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                                                                    EXHIBIT 10.1

                               FIRST AMENDMENT TO
                              EMPLOYMENT AGREEMENT

         This First Amendment to Employment Agreement (the "First Amendment") is
executed and dated effective as of the 28th day of March, 2001 between Zonagen,
Inc. (the "Company") and Joseph S. Podolski (the "Employee").

         WHEREAS, the Company and Employee entered into an Employment Agreement
dated as of January 1, 1993 (the "Employment Agreement"), which has been renewed
for successive terms pursuant to its terms;

         WHEREAS, the Company and Employee now wish to amend certain provisions
of the Employment Agreement;

         NOW THEREFORE, in consideration of the foregoing and the mutual
covenants herein, the parties hereto agree as follows:

         1. Capitalized terms used but not defined herein have the respective
meanings set forth in the Employment Agreement.

         2. Section 4 of the Employment Agreement is hereby amended to include
the following paragraphs:

                  "(e) In the event that Employee terminates his employment for
         Good Reason (as defined in Section 6 (c) below) or Employee's
         employment is terminated by the Company without Cause within twelve
         months following a Change of Control (as defined below) of the Company,
         the Employee shall receive a cash lump sum bonus payment of $666,045.
         Such bonus payment shall be in consideration for (i) past services and
         services rendered in connection with Change of Control and (ii) to the
         extent reasonable and to the extent necessary to avoid application of
         an excise tax under Section 4999 of the Internal Revenue Code of 1986,
         as amended, the consulting services required to be rendered by Employee
         during the first twelve (12) months after a Change of Control pursuant
         to Section 6(c) below. Employee agrees to defer payment of such lump
         sum bonus payment (and any earnings thereon) in accordance with and
         upon the following schedule, subject only to such payroll and
         withholding deductions as are required by applicable federal and state
         laws. Such payments shall be in lieu of any other severance payments
         payable to Employee under Section 6(a) of the Employment Agreement,
         provided however that Employee shall be entitled to continue to receive
         the benefits coverage for twelve (12) months following termination of
         employment as provided in such Section 6(a). All funds required to be
         paid to Employee pursuant to the terms hereof shall be segregated and
         contributed to the irrevocable Joe Podolski Rabbi Trust, as copy of
         which is attached hereto, by the Company or the successor or acquiring
         company for the benefit of the Employee upon closing of the Change of
         Control, and maintained there (subject to the terms of such trust
         regarding insolvency of the Company) until paid pursuant to the terms
         hereof in accordance with the following schedule:


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                  On the closing of the Change of Control:           $235,000.00

                  On first, second, third, and fourth anniversary
                  dates of the Change of Control:                    $150,000.00

                  On the fifth anniversary date of the Change of
                  Control:                                           $125,000.00

                  On the sixth anniversary date of the Change of
                  Control:                                           $ 75,000.00

         Such payments shall be made to Employee, or to his heirs or
         representative in the event of his death. Employee shall have the
         status of a general unsecured creditor of the Company with respect to
         the bonus payments required to be paid by the Company under this
         Section 4(e), and the Company's obligation to pay such bonus
         constitutes a mere promise by the Company to make such payments in the
         future. Employee's rights to receive such bonus payments shall not be
         subject in any manner to anticipation, alienation, sale, transfer,
         assignment, pledge, encumbrance, attachment, or garnishment by
         creditors of Employee or any beneficiary of Employee. It is the
         intention of the parties hereto that this deferred bonus arrangement be
         unfunded for tax purposes and for purposes of Title I of the Employee
         Retirement Income Security Act of 1974, as amended, to the extent
         applicable.

                  (f) As used in this Agreement, a "Change of Control" shall
                  mean:

         (i) the acquisition after the Effective Date of this First Amendment by
         any individual, entity or group (within the meaning of Section 13(d)(3)
         or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a
         "Person") of beneficial ownership of 30% or more of either (x) the then
         outstanding shares of common stock of the Company (the "Outstanding
         Common Stock") or (y) the combined voting power of the then outstanding
         voting securities of the Company entitled to vote generally in the
         election of directors (the "Outstanding Voting Securities"), provided
         that for purposes of this subsection (i), the following acquisitions
         shall not constitute a Change of Control: (A) any acquisition directly
         from the Company, (B) any acquisition by the Company, (C) any
         acquisition by any employee benefit plan (or related trust) sponsored
         or maintained by the Company or any corporation controlled by the
         Company, or (D) any acquisition by any corporation pursuant to a
         transaction which complies with clauses (A), (B) and (C) of subsection
         (ii) hereof; or

         (ii) consummation after the Effective Date of this First Amendment of a
         reorganization, merger or consolidation or sale or other disposition of
         all or substantially all of the assets of the Company (a "Corporate
         Transaction") in each case, unless, following such Corporate
         Transaction, (A) (1) all or substantially all of the persons who were
         the beneficial owners of the Outstanding Common Stock immediately prior
         to such Corporate Transaction beneficially own, directly or indirectly,
         more than 30% of the then outstanding shares of common stock of the
         corporation resulting from such Corporate Transaction, and (2) all or
         substantially all of the persons who were the beneficial owners of the
         Outstanding Voting Securities immediately prior to such Corporate
         Transaction beneficially own, directly or indirectly, more than 30% of
         the combined voting power of the then outstanding voting securities
         entitled to vote generally in the election of directors of the
         corporation resulting from such Corporate Transaction (including,
         without limitation, a corporation which as a result of such transaction
         owns the Company or all or substantially all of the Company's assets
         either directly or through one or


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         more subsidiaries) in substantially the same proportions as their
         ownership of the Outstanding Common Stock and the Outstanding Voting
         Securities immediately prior to such Corporate Transaction, as the case
         may be, (B) no Person (excluding (l) any corporation resulting from
         such Corporate Transaction or any employee benefit plan (or related
         trust) of the Company or such corporation resulting from such Corporate
         Transaction and (2) any Person approved by the members of the Board in
         office immediately prior to such Corporate Transaction) beneficially
         owns, directly or indirectly, 30% or more of the then outstanding
         shares of common stock of the corporation resulting from such Corporate
         Transaction or the combined voting power of the then outstanding voting
         securities of such corporation except to the extent that such ownership
         existed prior to such Corporate Transaction and (C) at least a majority
         of the members of the board of directors of the corporation resulting
         from such Corporate Transaction were members of the Board at the time
         of the execution of the initial agreement or of the action of the Board
         providing for such Corporate Transaction."

         3. Section 6 of the Employment Agreement is hereby amended (i) by
inserting the phrase "or if Employee terminates his employment for Good Reason
(as defined in Section 6(c) below)" in the second paragraph of Section 6(a) of
the Agreement immediately following the word "Cause" in line two thereof, (ii)
by deleting the phrase "subject to the terms of Section 6(c) below" from the
second and third lines thereof, (iii) by adding the following sentence after the
first sentence thereof: "In the event that Employee has not obtained full-time
employment with another company at the expiration of twelve months following his
termination of employment from the Company (except for Cause), Employee shall be
entitled to continuation of benefits as provided herein under Company plans, at
his own expense, until the earlier of the date he becomes a full-time employee
of another company or the date of the last payment to Employee under Section
4(e) hereof" and (iv) by deleting subsection (c) and inserting the following in
lieu thereof:

         "(c) In the event that Employee terminates his employment for Good
         Reason (as defined below) or Employee's employment is terminated by the
         Company without Cause within twelve months following a Change of
         Control, Employee agrees that he will provide consulting services to
         the successor or acquiring company on terms to be mutually agreeable,
         provided that Employee shall not be obligated to work more than 20 days
         per month for the first six months following the Change of Control,
         five days per month for the next six months, and twelve days a year for
         the remainder of the period during which Employee receives payments
         under Section 4(e) above. Employee shall be permitted to enter into
         employment with any other company to perform services to such company
         or pursue any other endeavor Employee desires, provided that any such
         activities shall not interfere with the above obligation to consult
         with the successor or acquiring company for the first six month period
         following the Change of Control, and under no circumstances shall
         Employee violate the terms of the Proprietary Information and
         Inventions and Non-Competition Agreement referenced in Section 5 of
         this Employment Agreement. As used in this Agreement, "Good Reason"
         shall mean a material diminution in the title, powers, duties,
         responsibilities or functions of the Employee as described in Section 3
         above within one year following the occurrence of a Change of Control."


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         4. Except as amended and modified by this First Amendment, the
Employment Agreement shall continue in full force and effect. The Employment
Agreement and this First Amendment shall be construed as one and the same
instrument.

         5. This Amendment may be signed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and it shall not be necessary in making proof of
this First Amendment to produce or account for more than one such counterpart.

         6. This First Amendment (i) constitutes the entire contract between the
parties relative to the amendments to the Employment Agreement made hereby, (ii)
supersedes all prior agreements, consents and undertakings relating to such
amendments and (iii) may not be contradicted by evidence of prior
contemporaneous or subsequent oral agreements of the parties.

         7. This First Amendment shall be construed and enforced in accordance
with the laws of the State of Texas.

         8. This First Amendment shall be binding upon and shall inure to the
benefit of and enforceable by the parties hereto and their respective successors
and assigns.













         IN WITNESS WHEREOF, the parties have executed this First Amendment to
the Employment Agreement effective (the "Effective Date") for all purposes as of
the date first above written.



EMPLOYEE                                          COMPANY

                                                  ZONAGEN, INC.



/s/ JOSEPH S. PODOLSKI                            By:  /s/ MARTIN P. SUTTER
------------------------------------                  --------------------------
Joseph Podolski                                   Name:    Martin P. Sutter
                                                        ------------------------
                                                  Title:   Chairman
                                                        ------------------------


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