EXHIBIT 10.1

                              MacroChem Corporation
                               110 Hartwell Avenue
                               Lexington, MA 02421

                                                              April 2, 2001

Mr. Robert J. Palmisano
216 Beacon Street
Boston, MA 02116

Dear Robert:

     This letter will confirm our offer to you of employment with MacroChem
Corporation (the "Company"), under the terms and conditions that follow:

     1. Position and Duties.

        a. Effective April 9, 2001 (the "Effective Date"), you will be employed
by the Company on a full-time basis as its President and Chief Executive
Officer. Also, the Board of Directors of the Company (the "Board") will elect
you to serve as a director of the Company. You agree to resign your position on
the Board in the event your employment by the Company as Chief Executive Officer
is terminated for any reason. Your continued service as a director will depend
on election by the shareholders in accordance with the Company's By-laws and
your continued service as Chief Executive Officer. In addition, the Company will
take all reasonable steps required to cause you to be appointed Chairman of the
Board on or prior to April 1, 2002. You may also be asked from time to time to
serve as a director or officer of one or more of the Company's Affiliates,
without further compensation.

        b. You agree to perform the duties of your position and such other
duties as may reasonably be assigned to you by the Board from time to time. You
also agree that, while employed by the Company, you will devote your full
business time and your best efforts, business judgment, skill and knowledge
exclusively to the advancement of the business and interests of the Company and
its Affiliates and to the discharge of your duties and responsibilities for
them.

     2. Compensation and Benefits. During your employment, as compensation for
all services performed by you for the Company and its Affiliates, the Company
will provide you the following pay and benefits:

        a. Base Salary. The Company will pay you a base salary at the rate of
Three Hundred and Sixty-Five Thousand Dollars ($365,000) per year, payable in
accordance with the regular payroll practices of the Company and subject to
increase from time to time by the Board in its discretion.

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        b. Bonus Compensation. Your standard bonus will be 50% of your base
salary for a given year, dependent upon your achieving certain performance
goals, which shall be mutually agreed upon by you and the Board. For the year
ending December 31, 2001, you will receive (i) a guaranteed bonus equal to 35%
of the actual base salary you receive during 2001 and (ii) an additional bonus
equal to up to 15% of the actual base salary you receive during 2001, dependent
upon your achieving certain performance goals, which shall be mutually agreed
upon by you and the Board. You will also be eligible for additional bonus
payments which the Board may grant in its discretion as recognition for
outstanding achievements.

        c. Participation in Employee Benefit Plans. You will be entitled to
participate in all employee benefit plans from time to time in effect for
employees of the Company generally, including group life insurance, except to
the extent such plans are duplicative of benefits otherwise provided you under
this agreement. Your participation will be subject to the terms of the
applicable plan documents and generally applicable Company policies.

        d. Vacations. You will be entitled to five (5) weeks of vacation per
year, in addition to holidays observed by the Company. Vacation may be taken at
such times and intervals as you shall determine, subject to the business needs
of the Company.

        e. Business Expenses. The Company will pay or reimburse you for all
reasonable business expenses incurred or paid by you in the performance of your
duties and responsibilities for the Company, in accordance with Company policy.

        f. Transportation. During the term of your employment hereunder, in
accordance with Company policy, you shall be entitled to an automobile allowance
of $1,000 each month.

        g. Stock Options. The Company shall grant to you non-qualified stock
options (the "Stock Options") with a ten-year term to purchase 1,000,000 shares
of Common Stock of the Company, par value $.01 per share (the "Common Stock").
The Stock Options will have an exercise price equal to the market price per
share of Common Stock on the date of grant. The Stock Options will vest as
follows:

                   Date              Number of Shares
              April 9, 2001               310,000
              April 9, 2002               230,000
              April 9, 2003               230,000
              April 9, 2004               230,000

     3. Confidential Information and Restricted Activities.

        a. Confidential Information. During the course of your employment with
the Company, you will learn of Confidential Information, as defined below, and
you may develop Confidential Information on behalf of the Company. You agree
that you will not use or disclose to any Person (except as required by
applicable law or for the proper performance of your regular duties and
responsibilities for the Company) any Confidential Information obtained by you


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incident to your employment or any other association with the Company or any of
its Affiliates. You understand that this restriction shall continue to apply
after your employment terminates, regardless of the reason for such termination.

        b. Protection of Documents. All documents, records and files, in any
media of whatever kind and description, relating to the business, present or
otherwise, of the Company or any of its Affiliates, and any copies, in whole or
in part, thereof (the "Documents"), whether or not prepared by you, shall be the
sole and exclusive property of the Company. You agree to safeguard all Documents
and to surrender to the Company, at the time your employment terminates or at
such earlier time or times as the Board or its designee may specify, all
Documents then in your possession or control.

        c. Non-Competition. You acknowledge that in your employment with the
Company you will have access to Confidential Information which, if disclosed,
would assist in competition against the Company and its Affiliates and that you
will also generate goodwill for the Company and its Affiliates in the course of
your employment. Therefore, you agree that the following restrictions on your
activities during and after your employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates:

           i. While you are employed by the Company and during the twelve months
immediately following termination of your employment (in the aggregate, the
"Non-Competition Period"), you shall not, directly or indirectly, whether as
owner, partner, investor, consultant, agent, employee, co-venturer or otherwise,
compete with the Company or any of its Affiliates within the United States or
undertake any planning for any business competitive with the Company or any of
its Affiliates. Specifically, but without limiting the foregoing, during the
Non-Competition Period you agree not to work or provide services, in any
capacity, whether as an employee, independent contractor or otherwise, whether
with or without compensation, to any Person that is engaged in any business that
is competitive with the business of the Company or its Affiliates, as conducted
or in planning during your employment with the Company.

           ii. You agree that during the Non-Competition Period, you will not
(i) hire any employee of the Company or any of its Affiliates or seek to
persuade any employee of the Company or any of its Affiliates to discontinue
employment, (ii) solicit or encourage any customer of the Company or any of its
Affiliates or independent contractor providing services to the Company or any of
its Affiliates to terminate or diminish its relationship with them or (iii) seek
to persuade any customer or prospective customer of the Company or any of its
Affiliates to conduct with anyone else any business or activity that such
customer or prospective customer conducts or could conduct with the Company or
any of its Affiliates.

        d. In signing this agreement, you give the Company assurance that you
have carefully read and considered all the terms and conditions of this
agreement, including the restraints imposed on you under this Section 3. You
agree without reservation that these restraints are necessary for the reasonable
and proper protection of the Company and its Affiliates and that each and every
one of the restraints is reasonable in respect to subject matter, length of time
and geographic area. You further agree that, were you to breach any of the


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covenants contained in this Section 3, the damage to the Company and its
Affiliates would be irreparable. You therefore agree that the Company, in
addition to any other remedies available to it, shall be entitled to preliminary
and permanent injunctive relief against any breach or threatened breach by you
of any of those covenants, without having to post bond. You and the Company
further agree that, in the event that any provision of this Section 3 is
determined by any court of competent jurisdiction to be unenforceable by reason
of its being extended over too great a time, too large a geographic area or too
great a range of activities, that provision shall be deemed to be modified to
permit its enforcement to the maximum extent permitted by law. It is also agreed
that each of the Company's Affiliates shall have the right to enforce all of
your obligations to that Affiliate under this agreement, including without
limitation pursuant to this Section 3.

     4. Termination of Employment. Your employment under this agreement shall
continue until terminated pursuant to this Section 4.

        a. The Company may terminate your employment for Cause upon notice to
you setting forth in reasonable detail the nature of the Cause. The following,
as determined by the Company in its reasonable judgment, shall constitute Cause
for termination: (i) willful malfeasance or gross negligence in the performance
by you of your duties, resulting in harm to the Company, (ii) fraud or
dishonesty by you with respect to the Company, or (iii) your conviction of any
felony. The Company may treat a termination of your employment as termination
for Cause only after (i) giving you written notice of the intention to terminate
for Cause and of your right to a hearing and (ii) at least 15 days after giving
the notice, conducting a hearing at which you may be represented by counsel. You
may be suspended with pay during the notice period.

        b. You may terminate your employment at any time upon two (2) months'
notice to the Company. In the event of termination pursuant to this Section 4.b,
the Board may elect to waive the period of notice, or any portion thereof.

        c. This agreement shall automatically terminate in the event of your
death during employment. In the event you become disabled during employment and,
as a result, are unable to continue to perform substantially all of your duties
and responsibilities under this agreement, the Company will continue to pay you
(i) your base salary and to provide you benefits in accordance with Section 2.c
above, to the extent permitted by plan terms, for up to twelve (12) weeks of
disability during any period of three hundred and sixty-five (365) consecutive
calendar days and (ii) fifty percent (50%) of your base salary and to provide
you benefits in accordance with Section 2.c above, to the extent permitted by
plan terms, for up to an additional twelve (12) weeks of disability during any
period of three hundred and sixty-five (365) consecutive calendar days . If you
are unable to return to work after twenty-four (24) weeks of disability, the
Company may terminate your employment, upon notice to you without further
liability to you. If any question shall arise as to whether you are disabled to
the extent that you are unable to perform substantially all of your duties and
responsibilities for the Company and its Affiliates, you shall, at the Company's
request, submit to a medical examination by a physician selected by the Company
to whom you or your guardian, if any, has no reasonable objection to determine
whether you are so disabled and such determination shall for the purposes of


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this agreement be conclusive of the issue. If such a question arises and you
fail to submit to the requested medical examination, the Company's determination
of the issue shall be binding on you.

     5. Severance Payments and Other Matters Related to Termination.

        a. In the event of termination of your employment by the Company other
than for Cause, the Company will continue to pay you your base salary, and any
bonus to which you are entitled in accordance with Section 2.b above, payable at
the time such bonuses are payable to Company executives generally, for the
period of twelve (12) months from the date of termination. The Company will also
pay you on the date of termination any base salary earned but not paid through
the date of termination and pay for any vacation time accrued but not used to
that date. Any obligation of the Company to provide you severance, or bonus
payments or benefits under this Section 5.a is conditioned, however, upon your
signing a release of claims in the form provided by the Company (the "Employee
Release") within twenty-one days of the date on which you give or receive, as
applicable, notice of termination of your employment and upon your not revoking
the Employee Release thereafter. All severance payments will be in the form of
salary continuation, payable in accordance with the normal payroll practices of
the Company, and will begin at the Company's next regular payroll period
following the effective date of the Employee Release, but shall be retroactive
to the date of termination. Notwithstanding anything else contained in this
agreement, no bonus payment will be due and payable under any provision of this
Section 5.a until the next regular Company payday following the effective date
of the Employee Release.

     With respect to any termination of employment to which this Section 5.a
applies, until the earlier to occur of (i) the first anniversary of the date of
termination or (ii) the date on which you commence other employment in
connection with which you receive medical and dental benefits substantially
comparable to those made available by the Company (including self-employment or
engaging in an enterprise as a sole proprietor or partner) (the "Benefits
Termination Date"), the Company shall, if you were participating in any medical
and dental insurance plans pursuant to Section 2.c above immediately prior to
the effectiveness of your termination of employment and subject to any employee
contribution applicable to you immediately prior to such effectiveness, continue
to contribute to the cost of your participation in such medical and dental
insurance plans so long as you are entitled to continue such participation under
applicable law and plan terms.

     In the event of any termination to which this Section 5.a applies, until
the first anniversary of the date of terminatio (a) the Company shall continue
to provide you with the monthly automobile allowance under Section 2.f above and
(b) to the extent permitted by law and the terms of the applicable benefit plan,
the Company shall continue to provide you with group life insurance.

        b. In the event of termination of your employment by the Company for
cause or by you (other than for Good Reason after a Change of Control), the
Company will pay you any base salary earned but not paid through the date of
termination and pay for any vacation time accrued but not used to that date, but
the Company shall have no obligation to you for bonus or severance payments in
such event.

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        c. Upon a Change of Control.

           i. If a Change of Control (as defined below) occurs and thereafter
the Company terminates your employment other than for cause or you terminate
your employment for Good Reason (as defined below) then, in lieu of any payments
to you under Section 5.a hereof, the Company will provide you with severance
benefits as follows:

     (A) The Company shall pay you, within thirty (30) business days of such
termination, a lump sum payment equal to (x) three times the sum of your then
annual base salary (or, if your base salary has been reduced within 60 days of
the termination or at any time after the Change of Control, your base salary in
effect prior to the reduction) plus (y) the greater of the amount of any bonus
compensation earned by you in respect of the most recently completed fiscal year
and your target bonus for the fiscal year during which termination occurs;
provided that you may in your sole discretion elect to have such payment made in
monthly installments with interest at the rate of 7% per annum over a period not
to exceed two years. The foregoing payments are in addition to and not in lieu
of salary and bonus for the current year that has been earned but not yet paid.
If current year target bonus is tied, in whole or in part, to annualized
performance benchmarks, it will be equitably prorated

     (B) Until the earlier to occur of (x) the third anniversary of the date of
termination or (y) the date on which you commence other employment in connection
with which you receive benefits substantially comparable to those made available
by the company (including self-employment or engaging in an enterprise as a sole
proprietor or partner), the Company shall (x) if you were participating in any
medical and dental insurance, disability or group insurance plans pursuant to
Section 2.c above immediately prior to the effectiveness of your termination of
employment and subject to any employee contribution applicable to you
immediately prior to such effectiveness, continue to contribute to the cost of
your participation in such plans and (y) if you were receiving an automobile
allowance pursuant to Section 2.f above immediately prior to the effectiveness
of your termination of employment, continue to provide such automobile
allowance. To the extent the Company is unable to provide such benefits to you
under its existing plans and arrangements, it will pay you cash amounts equal to
the additional cost to you of such benefits.

     (C) To the extent not otherwise provided for under the Company's stock
plans, all options to purchase Company stock held by you will become exercisable
and remain exercisable for the period of time set forth in the instruments
governing such options.

           ii. Notwithstanding anything to the contrary in Section 5.c.iii
below, in the event that the payments and benefits to which you would be
entitled pursuant to Section 5.c.i as a result of a Change of Control exceed the
maximum amount for which the Company will not be limited in its deduction
pursuant to Section 280G of the Internal Revenue Code of 1986, as amended, or
any successor provision (the "Maximum Amount") by an amount which is less than
5% of the Maximum Amount, the payments and benefits to which you would be
entitled pursuant to Section 5.c.i shall be reduced to the Maximum Amount. Any
such reduction shall be applied to the amounts due under Section 5.c.i as you
may determine.

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           iii. In the event that it is determined that any payment or benefit
provided by the Company to you or for your benefit, either under this Agreement
or otherwise, will be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code or any successor provision ("section 4999"), the Company
will, prior to the date on which any amount of the excise tax must be paid or
withheld, make an additional lump-sum payment (the "gross-up payment") to you.
The gross-up payment will be sufficient, after giving effect to all federal,
state and other taxes and charges with respect to the gross-up payment, to make
you whole for all taxes (including withholding taxes) imposed under section
4999.

     Determinations under this Section 5.c.iii will be made by the Company's
then current firm of independent auditors (the "Firm"). The determinations of
the Firm will be binding upon the Company and you except as the determinations
are established in resolution (including by settlement) of a controversy with
the Internal Revenue Service to have been incorrect. All fees and expenses of
the Firm will be paid by the Company.

     If the Internal Revenue Service asserts a claim that, if successful, would
require the Company to make a gross-up payment or an additional gross-up
payment, the Company and you will cooperate fully in resolving the controversy
with the Internal Revenue Service. The Company will make or advance such
gross-up payments as are necessary to prevent you from having to bear the cost
of payments made to the Internal Revenue Service in the course of, or as a
result of, the controversy. The Firm will determine the amount of such gross-up
payments or advances and will determine after resolution of the controversy
whether any advances must be returned by you to the Company. The Company will
bear all expenses of the controversy and will gross you up for any additional
taxes that may be imposed upon you as a result of its payment of such expenses.

        d. Provisions of this agreement shall survive any termination if so
provided in this agreement or if necessary or desirable to accomplish the
purposes of other surviving provisions, including without limitation your
obligations under Section 3. The obligation of the Company to make payments to
you under this Section 5 is expressly conditioned upon your continued full
performance of your obligations under Section 3 hereof. Upon termination by
either you or the Company, all rights, duties and obligations of you and the
Company to each other shall cease, except as otherwise expressly provided in
this agreement.

     6. Definitions. For purposes of this agreement, the following definitions
apply:

     "Affiliates" means all persons and entities directly or indirectly
controlling, controlled by or under common control with the Company, where
control may be by management authority, equity interest or otherwise.

     "Change of Control" means the occurrence of any of the following events:

     (1) any Person other than (i) you, an Executive Related Party, or any group
of which you or an Executive Related Party is a member, or (ii) the Company or a
wholly owned subsidiary of the Company or an employee benefit plan (or related
trust) of the Company or of a wholly owned subsidiary becomes the owner of 50%


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or more of the Company's Common Stock; PROVIDED THAT so long as Continuing
Directors (as defined below) represent a majority of the Board after the
consummation of such transaction, such event shall not be considered a Change of
Control; or

     (2) individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the "Continuing Directors") cease for any reason to
constitute at least a majority of such Board; provided, however, that any
individual becoming a director after the Effective Date whose election or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the Continuing Directors will be considered as though
such individual were a Continuing Director, but excluding for this purpose any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act")) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

     (3) a reorganization, merger, consolidation or similar transaction that
will result in the transfer of ownership of more than 50% of the Company's
outstanding Common Stock; provided that so long as Continuing Directors
represent a majority of the Board after the consummation of such transaction,
such event shall not be considered a Change of Control; or

     (4) the liquidation or dissolution of the Company or sale of substantially
all of the Company's assets.

     "Common Stock" means the then outstanding Common Stock of the Company plus,
for purposes of determining the stock ownership of any Person, the number of
shares of Common Stock which such Person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) upon the
exercise of conversion rights, exchange rights, warrants or options or
otherwise. Notwithstanding the foregoing, the term Common Stock does not include
shares of preferred stock or convertible debt or options or warrants to acquire
shares of Common Stock (including any shares of Common Stock issued or issuable
upon the conversion or exercise thereof) to the extent that the Board expressly
so determines in any future transaction or transactions. A Person will be deemed
to be the "owner" of any Common Stock of which such Person would be the
"beneficial owner," as such term is defined in Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Exchange Act.

     "Confidential Information" means any and all information of the Company and
its Affiliates that is not generally available to the public. Confidential
Information also includes any information received by the Company or any of its
Affiliates from any Person with any understanding, express or implied, that it
will not be disclosed. Confidential Information does not include information
that enters the public domain, other than through your breach of your
obligations under this agreement.

     An "Executive Related Party" means any affiliate or associate of you other
than the Company or a subsidiary of the Company. The terms "affiliate" and
"associate" have the meanings given in Rule 12b-2 under the Exchange Act; the
term "registrant" in the definition of "associate" means, in this case, the
Company.

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     "Good Reason" means, following a Change of Control, (i) failure by the
Company to maintain you in at least the positions you occupy on the date of this
Agreement or assignment to you of duties materially inconsistent with such
positions (ii) failure by the Company to provide you with the compensation and
benefits you are receiving on the date of this Agreement, or as they may
hereafter be increased, other than in connection with a Company-wide reduction
of compensation and benefits, (iii) breach by the Company of any material
provision of this Agreement, (iv) relocation of your principal place of work to
a location more than 50 miles from its location immediately prior to the Change
of Control or (v) any material reduction in your duties, responsibilities or
authority or any other action that has the effect of a demotion of you. To the
extent the Change of Control results in the Company (or a successor to the
Company by merger, consolidation or the like) continuing in existence as a
direct or indirect subsidiary of an acquirer, you shall be considered to have
been demoted unless given the same position, duties and authority in the
ultimate parent of the acquirer. By way of example, the Chief Executive Officer
of a public company would be considered to have reduced duties, responsibility
and authority, and hence to have been demoted if, as a result of the Change of
Control, such executive did not have the same role in the ultimate parent of the
acquirer.

     "Person" means an individual, a corporation, a limited liability company,
an association, a partnership, an estate, a trust or any other entity or
organization, other than the Company or any of its Affiliates.

     7. Conflicting Agreements. You hereby represent and warrant that your
signing of this agreement and the performance of your obligations under it will
not breach or be in conflict with any other agreement to which you are a party
or are bound and that you are not now subject to any covenants against
competition or similar covenants or any court order that could affect the
performance of your obligations under this agreement. You agree that you will
not disclose to or use on behalf of the Company any proprietary information of a
third party without that party's consent.

     8. Withholding. All payments made by the Company under this agreement shall
be reduced by any tax or other amounts required to be withheld by the Company
under applicable law.

     9. Assignment. Neither you nor the Company may make any assignment of this
agreement or any interest in it, by operation of law or otherwise, without the
prior written consent of the other; provided, however, that the Company may
assign its rights and obligations under this agreement without your consent to
one of its Affiliates or to any Person with whom the Company shall hereafter
effect a reorganization, consolidate with, or merge into or to whom it transfers
all or substantially all of its properties or assets. This agreement shall inure
to the benefit of and be binding upon you and the Company, and each of our
respective successors, executors, administrators, heirs and permitted assigns.

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


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portion and provision of this agreement shall be valid and enforceable to the
fullest extent permitted by law.

     11. Arbitration. Any dispute or controversy between the parties involving
the construction or application of any terms, covenants or conditions of this
Agreement (other than those contained in Section 3), or any claim arising out of
or relating to this Agreement (other than any claim arising out of or relating
to Section 3), or any claim arising out of or relating to your employment by the
Company (other than any claim arising out of or relating to Section 3), that is
not resolved within ten days by the parties will be settled by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
Company and you agree that the arbitrator(s) will have no authority to award
punitive or exemplary damages or so-called consequential or remote damages such
as damages for emotional distress. Any decision of the arbitrator(s) will be
final and binding upon the parties. Either party may request that the
arbitrator(s) submit written findings of fact and conclusions of law. The
parties agree and understand that they hereby waive their rights to a jury trial
of any dispute or controversy relating to the matters specified above in this
Section 11. The Company and you will share equally the cost of any such
arbitration.

     12. Miscellaneous. This agreement sets forth the entire agreement between
you and the Company and replaces all prior and contemporaneous communications,
agreements and understandings, written or oral, with respect to the terms and
conditions of your employment. This agreement may not be modified or amended,
and no breach shall be deemed to be waived, unless agreed to in writing by you
and an expressly authorized representative of the Board. The headings and
captions in this agreement are for convenience only and in no way define or
describe the scope or content of any provision of this agreement. This agreement
may be executed in two or more counterparts, each of which shall be an original
and all of which together shall constitute one and the same instrument. This is
a Massachusetts contract and shall be governed and construed in accordance with
the laws of The Commonwealth of Massachusetts, without regard to the conflict of
laws principles thereof.

     13. Notices. Any notices provided for in this agreement shall be in writing
and shall be effective when delivered in person or deposited in the United
States mail, postage prepaid, and addressed to you at your last known address on
the books of the Company or, in the case of the Company, to it at its principal
place of business, attention of the Board of Directors, or to such other address
as either party may specify by notice to the other actually received.

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     If the foregoing is acceptable to you, please sign this letter in the space
provided and return it to me no later than April 4, 2001. At the time you sign
and return it this letter will take effect as a binding agreement between you
and the Company on the basis set forth above. The enclosed copy is for your
records.


                                                     Sincerely yours,


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


Accepted and Agreed:

/s/ Robert J. Palmisano
-----------------------
Robert J. Palmisano

Date:  4/9/01



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