Director Designation Agreement

Exhibit 10.4


DIRECTOR DESIGNATION AGREEMENT


THIS DIRECTOR DESIGNATION AGREEMENT, dated as of October 1, 2007 (this " Agreement" ), is entered into by and between MacroChem Corporation, a Delaware corporation (the " Company" ) and SCO Capital Partners LLC (" SCO" ).


WHEREAS, pursuant to the terms of the Amended and Restated Preferred Stock and Warrant Purchase Agreement dated as of February 13, 2006, by and among the Company, SCO and the other parties set forth therein as purchasers (the " Purchase Agreement" ) , SCO was given the right to designate two individuals to serve as directors of the Company (the " Designation Right" );


WHEREAS, the Designation Right will expire according to its terms if less than 20% of the shares of Series C Cumulative Convertible Preferred Stock, par value $0.01 per share of the Company (the " Series C Preferred Stock" ) issued pursuant to the Purchase Agreement remain outstanding;


WHEREAS, the parties anticipate that more than 80% of the outstanding shares of Series C Preferred Stock will be converted (the " Series C Conversion" ) into the common stock, par value $0.01 per share, of the Company (the " Common Stock" ) in connection with a proposed new equity financing of the Company and thereafter, less than 20% of such shares of Series C Preferred Stock shall remain outstanding; and


WHEREAS, the parties desire to continue SCO' s right to designate two directors of the Company as more fully set forth herein.


NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

...