Document:

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                             EMPLOYMENT AGREEMENT

                                By and Between
                                    Endorex
                                      And
                                 Frank C. Reid

     Agreement made this 8/th/ day of February 2000, between ENDOREX
CORPORATION, a Delaware Corporation, (the "Company") and FRANK C. REID (the
"Executive").

     The company is desirous of employing the Executive as VICE PRESIDENT,
FINANCE AND CORPORATE DEVELOPMENT of the Company, and the Executive is desirous
of becoming employed by the Company in this capacity.

     The Company and the Executive desire to set forth in this Agreement the
terms and conditions on which the Executive will be employed by the Company as
its VICE PRESIDENT, FINANCE AND CORPORATE DEVELOPMENT.

     Accordingly, in consideration of the promises and the respective covenants
and agreements of the parties herein contained, and intending to be legally
bound hereby, the parties hereto agree as follows:

1.  Employment
     The Company hereby agrees to employ the Executive, and the Executive hereby
     agrees to serve the Company, on the terms and conditions set forth herein.

2.  Term
     The employment of the Executive by the Company as provided in Section 1
     will commence on February 21, 2000 and end on February 20, 2004 unless
     further extended or sooner terminated as hereinafter provided.

3.  Position and Duties
     The Executive shall serve as VICE PRESIDENT, FINANCE AND CORPORATE
     DEVELOPMENT of Endorex Corporation and its subsidiaries and shall have such
     responsibilities and authority consistent with this position as may, from
     time to time, be assigned to the Executive by the President/CEO or Board of
     Directors of the Company. The Executive shall devote substantially all his
     working time and efforts to the business affairs of the Company. The
     Executive will report directly to the President/CEO of the Company.

4.  Place of Performance
     In connection with the Executive's employment by the Company, the Executive
     shall be based at the Company's offices in Lake Forest, IL except for
     required travel on the Company's business.

5.  Compensation and Related Matters
     (A)  Salary. During the period of the Executive's employment hereunder, the
          Company shall pay to the Executive a salary at a rate of not less than
          $130,000 per annum, payable in accordance with the Company's normal
          payroll and withholding practices. The Executive's salary and
          performance shall be subject to a review commencing at the end of the
          calendar year but in any case no later than twelve (12) months
          following the commencement of the term of the Executive's employment
          hereunder.

     (B)  Bonuses. At the end of each full year of employment, Executive shall
          be entitled to a targeted bonus of up to 30% of the Executive's annual
          base salary, as in effect at the time. Determination of any actual
          bonus shall be based upon the Executive's meeting mutually agreed
          written objectives and the overall performance of the Company for that
          period of time, and is at the discretion of the President/CEO and the
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          Board of Directors. The written objectives for the first year of this
          Agreement will be established during the first 45 days of employment.
     (C)  Expenses. The Company shall reimburse Executive for all normal, usual
          and necessary expenses incurred by Executive in furtherance of the
          business and affairs of the Company.
     (D)  Other Benefits. The Executive shall be entitled to participate in or
          receive benefits under any employee benefit plan or arrangement made
          available by the Company as of this date and in the future to its key
          management employees, subject to and on a basis consistent with the
          terms, conditions and overall administration of such plans and
          arrangements. Nothing paid to the employee under any plan or
          arrangement presently in effect or made available in the future shall
          be deemed to be in lieu of the salary payable to the employee pursuant
          to paragraph (A) of this section.
     (E)  Vacations. The Executive shall be entitled to three (3) weeks of paid
          vacation in each year of his employment (this will be prorated during
          a calendar year by the amount of time an employee has worked with the
          Company for that given year). The Executive shall also be entitled to
          all paid holidays given by the Company to its employees.
     (F)  Services Furnished. The Company shall furnish the Executive with
          office and such other facilities and services as shall be suitable to
          the Executive's position and adequate for the performance of his
          duties as set forth in Section 3 hereof and for the accomplishment of
          Executive's mutually agreed written objectives.
     (G)  Options and Grants. Subject to execution of this Agreement, Executive
          shall be granted on the date of execution of this Agreement, 60,000
          share options of Endorex's Common Stock at a price per share equal to
          the Closing Price of the Common Stock on the date of execution of this
          Agreement. Such stock and options shall vest and become exercisable at
          the rate of five equal tranches of 12,000 share options beginning with
          the 90-day anniversary of the grant and with each successive tranche
          of 12,000 share options vesting on the annual anniversary of the
          grant. If Executive's employment with the Company shall terminate
          before such stock is fully vested, except as otherwise provided in the
          Company's Amended and Restated 1995 Omnibus Incentive Plan such stock
          shall be exercisable only to the extent the stock is vested on the
          date Executive's employment terminates. The grant of the foregoing
          stock shall not preclude the participation of the Executive in any
          other stock grant or option plan of the Company.

6.  Offices
     The Executive agrees to serve without additional compensation, if elected
     or appointed thereto, as an executive of Endorex or other Endorex
     subsidiaries (collectively "Endorex"), presently existing and as may be
     established in the future, and consistent with the position of the
     Executive with the Company at the time of such appointment, provided that
     the Executive is indemnified for serving in any and all such capacities on
     a basis no less favorable than is currently provided by Article VII of the
     Company's by-laws and any Directors and Officers insurance in effect during
     the term hereof. Executive agrees that, upon termination of his employment
     with the Company, for any reason whatsoever, he will terminate from all
     positions as an employee of Endorex and all of its subsidiaries.

7.  Confidential Information
     Executive covenants and agrees that he will not (except as required in the
     course of his employment or as required by law), while in the employment of
     the Company or thereafter, communicate or divulge to, or use for his own
     benefit, or for the benefit of any other person, firm, association or
     corporation, without the consent of the Company, as applicable, any
     information concerning any inventions, discoveries, improvements,
     processes, formulas, apparatus, equipment, methods, trade secrets,
     research, secret
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     data, cost or uses or purchasers of the Company's current or future
     products, research activities, immunopharmaceutical agents, or services, or
     other confidential matters possessed, owned, or used by the Company that
     may be communicated to, acquired by, or learned of by the Executive in the
     course of, or as a result of, his employment with the Company . All
     records, files, memoranda, reports, price lists, customer lists, drawings,
     plans, sketches, documents, equipment and like, relating to the business of
     the Company, which the Company, as applicable shall use or prepare or come
     into contact with, shall remain the sole property of the Company, as
     applicable. The obligations of confidentiality shall not apply to such
     information that (a) is at the time of receipt a matter of public knowledge
     or after its receipt becomes public knowledge through no act or omission on
     the part of Executive, (b) the Executive can establish by reasonable proof
     was known to him prior to disclosure by the Company, (c) is received from a
     third party who did not, directly or indirectly, obtain such information as
     a result of Executive's breach of this Paragraph 7. EXECUTIVE ACKNOWLEDGES
     THAT ANY INVENTION, IMPROVEMENT, DISCOVERY, PROCESS, FORMULA, METHOD OR
     OTHER INTELLECTUAL PROPERTY ("INVENTIONS"), WHETHER OR NOT PATENTABLE OR
     COPYRIGHTABLE DEVELOPED BY EXECUTIVE, ALONE OR JOINTLY WITH OTHERS, USING
     MATERIAL, RESOURCES OR FACILITIES OF THE COMPANY OR WHICH RELATE TO
     EXECUTIVE'S WORK FOR THE COMPANY OR ARE BASED ON THE COMPANY'S CONFIDENTIAL
     INFORMATION IS THE EXCLUSIVE PROPERTY OF THE COMPANY. EXECUTIVE ASSIGNS ALL
     OF HIS RIGHT, TITLE AND INTEREST IN AND TO ANY SUCH INVENTIONS TO THE
     COMPANY.

8.  Competition
     (A)  During the period of the Executive's employment by the Company and for
          a period of twelve (12) months after such employment ends (the
          "Restricted Period") (whether such employment shall have ended by
          reason of the expiration or termination of this Agreement or
          otherwise), Executive will not (i) engage in; (ii) have any interest
          in any person, firm or corporation that engages in; or (iii) perform
          any services for any person, firm or corporation that engages in
          direct competition with the Company, or any of its subsidiaries in the
          development, research relating to, manufacture, processing, marketing,
          distribution, or sale of products that are substantially similar to
          products ("Products") that were researched, developed, licensed,
          manufactured, processed, distributed, or sold by the Company, or any
          of its subsidiaries, during the twelve (12) month period immediately
          preceding the termination of his employment, provided the Company
          continues to engage in such activities with respect to the Products
          during the Restricted Period. The parties agree that the Company
          currently conducts business in the following areas: 1)
          immunomodulators for cancer and infectious disease and vaccine
          adjuvants based on muramyl dipeptide technology, 2) polymerized
          liposomes for oral/mucosal vaccine and drug delivery, and 3)
          monoterpene-based compounds for the prevention and treatment of
          cancer, and 4) delivery of iron chelators using Elan Corporation's
          Medipad technology. For the avoidance of doubt, the parties agree that
          "Products" shall include any technology and/or products that the
          Company in-licenses during the term of Executive's employment
          hereunder.
     (B)  During the period of the Executive's employment by the Company and for
          a period of two (2) years thereafter, Executive will not, directly or
          indirectly, employ, solicit for employment, or advise or recommend to
          any other person that they employ or solicit for employment, any
          employee of the Company.
     (C)  Notwithstanding any provision of this Section 8 to the contrary,
          Executive may own no more than three percent (3%) of the total shares
          of all classes of stock outstanding of any corporation having
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          securities registered with the Securities and Exchange Commission
          pursuant to the Securities Exchange Act of 1934.

9. Termination

     (A)  Notwithstanding any provision of this Agreement to the contrary,
          Executive's employment shall automatically terminate upon his death,
          and the Company at any time may terminate his employment immediately
          by giving him written notice of such termination (i) for cause, as
          hereinafter defined; (ii) if Executive shall materially violate any of
          the provisions of Section 7 or 8 hereof; or (iii) if Executive shall
          become physically or mentally incapacitated and by reason thereof be
          unable to perform his duties hereunder for a period of ninety (90)
          consecutive days. For the purpose of clause (i) of this Subsection 9A,
          "for cause" shall mean any of the following events: (x) conviction in
          a court of law of any crime or offense involving money or other
          property of the Company, or any of its subsidiaries, or any felony,
          (y) violation of specific written directions of the President/CEO or
          Board of Directors of the Company, provided, however, no discharge
          shall be deemed "for cause" under this clause (y) unless Executive
          shall have first received written notice from the President/CEO of the
          Company advising of the acts or omissions that constitute such
          violation, and such violation continues uncured for a period of (30)
          days after Executive shall have received such notice, or (z)
          intentional, reckless or grossly negligent conduct by Executive
          constituting misconduct. Termination of Executive by the Company in a
          circumstance other than one stipulated in this Subsection 9A shall
          occur with 30 days written notice, provided that the Company may pay
          Executive salary in lieu of any portion of such notice.
     (B)  Executive may terminate his employment with the Company upon thirty
          (30) days written notice. If Executive terminates his Employment with
          the Company pursuant to this Section 9B, Executive shall only be
          entitled to any unpaid compensation accrued through the last day of
          Executive's employment.
     (C)  In the event that (i) the Company terminates the employment of
          Executive for any reason (other than "for cause" as defined or as a
          consequence of Executive's violation of clause (ii) of Subsection 9A
          above,) or (ii) Executive terminates his employment for Good Reason
          within twelve (12) months after a Change in Control, then Executive
          shall be paid any earned but unpaid bonus plus his then current salary
          for a period of six (6) months following termination, subject to set
          off for amounts earned from alternative employment. "Good Reason"
          shall mean a material reduction in Executive's level of
          responsibility, a reduction in his level of base salary or targeted
          bonus level, or a proposed relocation without his consent by more than
          50 miles from Lake Forest, IL. "Change in Control" shall have the same
          meaning as in the Company's Amended and Restated 1995 Omnibus
          Incentive Plan.

10.  Successors: Binding Agreement
     (A)  The Company will require any successor (whether direct or indirect, by
          purchase, merger, consolidation or otherwise) to all or substantially
          all of the business and/or assets of the Company, by agreement in form
          and substance satisfactory to the Executive, to expressly assume and
          agree to perform this Agreement in the same manner and to the same
          extent that the Company would be required to perform if no such
          succession had taken place. As used in this Agreement, "Company" shall
          mean the Company as hereinbefore defined and any successor to its
          business and /or assets as aforesaid which executes and delivers the
          agreement provided for in this Section 10, or which otherwise becomes
          bound by all the terms and provisions of this Agreement by operation
          of law. If the successor does not agree to be bound by this
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          agreement, and Executive is terminated, the Company will terminate
          Executive as stipulated in Section 9(C).
     (B)  This Agreement, and all rights of the Executive hereunder, shall inure
          to the benefit of and be enforceable by the Executive's personal or
          legal representatives, executors, administrators, successors, heirs,
          distributees, devisees and legatees. If the Executive should die while
          any amounts would still be payable to him hereunder if he had
          continued to live, all such amounts, unless otherwise provided herein,
          shall be paid in accordance with the terms of this Agreement to the
          Executive's devisee, legatee, or other designee or, if there be no
          such designee, to the Executive's estate. The Executive shall not be
          entitled to assign any of his rights or obligations under this
          Agreement.

11. Notice

          For all purposes of this Agreement, notices, demands and all other
          communications provided for in this Agreement shall be in writing and
          shall be deemed to be effective upon personal delivery or fax or two
          (2) days after deposit in the U.S. registered mail, return receipt
          requested, postage prepaid, addressed as follows:

     If to the Executive:                If to the Employer:
          748 Chatham Rd.                28101 N. Ballard Drive
          Glenview, Ill. 60025           Lake Forest, Ill. 60045

          Or to such other address as any party may have furnished to the others
          in writing in accordance herewith, except that notices of change of
          address shall be effective only upon receipt.

12.  Miscellaneous
     No provisions of this Agreement may be modified, waived or discharged
     unless such waiver, modification or discharge is agreed to in writing
     signed by the parties hereto. No waiver by either party hereto at any time
     of any breach by the other party hereto of, or in compliance with, any
     condition or provision of this Agreement to be performed by such other
     party shall be deemed a waiver of similar or dissimilar provisions or
     conditions at the same or at any prior or subsequent time. No agreements or
     representations, oral or otherwise, express or implied, with respect to the
     subject matter hereof have been made by either party which are not set
     forth expressly in this Agreement. The validity, interpretation,
     construction and performance of this Agreement shall be governed by the
     laws of the State of Illinois.

13. Validity
     The invalidity or unenforceability of any provision or provisions of this
     Agreement shall not affect the validity or enforceability of any other
     provision of this Agreement, which shall remain in full force and effect.

14. Counterparts
     This agreement may be executed in one or more counterparts, each of which
     shall be deemed to be an original, but all of which together will
     constitute one and the same instrument.

15. Arbitration
     Any dispute or controversy arising under or in connection with this
     Agreement, other than Sections 7 or 8, shall be settled exclusively by
     arbitration, conducted before a panel of three arbitrators, in Chicago,
     Illinois, in accordance with the rules of the American Arbitration
     Association then in effect. Judgment may be entered on the arbitration's
     award in any court having jurisdiction. The expense of such arbitration
     shall be borne by the Company. The parties agree that any dispute arising
     out of or relating to Sections 7 or 8 shall be resolved in the State and/or
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     Federal courts located in Lake County, Illinois and the parties consent to
     the jurisdiction of such courts.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
     and year first above written.
                                         Endorex Corporation

     _________________              By:  _________________
     Attest                              Michael S. Rosen
                                         President/CEO

                                         _________________
                                         Frank C. Reid<PAGE>

March 13th, 2000

Mr. David Franckowiak
4151 Dubois Blvd.
Brookfield, Illinois
60513

Dear David:

This is to confirm our agreement regarding your departure from Endorex. Your
employment as Vice President/Chief Financial Officer, Treasurer and Corporate
Secretary will be terminated effective at the close of business on March 31,
2000. You will continue to be paid your current base salary of $127,000 per year
up to July 12, 2000. The Company will also pay you four days of unused vacation
time.

You will not accrue any bonuses, vacation, personal time or other employee
benefits during the severance period, except as set forth below. Should you find
another position during this period, the Company will still pay you salary up to
July 12, 2000.

At your request, the Company will continue your employment during the severance
period or until you secure a full-time position with another company, whichever
is earlier (the "Final Termination Date"). Additionally, because of your
expressed interest in assisting the Company during this period, the Company will
also provide you with the following benefits in exchange for your successful
completion of the mutually agreed upon tasks/activities (a listing of which is
attached to this letter) up to the Final Termination Date. Such assistance shall
include but not be limited to your spending a minimum of 7 business days at
Endorex's offices in Lake Forest during the period of March 21 to April 21, with
the specific days to be mutually agreed with Frank Reid.

Benefits to be provided by Endorex (subject to the above) include:

1. A Special Performance Bonus of $6000 upon satisfactory completion of the
attached activities list;

2. Continued participation in the Company's medical insurance, life and
disability insurance, and 401k programs up to the Final Termination Date;

3. An office, telephone, computer and access to the Company fax machine for
business use at the Company's headquarters in Lake Forest up to the Final
Termination Date;

4. Continued vesting of your Oct. 21, 1997 Stock Option Grant to the next
quarterly vesting period (April 21, 2000);

                                       1
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According to our calculations, the number of vested share options you will have
available for exercising at April 21, 2000 is as follows:

  - 10/21/97 Grant = 34,375 shares options @ $2.46875/share exercise price
  -  2/10/98 Grant = 25,000 shares options @ $6.75/share exercise price
  -  2/23/99 Grant =  4,250 shares options @ $2.00/share exercise price
  -------------------------------------------------------------------------
    TOTAL          = 63,625 share options

Please note that according to our stock option plan, you will have a period of
90 days after your Final Termination Date to exercise those stock options that
are vested. You can exercise any of the vested portion of these stock options
during this period, however, you agree not to sell any shares of Endorex stock
acquired through these options prior to your Final Termination Date and while
you are still an employee of the company.

You agree that we were not obligated to provide to you the payments and other
consideration described in this letter (other than 4 months' severance pay). You
accept the severance provisions set forth in this document, notwithstanding the
provisions of paragraph 9 (C) of your employment agreement dated March 10, 1997.
You further agree that your employment with the Company will irrevocably
terminate at the end of the severance period and that the Company will have no
obligations to you at the end of the severance period other than those
specifically described in this letter. In addition, by signing this letter, you
waive any and all claims, demands and causes of action, whether known or
unknown, that you have or may have against Endorex, its shareholders, directors,
officers, employees and agents, arising out of your association with Endorex or
the termination of your employment, existing from the beginning of time to the
date of this letter agreement. Such claims, demands and causes of action
include, but are not limited to, claims for wrongful termination, employment
discrimination or harassment, wage claims, claims involving stock options or
securities laws, tort claims, fraud claims, contract claims, equitable claims or
any other claims relating to your employment with Endorex.

Please confirm your agreement to these terms by signing below.

Sincerely,

/s/ Michael S. Rosen
Michael S. Rosen
President/CEO
Endorex Corporation                             Agreed by:

                                                /s/ David Franckowiak
                                                David Franckowiak

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