Exhibit 10.1


EMPLOYMENT AGREEMENT


          AGREEMENT
(the “Agreement”), dated as of February 22, 2007 by and between NOVADEL PHARMA INC., a
Delaware corporation with principal executive offices at 25 Minneakoning Rd.,
Flemington, New Jersey 08822 (the “Company”), and Deni M. Zodda residing at 440
Coldstream Drive, Berwyn, Pennsylvania, 19312 (the “Executive”).


W I T N E S S E T
H:


          WHEREAS,
the Company desires to employ the Executive as Senior Vice President, Chief
Business Officer of the Company, and the Executive desires to serve the Company
in that capacity, upon the terms and subject to the conditions contained in
this Agreement; 


          NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows: 


	
 

	
 

	
 


	
 

	
1.

	
Employment.
  


	
 

	
 

	
 


	
          The
  Company agrees to employ the Executive, and the Executive agrees to be
  employed by the Company, upon the terms and subject to the conditions of this
  Agreement. 


	
 


	
 

	
2.

	
Term.


	
 

	
 

	
 


	
          The
  employment of the Executive by the Company as provided in Section 1 shall be
  for a period of three (3) years commencing on the date hereof, unless sooner
  terminated in accordance with the provisions of Section 8 below (the “Term”).


	
 


	
 

	
3.

	
Duties; Best
  Efforts; Place of Performance.


	
 

	
 

	
 


	
          (a)        The
  Executive shall initially serve as Senior Vice President, Chief Business
  Officer of the Company and shall perform, subject to the direction of the
  Chief Executive Officer, such duties as are customarily performed by the Senior
  Vice President, Chief Business Officer. The Executive shall also have such
  other powers and duties as may be from time to time prescribed by the Chief
  Executive Officer or Board of Directors of the Company provided that the
  nature of the Executive’s powers and duties so prescribed shall not be
  inconsistent with the Executive’s position and duties hereunder.


	
 


	
          (b)        The
  Executive shall devote substantially all of his business time, attention and
  energies to the business and affairs of the Company and shall use his best
  efforts to advance the best interests of the Company and shall not, during
  the Term, be actively engaged in any other business activity, whether or not
  such business activity is pursued for gain, profit or other pecuniary
  advantage, that will interfere with the performance by the Executive of his
  duties hereunder or the Executive’s availability to perform such duties or
  that will adversely affect, or negatively reflect upon, the Company. Notwithstanding
  the above, Executive may hold external 










directorships
or executive positions with the advance approval of the Company’s Board of
Directors.


          (c)          The
duties to be performed by the Executive hereunder shall be performed primarily
at the office of the Company in Flemington, New Jersey, subject to reasonable
travel requirements on behalf of the Company.


          4.          Compensation.
As full compensation for the performance by the Executive of his duties under
this Agreement, the Company shall pay the Executive as follows: 


          (a)          Base
Salary. The Company shall pay the Executive a base salary (the “Base Salary”) at a rate of $275,000 per annum,
payable in
equal semi-monthly installments during the Term. The Executive’s Base Salary
shall be subject to annual review by the Compensation Committee of the Board of
Directors and may be increased, but not decreased, from time to time at the
discretion of the Compensation Committee of the Board of Directors.


          (b)          Bonus.
Executive shall be eligible to receive a bonus of up to 30% of his Base Salary,
provided, however, that such bonus shall be payable only upon the successful
achievement of certain performance milestones related to the Executive’s role
in the Company, which milestones shall be defined and enumerated by mutual
agreement between the Executive and the President & Chief Executive Officer
of the Company within the first month of Executive’s term of employment, and
again at the same time in each succeeding year of Executive’s term of
employment with the Company. The amount of Bonus paid to the Executive shall be
increased or decreased from time to time at the discretion of the Compensation
Committee of the Board.


          (c)          Withholding.
The Company shall withhold all applicable federal, state and local taxes and
social security and such other amounts as may be required by law from all
amounts payable to the Executive under this Section 4.


          (d)          Stock
Options. On the first day of employment, and as additional compensation for the
services to be rendered by the Executive pursuant to this Agreement, the
Company shall grant the Executive incentive stock options to purchase 68,027
shares of Common Stock of the Company and non-qualified stock options (collectively,
“Stock
Options”) to purchase 598,973 shares of Common Stock of the Company.
Such option grants will have a term of ten (10) years. The stock options shall
vest upon achievement of performance milestones; so that 22,676 incentive stock
options and 200,324 non-qualified stock options will vest on the signing of a
Board of Director approved third party agreement for U.S. or world wide rights
of sumatriptan; 22,676 incentive stock options and 199,324 non-qualified stock
options will vest on the signing of a Board of Director approved third party
agreement for U.S. or world wide rights of zolpidem; and 22,675 incentive stock
options and 199,325 non-qualified stock options will vest upon approval by the
Board of Directors of any third party agreement whereby the Company obtains the
right to develop a product incorporating an active pharmaceutical ingredient (“API”)
that is the subject of a then valid United States Patent (or in-process United
States Patent Application) and already approved for sale by the United States
Food and Drug Administration with sales in the United States of at least $100
million, subject, in each case, to the provisions of Section 9 


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below and
specifically sub paragraph 9 (c), which provides for the immediate full vesting
of all options upon Change of Control of the Company. 


If the
Agreement is not renewed by the Executive beyond its initial term and the
Company wishes to renew the Agreement beyond the initial term without
substantial change in the terms of this Agreement, but not including Section 4 (d),
then such options which have not vested will expire upon termination. In
connection with such grants, the Executive shall enter into the Company’s
standard stock option agreement which will incorporate the foregoing vesting
schedule and the Stock Option related provisions contained in Section 9 below. The
exercise price of said Stock Options shall be equal to 100% of the Fair Market
Value (trading price) on the first date of employment. Non-qualified option
grants are taxed differently than incentive stock options, and as such,
research of taxation for these stock option grants shall be the sole
responsibility of the Executive. 


          (e)          Expenses.
The Company shall reimburse the Executive for all normal, usual and necessary
expenses incurred by the Executive in furtherance of the business and affairs
of the Company, including reasonable travel and entertainment, upon timely
receipt by the Company of appropriate vouchers or other proof of the Executive’s
expenditures and otherwise in accordance with any expense reimbursement policy
as may from time to time be adopted by the Company. 


          (f)          Other
Benefits. The Executive shall be entitled to all rights and benefits for which
he shall be eligible under any benefit or other plans including, without
limitation, dental, medical, medical reimbursement and hospital plans,
supplemental life insurance plans, pension plans, employee stock purchase
plans, profit sharing plans, bonus plans and other so-called “fringe” benefits
as the Company shall make available to its senior executives from time to time.
In addition to those benefits noted above, the Company shall reimburse the
Executive for local hotel expenses for up to 100 days per year, (Hampton Inn,
Flemington NJ, or equivalent).


          (g)          Vacation.
The Executive shall, during the Term, be entitled to a vacation of four (4) weeks
per annum commencing February 22, 2007, in addition to holidays observed by the
Company. The Executive shall not be entitled to carry any vacation forward to
the next year of employment. The Executive shall be entitled to company
holidays, and Sick/Personal/Bereavement days, under the then current Company
policies relating to senior executives.


          5.           Confidential
Information and Inventions. 


          (a)          The
Executive recognizes and acknowledges that in the course of his duties he is
likely to receive confidential or proprietary information owned by the Company,
its affiliates, or third parties with whom the Company or any such affiliates
has an obligation of confidentiality. Accordingly, during and after the Term,
the Executive agrees to keep confidential and not disclose or make accessible
to any other person or use for any other purpose other than in connection with
the fulfillment of his duties under this Agreement, any Confidential and
Proprietary Information (as defined below) owned by, or received by or on
behalf of, the 


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Company or any
of its affiliates. “Confidential and Proprietary Information”
shall include, but shall not be limited to, confidential or proprietary
scientific or technical information, data, formulas and related concepts,
business plans (both current and under development), client lists, promotion
and marketing programs, trade secrets, or any other confidential or proprietary
business information relating to development programs, costs, revenues,
marketing, investments, sales activities, promotions, credit and financial
data, manufacturing processes, financing methods, plans or the business and
affairs of the Company or of any affiliate or client of the Company. The
Executive expressly acknowledges the trade secret status of the Confidential
and Proprietary Information and that the Confidential and Proprietary
Information constitutes a protectable business interest of the Company. The
Executive agrees: (i) not to use any such Confidential and Proprietary
Information for himself or others; and (ii) not to take any Company material or
reproductions (including but not limited to writings, correspondence, notes,
drafts, records, invoices, technical and business policies, computer programs
or disks) thereof from the Company’s offices at any time during his employment
by the Company, except as required in the execution of the Executive’s duties
to the Company. The Executive agrees to return immediately all Company material
and reproductions (including but not limited, to writings, correspondence,
notes, drafts, records, invoices, technical and business policies, computer
programs or disks) thereof in his possession to the Company upon request and in
any event immediately upon termination of employment. 


          (b)          The
Executive agrees not to disclose or publish any of the Confidential and
Proprietary Information, or any confidential, scientific, technical or business
information of any other party to whom the Company or any of its affiliates
owes an obligation of confidence, at any time during or after his employment
with the Company. Such restriction does not apply to Executive’s utilization of
that information in furtherance of Company’s normal business objectives. 


          (c)          The
Executive agrees that all inventions, discoveries, improvements in “know how”
and other trade secrets, other improvements and patentable or copyrightable
works (“Inventions”)
initiated, conceived or made by him, either alone or in conjunction with
others, during the Term, other than those Inventions listed on Schedule 6(c)
attached hereto, shall be the sole property of the Company to the maximum
extent permitted by applicable law and, to the extent permitted by law, shall
be “works made for hire” as that term is defined in the United States Copyright
Act (17 U.S.C.A., Section 101). The Company shall be the sole owner of all
patents, copyrights, trade secret rights, and other intellectual property or
other rights in connection therewith. The Executive hereby assigns to the
Company all right, title and interest he may have or acquire in all such
Inventions; provided, however, that the Board of Directors of the Company may
in its sole discretion agree to waive the Company’s rights pursuant to this
Section 5(c) with respect to any Invention that is not directly or indirectly
related to the Company’s business. The Executive further agrees to assist the
Company in every proper way (but at the Company’s expense) to obtain and from
time to time enforce patents, copyrights, trade secrets or other rights on such
Inventions in any and all countries, and to that end the Executive will execute
all documents necessary: 


	
 

	
 

	
 


	
 

	
              (i)          to
  apply for, obtain and vest in the name of the Company alone (unless the
  Company otherwise directs) letters patent, copyrights or other analogous
  protection in 





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any country
  throughout the world and when so obtained or vested to renew and restore the
  same; and


	
 

	
 

	
 


	
 

	
              (ii)          to
  defend any opposition proceedings in respect of such applications and any
  opposition proceedings or petitions or applications for revocation of such
  letters patent, copyright or other analogous protection. 





          (d)          The
Executive acknowledges that while performing the services under this Agreement
the Executive may locate, identify and/or evaluate patented or patentable
inventions having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which
may be of potential interest to the Company or one of its affiliates (the “Third Party
Inventions”). The Executive understands, acknowledges and agrees
that all rights to, interests in or opportunities regarding, all Third-Party
Inventions identified by the Company, any of its affiliates or either of the
foregoing persons’ officers, directors, employees (including the Executive),
agents or consultants during the Term shall be and remain the sole and
exclusive property of the Company or such affiliate and the Executive shall have
no rights whatsoever to such Third-Party Inventions and will not pursue for
himself or for others any transaction relating to the Third-Party Inventions
which is not on behalf of the Company. 


          (e)          The
provisions of this Section 5 shall survive any termination of this Agreement,
but shall not apply during or after Executive’s employment term to information
or inventions of other entities that Executive may serve as a director with
prior Board of Directors approval. 


          6.           Non-Competition,
Non-Solicitation and Non-Disparagement. 


          (a)          The
Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 5) and the Executive agrees that, during the
Term and for a period of eighteen (18) months thereafter, he shall not in any
manner, directly or indirectly, on behalf of himself or any person, firm,
partnership, joint venture, corporation or other business entity (“Person”),
enter into or be employed by any business that is competitive with the Company,
either as an individual for his own account, or as a partner, joint venturer,
owner, executive, employee, independent contractor, principal, agent,
consultant, salesperson, officer, director or shareholder of a Person in a
business competitive with the Company within the geographic area of the Company’s
business, which is deemed by the parties hereto to be worldwide. The Executive
acknowledges that, due to the unique nature of the Company’s business, the loss
of any of its clients or business flow or the improper use of its Confidential
and Proprietary Information could create significant instability and cause
substantial damage to the Company and its affiliates and therefore the Company
has a strong legitimate business interest in protecting the continuity of its
business interests and the restriction herein agreed to by the Executive
narrowly and fairly serves such an important and critical business interest of
the Company. For purposes of this Agreement, the Company shall be deemed to be
actively engaged on the date hereof in the development of novel application oral
drug delivery systems for presently marketed prescription and over-the-counter drugs
where such drug is a small molecule, non-biologic, and providing consulting
services in connection 


5






therewith, and
in the future in any other business in which it actually devotes substantive
resources to study, develop or pursue. For the sake of clarity, the Executive
will not be in breach of this paragraph 6(a) if, during the eighteen (18)
months following the termination of his employment with the Company, he becomes
employed by or consults to a Person whose primary business is outside the area
of novel oral drug delivery systems for use with small molecule, non-biologic
pharmaceuticals – provided that the Executive’s work for said Person during the
eighteen (18) months following the termination of his employment does not
relate to novel oral drug delivery systems for use with small molecule,
non-biologic pharmaceuticals. Notwithstanding the foregoing, nothing
contained in this Section 6(a) shall be deemed to prohibit the Executive from
(i) acquiring or holding, solely for investment, publicly traded securities of
any corporation, some or all of the activities of which are competitive with
the business of the Company so long as such securities do not, in the
aggregate, constitute more than 4.9% of any class or series of outstanding
securities of such corporation. 


          (b)          During
the Term and for eighteen (18) months thereafter, the Executive shall not,
directly or indirectly, without the prior written consent of the Company: 


	
 

	
 

	
 


	
 

	
              (i)            solicit
  or induce any employee of the Company or any of its affiliates to leave the
  employ of the Company or any such affiliate; or hire for any purpose any
  employee of the Company or any affiliate or any employee who has left the
  employment of the Company or any affiliate within one year of the termination
  of such employee’s employment with the Company or any such affiliate or at
  any time in violation of such employee’s non-competition agreement with the
  Company or any such affiliate; or 


	
 

	
 

	
 


	
 

	
              (ii)           solicit
  or accept employment or be retained by any Person who, at any time during the
  term of this Agreement, was an agent, client or customer of the Company or
  any of its affiliates where his position will be related to the business of
  the Company or any such affiliate; or 


	
 

	
 

	
 


	
 

	
              (iii)          solicit
  or accept the business of any agent, client or customer of the Company or any
  of its affiliates with respect to products, services or investments similar
  to those provided or supplied by the Company or any of its affiliates. 





          (c)          The
Executive and the Company mutually agree that both during the Term and at all
times thereafter, they shall not directly or indirectly disparage, whether or
not true, the name or reputation of the Executive, Company or any of its
affiliates, including but not limited to, any officer, director, employee or shareholder
of the Company or any of its affiliates. 


          (d)          In
the event that the Executive breaches any provisions of Section 5 or this
Section 6 or there is a threatened breach, then, in addition to any other
rights which the Company may have, the Company shall (i) be entitled, without
the posting of a bond or other security, to injunctive relief to enforce the
restrictions contained in such Sections and (ii) have the right to require the
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments and other benefits (collectively “Benefits”)
derived or received by the Executive as a result of any transaction
constituting a breach of any of the provisions of 


6






Sections 5 or 6
and the Executive hereby agrees to account for and pay over such Benefits to
the Company. 


          (e)          Each
of the rights and remedies enumerated in Section 6(d) shall be independent of
the others and shall be in addition to and not in lieu of any other rights and
remedies available to the Company at law or in equity. If any of the covenants
contained in this Section 6, or any part of any of them, is hereafter construed
or adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or rights or remedies which shall be
given full effect without regard to the invalid portions. If any of the
covenants contained in this Section 6 is held to be invalid or unenforceable
because of the duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall have the power to
reduce the duration and/or area of such provision and in its reduced form such
provision shall then be enforceable. No such holding of invalidity or
unenforceability in one jurisdiction shall bar or in any way affect the Company’s
right to the relief provided in this Section 6 or otherwise in the courts of
any other state or jurisdiction within the geographical scope of such covenants
as to breaches of such covenants in such other respective states or
jurisdictions, such covenants being, for this purpose, severable into diverse
and independent covenants. 


          (f)          In
the event that an actual proceeding is brought in equity to enforce the
provisions of Section 5 or this Section 6, the Executive shall not urge as a
defense that there is an adequate remedy at law nor shall the Company be
prevented from seeking any other remedies which may be available. The Executive
agrees that he shall not raise in any proceeding brought to enforce the
provisions of Section 5 or this Section 6 that the covenants contained in such
Sections limit his ability to earn a living. 


          (g)          The
provisions of this Section 6 shall survive any termination of this Agreement. 


          7.            Representations
and Warranties by the Executive and Company. 


          The
Executive and the Company hereby represent and warrant to each other as
follows: 


	
 

	
 

	
 


	
 

	
              (i)          Neither
  the execution or delivery of this Agreement nor the performance by the
  Executive of his duties and other obligations hereunder violate or will violate
  any statute, law, determination or award, or conflict with or constitute a
  default or breach of any covenant or obligation under (whether immediately,
  upon the giving of notice or lapse of time or both) any prior employment
  agreement, contract, or other instrument to which the Executive or Company is
  a party or by which they are bound. 


	
 

	
 

	
 


	
 

	
              (ii)         The
  Executive and the Company have the full right, power and legal capacity to
  enter and deliver this Agreement and to perform their duties and other
  obligations hereunder. This Agreement constitutes the legal, valid and
  binding obligation of the Executive and the Company enforceable against them
  in accordance with its terms. No approvals or consents of any persons or
  entities are required for the Executive or Company to execute and deliver
  this Agreement or perform their duties and other obligations hereunder. 





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          8.          Termination.
The Executive’s employment hereunder shall be terminated upon the Executive’s
death and may be terminated as follows: 


          (a)         The
Executive’s employment hereunder may be terminated for “Cause”. Cause is
defined as: 


	
   

  	
   

  
	
   

  	
               (i)         The
  willful failure, disregard or refusal by the Executive to perform his duties
  hereunder; 

  
	
   

  	
   

  
	
   

  	
               (ii)        Any
  willful, intentional or grossly negligent wrongdoing by the Executive having
  the effect of injuring, in a material way (whether financial or otherwise),
  the business or reputation of the Company or any of its affiliates, including
  but not limited to any officer, director, or executive of the Company or any
  of its affiliates; 

  
	
   

  	
   

  
	
   

  	
               (iii)       Willful
  misconduct by the Executive in respect of the duties or obligations of the
  Executive under this Agreement, including, without limitation,
  insubordination with respect to legal directions received by the Executive
  from the President and CEO or the Board of Directors of the Company; 

  
	
   

  	
   

  
	
   

  	
               (iv)       The
  Executive’s indictment for any felony or conviction of a misdemeanor
  involving moral turpitude (including entry of a nolo contendere plea)
  where such event has the effect of injuring, in a material way (whether
  financial or otherwise), the business or reputation of the Company, or of any
  of its affiliates, including but not limited to, any officer, director, or
  executive of the Company or any of its affiliates; 

  
	
   

  	
   

  
	
   

  	
               (v)        The
  determination by the Company, after a reasonable and good-faith investigation
  by the Company following a written allegation by another employee of the
  Company, that the Executive engaged in some form of harassment prohibited by
  law (including, without limitation, age, sex or race discrimination);

  
	
   

  	
   

  
	
   

  	
               (vi)       Any
  misappropriation or embezzlement of the property of the Company or its
  affiliates (whether or not a misdemeanor or felony); 

  
	
   

  	
   

  
	
   

  	
               (vii)      Breach
  by the Executive of any of the provisions of Sections 5, 6 or 7 of this
  Agreement; and 

  
	
   

  	
   

  
	
   

  	
               (viii)     Breach
  by the Executive of any provision of this Agreement other than those
  contained in Sections 5, 6 or 7 which is not cured by the Executive within
  thirty (30) days after written notice thereof is given to the Executive by
  the Company. 

  
	
   

  	
   

  
	
   

  	
               (ix)       Before
  constituting grounds for termination for cause, Executive will be given
  written notice and five (5) business days to cure conduct under Paragraphs i,
  iii, vii, and viii of this section. 

  



8






          (b)         The
Executive’s employment hereunder may be terminated by the Board of Directors of
the Company due to the Executive’s Disability. For purposes of this Agreement,
a termination for “Disability” shall occur (i) when the Board
of Directors of the Company has provided a written termination notice to the
Executive supported by a written statement from two reputable independent
physicians one of which has been selected by Executive, to the effect that the
Executive shall have become so physically or mentally incapacitated as to be
unable to resume, within the ensuing twelve (12) months, his employment
hereunder by reason of physical or mental illness or injury, or (ii) upon
rendering of a written termination notice by the Board of Directors of the
Company after the Executive has been unable to substantially perform his duties
hereunder for 90 or more consecutive days, or more than 120 days in any
consecutive twelve month period, by reason of any physical or mental illness or
injury. Such written statements supporting Disability will have the same
meaning as Long Term Disability allowing coverage by the Company’s Long Term
Disability Insurance. For purposes of this Section 8(b), the Executive agrees
to make himself available and to cooperate in any reasonable examination by a
reputable independent physician retained by the Company. 


          (c)         The
Executive’s employment hereunder may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “Good Reason” means (i) a breach by the
Company of its material obligations under Section 3 and/or 4 of this Agreement
(a “Material
Breach”), (ii) a material reduction by the Board of Directors of the
Company of the Executive’s duties, title or authority, including but not
limited to reporting to the Chief Executive Officer of the Company, provided
for in this Agreement (a “Material Change”), or (iii) the relocation
of the principal executive office of the Company in excess of fifty (50) miles
from its present location not consented to by the Executive; provided, however,
that a Material Breach or a Material Change shall constitute Good Reason only
if the Executive has notified the Board of Directors of the Company in writing
of the existence and particulars of such Material Breach or Material Change and
the Board of Directors has failed to remedy such Material Change or Material
Breach within thirty (30) days of such notice. 


          (d)         The
Executive’s employment hereunder may be terminated by the Board of Directors of
the Company (or its successor) upon the occurrence of a Change of Control. For
purposes of this Agreement, “Change of Control” means (i) the
acquisition, directly or indirectly, following the date hereof by any person
(as such term is defined in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) of the combined voting power of the Company’s then outstanding
securities if such person or his or its affiliate(s) do not own in excess of
50% of such voting power on the date of this Agreement, or (ii) the future
disposition by the Company (whether direct or indirect, by sale of assets or
stock, merger, consolidation or otherwise) of all or substantially all of its
business and/or assets in one transaction or series of related transactions
(other than a merger effected exclusively for the purpose of changing the
domicile of the Company). 


          9.          Compensation
upon Termination.


          (a)         If
the Executive’s employment is terminated as a result of his death or
Disability, the Company shall (i) pay to the Executive or to the Executive’s
estate, as applicable, (x) his 


9






Base Salary through
the date of his death or Disability and (y) the Bonus, if any, that would otherwise
have been due at the end of the calendar year in which such death or Disability
occurs; and the pro rata portion of the Stock Options earned by the Executive
during the year of his death or Disability, prorated in accordance with the
number of full months in such year during which the Executive was employed by
the Company; (ii) for the longer of twelve (12) months following his death or
Disability or the balance of the Term (as if such termination had not occurred)
provide continuation coverage to the members of the Executive’s family and, in
the case of termination for Disability, the Executive under all major medical
and other health, accident, life or other disability plans and programs in
which such family members and, in the case of termination for Disability, the
Executive participated immediately prior to his death or Disability; and (iii) pay
any expense reimbursement amounts owed through the date of death or Disability.
All Stock Options that are scheduled to vest by the end of the calendar year in
which such termination occurs shall be accelerated and deemed to have vested as
of the termination date. All Stock Options that have not vested (or been deemed
pursuant to the immediately preceding sentence to have vested) as of the date
of termination shall be deemed to have expired as of such date. Any Stock
Options that have vested as of the date of the Executive’s death (including the
Options described in the immediately preceding sentence) shall remain
exercisable for a period of one hundred and eighty (180) days after the date of
his death; in the event of a Disability, any unexercised option may be
exercised in whole or in part, within the first ninety (90) days after such
termination of employment or service. Any Restricted Shares that were
forfeitable shall thereupon become non-forfeitable.


          (b)          If
the Executive’s employment is terminated by the Board of Directors of the
Company for Cause or by the Executive other than for Good Reason, the Company
shall pay to the Executive his Base Salary through the date of his termination
and the Executive shall have no further entitlement to any other compensation
or benefits from the Company. All Stock Options that have not vested as of the
date of any such termination shall be deemed to have expired as of such date
and, in addition, the Executive’s right to exercise any vested Stock Options
shall terminate as of such date. Any Restricted Shares that are then
forfeitable shall be forfeited immediately.


          (c)          If
the Executive’s employment is terminated by the Company (or its successor) upon
the occurrence of a Change of Control, the Company (or its successor, as
applicable) shall, upon receiving a copy of a release and separation agreement
signed by the Executive, and containing, among other provisions, the release provisions
attached hereto as Exhibit A (the “Release”), pay to the Executive within ten
(10) business days: (i) a lump sum equivalent to twelve (12) months of his Base
Salary, and (ii) a lump sum equivalent to the Bonus, if any, that would
otherwise have been due at the end of the calendar year in which such
termination occurs; and (iii) any expense reimbursement amounts owed through
the date of termination. All Stock Options that have not vested as of the date
of such termination shall be accelerated and deemed to have vested as of the date
of the Change of Control. All restrictions on the Executive’s Restricted Shares
shall lapse immediately.


          (d)          If
(i) the Executive’s employment is terminated prior to the end of the first year
by the Company other than as a result of the Executive’s death or Disability
and other than for reasons specified in Sections 9(b) or (c); or (ii) the
Executive’s employment is terminated prior 


10






to the end
first year by the Executive for Good Reason, the Company shall, upon receiving
a copy of the Release signed by the Executive, pay to the Executive: (i) severance
payments made in semi-monthly installments equivalent to the Executive’s current
Base Salary divided by twenty-four (24), for a period of six (6) months; (ii) within
ten (10) business days the Bonus, if any, that would otherwise have been due at
the end of the calendar year in which such termination occurs; and (iii) any
expense reimbursement amounts owed through the date of termination. The Company’s
obligation under clause (i) in the preceding sentence will be reduced, however,
by any amounts actually earned by the Executive, other than consulting income (“Consulting Income”)
(as defined below), during the six (6) month period following the date of termination.
As used in this Agreement, Consulting Income means income that the Executive
earns as a result of a consulting agreement with a third party with whom the Executive
does not have an employment relationship. All vested options at date of
termination shall expire ninety (90) days post termination of employment, all
Stock Options that have not vested as of the date of termination shall be
deemed to have expired as of such date. All Restricted Shares that are subject
to forfeiture as of the termination date shall be forfeited and returned to the
Company.


          (e)          If
(i) the Executive’s employment is terminated after the end of the first year by
the Company other than as a result of the Executive’s death or Disability and
other than for reasons specified in Sections 9(b) or (c); or (ii) the Executive’s
employment is terminated after the end of the first year by the Executive for
Good Reason, or the Company provides notice to Executive this Employment
agreement will not be renewed, the Company shall, upon receiving a copy of the
Release signed by the Executive, pay to the Executive: (i) severance payments
made in semi-monthly installments equivalent to the Executive’s current Base
Salary divided by twenty-four (24), for a period of twelve (12) months; (ii) within
ten (10) business days the Bonus, if any, that would otherwise have been due at
the end of the calendar year in which such termination or non-renewal occurs;
and (iii) any expense reimbursement amounts owed through the date of
termination or non-renewal. The Company’s obligation under clause (i) in the
preceding sentence will be reduced, however, by any amounts actually earned by
the Executive, other than Consulting Income, during the twelve (12) month
period following the date of termination or non-renewal. All vested options at
date of termination shall expire ninety (90) days post termination of
employment, all Stock Options that have not vested as of the date of
termination shall be deemed to have expired as of such date. All Restricted
Shares that are subject to forfeiture as of the termination or non-renewal date
shall be forfeited and returned to the Company.


          (f)          The
continuation coverage under any major medical and other health, accident, life
or other disability plans and programs for the periods provided in Sections 9(a),
9(c), 9(d), and 9(e) shall be provided (i) at the expense of the Company and
(ii) in satisfaction of the Company’s obligation under Section 4980B of the
Internal Revenue Code of 1986 (and any similar state law) with respect to the
period of time such benefits are continued hereunder. Notwithstanding anything
to the contrary contained herein, the Company’s obligation to provide such
continuation coverage under such Sections shall cease immediately upon the date
any covered individual becomes eligible for similar benefits under the plans or
policies of another employer. 


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          (g)          This
Section 9 sets forth the only obligations of the Company with respect to the
termination of the Executive’s employment with the Company, and the Executive
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided in
Section 9. 


          (h)          The
provisions of this Section 9 shall survive any termination of this Agreement. 


          10.          Miscellaneous.


          (a)          This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New Jersey, without giving effect to its
principles of conflicts of laws. 


          (b)          Any
dispute arising out of, or relating to, this Agreement or the breach thereof
(other than Sections 5 or 6 hereof), or regarding the interpretation thereof,
shall be finally settled by arbitration conducted in New Jersey in accordance
with the commercial rules of the American Arbitration Association then in
effect before a single arbitrator appointed in accordance with such rules. Judgment
upon any award rendered therein may be entered and enforcement obtained thereon
in any court having jurisdiction. The arbitrator shall have authority to grant
any form of appropriate relief, whether legal or equitable in nature, including
specific performance. For the purpose of any judicial proceeding to enforce
such award or incidental to such arbitration or to compel arbitration and for
purposes of Sections 5 and 6 hereof, the parties hereby submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New Jersey,
Hunterdon County, or the United States District Court for the District of New
Jersey, and agree that service of process in such arbitration or court
proceedings shall be satisfactorily made upon it if sent by registered mail addressed
to it at the address referred to in paragraph (g) below. The costs of such
arbitration shall be borne by the non prevailing party as determined by the
arbitrator. Judgment on the arbitration award may be entered by any court of
competent jurisdiction. 


          (c)          This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and assigns. 


          (d)          This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets. 


          (e)          This
Agreement cannot be amended orally, or by any course of conduct or dealing, but
only by a written agreement signed by the parties hereto. 


          (f)          The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as a
waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and
signed by such party. 


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          (g)          All
notices, requests, consents and other communications, required or permitted to
be given hereunder, shall be in writing and shall be delivered personally or by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier, or, if mailed, five days after the date of
deposit in the United States mails. Either party may designate another address
for receipt of notices hereunder by giving notice to the other party in
accordance with this paragraph (g). 


          (h)          This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject
matter hereof. No representation, promise or inducement has been made by either
party that is not embodied in this Agreement, and neither party shall be bound
by or liable for any alleged representation, promise or inducement not so set
forth. 


          (i)          As
used in this Agreement, “affiliate” of a specified Person shall mean and
include any Person controlling, controlled by or under common control with the
specified Person. 


          (j)          The
section headings contained herein are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement. 


          (k)          This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. 


          IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written. 


	
   

  	
   

  
	
   

  	
  NOVADEL
  PHARMA INC

  
	
   

  	
   

  
	
   

  	
  By: /s/ JAN H.
  EGBERTS, M.D.

  
	
   

  	
   

  
	
   

  	
  Name: Jan H.
  Egberts, M.D.

  
	
   

  	
   

  
	
   

  	
  Title: President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  By: /s/ DENI M.
  ZODDA

  
	
   

  	
   

  
	
   

  	
  Name: Deni
  M. Zodda

  



13






Exhibit
A


Release


1.          You hereby
release and discharge NovaDel Pharma, Inc., its parent, divisions, subsidiaries
and affiliates and their current and former directors, officers, shareholders,
agents and employees, and each of their predecessors, successors, and assigns
(hereinafter “the Company”), from any and all claims and causes of action
(except for the benefits specifically set forth in this Separation and Release Agreement
(the “Agreement”)) arising out of or related to any act or omission prior to
the date of this Agreement, including claims related to your employment or the
termination of your employment. This Agreement includes, but is not limited to,
any claims for salary, bonuses, severance pay, vacation pay or any benefits
under the Employee Retirement Income Security Act (except for vested benefits
which are not affected by this Agreement); claims under Title VII of the 1964
Civil Rights Act, as amended, Americans With Disabilities Act, Family and
Medical Leave Act, Age Discrimination in Employment Act (“ADEA”), New Jersey
Law Against Discrimination, New Jersey Conscientious Employee Protection Act,
the New Jersey Wage and Hour Law, the New Jersey Constitution, and or any other
federal, state, or local laws, and claims for breach of implied or express
contract, breach of promise, misrepresentation, negligence, fraud, estoppel,
defamation, infliction of emotional distress, violation of public policy or
wrongful or constructive discharge, and for attorneys’ fees, that you or you
heirs, executors, administrators, successors, and assigns now have, ever had or
may hereafter have, whether known or unknown, suspected or unsuspected, up to
and including the date of this Agreement. You represent and warrant that you
have not filed any complaints, charges, lawsuits or legal actions with any
court or government agency against the Company. You agree that if any court or
agency assumes jurisdiction of any such complaint, charge, lawsuit, or other
legal action filed by you or on your behalf relating to any claims being
released by you in this Agreement, you will request such court or agency to
withdraw from the matter and you hereby agree to waive any right to relief and
to return any relief afforded. You are not waiving any claims that may arise
after you execute the Agreement. This Agreement excludes any waiver of claims
that cannot be waived as a matter of law.


2.          You
acknowledge that you have carefully read this Agreement and understand all of
its terms including the full and final release of claims set forth above. You
further acknowledge that you had adequate time to consider the terms of this
Agreement and knowingly and voluntarily entered into it; that you have not
relied upon any representation or statement, written or oral, not set forth in
this Agreement; that the only consideration for signing this Agreement is as
set forth herein; that the consideration received for executing this Agreement
is greater than that to which you may otherwise be entitled; and that you have
been advised in writing to consult with an attorney prior to executing the
Agreement. You also acknowledge that you have been afforded at least twenty-one
(21) calendar days from the receipt of this Agreement to consider the release
provision contained herein and that you have seven (7) days after signing this
Agreement to revoke it in writing. Revocation must be made by sending a written
notice of revocation to Michael Spicer, NovaDel Pharma, 25 Minneakoning Rd,
Flemington, NJ 08822. Accordingly, no payments required under this Agreement
shall be made until the expiration of seven (7) calendar days following your
execution of this Agreement. 


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