<PAGE>
                                                                    EXHIBIT 10.1


         DISPUTES RELATING TO THIS AGREEMENT ARE REQUIRED TO BE SETTLED
         PURSUANT TO CERTAIN DISPUTE RESOLUTION PROCEDURES AS PROVIDED
                 IN ARTICLE 6 AND APPENDIX A OF THIS AGREEMENT.


                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "Agreement") is entered into effective
as of the 1st day of January, 2002, between Jeffrey H. Buchalter ("Employee"),
and ILEX Products, Inc., a Delaware corporation (the "Company"), the principal
executive offices of which are located in San Antonio, Texas.

         WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company, on terms hereinafter set forth;

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

                                   ARTICLE 1
                                     DUTIES

         1.1 Employment. During the term of this Agreement until notice of
termination is given under Section 4.1, the Company agrees to employ Employee,
and Employee accepts such employment, on the terms and conditions set forth in
this Agreement. During the term of this Agreement until notice of termination is
given under Section 4.1, ILEX Oncology, Inc., the parent of the Company (the
"Parent"), agrees to use its best efforts to cause Employee to be elected as
President and Chief Executive Officer of Parent on the terms and conditions set
forth in this Agreement. Parent shall use its best efforts to cause Employee to
be nominated as a director of Parent for service as a director of Parent during
the term of this Agreement until notice of termination is given under Section
4.1.

         1.2 Extent of Service. During the term of this Agreement until notice
of termination is given under Section 4.1, Employee shall devote his full-time
business time, energy and skill to the affairs of the Company and its affiliated
companies, and, the discharge of his duties hereunder shall be Employee's
primary occupation. All other activities shall be secondary and shall be limited
so as not to interfere in any material respect with the discharge of Employee's
duties hereunder. The foregoing shall not prevent Employee from making monetary
investments in businesses or serving as a director, provided that such
investments do not involve any services on the part of Employee in the operation
of such businesses.

         1.3 Duties. Until notice of termination is given under Section 4.1,
Employee shall render full-time services to the Company as President and Chief
Executive Officer of the Parent. Employee's duties hereunder shall include such
duties as may be prescribed from time to time by the Board of Directors of the
Parent (the "Board"). Employee shall be responsible for all aspects of the
business of the Parent, including drug development and business operations, and
shall be


<PAGE>

accountable for the profits and losses of the Parent, and Employee shall serve
as the key architect of the strategic development plan of the Parent, all
subject to the direction and control of the Board. Employee shall also perform,
without additional compensation, such duties for the Company and its affiliated
companies.

                                   ARTICLE 2
                               TERM OF EMPLOYMENT

         The term of this Agreement shall commence on January 1, 2002, and
continue for a period of three years unless earlier terminated pursuant to
Article 4 hereof.

                                   ARTICLE 3
                                  COMPENSATION

         3.1 Monthly Base Salary. As compensation for services rendered under
this Agreement, Employee shall be entitled to receive from the Company a monthly
base salary (before standard deductions) equal to $33,333.33, subject to
periodic review and upward adjustment (which upward adjustment shall not
thereafter be adjusted downward) by the Board in its sole discretion. Employee's
monthly base salary shall be payable at regular intervals (at least
semi-monthly) in accordance with the prevailing practice and policy of the
Company.

         3.2 Discretionary Performance Bonus. As additional compensation for
services rendered under this Agreement until notice of termination is given by
the Company under Section 4.1, Employee shall also be eligible to receive a
discretionary performance bonus if, as and when declared by the Board in its
sole discretion.

         3.3 Benefits. Employee shall, in addition to the compensation provided
for herein, be entitled to the following additional benefits:

                  (a) Medical, Health and Disability Benefits. Employee shall be
         entitled to receive all medical, health and disability benefits that
         may, from time to time, be provided by the Company or Parent to all
         employees of the Company as a group.

                  (b) Other Benefits. Employee shall also be entitled to receive
         any other benefits that may, from time to time, be provided by the
         Company to all employees of the Company as a group or to all officers
         of the Parent as a group and, in addition thereto, estate planning, tax
         preparation and tax counseling provided by professional advisors
         selected by Employee.

                  (c) Vacation. Employee shall be entitled to an annual vacation
         as determined in accordance with the prevailing practice and policy of
         the Company.

                  (d) Holidays. Employee shall be entitled to holidays in
         accordance with the prevailing practice and policy of the Company.

                  (e) Reimbursement of Expenses. The Company shall reimburse
         Employee for all expenses reasonably incurred by Employee in
         conjunction with the rendering of services at the Company's request,
         provided that such expenses are incurred in



                                        2


<PAGE>

         accordance with the prevailing practice and policy of the Company and
         are properly deductible by the Company for federal income tax purposes.
         As a condition to such reimbursement, Employee shall submit an itemized
         accounting of such expenses in reasonable detail, including receipts
         where required under federal income tax laws.

                  (f) Moving Expenses. The Company shall reimburse Employee for
         the reasonable and necessary costs of relocating his household goods to
         San Antonio and other reasonable and necessary moving and interim
         housing expenses incurred in connection with the move of Employee and
         his family to San Antonio. The Company shall reimburse Employee for (1)
         realtor commissions and customary closing costs in connection with the
         sale of his home in New Jersey and interim loan closing costs and
         permanent loan closing costs relating to the construction of his home
         in San Antonio and (2) interest payments on the mortgage loan relating
         to his home in New Jersey (except to the extent the outstanding
         principal balance of such mortgage loan has increased since August 8,
         2001) until the earlier of (i) the sale of his home in New Jersey, or
         (ii) the completion of constructing and moving into his home in San
         Antonio. The Company shall reimburse Employee for the monthly rental
         payments on his home located in San Antonio at 5106 Casbury until the
         construction of Employee's new home in San Antonio is complete. In
         addition, the Company shall reimburse Employee for any federal income
         tax liability incurred by Employee in connection with the foregoing
         reimbursements under this subparagraph (f).

                  (g) Life Insurance. The Company shall obtain a term life
         insurance policy on Employee in the amount of $1,000,000, with Employee
         or his designee as the beneficiary. The premiums on such policy shall
         be paid by the Company during the term of this Agreement until notice
         of termination is given by the Company under Section 4.1. Upon the
         termination of this Agreement or notice of termination by the Company
         being given under Section 4.1, Employee or his designee shall have the
         right to buy such term life insurance policy from the Company for an
         amount equal to the value of the unused term premiums.

                                   ARTICLE 4
                                   TERMINATION

         4.1 Termination With Notice. This Agreement may be terminated by the
Company, with or without cause, upon one (1) year's prior written notice thereof
given by the Company to Employee. In the event of a material breach of this
Agreement by the Company, Employee may terminate this Agreement upon one (1)
year's prior written notice thereof given by Employee to the Company. In the
event notice of termination is given pursuant to this Section 4.1, the Company
shall continue to pay Employee his monthly base salary (subject to standard
deductions) at regular intervals (at least semi-monthly) in accordance with the
prevailing practice and policy of the Company to the date of termination and
shall continue to provide the benefits under Section 3.3(a) to the date of
termination. Except as provided in the immediately preceding sentence, in the
event notice of termination is given pursuant to this Section 4.1, the Company
shall have no further obligations to Employee hereunder. Upon payment of the
foregoing, the Company shall have no further obligation to Employee hereunder.
Once Employee receives or provides notice of termination pursuant to this
Section 4.1, Employee shall be free to accept



                                       3

<PAGE>

employment from another employer without any common law duties to the Company
other than those duties and obligations of Employee under Article 5 of this
Agreement.

         4.2 Termination Upon Death or Disability. In the event that Employee
dies, this Agreement shall terminate upon Employee's death. Likewise, if
Employee becomes unable to perform the essential functions of his duties
hereunder, with or without reasonable accommodation, on account of illness,
disability or other reason whatsoever for a period of more than 180 consecutive
or nonconsecutive days in any 12-month period, either party may, upon notice to
the other party, terminate this Agreement. In the event of termination pursuant
to this Section 4.2 due to disability, Employee (or his legal representative)
shall only be entitled to his monthly base salary, less any disability benefits
Employee receives under employee benefit plans maintained from time to time by
the Company, for a period of one (1) year from the date of termination payable
at regular intervals (at least semi-monthly) in accordance with the prevailing
practice and policy of the Company. In the event of termination pursuant to this
Section 4.2 due to death, Employee (or his legal representative) shall only be
entitled to his monthly base salary earned pro rata for services actually
rendered prior to the date of such termination.

         4.3 Change of Control. In the event of a Change of Control during the
term of this Agreement, this Agreement shall be terminated and the Company shall
pay Employee three times his yearly base salary in effect immediately prior to
the date of such Change of Control, which amount shall be payable to Employee in
12 equal monthly installments following such Change of Control; provided,
however, in the event that the Company has previously given notice of
termination pursuant to Section 4.1 hereof, there shall be deducted from the
amount that the Company shall pay Employee pursuant to this Section 4.3 the
amount that the Company has already paid to Employee under Section 4.1. For
purposes of this Agreement, a "Change of Control" shall mean (i) a sale,
transfer or disposition of substantially all of the assets of the Parent, (ii) a
merger or consolidation of the Parent with or into another entity or other
corporate reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's securities outstanding immediately after such
merger, consolidation or other reorganization is owned by persons who are not
stockholders of the Parent immediately prior to such merger, consolidation or
other reorganization or (iii) any person or group shall acquire (whether in one
or more transactions) voting securities of the Parent that result in such person
or group directly or indirectly beneficially owning 50% or more of the voting
securities of the Parent.

                                   ARTICLE 5
                 PROPRIETARY PROPERTY; CONFIDENTIAL INFORMATION

         5.1 Proprietary Property; Confidential Information. Employee
acknowledges that, in and as a result of Employee's employment hereunder,
Employee will be making use of, acquiring and adding to confidential information
and proprietary property of a special and unique nature and value relating to
such matters as the Company's trade secrets, business plans, drug development,
patents, systems, procedures, manuals, confidential reports and lists of
customers ("Confidential Information"). As a material inducement to the Company
to enter into this Agreement and to pay to Employee the compensation and
benefits stated herein, the Employee covenants and agrees that Employee shall
not, at any time during or following the term of Employee's employment, directly
or indirectly, divulge or disclose for any purpose whatsoever



                                       4

<PAGE>

any Confidential Information or proprietary information of the Company. Upon
termination of this Agreement, regardless of how such termination may be brought
about, Employee shall deliver to the Company any and all documents, instruments,
notes, papers or other expressions or embodiments of confidential information
which are in Employee's possession or control. In addition, Employee shall
comply with the terms of the Agreement to Protect Proprietary and Confidential
Information and the Policy Statement as to Confidential Information, each as
previously executed by Employee.

         5.2 Publicity. During the term of this Agreement and for a period of
ten years thereafter, Employee shall not, directly or indirectly, originate or
participate in the origination of any publicity, news release or other public
announcements, written or oral, whether to the public press or otherwise,
relating to this Agreement, to any amendment hereto, to Employee's employment
hereunder or to the Company, without the prior written approval of the Company.

                                   ARTICLE 6
                                   ARBITRATION

         Except for the provisions of Article 5 of this Agreement dealing with
proprietary property and confidential information, with respect to which the
Company expressly reserves the right to petition a court directly for injunctive
and other relief, any claim, dispute or controversy of any nature whatsoever,
including but not limited to tort claims or contract disputes, between the
parties to this Agreement or their respective heirs, executors, administrators,
legal representatives, successors and assigns, as applicable, arising out of or
related to Employee's employment or the terms and conditions of this Agreement,
including the implementation, applicability or interpretation thereof, shall be
resolved in accordance with the dispute resolution procedures set forth in
Appendix A attached hereto and made a part hereof.

                                   ARTICLE 7
                                  MISCELLANEOUS

         7.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by an overnight
delivery service with tracking procedures or by facsimile to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice: If to Employee, at the address set forth below his name
on the signature page hereof; and if to the Company, at 4545 Horizon Hill Blvd.,
San Antonio, Texas 78229, Attention: Chairman of the Board.

         7.2 Equitable Relief. In the event of a breach or a threatened breach
by Employee of any of the provisions contained in Article 5 of this Agreement,
Employee acknowledges that the Company will suffer irreparable injury not fully
compensable by money damages and, therefore, will not have an adequate remedy
available at law. Accordingly, the Company shall be entitled to obtain such
injunctive relief or other equitable remedy from any court of competent
jurisdiction as may be necessary or appropriate to prevent or curtail any such
breach, threatened or actual. The foregoing shall be in addition to and without
prejudice to any other rights that the Company may have under this Agreement, at
law or in equity, including, without limitation, the right to sue for damages.



                                       5

<PAGE>

         7.3 No Rights in Contracts. Employee acknowledges and agrees that he
shall not have any rights in or to any contracts entered into with clients or
customers of the Company in connection with services provided by Employee
hereunder (including those in which Employee may be specifically named with the
Company), unless otherwise agreed to in writing by the Company.

         7.4 Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. Employee's rights under this Agreement are not
assignable and any attempted assignment thereof shall be null and void.

         7.5 Governing Law; Venue. This Agreement shall be subject to and
governed by the laws of the State of Texas. Non-exclusive venue for any action
permitted hereunder shall be proper in San Antonio, Bexar County, Texas, and
Employee hereby consents to such venue.

         7.6 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement between the parties and supersedes all other agreements between the
parties which may relate to the subject matter contained in this Agreement. This
Agreement may not be amended or modified except by an agreement in writing which
refers to this Agreement and is signed by both parties.

         7.7 Headings. The headings of sections and subsections of this
Agreement are for convenience only and shall not in any way affect the
interpretation of any provision of this Agreement or of the Agreement itself.

         7.8 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         7.9 Waiver. The waiver by any party of a breach of any provision hereof
shall not be deemed to constitute the waiver of any prior or subsequent breach
of the same provision or any other provisions hereof. Further, the failure of
any party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement unless such party expressly waives such provision pursuant to
a written instrument which refers to this Agreement and is signed by such party.

         7.10 Survival of Provisions. The covenants and provisions of Articles 5
and 6 hereof shall survive any termination of this Agreement and continue for
the periods indicated, regardless of how such termination may be brought about.

         7.11 Fees and Expenses. The Company will reimburse Employee for
one-half of all reasonable attorneys' fees and expenses incurred by Employee in
connection with the negotiation and preparation of this Agreement.



                                       6


<PAGE>


         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                    ILEX PRODUCTS, INC.



                                    By:      /s/ Michael T. Dwyer
                                             ----------------------------------
                                    Name:    Michael T. Dwyer
                                             ----------------------------------

                                     Title:  Treasurer
                                             ----------------------------------

                                    EMPLOYEE:


                                             /s/ Jeffrey H. Buchalter
                                             ----------------------------------
                                             Jeffrey H. Buchalter

                                    Address: 5106 Casbury
                                             -------------------------------

                                             San Antonio, Texas 78249
                                             -------------------------------




PARENT JOINS IN THIS AGREEMENT SOLELY
FOR PURPOSES OF ITS OBLIGATIONS
UNDER SECTIONS 1.1, 1.3 AND 4.3 AND ARTICLE 6:

ILEX ONCOLOGY, INC.


By:    /s/ Michael T. Dwyer
       --------------------------------------
Name:  Michael T. Dwyer
       --------------------------------------
Title: Executive Vice President and
       Chief Financial Officer
       --------------------------------------



                                       7


<PAGE>


                                   APPENDIX A


                          DISPUTE RESOLUTION PROCEDURES

         Re: Employment Agreement dated January 1, 2002 (including any
amendments, the "Agreement"), between ILEX Products, Inc., a Delaware
corporation (the "Company"), and Jeffrey H. Buchalter ("Employee"). Unless
otherwise defined in this Appendix A, terms defined in the Agreement and used
herein shall have the meanings set forth therein.

         A. Negotiations. If any claim, dispute or controversy described in
Article 6 of the Agreement (collectively, the "Dispute") arises, either party
may, by written notice to the party, have the Dispute referred to the persons
designated below for attempted resolution by good faith negotiations within 45
days after such written notice is received. Such designated persons are as
follows:

                  1. Company. The Chairman of the Board; and

                  2. Employee. Employee or his designee.

         Any settlement reached by the parties under this paragraph A shall not
be binding until reduced to writing and signed by both parties. When reduced to
writing, such settlement agreement shall supersede all other agreements, written
or oral, to the extent such agreements specifically pertain to the matters so
settled. If the above-designated persons are unable to resolve such dispute
within such 45-day period, either party may invoke the provisions of paragraph B
below.

         B. Arbitration. All Disputes shall be settled by negotiation among the
parties as described in paragraph A above or, if such negotiation is
unsuccessful, by binding arbitration in accordance with procedures set forth in
paragraphs C and D below.

         C. Notice. Notice of demand for binding arbitration by one party shall
be given in writing to the other party pursuant to the Agreement. In no event
may a notice of demand of any kind be filed more than one (1) year after the
date the Dispute is first asserted in writing to the other party pursuant to
paragraph A above, and if such demand is not timely filed, the Dispute
referenced in the notice given pursuant to paragraph A above shall be deemed
released, waived, barred and unenforceable for all time, and barred as if by
statute of limitations.

         D. Binding Arbitration. Upon filing of a notice of demand for binding
arbitration by either party, arbitration shall be commenced and conducted as
follows:

         1. Arbitrators. All Disputes and related matters in question shall be
referred to and decided and settled by a panel of three arbitrators, one
selected by the Company, one selected by Employee and the third selected by the
two arbitrators so selected. Selection of the arbitrators to be selected the
Company and Employee shall be made within ten (10) business days after the date
of giving of a notice of demand for arbitration, and the two arbitrators so
appointed shall appoint the third within 10 business days following their
appointment.



                                       8

<PAGE>

         2. Cost of Arbitration. The cost of arbitration proceedings, including
without limitation the arbitrators' compensation and expenses, hearing room
charges, court reporter transcript charges etc., shall be borne by the parties
equally or otherwise as the arbitrators may determine. The arbitrators may award
the prevailing party its reasonable attorneys' fees and costs incurred in
connection with the arbitration. The arbitrators are specifically instructed to
award attorneys' fees for instances of abuse in the discovery process.

         3. Location of Proceedings. The arbitration proceedings shall be held
in San Antonio, Texas, unless the parties agree otherwise.

         4. Pre-hearing Discovery. The parties shall have the right to conduct
and enforce pre-hearing discovery in accordance with the then current Federal
Rules of Civil Procedure, subject to these limitations:

                  (a) Each party may serve no more than one set of
         interrogatories limited to 30 questions, including sub-parts;

                  (b) Each party may depose the other party's expert witnesses
         who will be called to testify at the hearing, plus two fact witnesses
         without regard to whether they will be called to testify (each party
         will be entitled to a total of no more than 24 hours of deposition time
         of the other party's witnesses), provided however, that the arbitrators
         may provide for additional depositions upon showing of good cause; and

                  (c) Document discovery and other discovery shall be under the
         control of and enforceable by the arbitrators.

         5. Discovery Disputes. All discovery disputes shall be decided by the
arbitrators. The arbitrators are empowered;

                  (a) to issue subpoenas to compel pre-hearing document or
         deposition discovery;

                  (b) to enforce the discovery rights and obligations of the
         parties; and

                  (c) to otherwise to control the scheduling and conduct of the
         proceedings.

Notwithstanding any contrary foregoing provisions, the arbitrators shall have
the power and authority to, and to the fullest extent practicable shall,
abbreviate arbitration discovery in a manner which is fair to all parties in
order to expedite the conclusion of each alternative dispute resolution
proceeding.

         6. Pre-hearing Conference. Within fifteen (15) days after selection of
the third arbitrator, or as soon thereafter as is mutually convenient to the
arbitrators, the arbitrators shall hold a pre-hearing conference to establish
schedules for completion of discovery, for exchange of exhibit and witness
lists, for arbitration briefs and for the hearing, and to decide procedural
matters and address all other questions that may be presented.



                                        9
<PAGE>

         7. Hearing Procedures. The hearing shall be conducted to preserve its
privacy and to allow reasonable procedural due process. Rules of evidence need
not be strictly followed, and the hearing shall be streamlined as follows:

                  (a) Documents shall be self-authenticating, subject to valid
         objection by the opposing party;

                  (b) Expert reports, witness biographies, depositions and
         affidavits may be utilized, subject to the opponent's right of a live
         cross-examination of the witness in person;

                  (c) Charts, graphs and summaries shall be utilized to present
         voluminous data, provided (i) that the underlying data is made
         available to the opposing party thirty (30) days prior to the hearing,
         and (ii) that the preparer of each chart, graph or summary is available
         for explanation and live cross-examination in person;

                  (d) The hearing should be held on consecutive business days
         without interruption to the maximum extent practicable; and

                  (e) The arbitrators shall establish all other procedural rules
         for the conduct of the arbitration in accordance with the rules of
         arbitration of the Center for Public Resources.

         8. Governing Law. This arbitration provision shall be governed by, and
all rights and obligations specifically enforceable under and pursuant to, the
Federal Arbitration Act (9 U.S.C. Section 1, et seq.)

         9. Consolidation. No arbitration shall include, by consolidation,
joinder or in any other manner, any additional person not a party to the
Agreement, except by written consent of both parties containing a specific
reference to these provisions.

         10. Award. The arbitrators are empowered to render an award of general
compensatory damages and equitable relief (including, without limitations,
injunctive relief), but are not empowered to award exemplary, special or
punitive damages. The award rendered by the arbitrators (a) shall be final, (b)
shall not constitute a basis for collateral estoppel as to any issue and (c)
shall not be subject to vacation or modification.

         11. Confidentiality. The parties hereto will maintain the substance of
any proceedings hereunder in confidence and the arbitrators, prior to any
proceedings hereunder, will sign an agreement whereby the arbitrators agree to
keep the substance of any proceedings hereunder in confidence.



                                       10