VIMRx Pharmaceuticals Inc.
                              2751 Centerville Road
                           Suite 210, Little Falls II
                           Wilmington, Delaware 19808




                                 August 26, 1996




Mr. David A. Jackson
49 Guyencourt Road
Wilmington, DE  19807-1415

Dear David:

                  This  letter  agreement  will serve to set forth the terms and
conditions of your employment by VIMRx Pharmaceuticals Inc. ("VIMRx").

                  You are being  employed  as the  Executive  Vice  President  -
Research  and  Development  and  Chief  Scientific  Officer  of  VIMRx.  In such
capacity,  you will have  general  charge  of and  administration  over  VIMRx's
research and development  activities and programs and primary responsibility for
technology assessment and the making of scientific and technology determinations
with respect to the  corporation's  business plans.  You will report directly to
the President and Chief Executive Officer. If requested, you agree to serve, for
no  additional  compensation,  in like  capacities  for any  VIMRx  subsidiaries
throughout the term of your employment.

                  The term of your  employment  will  commence as of the date of
this letter  agreement and shall continue until  terminated under the provisions
of  Paragraph 6 below.  You will be a  full-time  employee of VIMRx and agree to
devote your business and professional  time and energy and skills to the affairs
of VIMRx and its  subsidiaries  and to serve VIMRx faithfully and to the best of
your ability.

                  As  compensation  for  the  services  to be  rendered  by  you
hereunder,  VIMRx will pay you (i) a signing  bonus of  $40,000  payable on your
execution  and delivery of this letter  agreement  and (ii) a base salary of not
less than $175,000 per annum, payable in installments in accordance with VIMRx's
regular payroll  practices.  You will also be entitled to a  discretionary  cash
bonus  determined  as of the end of each  calendar  year  during the term hereof
(based on performance  criteria to be agreed upon between VIMRx and you and such
additional  discretionary  factors as the President and Chief Executive  Officer
and the Board of Directors of VIMRx (the  "Board") may apply from time to time).
The minimum target bonus amount each year, assuming satisfactory  performance by
you, will be one-third ( ) of your base compensation. The bonus determined as of
December 31, 1996 will be  calculated  as if you had been  employed by VIMRx for
the entire 1996 calendar year at the base annual compensation referenced above.

                  As  additional  compensation,  VIMRx shall  award you,  (i) an
Incentive Stock Option (the  "Incentive  Option") to purchase a number of shares
of VIMRx Common  Stock  ("Shares")  equal to 400,000  divided by the fair market
value of one  Share on the date of  grant  of the  Incentive  Option  and (ii) a
Non-Incentive Stock Option (the "Non-Incentive Option" and collectively with the
Incentive Option, the "Options") to purchase a number of Shares equal to 500,000
minus the number of Shares issuable  pursuant to the Incentive  Option,  in each
case pursuant to VIMRx's  Amended and Restated 1990 Incentive and  Non-Incentive
Stock Option Plan, as amended (the "1990 Plan").  The purchase  price for Shares
under each Option  shall be the fair market  value of VIMRx  Common Stock on the
date of grant of the Options. Shares subject to the Incentive Option will become
exercisable  in  accordance  with the  terms of the 1990  Plan.  Subject  to the
further  exercise  terms set forth below,  Shares  subject to the  Non-Incentive
Option will become  exercisable as follows:  one year from the date of grant, up
to 20% of the total Shares  subject to such  Option;  two years from the date of
grant, up to 40%; three years from the date of grant, up to 60%; four years from
the date of  grant,  up to 80%;  and at the end of five  years  from the date of
grant and until termination of the Non-Incentive  Option, up to 100%. Subject to
the provisions of the 1990 Plan, the Non-Incentive Option shall expire ten years
from the date of grant.  Additional  provisions  relating  to the Options are as
follows:

                  In the event your  employment  is  terminated by VIMRx (except
for Cause (as defined in Paragraph 6(d)), but including constructive termination
pursuant to Paragraph 6(f) of this letter  agreement and  termination on account
of Permanent  Disability  (as defined in Paragraph  6(e))) on or before one year
from the date of this letter  agreement  (the  "First  Anniversary  Date"),  the
Non-Incentive  Option will  immediately  become  exercisable  to purchase 20% of
total number of Shares subject to  Non-Incentive  Option and may be exercised at
any time during the  three-month  period  following the  effective  date of such
termination,  and the  exercisability  of the  remaining  Shares  subject to the
Non-Incentive  Option will lapse.  In the event you are so terminated  after the
First  Anniversary  Date,  the  Non-Incentive  Option  will  immediately  become
exercisable  with  respect  to all  Shares  subject  to the  Option  and  may be
exercised at any time during the three-month period following the effective date
of such  termination  but in no event  subsequent  to ten years from the date of
grant.

                  In the event you die on or before the First  Anniversary Date,
the Non-Incentive  Option will immediately become exercisable to purchase 20% of
the  total  number  of  Shares  subject  to the  Non-Incentive  Option,  and the
exercisability of the remaining Shares subject to the Non-Incentive  Option will
lapse. In the event you die after the First  Anniversary Date, the Non-Incentive
Option will become exercisable with respect to all Shares subject to the Option.
In either event, the  Non-Incentive  Option may be exercised with respect to the
applicable  number  of  Shares  by  your  heirs,  personal   representatives  or
distributees  within  twelve  months  of the date of your  death but in no event
subsequent to ten years from the date of grant.

                  All Shares  subject to the Options will be  registered on Form
S-8 as soon as practicable after the Board approves such registration.

                  In the event a sale of substantially  all the assets of VIMRx,
to a Person (as  hereinafter  defined)  other than an Affiliate (as  hereinafter
defined) of VIMRx, is  consummated,  or any Person or group of Persons acting in
concert,  directly or  indirectly,  by purchase,  merger or otherwise,  acquires
beneficial  ownership of stock representing more than fifty percent (50%) of the
voting power of the  then-outstanding  stock of VIMRx (or any successor of VIMRx
by merger or  consolidation),  or a single  transaction,  or a series of related
transactions,  is consummated pursuant to which the beneficial ownership of more
than fifty percent (50%) of the voting stock of VIMRx changes, the Non-Incentive
Option will immediately become exercisable with respect to all Shares subject to
the Option. For purposes of this subparagraph 3(b)(iv):  "Person" shall mean any
individual, company, limited liability company, partnership,  association, trust
or other  entity;  "Affiliate"  of a Person  shall mean any Person  controlling,
controlled  by or under  common  control  with  such  Person;  and  open  market
transactions by  unaffiliated  Persons not acting in concert shall not be deemed
"related transactions."

                  You  will be  eligible  to  participate  in  VIMRx's  medical,
dental,  life and long-term  disability  insurance  and other benefit  programs,
including any 401(k) or other retirement or welfare plans,  from time to time in
effect for VIMRx's senior executives, your participation in any such plans to be
in  accordance  with  their  respective   terms  and  conditions.   In  lieu  of
participation  in VIMRx's  medical and dental  plans (if any),  you may elect to
receive a $500 (after tax) monthly allowance therefor.

                  Your  performance  will be reviewed  annually by the President
and  Chief  Executive  Officer  and  the  Board  (or  its  compensation  or like
committee), in connection with which they will consider an increase in your base
compensation, it being understood that any such increase will be discretionary.

                  You will be entitled to take up to an  aggregate of four weeks
vacation each calendar year as business  conditions  permit, it being understood
that no more than one week of unused vacation per year of service with VIMRx may
be carried over to the  succeeding  year.  VIMRx will not be required to provide
any additional compensation to you for vacation time not utilized by you.

                  VIMRx will  reimburse you for all  reasonable  and  documented
business  expenses  incurred  by you on behalf of VIMRx  during the term of your
employment  hereunder  consistent with VIMRx's expense  reporting policy (as the
same may be modified from time to time).  Notwithstanding anything herein to the
contrary, the provisions of this Paragraph 5 shall survive the effective date of
termination of this Agreement for a period of six months.

                  Your  employment  hereunder  may be  terminated at any time by
VIMRx for Cause or,  upon at least 60 days'  prior  written  notice by you or by
VIMRx, without Cause.

                  In the event your  employment  is  terminated by VIMRx without
Cause  (including  a  constructive   termination  under  Paragraph  6(f)),  this
Agreement  shall  terminate  immediately on the effective date of termination of
your employment;  provided,  however, that: you will be paid twelve months' base
salary as severance in monthly  installments  (in arrears)  beginning  the first
full month  following the cessation of your  employment with VIMRx (during which
time you will be entitled to continue to participate in VIMRx's benefit plans to
the extent  permitted  by such  plans);  and you will be entitled to receive any
accrued  but unpaid  salary  earned by you through  the  effective  date of such
termination.

                  No severance shall be paid or payable to you in the event your
employment  is  terminated  for  Cause,  or you  voluntarily  resign  from  your
employment  with VIMRx  (excluding a constructive  termination  under  Paragraph
6(f)),  in which  event this  Agreement  shall  terminate  immediately  upon the
effective date of  termination of your  employment or upon the effective date of
your resignation,  respectively; provided, however, that VIMRx shall nonetheless
be obligated to pay you any accrued but unpaid  salary earned by you through the
date of such termination.

                  For purposes of this Agreement,  termination for "Cause" shall
mean  termination  due to any  one or  more  of the  following:  (i) if you  are
indicted for committing a felony or a decision or  determination  is rendered by
any court or  governmental  authority  that you have committed any act involving
fraud, willful misconduct,  dishonesty, breach of trust or moral turpitude; (ii)
if you  willfully  breach  your duty of loyalty to, or commit an act of fraud or
dishonesty  upon,  VIMRx;  (iii) if you demonstrate  gross negligence or willful
misconduct in connection with your employment;  (iv) if, in the reasonable, good
faith opinion of a majority of VIMRx's whole Board (excluding  yourself,  if you
shall then be a director of VIMRx), you engage in personal  misconduct of such a
material  nature  as to  render  your  presence  as a senior  executive  officer
detrimental to VIMRx or its reputation and you fail to cure the same within five
days after written  notice  thereof from VIMRx;  or (v) if you commit a material
breach of or default under any of the terms or conditions of this  Agreement and
you fail to cure such  breach or default  within ten days after  written  notice
thereof from VIMRx.

                  Your employment  hereunder shall  terminate  immediately  upon
your death or Permanent  Disability.  In either such event, this Agreement shall
terminate immediately upon the cessation of your employment;  provided, however,
you (or your  legal  representative,  as the case  may be) will be  entitled  to
receive  any accrued  but unpaid  salary  earned by you through the date of such
termination,  plus severance in monthly installments (in arrears), beginning the
first full month following the date of such  termination in an aggregate  amount
equal to the positive  difference if any,  between (x) the base salary you would
have  received  hereunder  for the  twelve  months  immediately  following  such
termination date had your employment continued for such twelve month period, and
(y) the total  monies paid or payable to you with  respect to such twelve  month
period under the long-term disability insurance policy or policies maintained by
VIMRx  for your  benefit,  if any.  For  purposes  of this  Agreement,  the term
"Permanent  Disability"  shall  have the  meaning  set  forth  in the  long-term
disability insurance policy or policies then maintained by VIMRx for the benefit
of its employees,  or if no such policy shall then be in effect, or if more than
one such policy shall then be in effect and the term Permanent  Disability shall
be assigned  different  definitions  in such  policies,  then the term Permanent
Disability  shall be defined for purposes  hereof to mean any physical or mental
disability or incapacity  which  renders you incapable of fully  performing  the
services  required of you in accordance  with your  obligations  hereunder for a
period aggregating 120 days during any twelve-month period.

                  Upon the occurrence of any of the following events,  you shall
have the right to  terminate  your  employment  with  VIMRx on at least 60 days'
notice.  In the event  such  notice is given by you within 30 days of any one or
more of such events,  such  termination of employment  shall be deemed,  for all
purposes of this Agreement, as a termination of your employment by VIMRx without
Cause:

                  a material  breach of or default under this Agreement by VIMRx
which is not cured by VIMRx  within ten (10) days  after its  receipt of written
notice thereof from you;

                  a material reduction in your duties or a material interference
with the  exercise of your  authority  (not  arising from any physical or mental
disability you may sustain) which would be  inconsistent  with your position and
authority as  referenced  in Paragraph 1 hereof and the same shall not have been
alleviated by the President and Chief Executive  Officer or the Board within ten
(10) days after its receipt of written notice thereof from you; or

                  a  relocation  of VIMRx's  principal  executive  offices  from
Wilmington,  Delaware to a location  whose distance is at least fifty (50) miles
(by road) farther from your current  residence in Wilmington,  Delaware than the
distance  between VIMRx's current offices in Wilmington,  Delaware area and such
residence  address,  provided  that you shall not have  approved the decision to
effect such subsequent relocation.

                  Notwithstanding  anything in Paragraphs  6(b) or 6(c) above to
the contrary:

                  you shall not have any  obligation  to VIMRx to  mitigate  any
termination of your  employment  whereby you would be required by VIMRx promptly
to seek, procure or commence substitute employment; and

                  in the event you do seek,  procure or commence such substitute
employment,  none of the income derived or to be derived by you therefrom  shall
be setoff by VIMRx against the balance of any severance payments,  if any, owing
to you by VIMRx under this Agreement.

                  You hereby agree that you shall not,  directly or  indirectly,
during  the term of your  employment  hereunder,  own,  manage,  operate,  join,
control or become  employed by, or render any services of an advisory  nature or
otherwise,  or  participate  in  the  ownership  (other  than  shares  held  for
investment in publicly traded companies),  management,  operation or control of,
or otherwise be connected in any manner with,  any business that sells  products
or services  that are  competitive  in a material  respect  with the products or
services sold by VIMRx,  without VIMRx's prior written consent.  The restriction
on  competitive  activities  set forth in the prior  sentence  shall continue to
apply for a period of one year  following the effective  date of  termination of
your employment hereunder in the event you voluntarily terminate your employment
(excluding a constructive  termination  under  Paragraph 6(f)) prior to the date
that is two years from the date of this letter  agreement or your  employment is
terminated  by VIMRx for  Cause.  In the event the  restriction  on  competition
remains in effect for the 12-month period following your termination pursuant to
the prior  sentence,  you  further  agree that  during  such period you will not
directly or indirectly entice away from VIMRx's employment,  retain or otherwise
engage, any employee of VIMRx.

                  You further hereby covenant and agree that you will not at any
time during,  or for a period of three (3) years  following the  termination of,
your  employment  with  VIMRx,  reveal,  divulge  or make known to any person or
entity any  secrets or  confidential  information  (whether  oral,  written,  or
electronically  encoded)  whatsoever,  of or concerning VIMRx or its business or
anything connected  therewith,  all of which is and shall remain the property of
VIMRx and shall be returned by you to VIMRx  (including all copies)  immediately
upon any termination of your employment (or earlier, if requested by VIMRx). For
purposes  hereof,  confidential  information  shall not include any  information
which:  (i) is or becomes  generally  available  to the  public  other than as a
result of a wrongful disclosure by you or your  representatives;  (ii) was known
by you on a  non-confidential  basis prior to its  disclosure to you by VIMRx or
its  representatives;  (iii)  becomes  available to you from a source other than
VIMRx or its  representatives,  provided  that  such  source  is not  bound by a
confidentiality agreement with VIMRx, or its representatives and otherwise has a
right  to  disclose  the  same;  or  (iv) is  required  to be  disclosed  by any
governmental or judicial authority,  provided,  in such case, that you shall use
your best efforts to notify VIMRx  immediately  of any such  requirement so that
VIMRx shall have an opportunity to contest it.

                  In the event of any breach or threatened  breach by you of any
one or more of the  provisions of Paragraph 7 (relating to  non-competition  and
non-enticement of employees) or Paragraph 8 (relating to non-disclosure),  VIMRx
will be entitled,  in addition to any remedy  otherwise  available at law, to an
injunction restraining the breach of such provision hereof.

                  You agree  that VIMRx may,  in its  discretion,  apply for and
take out in its name and at its own expense, and solely for its benefit, key man
life  insurance  on you in any amount  deemed  advisable by VIMRx to protect its
interests, and you agree that you shall have no right, title or interest therein
and further agree to submit to any medical or other  examination  and to execute
and deliver any application or other instruments in writing reasonably necessary
to effectuate such insurance.

                  You   represent  and  warrant  that  you  are  not  under  any
obligation,  restriction or limitation,  contractual or otherwise,  to any other
individual  or entity which would  prohibit or impede you from  performing  your
duties and responsibilities  hereunder,  and that you are free to enter into and
perform the terms and provisions of this Agreement.

                  Notwithstanding   anything   herein  to  the   contrary,   the
provisions of  Paragraphs 5, 7, 8, 9 and 11 hereof shall survive the  expiration
or termination of this Agreement.

                  All  notices,   requests,  demands  and  other  communications
provided  for by  this  Agreement  shall  be in  writing  and  shall  be  either
personally  delivered  (including by couriers such as FedEx) or sent by pre-paid
certified mail, return receipt requested,  addressed to the address stated below
of the party to which notice is given,  or to such changed address as such party
may have fixed by notice given in accordance with the terms hereof:

                  TO VIMRx:

                           VIMRx Pharmaceuticals Inc.
                           2751 Centerville Road
                           Suite 210, Little Falls II
                           Wilmington, Delaware  19808
                           Attn: Richard L. Dunning
                                   President & CEO
                           With A Copy To:

                           Lowell S. Lifschultz
                           Epstein Becker & Green, P.C.
                           250 Park Avenue
                           New York, New York  10177-0077

                  TO DAVID A. JACKSON:

                           Mr. David A. Jackson
                           49 Guyencourt Road
                           Wilmington, DE  19807-1415

Any notice,  sent as provided  above,  shall be deemed given upon receipt at the
address provided for above (or, in the event delivery is refused, the first date
on which delivery was tendered).

                  This Agreement contains the entire agreement and understanding
between the parties relating to the subject matter hereof and supersedes any and
all prior  understandings,  agreements  and  representations,  written  or oral,
expressed or implied, with respect thereto.

                  This  Agreement  may  not be  amended,  modified,  altered  or
terminated (other than pursuant to its terms) except by an instrument in writing
signed by the parties.

                  This  Agreement  shall be binding upon the parties  hereto and
their heirs, distributees, successors and assigns.

                  In case any one or more of the  provisions  of this  Agreement
shall be  invalid,  illegal  or  unenforceable  in any  respect,  the  validity,
legality and enforceability of the remaining  provisions  contained herein shall
not in any way be affected thereby.

                  This Agreement shall be governed by, construed and enforced in
accordance  with the laws of the State of Delaware  applicable to contracts made
and to be performed  entirely  therein (without giving effect to the conflict of
law rules thereof).

                  Kindly   indicate  your   agreement   with  the  foregoing  by
countersigning  the  enclosed  duplicate  copy  of  this  letter  agreement  and
returning it to me on behalf of VIMRx.

                  On behalf of VIMRx,  we look  forward  to a long and  mutually
rewarding relationship.

                                              Sincerely,

                                              VIMRx PHARMACEUTICALS INC.


                                              By: _______________________
                                                  Richard L. Dunning
                                                  President & CEO


ACCEPTED AND AGREED TO THIS

26th day of August,  1996



--------------------------------
David A. Jackson