d) for the
same period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 7(d) that are eligible for sale pursuant to Rule 144(k) of the
Securities Act. In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the managing underwriter should reasonably determine
that the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).

     (e) FAILURE TO FILE REGISTRATION STATEMENT AND OTHER EVENTS. The Company
and the Holders agree that the Holders will suffer damages if the Registration
Statement is not filed on or prior to the sixtieth (60th) day following the
Additional Closing Date and maintained in the manner contemplated herein during
the Effectiveness Period. The Company and the Holders further agree that it
would not be feasible to ascertain the extent of such damages with precision.


                                       14
<PAGE>

Accordingly, if (i) the Registration Statement is not filed on or prior to the
sixtieth (60th) day following the Additional Closing Date, or (ii) the Company
fails to file with the Commission a request for acceleration in accordance with
Rule 461 promulgated under the Securities Act within five (5) Business Days of
the date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be "reviewed,"
or not subject to further review, or (iii) the Registration Statement is filed
with and declared effective by the Commission but thereafter ceases to be
effective as to all Registrable Securities at any time prior to the expiration
of the Effectiveness Period, without being succeeded immediately by a subsequent
Registration Statement filed with the Commission, except as otherwise permitted
by this Agreement, including pursuant to Section 3(n), or (iv) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from any
securities exchange, quotation system (including, without limitation, Pink
Sheets), market or over-the-counter bulletin board on which Registrable
Securities are required hereunder to be listed (each an "EXCHANGE"), without
immediately being listed on any other Exchange, for any reason for more than one
(1) Business Day, other than pursuant to Section 3(n), or (v) the Preferred
Stock conversion rights of the Holders or the rights of the Holders to exercise
the Warrants are suspended for any reason without the consent of the particular
Holder other than as set forth in the Certificate of Designation or Warrant, as
applicable, or (vi) the Company has breached Section 3(n) of this Agreement (any
such failure or breach being referred to as an "Event"), the Company shall pay
in cash as liquidated damages for such failure and not as a penalty to each
Holder an amount equal to two percent (2%) of such Holder's Purchase Price for
the initial thirty (30) day period until the applicable Event has been cured,
which shall be pro rated for such periods less than thirty (30) days and two
percent (2%) of such Holder's Purchase Price for each subsequent thirty (30) day
period until the applicable Event has been cured which shall be pro rated for
such periods less than thirty days (the "PERIODIC AMOUNT"). Payments to be made
pursuant to this Section 7(e) shall be due and payable immediately upon demand
in immediately available cash funds. The parties agree that the Periodic Amount
represents a reasonable estimate on the part of the parties, as of the date of
this Agreement, of the amount of damages that may be incurred by the Holders if
the Registration Statement is not filed on or prior to the sixtieth (60th) day
following the Additional Closing Date and maintained in the manner contemplated
herein during the Effectiveness Period or if any other Event as described herein
has occurred. Notwithstanding the foregoing, the Company shall remain obligated
to cure the breach or correct the condition that caused the Event, and the
Holder shall have the right to take any action necessary or desirable to enforce
such obligation.

     (f) FAILURE OF REGISTRATION STATEMENT TO BECOME EFFECTIVE. The Company and
the Holders agree that the Holders will suffer damages if the Registration
Statement is not declared effective on or prior to the one hundred and tenth
(110th) day following the Additional Closing Date. The Company and the Holders
further agree that it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, if the Registration Statement is not
declared effective within one hundred and ten (110) days after the Additional
Closing Date, the Company shall pay in cash as liquidated damages for such
failure and not as a penalty to each Holder an amount equal to (i) two percent
(2%) of such Holder's Purchase Price and (ii) two percent (2%) of such Holder's
Purchase Price for each subsequent thirty (30) day period (which shall be pro


                                       15
<PAGE>

rated for such periods less than thirty (30) days) until either (x) the
Registration Statement is declared effective or (y) the twelfth (12th) month
after the Additional Closing Date has ended. Payments to be made pursuant to
this Section 7(f) shall be due and payable immediately upon demand in
immediately available cash funds. The parties agree that the amounts set forth
in this Section 7(f) represent a reasonable estimate on the part of the parties,
as of the date of this Agreement, of the amount of damages that may be incurred
by the Holders if the Registration Statement is not declared effective on or
prior to the one hundred and tenth (110th) day following the Additional Closing
Date. At any time that amounts continue to accrue pursuant to Section 7(e), such
amounts shall be credited against any amounts that simultaneously accrue
pursuant to this Section 7(f) such that the Company shall in no event be
obligated to make any payments under this Section 7(f) with respect to any
period for which it is obligated to pay the Periodic Amount under Section 7(e).
Notwithstanding the foregoing, the Company shall remain obligated to cause the
Registration Statement to become effective, and the Holders shall have the right
to take any action necessary or desirable to enforce this obligation.

     (g) PROSPECTUS DELIVERY. Each Holder agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to such
Holder in connection with sales of Registrable Securities pursuant to the
Registration Statement.

     (h) SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.

         (i) The Company and the Holders acknowledge and agree that irreparable
     damage would occur in the event that any of the provisions of this
     Agreement were not performed in accordance with their specific terms or
     were otherwise breached. It is accordingly agreed that the parties shall be
     entitled to an injunction or injunctions to prevent or cure breaches of the
     provisions of this Agreement and to enforce specifically the terms and
     provisions hereof, this being in addition to any other remedy to which any
     of them may be entitled by law or equity.

         (ii) Each of the Company and the Holders (i) hereby irrevocably submits
     to the exclusive jurisdiction of the state and federal courts located in
     New York City, New York for the purposes of any suit, action or proceeding
     arising out of or relating to this Agreement and (ii) hereby waives, and
     agrees not to assert in any such suit, action or proceeding, any claim that
     it is not personally subject to the jurisdiction of such court, that the
     suit, action or proceeding is brought in an inconvenient forum or that the
     venue of the suit, action or proceeding is improper. Each of the Company
     and the Holders consents to process being served in any such suit, action
     or proceeding by mailing a copy thereof to such party at the address in
     effect for notices to it under this Agreement and agrees that such service
     shall constitute good and sufficient service of process and notice thereof.
     Nothing in this Section 7(h) shall affect or limit any right to serve
     process in any other manner permitted by law.

     (i) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
at least a majority of the Registrable Securities. Notwithstanding the


                                       16
<PAGE>

foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of the Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence. Notwithstanding the foregoing, this Agreement
may be amended by the Company with the consent of SCO Securities LLC and without
the consent of the other Purchasers by supplementing SCHEDULE 1 with respect to
Purchasers in any Additional Closing pursuant to Section 2.2 of the Purchase
Agreement and by adding any such Purchaser as a party to this Agreement,
provided that any such Purchaser agrees to be bound by this Agreement by
executing a counterpart signature page to this Agreement.

     (j) NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) the next Business Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Business Day or later than 5:00
p.m., New York City time, on any date and earlier than 11:59 p.m., New York City
time, on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service such as Federal Express
or (iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to each Holder at
its address set forth under its name on SCHEDULE 1 attached hereto, or with
respect to the Company, addressed to:

                       MacroChem Corporation
                       110 Hartwell Avenue
                       Lexington, Massachusetts 02421-3134
                       Attention: Chief Financial Officer
                       Facsimile No.: 781-862-4438

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Ropes & Gray
LLP, One International Place, Boston, MA 02110, Attn: Dwight W. Quayle,
Facsimile No. 617-951-7050. Copies of notices to any Holder shall be sent to the
addresses, if any, listed on SCHEDULE 1 attached hereto.

     (k) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns and
shall inure to the benefit of each Holder and its successors and assigns;
provided, that the Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder; and
provided, further, that each Holder may assign its rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.

                                       17
<PAGE>

     (l) ASSIGNMENT OF REGISTRATION RIGHTS. The rights of each Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the Preferred Stock, the Warrants or the Registrable Securities
if: (i) the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment the further disposition of such
securities by the transferee or assignees is restricted under the Securities Act
and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section 7(l),
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions of this Agreement, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holders (and to subsequent) successors
and assigns.

     The Company may require, as a condition of allowing such assignment in
connection with a transfer of Preferred Stock, Warrants or Registrable
Securities (i) that the Holder or transferee of all or a portion of the
Preferred Stock, the Warrants or the Registrable Securities as the case may be,
furnish to the Company a written opinion of counsel that is reasonably
acceptable to the Company to the effect that such transfer may be made without
registration under the Securities Act, (ii) that the Holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities Act.

     (m) COUNTERPARTS; FACSIMILE. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by electronic means or
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.

     (n) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law thereof.

     (o) CUMULATIVE REMEDIES. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

     (p) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable in any respect, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative


                                       18
<PAGE>

means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

     (q) HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

     (r) REGISTRABLE SECURITIES HELD BY THE COMPANY AND ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

     (s) OBLIGATIONS OF PURCHASERS. The Company acknowledges that the
obligations of each Purchaser under this Agreement, are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to enter into to
this Agreement has been made by such Purchaser independently of any other
Purchaser. The Company further acknowledges that nothing contained in this
Agreement, and no action taken by any Purchaser pursuant hereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

     Each Purchaser was introduced to the Company by SCO Securities LLC which
has acted solely as agent for the Company and not for any Purchaser (other than
itself). Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of this Agreement and with respect to the
transactions contemplated hereby. For reasons of administrative convenience
only, this Agreement has been prepared by Special Counsel (counsel for SCO
Securities LLC) and the Special Counsel will perform certain duties under this
Agreement. Such counsel does not represent all of the Purchasers but only SCO
Securities LLC. The Company has elected to provide all Purchasers with the same
terms and Agreement for the convenience of the Company and not because it was
required or requested to do so by the Purchasers. The Company acknowledges that
such procedure with respect to this Agreement in no way creates a presumption
that the Purchasers are in any way acting in concert or as a group with respect
to this Agreement or the transactions contemplated hereby or thereby.


                                       19
<PAGE>

                            [signature page follows]


                                       20
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Investor Rights Agreement to be duly executed by their respective
authorized persons as of the date first indicated above.

COMPANY:

MACROCHEM CORPORATION


By:______________________________
Name:
Title:


                                       21
<PAGE>

PURCHASERS:

Print Exact Name:_________________________________



By:_____________________________________________
Name:
Title:









    [Omnibus MacroChem Corporation Investor Rights Agreement Signature Page]


                                       22
<PAGE>

                                   SCHEDULE 1
                                   PURCHASERS

<TABLE>
<CAPTION>

-----------------------------------    -------------------------------------
       NAME AND ADDRESS:                       COPY OF NOTICE TO:
       ----------------                        -----------------
-----------------------------------    -------------------------------------
<S>                                         <C>
SCO Capital Partners LLC                    Wiggin and Dana LLP
1285 Avenue of the Americas                 400 Atlantic Street
35th Floor                                  Stamford, CT 06901
New York, New York 10019                    Telephone: (203) 363-7630
Attn: Steven H. Rouhandeh                   Facsimile:  (203) 363-7676
T: (212) 554-4158                           Attn: Michael Grundei, Esq.
F: (212) 554-4058
-----------------------------------    -------------------------------------
Lake End Capital LLC
33 Tall Oaks Drive
Summit, New Jersey 07501
Attn: Jeffrey B. Davis
T: (212) 554-4158
F: (212) 554-4058
-----------------------------------    --------------------------------------
Alpha Capital AG
Pradafant 7 Furstentums 9490
Vaduz Liechtenstein
Telephone:  011-423-232-3195
Fax:  011-423-232-3196
Contact:  R. Posch
-----------------------------------    -------------------------------------
BF Holding GmbH
AM Eulenhof 14
95326 Kulmbach
Germany
Telephone:  49-9221-952-25
Fax:  49-9221-952-17
Contact:  Bernd Fuertsch
e-mail:  s.mueller@ucm-ag.de
-----------------------------------    -------------------------------------
Beach Capital LLC
1285 Avenue of the Americas,
35th Floor
New York, NY  10019
Telephone:  (212) 554-4158
Fax:  (212) 554-4058
contact:  Steven H. Rouhandeh
e-mail:  srouhandeh@scogroup.com
-----------------------------------    -------------------------------------
                                       23
<PAGE>
-----------------------------------    -------------------------------------
       NAME AND ADDRESS:                       COPY OF NOTICE TO:
       ----------------                        -----------------
-----------------------------------    -------------------------------------
Catalytix LDC Lifescience Hedge AZ
425 Fifth Avenue, #28D
New York, NY  10016
Telephone:  (212) 481-1394
Fax:  (212) 481-1396
Contact:  Ken Sorensen
-----------------------------------    -------------------------------------
Catalytix LDC
425 Fifth Avenue, #28D
New York, NY  10016
Telephone:  (212) 481-1394
Fax:  (212) 481-1396
Contact:  Ken Sorensen
-----------------------------------    -------------------------------------
Hudson Bay Fund LP
120 Broadway, 40th Floor
New York, NY  10271
Telephone:  (212) 571-1244
Fax:  (212) 571-1279
Contact:  Yoav Roth
-----------------------------------    -------------------------------------
Iroquois Master Fund Ltd.
641 Lexington Avenue, 26th Floor
New York, NY  10022
Telephone:  (212) 974-3070
Fax:  (212) 207-3452
Contact:  Joshua Silverman
-----------------------------------    -------------------------------------
Midsouth Investors Fund LP
1776 Peachtree Street NW
Suite 412 North
Atlanta, GA  30309
Telephone:  (615) 254-0992
Fax:  (615) 254-1603
Contact:  Lyman O. Heidtke
-----------------------------------    -------------------------------------

                                       24
<PAGE>
-----------------------------------    -------------------------------------
       NAME AND ADDRESS:                       COPY OF NOTICE TO:
       ----------------                        -----------------
-----------------------------------    -------------------------------------
Perceptive Life Sciences Master
Fund, Ltd.
7284 W. Palmetta Park Road,
Suite 306
Boca Raton, FL  33433
Telephone:  (561) 391-7770
Fax:  (561) 391-7776
Contact:  Andrew C. Sankin, COO
-----------------------------------    -------------------------------------
Quogue Capital LLC
1285 Avenue of the Americas
35th Floor
New York, NY  10019
Telephone:
Fax:
Contact:  Wayne Rothbaum
-----------------------------------    -------------------------------------
SDS Capital Group SPC, Ltd.
c/o SDS Management, LLC
53 Old Forest Avenue, 2nd Floor
Old Greenwich, CT  06870
Telephone:  (203) 967-5850
Fax:  (203) 967-5851
Contact:  Steve Derby, Director
-----------------------------------    -------------------------------------
TMW Capital, LLC
48 Route 25A, Suite 305
Smithtown, NY  11787
Telephone:  (631) 862-3625
Fax:  (631) 863-3347
Contact:  Todd Wider
-----------------------------------    -------------------------------------

                                       25
<PAGE>
-----------------------------------    -------------------------------------
       NAME AND ADDRESS:                       COPY OF NOTICE TO:
       ----------------                        -----------------
-----------------------------------    -------------------------------------
Whalehaven Capital Fund Limited
14 Par-La-Ville Road, 3rd Floor
Hamilton HM08 Bermuda
Telephone:  (414) 295-8313
Fax:  (441) 292-1373
Contact:  Evan Schemenauer
e-mail:eschemenauer@consolidated.bm
-----------------------------------    -------------------------------------

</TABLE>

                                       26
<Page>

                                    EXHIBIT A

                              PLAN OF DISTRIBUTION


     We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders,
including their respective donees, transferees, pledgees or other
successors-in-interest directly to purchasers or to or through underwriters,
broker-dealers or through agents. Sales may be made from time to time on the
[__________], any other exchange or market upon which our shares may trade in
the future, in the over-the-counter market or otherwise, at market prices
prevailing at the time of sale, at prices related to market prices, or at
negotiated or fixed prices. The shares may be sold by one or more of, or a
combination of, the following:

-    a block trade in which the broker-dealer so engaged will attempt to sell
     the shares as agent but may position and resell a portion of the block as
     principal to facilitate the transaction (including crosses in which the
     same broker acts as agent for both sides of the transaction);

-    purchases by a broker-dealer as principal and resale by such broker-dealer,
     including resales for its account, pursuant to this prospectus;

-    ordinary brokerage transactions and transactions in which the broker
     solicits purchases;

-    through options, swaps or derivatives;

-    in privately negotiated transactions;

-    in making short sales or in transactions to cover short sales; and

-    put or call option transactions relating to the shares.

     The selling security holders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling security holders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
selling security holders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities.

     The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security holders. The selling security holders may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery of shares offered by this prospectus to those


                                       27
<PAGE>

broker-dealers or other financial institutions. The broker-dealer or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or supplemented, if required by applicable law, to reflect those
transactions).

     The selling security holders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling security holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling security holders
and each selling security holder has agreed, severally and not jointly, to
indemnify us against some liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.

     The selling security holders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling security
holders that the anti-manipulative provisions of Regulation M promulgated under
the Securities Exchange Act of 1934 may apply to their sales in the market.

     Selling security holders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.

     Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act,
disclosing:

-    the name of each such selling security holder and of the participating
     broker-dealer(s);

-    the number of shares involved;

-    the initial price at which the shares were sold;

-    the commissions paid or discounts or concessions allowed to the
     broker-dealer(s), where applicable;

-    that such broker-dealer(s) did not conduct any investigation to verify the
     information set out or incorporated by reference in this prospectus; and

-    other facts material to the transactions.

     In addition, if required under applicable law or the rules or regulations
of the Commission, we will file a supplement to this prospectus when a selling


                                       28
<PAGE>

security holder notifies us that a donee or pledgee intends to sell more than
500 shares of common stock.

     We are paying all expenses and fees in connection with the registration of
the shares. The selling security holders will bear all brokerage or underwriting
discounts or commissions paid to broker-dealers in connection with the sale of
the shares.


                                       29
<PAGE>

                                    EXHIBIT B

                         FORM OF NOTICE OF EFFECTIVENESS

                            OF REGISTRATION STATEMENT


[Name and Address of Transfer Agent]

Re:  MacroChem Corporation

Dear [______]:

     We are counsel to MacroChem Corporation, a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Amended and Restated Preferred Stock and Warrant Purchase Agreement (the
"Purchase Agreement") dated as of __________________, 2006 by and among the
Company and the buyers named therein (collectively, the "Holders") pursuant to
which the Company issued to the Holders its Series C Cumulative Convertible
Preferred Stock, par value $0.01 per share, (the "Preferred Stock") convertible
into shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"), and warrants to purchase shares of the Common Stock (the
"Warrants"). Pursuant to the Purchase Agreement, the Company has also entered
into an Investor Rights Agreement with the Holders (the "Investor Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the shares of Common Stock issuable upon conversion of the Preferred
Stock and exercise of the Warrants, under the Securities Act of 1933, as amended
(the "1933 Act"). In connection with the Company's obligations under the Amended
and Restated Investor Rights Agreement, on ____________ ___, 2006, the Company
filed a Registration Statement on Form S-[__] (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities (as defined in the Investor Rights
Agreement) which names each of the Holders as a selling securityholder
thereunder.

     In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

Very truly yours,

By:__________________________________
cc:  [LIST NAMES OF HOLDERS]


                                       30



</TEXT>
</DOCUMENT>
