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                                                                   Exhibit 10.26

                              EMPLOYMENT AGREEMENT

                                By and Between
                              Endorex Corporation
                                      and
                      Panayiotis P. Constantinides, Ph.D.

     Agreement made this 4th day of January 2001, between ENDOREX CORPORATION, a
Delaware Corporation, (the "Company" or "Endorex") and Panayiotis P.
Constantinides, Ph.D. (the "Executive").

     The company is desirous of employing the Executive as VICE PRESIDENT,
RESEARCH AND 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, RESEARCH AND 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 January 12, 2001 and will end on January 11, 2004 unless sooner
terminated as provided in Section 8.  If neither Executive or the Company has
provided written notice of termination not less than six (6) months prior to
January 11, 2004, this agreement shall continue for an additional year term and
shall continue to renew annually until either Executive or the Company has
provided written notice of termination at least six (6) months prior to the end
of any renewal term.

3.  Position and Duties

     The Executive shall serve as VICE PRESIDENT, RESEARCH AND DEVELOPMENT of
the Company 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 CEO or Board of Directors of the Company.  The Executive
shall devote all his working time and efforts to the business affairs of the
Company.  The Executive will report directly to the CEO of the Company or his or
her designee.

4.  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
     $170,000 per annum, payable in accordance with the Company's normal payroll
     and withholding practices.

     (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 (it is understood that this represents a
     range of 0% to 30% of the Executive's annual base salary). Determination of
     any actual bonus shall be based upon the Executive's meeting reasonable
     written objectives and the overall performance of the Company for that
     period of time, as determined by the CEO and the Board of Directors in
     their sole discretion. The written objectives for the first year of this
     Agreement will be established during the first 45 days of employment and
     shall be subject to revision quarterly with the CEO based on information
     developed during the quarter.

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     (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.  Additionally, the Company shall reimburse
     Executive for reimbursement of reasonable home sale and moving expenses
     (including closing costs and excise taxes) of up to $18,000 for the
     employee's current Gurnee property to another Chicago location within first
     12 months for Executive and his wife.  All relocation expenses over $1,000
     must be pre-approved in advance by the CEO.  The Company shall also
     reimburse Executive for actual income taxes incurred by the Executive, if
     any, as a result of the reimbursement of expenses provided for herein upon
     presentation of reasonably acceptable proof of payment of such taxes.

     (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
     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 for any
     partial calendar years worked).  The Executive shall also be entitled to
     all paid holidays given by the Company to its employees.

     (F)  Options and Grants.  Subject to execution of this Agreement, Executive
     shall be granted as of the date of execution of this Agreement, an option
     (the "Stock Option") to purchase 60,000 shares of Endorex's Common Stock
     (the "Option Shares") at a price per share equal to the Closing Price of
     the Company's Common Stock on the date of execution of this Agreement
     [vesting and becoming exercisable as to 25% of the Option Shares on the
     first anniversary of the grant of the Stock Option and then an additional
     25% each yearly anniversary thereafter, as long as Executive is employed
     by Endorex on such vesting dates].  The Stock Option shall be granted under
     the terms of the Company's Amended and Restated 1995 Omnibus Incentive Plan
     (the "Plan") and the terms of the Company's standard Stock Option
     Agreement, which Executive must agree to and sign as a condition of
     receiving the Stock Option.  The grant of the Stock Option shall not
     preclude the participation of the Executive in any other stock grant or
     option plan of the Company which the Board may grant from time to time.

5.  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
provided by the Company's by-laws and any applicable 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.

6.  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 at any time 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 data, cost or
uses or purchasers of the Company's current or future products (including but
not limited to: its cancer products, POH and ImmTher(R): its oral/mucosal
protein, peptide and vaccine delivery system; the Elan technologies in either of
the two joint ventures with this company, and its MDP vaccine adjuvant product),
research activities, or services, or other confidential information 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 uses or prepares or comes into
contact with, shall remain the sole property of the Company, as applicable.  The
obligations of

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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, or (b) the
Executive can establish by reasonable proof was known to him prior to disclosure
by the Company.  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, on working time or 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.

7.  Competition

     (A)  During the period of the Executive's employment by the Company and for
     a period of eighteen (18) 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, at any time during the twelve (12)
     month period immediately preceding the termination of his employment.  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) liposome-based
     particles for oral/mucosal vaccine and drug delivery, 3) PLGA microspheres
     for oral delivery of vaccines, 4) monoterpene-based compounds for the
     prevention and treatment of cancer, and 5) delivery of iron chelators using
     Elan Corporation's MEDIPAD(R) 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)  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 person employed by the Company during the
     period of the Executive's employment by the Company and for a period of
     eighteen (18) months thereafter.

     (C)  Notwithstanding any provision of this Section 7 to the contrary,
     Executive shall be permitted to own up to three percent (3%) of the total
     shares of all classes of publicly-traded stock of any corporation engaging
     in direct competition with the Company as described in section 7(A) above,
     as a passive investment.

8.  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 6 or 7 hereof; or (iii) if Executive shall become physically or
     mentally incapacitated and by reason thereof be unable to perform his
     duties hereunder with or without reasonable accommodation for a period of
     ninety (90) consecutive days.  For the purpose of clause (i) of this
     Subsection 8A, "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 CEO or Board of
     Directors of the Company regarding lawful activities consistent with the
     Executive's job responsibilities to improve the business 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 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.
     The Company may also terminate Executive's employment at any time without
     cause, subject to its obligations under Section 8C below, with thirty (30)
     days written notice, provided that the Company may pay Executive salary in
     lieu of any portion of such notice.

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     (B)  Executive may terminate his employment with the Company upon sixty
     (60) days' written notice.  If Executive terminates his Employment with the
     Company pursuant to this Section 8B, Executive shall only be entitled to
     any unpaid compensation accrued through the last day of Executive's
     employment; provided, however, that Executive may terminate his employment
     agreement with the Company for "Good Reason" and within twelve (12) months
     after a "Change in Control" and be entitled to the benefits stated in sub-
     paragraph C hereafter.

     (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 8A above
     [or due to disability or death],) or (ii) Executive terminates his
     employment for Good Reason within twelve (12) months after a Change in
     Control, then Executive shall be paid his then current salary plus any
     earned but unpaid bonus, prorated for the amount of the calendar year
     worked, for a period of six (6) months following termination, subject to
     set off for amounts earned from alternative employment.  A termination by
     Executive for "Good Reason" shall mean a termination by Executive within 60
     days of (i) a material reduction in Executive's level of responsibility,
     (ii) a reduction in his level of base salary or (iii) a relocation of
     Executive's primary worksite without his consent of more than 50 miles from
     Lake Forest, IL.  Executive shall give the Company sixty (60) days' written
     notice and opportunity to cure prior to any termination for Good Reason.
     "Change in Control" shall have the same meaning as in the Company's Amended
     and Restated 1995 Omnibus Incentive Plan.

9.  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 to assume 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 9, 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
     agreement, and Executive is terminated, the Company will pay Executive
     severance pay as set forth in Section 8(C).

     (B)  If the Executive should die during the term of this Agreement, any
     amounts earned hereunder but not yet paid, 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.

10.  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:
          95 Berkshire Court                28101 N. Ballard Drive, Suite F
          Gurnee, IL  60031                 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.

11.  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

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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.

12.  Validity

The invalidity or unenforceablitity 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.

13.  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 6 or 7, 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 arbitrator's award in any court having
jurisdiction.  The arbitration fees shall be borne by the Company but each party
shall be responsible for its own legal fees.  The parties agree that any dispute
arising out of or relating to Sections 6 or 7 shall be resolved in the State
and/or 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
     /s/ Sarah Bauer
     -----------------                By:    /s/ Michael S. Rosen
          Attest                             --------------------
                                             Michael S. Rosen
                                             President/CEO

                                             /s/ Panayiotis P. Constantinides
                                             --------------------------------
                                             Panayiotis P. Constantinides, Ph.D.

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                                                                   Exhibit 10.27

                              EMPLOYMENT AGREEMENT

                                 BY AND BETWEEN
                              ENDOREX CORPORATION
                                      AND
                                 John McCracken

     Agreement made this 21st day of February 2001, between ENDOREX CORPORATION,
a Delaware Corporation, (the "Company" or "Endorex") and John McCracken (the
"Executive").

     The company is desirous of employing the Executive as Vice President,
Business 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, Business 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 26, 2001 and will end on February 25 2005 unless
sooner terminated as provided in Section 8.  If neither Executive or the Company
has provided written notice of termination not less than eight (8) months prior
to February 25, 2005, this agreement shall continue for an additional year term
and shall continue to renew annually until either Executive or the Company has
provided written notice of termination at least eight (8) months prior to the
end of any renewal term.

3.  POSITION AND DUTIES

     The Executive shall serve as Vice President, Business Development of the
Company 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 CEO or Board of Directors of the Company.  The Executive shall
devote his full business time and efforts to the business affairs of the
Company, unless the CEO authorizes efforts related to other initiatives.  The
Executive will report directly to the President and/or CEO of the Company.

4.  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 $175,000 per annum, payable in accordance with the Company's
          normal payroll and withholding practices. This base salary will be
          increased by $20,000 following the receipt by the Company of
          $2,000,000 or more in aggregate revenue or income, as determined in
          good faith by the Company's auditors, from business development
          transactions ("Business Development Milestone") with third parties or
          joint venture partners including, but not limited to, license fees,
          option fees, R&D development funding, equity investment by a corporate
          partner, or sale of products or technologies, or renegotiation of
          existing agreements with such parties, for which the Executive has
          been designated the primary person responsible for such transaction by
          the CEO. The amount to be applied to the $2,000,000 milestone for
          renegotiation of existing agreements is to be based on the incremental
          value achieved in excess of the previously target for each project as
          agreed upon in good faith with the CEO. The Executive's salary and
          performance shall be subject to a review commencing at the end of the
          first calendar year of his employment but in any case no later than
          twelve (12) months following the commencement of the term of the
          Executive's

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          employment hereunder, and thereafter on annual calendar year basis.
          After each such review, Executive's salary and target bonus may be
          increased at the reasonable discretion of the Company. The Executive's
          raise attributable to the Business Development Milestone shall not be
          considered a raise for purposes of the preceding sentence, but shall
          be considered in base pay, without proration, for purposes of
          calculating the next salary increase.

     (B)  BONUSES.  At the end of each full year of employment, Executive shall
     be entitled to a targeted bonus of up to 35% of the Executive's annual base
     salary, as in effect at the time (it is understood that this represents a
     range of 0% to 35% of the Executive's annual base salary). Determination of
     any actual bonus shall be based upon the Executive's meeting reasonable
     measurable objectives and the overall performance of the Company for that
     period of time, as determined by the CEO and the Board of Directors in
     their reasonable discretion. The written objectives for the first year of
     this Agreement will be established during the first 45 days of employment
     and shall be subject to revision quarterly with the CEO based on
     information developed during the quarter. The Company's assessment of the
     Executive's achievement of milestones shall be issued in writing to the
     Executive within a reasonable time after the conclusion of the applicable
     bonus period.

     (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
     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 for any
     partial calendar years worked), or whatever period is provided for the
     company's policy, whichever is greater. The Executive shall also be
     entitled to all paid holidays given by the Company to its employees.

     (F)  OPTIONS AND GRANTS.  Subject to execution of this Agreement, Executive
     shall be granted as of the date of execution of this Agreement, an option
     (the "Stock Option") to purchase 100,000 shares of Endorex's Common Stock
     (the "Option Shares") at a price per share equal to the Closing Price of
     the Company's Common Stock on the date of execution of this Agreement and
     vesting and becoming exercisable as to 18,750 Option Shares on the first
     anniversary of the grant of the Stock Option and then an additional 18,750
     each yearly anniversary for the next three (3) years for a total of 75,000
     share options as long as Executive is employed by Endorex on such vesting
     dates. The remaining 25,000 option shares will vest solely upon completion
     of the Business Development Milestone identified in Section 4(a). The Stock
     Option shall be granted under the terms of the Company's Amended and
     Restated 1995 Omnibus Incentive Plan (the "Plan") and the terms of the
     Company's standard Stock Option Agreement, which Executive must agree to
     and sign as a condition of receiving the Stock Option. The grant of the
     Stock Option shall not preclude the participation of the Executive in any
     other stock grant or option plan of the Company that the Board may grant
     from time to time.

     (G)  SERVICES FURNISHED.  The Company shall furnish the Executive with
     office space, stenographic assistance 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.

5.  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
provided by the Company's by-laws and any applicable 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.

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6.  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 at any time 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 data, cost or
uses or purchasers of the Company's current or future products (including but
not limited to: its cancer products, POH and ImmTher(R): its oral/mucosal
protein, peptide and vaccine delivery system; the Elan technologies in either of
the two joint ventures with this company, and its MDP vaccine adjuvant product),
research activities, or services, or other confidential information 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 uses or prepares or comes 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 or industry knowledge or after its
receipt becomes public or industry knowledge through no act or omission on the
part of Executive, or (b) the Executive can establish by reasonable proof was
known to him prior to disclosure by the Company, or (c) is required to be
disclosed in court or other legal proceedings.  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, on working time or 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.

7.  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, at any time during the twelve (12)
     month period immediately preceding the termination of his employment. 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) liposome-based
     particles for oral/mucosal vaccine and drug delivery, 3) PLGA microspheres
     for oral delivery of vaccines, 4) monoterpene-based compounds for the
     prevention and treatment of cancer, and 5) delivery of iron chelators using
     Elan Corporation's MEDIPAD(R) 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)  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 person employed by the Company during the
     period of the Executive's employment by the Company and for a period of
     eighteen (18) months thereafter, unless such person is no longer employed
     by the company through no conduct of Executive in violation of this section
     7(B).

     (C)  Notwithstanding any provision of this Section 7 to the contrary,
     Executive shall be permitted to own up to three percent (3%) of the total
     shares of all classes of publicly-traded stock of any corporation engaging
     in direct competition with the Company as described in section 7(A) above,
     as a passive investment.

8.  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

                                       3
<PAGE>

     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 6 or 7 hereof; or (iii) if Executive shall become
     physically or mentally incapacitated and by reason thereof be unable to
     perform his duties hereunder with or without reasonable accommodation for a
     period of ninety (90) consecutive days. For the purpose of clause (i) of
     this Subsection 8A, "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 good faith written directions of the CEO or Board
     of Directors of the Company regarding lawful activities consistent with the
     Executive's job responsibilities to improve the business 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 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) grossly
     negligent or intentional misconduct by Executive that could cause material
     harm to the Company. The Company may also terminate Executive's employment
     at any time without cause, subject to its obligations under Section 8C
     below, with thirty (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 forty-
     five (45) days' written notice.  If Executive terminates his Employment
     with the Company pursuant to this Section 8B, Executive shall only be
     entitled to any unpaid compensation accrued through the last day of
     Executive's employment; provided, however, that Executive may terminate his
     employment agreement with the Company for "Good Reason" or within six (6)
     months after a "Change in Control" and be entitled to the benefits stated
     in sub-paragraph C hereafter.

     (C)  In the event that Executive terminates his employment for Good Reason
     within six (6) months after a Change in Control, then Executive shall be
     paid his then current salary plus any earned but unpaid bonus, such bonus
     prorated for the amount of the calendar year worked, for a period of six
     (6) months following termination, subject to set off for amounts earned
     from alternative employment. In the event that 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
     8A above [or due to disability or death],), then Executive shall be paid
     his then current salary plus any earned but unpaid bonus, such bonus
     prorated for the amount of the calendar year worked, for a period of seven
     (7) months following termination, subject to set off for amounts earned
     from alternative employment, in addition to the 30-day written notice
     period in Section 8(A).  A termination by Executive for "Good Reason" shall
     mean a termination by Executive within 60 days of (i) a material breach of
     this Agreement by the Company or a material reduction in Executive's level
     of responsibility, (ii) a reduction in his level of base salary or bonus
     levels or (iii) a relocation of Executive's primary worksite without his
     consent of more than 40 miles from Lake Forest, IL.  Executive shall give
     the Company forty-five (45) days' written notice and opportunity to cure
     prior to any termination for Good Reason.  "Change in Control" shall have
     the same meaning as in the Company's Amended and Restated 1995 Omnibus
     Incentive Plan.

9.  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 to assume 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 9, 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
     agreement, and Executive is terminated, the Company will pay Executive
     severance pay as set forth in Section 8(C), in addition to the 30-day
     written notice period in Section 8(A).

     (B)  If the Executive should die during the term of this Agreement, any
     amounts earned hereunder but not yet paid, 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.

                                       4
<PAGE>

10.  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:
          210 Brampton Lane                 28101 N. Ballard Drive, Suite F
          Lake Forest, IL  60045            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.

11.  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.

12.  Validity

The invalidity or unenforceablitity 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.

13.  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 6 or 7, 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 arbitrator's award in any court having
jurisdiction.  The arbitration fees shall be borne by the Company but each party
shall be responsible for its own legal fees.  The parties agree that any dispute
arising out of or relating to Sections 6 or 7 shall be resolved in the State
and/or 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
     /s/ Sarah Bauer
     -----------------                 By:    /s/ Michael S. Rosen
          Attest                              --------------------
                                              Michael S. Rosen
                                              President/CEO

                                              /s/ John McCracken
                                              ----------------------------
                                              John McCracken

                                       5

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