<PAGE>


                                                                   EXHIBIT 10.31

[Portions  herein  identified by *** have been omitted pursuant to a request for
confidential  treatment  and have  been  filed  separately  with the  Commission
pursuant to Rule 24b-2 of the Secureities Exchange Act of 1934, as amended.]

                        LICENSE AND DEVELOPMENT AGREEMENT

                  THIS LICENSE AND  DEVELOPMENT  AGREEMENT  (this  "Agreement"),
effective  as of April 4, 2003 (the  "Effective  Date"),  is entered into by and
between NOVADEL PHARMA INC., a Delaware corporation  ("NovaDel"),  and MANHATTAN
PHARMACEUTICALS,  INC., a Delaware  corporation  (the  "Licensee").  NovaDel and
Licensee  each  may  be  referred  to  herein  individually  as  a  "Party,"  or
collectively as the "Parties."

                  WHEREAS,   NovaDel   has   certain   proprietary   rights  and
intellectual  property  (including  to certain  patents) with respect to lingual
sprays for the metered delivery of pharmaceutical  products (the  "Technology");
and

                  WHEREAS,  Licensee desires to obtain from NovaDel, and NovaDel
desires  to  grant to  Licensee,  a  license  to  develop  and  commercialize  a
pharmaceutical  product  containing  propofol as active  ingredient that will be
administered  using the Technology on the terms and conditions set forth herein;
and

                  WHEREAS,  Licensee desires that NovaDel  provide,  and NovaDel
desires to  provide,  certain  services  in respect of the  development  of such
pharmaceutical product containing propofol as active ingredient on the terms and
conditions set forth herein.

                  NOW,  THEREFORE,  in consideration of the foregoing  premises,
the mutual  promises and covenants of the Parties  contained  herein,  and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto, intending to be legally bound, do hereby agree
as follows:

                                    ARTICLE 1
                                   DEFINITIONS

                  For the purposes of this  Agreement,  the following  words and
phrases  shall  have  the  following  meanings,  unless  otherwise  specifically
provided herein:

                  1.1 "AFFILIATE"  shall mean,  with respect to any Entity,  any
other Entity that  directly or  indirectly  through one or more  intermediaries,
controls,  is  controlled  by or is under common  control with such Entity.  For
purposes of this Section 1.1 only, "control" and, with correlative meanings, the
terms  "controlled  by" and  "under  common  control  with"  shall  mean (a) the
possession,  directly or  indirectly,  of the power to direct the  management or
policies of an Entity,  whether through the ownership of voting  securities,  by
contract or otherwise, or (b) the ownership, directly or indirectly, of at least
fifty percent (50%) of the voting  securities or other ownership  interest of an
Entity.

                  1.2 "APPLICABLE  LAW" shall mean the applicable  laws,  rules,
regulations,  guidelines and requirements of the Regulatory Authorities,  in the
Territory.

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                  1.3   "COMBINATION   PRODUCT"   shall   mean   a   combination
pharmaceutical product containing one or more therapeutically active ingredients
in addition to a Designated Compound.

                  1.4 "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect
to the  development  or  commercialization  of a Licensed  Product,  efforts and
resources  commonly  used in the  research-based  pharmaceutical  industry for a
product of similar  commercial  potential at a similar  stage in its  lifecycle,
taking into  consideration  its safety and  efficacy,  its cost to develop,  the
competitiveness  of  alternative  products,   its  proprietary   position,   the
likelihood of regulatory  approval,  its  profitability,  and all other relevant
factors.   Commercially   Reasonable   Efforts   shall   be   determined   on  a
market-by-market   basis  for  each  Licensed  Product  without  regard  to  the
particular  circumstances of a Party,  including any other product opportunities
of such Party.

                  1.5  "CONFIDENTIAL  INFORMATION"  shall have the  meaning  set
forth in Article 15.

                  1.6  "CONTROL"  shall  mean,  with  respect  to  any  item  of
Information  and  Inventions,  Patents  or other  intellectual  property  right,
possession  of the  ability,  whether  directly  or  indirectly,  and whether by
ownership,  license or otherwise,  to assign, or grant a license,  sublicense or
other  right to or under,  such  item,  Patent or right as  provided  for herein
without violating the terms of any agreement or other arrangement with any Third
Party.

                  1.7 "DESIGNATED COMPOUND" shall mean initially, propofol.

                  1.8  "DEVELOPMENT   ACTIVITIES"   shall  mean  the  activities
performed by the Parties under the Development Plan pursuant to Article 3.

                  1.9  "DEVELOPMENT  BUDGET" shall have the meaning set forth in
Section 3.3.

                  1.10 "DEVELOPMENT  COMMITTEE" shall have the meaning set forth
in Section 3.4.1.

                  1.11  "DEVELOPMENT  PLAN"  shall have the meaning set forth in
Section 3.3.

                  1.12 "EFFECTIVE  DATE" shall have the meaning set forth in the
preamble.

                  1.13 "ENTITY" shall mean any individual,  sole proprietorship,
corporation, limited liability company, association, joint venture, partnership,
limited partnership, limited liability partnership, trust, university, business,
government or political  subdivision thereof,  including an agency, or any other
organization that possesses independent legal standing.

                  1.14 "EXPLOIT"  shall mean to make,  have made,  import,  use,
sell,  or offer for sale,  including to  research,  develop,  register,  modify,
improve,  manufacture,  have manufactured,  store, have used, export, transport,
distribute,  promote,  market or have sold or  otherwise  dispose  of a licensed
product or process.

                  1.15  "EXPLOITATION"  shall  mean  the  making,  having  made,
importation,  use,  sale,  offering  for sale of a licensed  product or process,
including the research, development,

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registration,  modification,  improvement,  manufacture,  storage, optimization,
import, export,  transport,  distribution,  promotion,  marketing, sale or other
disposition of a licensed product or process.

                  1.16  "FDA"  shall  mean  the  United  States  Food  and  Drug
Administration,  or any successor  agency  responsible  for the  evaluation  and
approval of pharmaceutical products.

                  1.17 "FIRST COMMERCIAL SALE" shall mean the first sale for use
or consumption by the general public of the Licensed  Product in a country after
Regulatory  Approval   (including  pricing  and  reimbursement   approval  where
applicable) for the marketing and sale of the Licensed Product has been obtained
in such country.

                  1.18 "IMPROVEMENT"  shall mean any modification,  variation or
revision to an  apparatus,  method,  product or  technology,  or any  discovery,
technology,  device,  process or  formulation  related to an apparatus,  method,
product or  technology,  whether or not patented or  patentable,  including  any
enhancement  in the  manufacture  or steps or  processes  thereof,  ingredients,
preparation,  presentation,  formulation, means of delivery, packaging or dosage
of an apparatus,  method, product or technology, any discovery or development of
any new or expanded indications for an apparatus, method, product or technology,
or any discovery or development that improves the stability,  safety or efficacy
of an apparatus, method, product or technology.

                  1.19 "IND" shall mean an investigational  new drug application
filed with the FDA for  approval  to commence  human  clinical  trials,  and its
equivalent in other countries or regulatory jurisdictions in the Territory.

                  1.20 "INDEMNIFICATION CLAIM NOTICE" shall have the meaning set
forth in Section 10.3.1.

                  1.21  "INDEMNIFIED  PARTY" shall have the meaning set forth in
Section 10.3.1.

                  1.22  "INFRINGEMENT  SUIT" shall have the meaning set forth in
Section 6.8.2.

                  1.23  "INFORMATION  AND INVENTIONS"  shall mean all technical,
scientific  and  other  know-how  and  information,  trade  secrets,  knowledge,
technology,  means,  methods,  processes,  practices,  formulas,   instructions,
skills,  techniques,  procedures,   experiences,  ideas,  technical  assistance,
designs,  drawings,   assembly  procedures,   computer  programs,   apparatuses,
specifications,  data,  results and other material,  including  pre-clinical and
clinical  trial  results,  manufacturing  procedures  and  test  procedures  and
techniques, (whether or not confidential,  proprietary,  patented or patentable)
in written,  electronic or any other form now known or hereafter developed,  and
all Improvements,  whether to the foregoing or otherwise, and other discoveries,
developments,  inventions,  and  other  intellectual  property  (whether  or not
confidential, proprietary, patented or patentable).

                  1.24  "KNOWLEDGE"  shall mean the good faith  understanding of
the  vice  presidents,  senior  vice  presidents,   executive  vice  presidents,
president or chief  executive  officer of the respective  party of the facts and
information  then  in  their   possession   without  any  duty  to  conduct  any
investigation with respect to such facts and information.

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                  1.25  "LICENSED  PROCESS" shall mean the  proprietary  lingual
spray  technology  for the  delivery  of  pharmaceutical  compounds  through the
mucosal  membrane  of the mouth  using an aerosol or pump spray  device  that is
under the  Control  of  NovaDel as of the  Effective  Date and any  Improvements
thereto that are  conceived  and reduced to practice by NovaDel in the course of
performing the Development Activities.

                  1.26   "LICENSED   PRODUCT(S)"   shall   mean  any  dosage  of
pharmaceutical  composition or preparation in finished form labeled and packaged
for  sale by  prescription,  over-the-counter  or any  other  method  for  human
applications that contains propofol delivered by means of the Licensed Process.

                  1.27 "LICENSED TECHNOLOGY" shall mean the NovaDel Patents, the
NovaDel Know-How and the Drug Master File,  collectively,  but only with respect
to the Exploitation of the Licensed Product.

                  1.28  "LICENSED  TRADEMARK"  shall mean those  Trademarks  set
forth  on  Exhibit  A  attached  hereto  and  such  other  Trademarks  as may be
designated by NovaDel in writing from time to time, and any registrations of the
foregoing and pending applications relating thereto.

                  1.29 "LICENSEE" shall mean Manhattan Pharmaceuticals,  Inc., a
Delaware corporation.

                  1.30  "LOSSES"  shall  have the  meaning  set forth in Section
10.1.

                  1.31 "MAJOR  MARKET  COUNTRY"  shall mean the United States of
America and the European Union.

                  1.32 "NDA" shall mean a New Drug Application filed pursuant to
the requirements of the FDA, as more fully defined in 21 C.F.R.ss.314.5 et seq.,
and any  equivalent  application  required by any  Regulatory  Authority for the
marketing, sale or use of the Licensed Product in the Territory.

                  1.33 "NET PROFITS" shall mean for any period, the gross amount
invoiced  by Licensee  and its  Affiliates  for the sale of Licensed  Product by
Licensee or any of its Affiliates to Third  Parties,  less  deductions  for: (a)
normal and customary  trade,  quantity and cash  discounts and sales returns and
allowances, including (i) those granted on account of price adjustments, billing
errors,  rejected goods, damaged goods, returns and rebates, (ii) administrative
and other fees and  reimbursements and similar payments to wholesalers and other
distributors,  buying groups, pharmacy benefit management organizations,  health
care insurance carriers and other  institutions,  (iii) allowances,  rebates and
fees paid to distributors and (iv) chargebacks;  (b) freight,  postage, shipping
and  insurance  expenses to the extent that such items are included in the gross
amount  invoiced;  (c) customs and excise duties and other duties related to the
sales to the extent that such items are included in the gross  amount  invoiced;
(d)  rebates  and similar  payments  made with  respect to sales paid for by any
governmental or regulatory  authority such as, by way of illustration and not in
limitation of the Parties' rights hereunder, Federal or state Medicaid, Medicare
or similar state program or equivalent foreign  governmental  program; (e) sales
and other  taxes and  duties  directly  related to the sale or  delivery  of the
Licensed  Product (but not including  taxes assessed  against the income derived
from such  sale);  (f)  distribution


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expenses  to the  extent  that such  items  are  included  in the  gross  amount
invoiced;  (g) any other similar and customary  deductions  that are  consistent
with United States generally accepted accounting  principles,  or in the case of
non-United States sales, other applicable  accounting  standards;  (h) insurance
costs; (i) employee salaries and other consultant and employee compensation; (j)
research and development  costs;  (k)  manufacturing  costs;  (l) sales expenses
(including  sales  commissions);  (m)  storage  of  Licensed  Product;  and  (n)
royalties  payable to third  parties.  Any of the  deductions  listed above that
involves a payment by Licensee or its  Affiliates  shall be taken as a deduction
in the  calendar  quarter in which the payment is accrued by such  eentity.  For
purposes of determining Net Sales, a Licensed Product shall be deemed to be sold
when invoiced and a "sale" shall not include transfers, uses or dispositions for
charitable,  promotional,  pre-clinical,  clinical,  regulatory or  governmental
purposes.  For  purposes of  calculating  Net  Profits,  sales  between or among
Licensee  or its  Affiliates  shall  be  excluded  from the  computation  of Net
Profits,  but sales by  Licensee or its  Affiliates  to Third  Parties  shall be
included in the computation of Net Profits.

                  1.34 "NET SALES" shall mean, for any period,  the gross amount
invoiced  by Licensee  and its  Affiliates  for the sale of Licensed  Product by
Licensee  or any  of its  Affiliates  to  Third  Parties,  less  deductions  for
chargebacks,  billing errors,  rejected goods, damaged goods and returns. Any of
the  deductions  listed  above  that  involves  a  payment  by  Licensee  or its
Affiliates  shall be taken as a deduction in the  calendar  quarter in which the
payment is accrued by such entity.  For  purposes of  determining  Net Sales,  a
Licensed Product shall be deemed to be sold when invoiced and a "sale" shall not
include transfers, uses or dispositions for promotional, pre-clinical, clinical,
regulatory or  governmental  purposes.  For purposes of  calculating  Net Sales,
sales  between or among  Licensee or its  Affiliates  shall be excluded from the
computation  of Net Sales,  but sales by  Licensee  or its  Affiliates  to Third
Parties shall be included in the computation of Net Sales.

                  1.35  "NOVADEL"  shall  have  the  meaning  set  forth  in the
preamble.

                  1.36  "NOVADEL   KNOW-HOW"  shall  mean  all  Information  and
Inventions  Controlled by NovaDel or an Affiliate of NovaDel as of the Effective
Date or, from time to time,  during the Term that (a) (i) are  necessary for the
use of the Licensed  Process to Exploit the  Licensed  Product or (ii) relate to
Improvements to the Licensed  Product that are conceived and reduced to practice
in the  course  of  performing  the  Development  Activities,  and  (b)  are not
generally  known,  but excluding any  Information  and  Inventions to the extent
claimed by any NovaDel Patents.

                  1.37  "NOVADEL  PATENTS"  shall mean the Patents  that NovaDel
Controls  (a) as of the  Effective  Date that are listed on Exhibit A hereto and
(b) from time to time during the Term that claim (i) the  Licensed  Process,  or
(b) any  Improvements to the Licensed  Product that are conceived and reduced to
practice in the course of performing the Development Activities.

                  1.38   "PATENTS"   shall  mean  (a)  all  patents  and  patent
applications;     (b)    any    substitutions,     divisions,     continuations,
continuations-in-part,   reissues,   renewals,   registrations,   confirmations,
re-examinations, extensions, supplementary protection certificates and the like,
and any provisional  applications,  of any such patents or patent  applications;
and (c) any international equivalent of any of the foregoing.



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                  1.39  "REGULATORY  APPROVAL"  shall mean any and all approvals
(including  pricing and  reimbursement  approvals),  licenses,  registrations or
authorizations  of any Regulatory  Authority,  necessary for the Exploitation of
the Licensed  Product in a country in the Territory,  including (a) any approval
of any Licensed Product (including any INDs, NDAs, and supplements or amendments
thereto);  (b) pre- and post-approval  marketing  authorizations  for a Licensed
Product  (including any  prerequisite  manufacturing  approval or  authorization
related  thereto);  (c)  labeling  approval  for a  Licensed  Product;  and  (d)
technical, medical and scientific licenses.

                  1.40   "REGULATORY   AUTHORITY"   shall  mean  any  applicable
supra-national,   federal,  national,   regional,  state,  provincial  or  local
regulatory  agencies,  departments,  bureaus,  commissions,  councils  or  other
government entities regulating or otherwise exercising authority with respect to
the Licensed Technology or the Licensed Product in the Territory.

                  1.41 "REGULATORY  DOCUMENTATION"  shall mean all applications,
registrations,  licenses, authorizations and approvals (including all Regulatory
Approvals),   all  correspondence  submitted  to  or  received  from  Regulatory
Authorities  (including  minutes and official  contact  reports  relating to any
communications with any Regulatory Authority),  all supporting documents and all
clinical  studies and tests,  relating  to any  Licensed  Product,  and all data
contained  in  any  of the  foregoing,  including  all  regulatory  drug  lists,
advertising and promotion documents, adverse event files and complaint files.

                  1.42 "SECONDARY  MARKET  COUNTRIES" shall mean Japan,  Canada,
Australia and South Africa.

                  1.43  "SUBLICENSEE"  shall  mean  any  Third  Party  to  which
Licensee grants a sublicense  pursuant to Section 2.5 under the licenses granted
to Licensee by NovaDel under Section 2.1.

                  1.44   "SUBLICENSING   FEES"   shall   mean  all   non-royalty
consideration  of any kind,  including any fees,  milestones  or other  payments
(whether  cash or  non-cash  (which  shall be  valued  at fair  market  value)),
received by Licensee or any of its Affiliates  from any  Sublicensee as a direct
or  indirect  result of the grant by Licensee  or any of its  Affiliates  to any
Sublicensee of a license under,  or the use by any such  Sublicensee  of, any of
the Licensed Technology or Licensed Trademarks,  in excess of the payments to be
paid pursuant to sections 4.4 and 4.5.

                  1.45  "TECHNOLOGY"  shall  have the  meaning  set forth in the
preamble.

                  1.46 "TERM" shall have the meaning set forth in Section 7.1.

                  1.47 "TERRITORY" shall mean the entire world.

                  1.48 "THIRD  PARTY" shall mean any Entity other than  NovaDel,
Licensee and their respective Affiliates.

                  1.49 "THIRD  PARTY  CLAIM" shall have the meaning set forth in
Section 10.3.2.



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                  1.50 "TRADEMARK" shall include any word, name, symbol,  color,
designation or device or any combination thereof, including any trademark, trade
dress, brand mark, trade name, brand name, logo or business symbol.

                  1.51 "VALID  CLAIM"  shall mean,  with respect to a particular
country,  a claim of a Patent in such  country  that (a) has not been revoked or
held unenforceable or invalid by a decision of a court or governmental agency of
competent  jurisdiction  from  which no  appeal  can be taken or has been  taken
within the time allowed for appeal, and (b) has not been abandoned,  disclaimed,
denied or admitted to be invalid or unenforceable  through reissue or disclaimer
or otherwise in such country.

                                    ARTICLE 2
                                 GRANT OF RIGHTS

                  2.1 LICENSE GRANTS TO LICENSEE.

                       2.1.1  Subject  to  Section  2.3 and the other  terms and
conditions  of this  Agreement,  NovaDel  hereby grants to Licensee and Licensee
accepts,  a non-transferable  (except as provided in Article 12),  sublicensable
(only as provided in Section 2.5), royalty-bearing,  worldwide,  exclusive right
and license under the Licensed Technology to Exploit the Licensed Product in the
Territory,  to the full end of the Term for which  the  Licensed  Technology  is
licensed, unless sooner terminated as herein after provided.

                       2.1.2  Subject  to  Section  2.3 and the other  terms and
conditions  of this  Agreement,  NovaDel  hereby grants to Licensee and Licensee
accepts,  a non-transferable  (except as provided in Article 13),  sublicensable
(only as  provided in Section  2.4),  royalty-bearing,  non-exclusive  right and
license  under  the  Licensed  Trademarks  for the sole  purpose  of using  such
Licensed Trademarks to market, distribute and sell the Licensed Product licensed
under Section 2.1.1 in the Territory,  to the full end of the Term for which the
Licensed Product are licensed, unless sooner terminated as hereinafter provided.

                  2.2  LICENSE  GRANT TO  NOVADEL.  Licensee  hereby  grants  to
NovaDel  a  limited,  royalty-free,  non-exclusive  right  and  license  in  the
Territory in and to the Licensed  Technology to the extent  necessary to perform
its Development Activities under Article 3.

                  2.3  RETAINED  RIGHTS.  NovaDel  retains all right,  title and
interest,  including the right to grant licenses to Third Parties, in and to the
Licensed Technology (other than for delivery of the Designated Compounds only as
expressly provided in Section 2.1.1) and the Licensed Trademarks (other than for
the  Exploitation  of Licensed  Product  only as  expressly  provided in Section
2.1.2).  Licensee shall have no rights,  express or implied, with respect to the
Licensed Technology or the Licensed Trademarks, except as expressly set forth in
Section  2.1, and  Licensee  covenants  to NovaDel  that none of  Licensee,  its
Affiliates  or  Sublicensees  shall use the  Licensed  Technology,  directly  or
indirectly,  for any purpose  other than for  administration  of the  Designated
Compounds  in  connection  with the  Exploitation  of Licensed  Product,  or the
Licensed  Trademarks,  directly or  indirectly,  for any purpose  other than the
marketing,  distribution and sale of Licensed Product hereunder.  Licensee shall
have  no  right  to  develop   Combination   Product   under   this   Agreement.
Notwithstanding anything in this Agreement to the



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contrary,  NovaDel does hereby retain the right to (a) enter into collaborations
or other  agreements  with,  and to grant  licenses  and other  rights under the
NovaDel  Patents  and  NovaDel  Know-How  to Third  Parties to Exploit  products
containing compounds other than the Designated Compounds and to use the Licensed
Process  in  connection  therewith,   and  (b)  independently  Exploit  products
containing compounds other than the Designated Compounds and to use the Licensed
Process in connection  therewith.  Notwithstanding any other provision contained
in this Agreement, NovaDel retains an irrevocable,  non-exclusive,  royalty-free
right to use the  Licensed  Technology  (including  the Licensed  Process)  with
respect to the Designated Compounds,  for its internal,  non-commercial research
and development activities.

                  2.4  SUBLICENSES.  Licensee  shall  have  the  right  to grant
sublicenses  under the  grants in Section  2.1 to Third  Parties  pursuant  to a
separate  written   agreement,   subject  to  the  following   requirements  and
conditions:

                       2.4.1  Licensee  must  obtain   NovaDel's  prior  written
consent in respect of each such sublicense,  such consent not to be unreasonably
withheld,  and any sublicense  agreement must be fully consistent with the terms
and conditions of this Agreement,  including Articles 3.10, 5, 6, 10, 11, 13 and
16, and provide that  Sublicensee  will indemnify  NovaDel and its Affiliates to
the extent provided in Article 10.

                       2.4.2  Within  five (5) days after  execution  or receipt
thereof, as applicable,  Licensee shall provide NovaDel with a full and complete
copy of each sublicense granted here

                       2.4.3  .under  and shall  deliver  copies of all  reports
(including  relating to royalties and other payments)  received by Licensee from
such Sublicensees.

                       2.4.4  Termination of this Agreement by NovaDel  pursuant
to Section  8.3 with  respect to Licensee  shall not  terminate  any  sublicense
granted by Licensee  pursuant to this Section 2.5 with respect to a Sublicensee,
provided  that (a) such  Sublicensee  is not in breach of any  provision of this
Agreement or the applicable  sublicense  agreement,  (b) such Sublicensee  shall
perform all obligations of Licensee under this Agreement, (c) NovaDel shall have
all rights with respect to any and all  Sublicensees  as it had  hereunder  with
respect to Licensee  prior to  termination  of this  Agreement  with  respect to
Licensee, (d) Licensee shall include in any sublicense a provision in which said
Sublicensee  acknowledges its obligations to NovaDel hereunder and the rights of
NovaDel to terminate this Agreement with respect to any Sublicensee for breaches
of this Agreement by such  Sublicensee.  The failure of Licensee to include in a
sublicense  the  provisions  referenced  in clause (d) shall render the affected
sublicense void ab initio.

                                   ARTICLE 3
                  DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES

                  3.1 DEVELOPMENT AND COMMERCIALIZATION. Licensee shall have the
sole right and obligation to develop and  commercialize  the Licensed Product in
the  Territory.  NovaDel shall  perform or cause to be  performed,  on behalf of
Licensee,  certain  Development  Activities in  accordance  with this Article 3.
Except as set forth herein,  Licensee shall be solely  responsible



                                     Page 8
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for  all  costs  and   expenses  in   connection   with  all   development   and
commercialization activities,  including the Development Activities performed by
NovaDel on behalf of Licensee.

                  3.2 DEVELOPMENT  ACTIVITIES.  NovaDel shall not be required to
commence any Development Activities until Licensee has paid at least twenty-five
percent (25%) of the non-refundable License Fee described in Section 4.4.

                       3.2.1 GENERAL. Under the direction and supervision of the
Development  Committee,  NovaDel and Licensee each shall perform, or cause to be
performed,   its  respective  Development  Activities  in  accordance  with  the
Development  Plan and Development  Budget.  Notwithstanding  the foregoing,  the
Parties  acknowledge  and  agree  that  there  can  be no  assurances  that  the
objectives of the  Development  Activities can be achieved,  or that they can be
achieved  in the  manner  or in the time  set  forth  in the  Development  Plan.
Although  outcomes  cannot be  guaranteed,  each  Party  shall use  Commercially
Reasonable   Efforts  to  perform  or  cause  to  be  performed  its  respective
Development  Activities in good scientific  manner,  and in material  compliance
with Applicable Law.

                       3.2.2  REPORTS.  Within thirty (30) days after the end of
each calendar quarter in which Development Activities are performed,  each Party
shall provide to the  Development  Committee a written  progress  report,  which
shall  describe the  Development  Activities  it has  performed,  or cause to be
performed, during such calendar quarter, evaluate the work performed in relation
to the goals of the Development Plan and in relation to the Development  Budget,
and provide such other information as may be required by the Development Plan or
reasonably   requested  by  the  Development   Committee  with  respect  to  the
Development Activities.

                  3.3 DEVELOPMENT  PLAN AND BUDGET.  The  development  plan (the
"Development  Plan") and the development  budget (the "Development  Budget") for
the Development Activities relating to propofol are attached hereto as Exhibit B
and  Exhibit  C,  respectively.  The  Development  Committee  shall  review  the
Development  Plans and the  Development  Budgets at least monthly and shall have
the right to make such  modifications  or  updates to the  Development  Plans or
Development Budgets that it deems appropriate. The Parties acknowledge and agree
that the amounts set forth in the  Development  Budgets are estimates and, given
the unpredictability of the Development  Activities,  there can be no assurances
that the Development Activities can be completed within the Development Budgets,
provided,  however, that the Parties agree to use their Commercially  Reasonable
Efforts to adhere to the Development Budgets.

                  3.4 DEVELOPMENT COMMITTEE.

                       3.4.1  FORMATION AND AUTHORITY OF DEVELOPMENT  COMMITTEE.
NovaDel and Licensee shall establish a development  committee (the  "Development
Committee"),  which shall oversee the  Development  Activities  performed by the
Parties,  review and approve the  Development  Budget and approve any changes to
the Development Plan and Development  Budget.  Each Party shall appoint an equal
number of representatives  with the requisite experience and seniority to enable
them to make decisions on behalf of the Parties with



                                     Page 9
<PAGE>

respect  to the  Development  Activities.  From  time to time,  each  Party  may
substitute its representatives on written notice to the other Party.

                       3.4.2  PROCEDURAL  RULES OF  DEVELOPMENT  COMMITTEE.  The
Development  Committee  shall meet  monthly,  or as  otherwise  agreed to by the
Parties.  The Development  Committee shall adopt such standing rules as shall be
necessary  for its  work.  A quorum of the  Development  Committee  shall  exist
whenever there is present at a meeting at least one representative  appointed by
each Party. Members of the Development  Committee may attend a meeting either in
person  or by  telephone,  video  conference  or  similar  means in  which  each
participant can hear what is said by the other  participants.  Representation by
proxy  shall not be  allowed.  The  Development  Committee  shall take action by
unanimous consent of NovaDel and Licensee,  with each such Party having a single
vote, irrespective of the number of representatives  actually in attendance at a
meeting, or by a written resolution signed by the designated  representatives of
each of NovaDel and Licensee.

                       3.4.3 DISPUTE  RESOLUTION.  If the Development  Committee
cannot,  or does not, reach agreement on an issue,  then either Party shall have
the right to refer such issue to the Chief Executive Officers of the Parties who
shall confer on the resolution of the issue. Any final decision  mutually agreed
to by the Chief Executive  Officers of the Parties shall be in writing and shall
be conclusive and binding on the Parties. If such officers are not able to agree
on the resolution of an issue within twenty (20) days after such issue was first
referred to them,  either  Party  shall have the right to refer such  dispute to
arbitration pursuant to Article 9.

                       3.4.4 LIMITATIONS ON AUTHORITY OF DEVELOPMENT  COMMITTEE.
Each Party to this  Agreement  shall retain the rights,  powers,  and discretion
granted to it under this Agreement,  and no such rights,  powers,  or discretion
shall be  delegated  to or  vested  in the  Development  Committee  unless  such
delegation or vesting of rights is expressly  provided for in this  Agreement or
the Parties expressly so agree in writing.  The Development  Committee shall not
have the power to amend or modify this  Agreement,  which may only be amended or
modified as provided in Section 16.4.

                  3.5 REGULATORY  APPROVALS.  All INDs,  NDAs and other filings,
applications  or  requests  pursuant  to or in  connection  with the  Regulatory
Approvals  required  under  the  Development  Plan  shall be made in the name of
Licensee or its  designee,  unless  Applicable  Law  requires  that a Regulatory
Approval be solely or jointly in the name of NovaDel or its Affiliates, in which
case  NovaDel  hereby  assigns  and shall  cause its  Affiliates  to assign,  as
applicable,  such  Regulatory  Approval to Licensee to the extent  permitted  by
Applicable  Law;  provided,  however,  that  NovaDel  shall  have  a  perpetual,
irrevocable,  worldwide right to use and reference the Regulatory  Documentation
with respect to the Licensed Product and any data included or referenced therein
for all purposes.  NovaDel,  with prior notice to the  Licensee,  shall have the
right  to  communicate  with  the  Regulatory  Authorities  with  regard  to the
Development Activities.  Licensee agrees that the Drug Master File ("DMF") shall
be owned by NovaDel,  provided that Licensee shall have unlimited  access to the
DMF for purposes of any Regulatory  Filings  relating to each Licensed  Product.
Licencee  agrees to request  that the DMF be treated  as  confidential.  NovaDel
agrees to keep the Licensee  reasonably  informed as to the  communications,  if
any, between NovaDel and the Regulatory Authorities.



                                    Page 10
<PAGE>

                  3.6  REGULATORY  RECORDS.  NovaDel  and  Licensee  each  shall
maintain,  or cause to be  maintained,  records  of its  respective  Development
Activities in sufficient  detail and in good scientific  manner  appropriate for
patent and regulatory  purposes,  which shall be complete and accurate and shall
fully and properly reflect all work done and results achieved in the performance
of its respective  Development  Activities,  and which shall be retained by such
Party for at least five (5) years after the  termination of this  Agreement,  or
for such longer  period as may be required by  Applicable  Law. Each Party shall
have the right,  during normal  business hours and upon  reasonable  notice,  to
inspect and copy any such records.

                  3.7 DEVELOPMENT EXPENSES.

                       3.7.1   LICENSEE'S   OBLIGATION.   In   consideration  of
NovaDel's  performance of its Development  Activities,  Licensee shall reimburse
NovaDel for the reasonable and documented costs and expenses incurred by NovaDel
in performing such activities in accordance with the Development  Budget (as may
be amended in accordance  with Section 3.3).  Licensee  shall bear all costs and
expenses incurred by or on behalf of Licensee in connection with the performance
of its Development Activities.

                       3.7.2  INVOICES  AND  PAYMENTS.  Within  thirty (30) days
after  the end of each  month in which  Development  Activities  are  performed,
NovaDel shall invoice Licensee for any costs and expenses incurred by NovaDel or
its  Affiliates in such month.  Each invoice shall be payable to NovaDel  within
thirty (30) days after receipt by Licensee of such invoice.

                       3.7.3  BOOKS  AND  RECORDS.  Each  party  shall  maintain
complete and accurate  books,  records and accounts that, in reasonable  detail,
fairly  reflect  any  reimbursable  costs  and  expenses  incurred  by it or its
Affiliates in  performance  of the  Development  Activities  in conformity  with
Generally Accepted Accounting Principles ("GAAP").  Each party shall retain such
books, records and accounts until the later of (a) three (3) years after the end
of the period to which such books,  records and  accounts  pertain,  and (b) the
expiration  of the  applicable  tax statute of  limitations  (or any  extensions
thereof),  or for such longer period as may be required by Applicable  Law. Each
party shall have the right to have its certified public accountant, who shall be
reasonably  acceptable to NovaDel,  audit the books and financial records of the
other  party  and  their  respective  Affiliates  relating  to  its  Development
Activities  during  one or  more  calendar  quarters;  provided,  however,  that
Licensee shall not have the right to audit a calendar  quarter more than two (2)
years after the end of such quarter,  to conduct more than one such audit in any
twelve-month  period,  or to audit any  calendar  quarter  more than  once;  and
provided  further  that each party shall bear the cost of such audit  unless the
audit  reveals  a  variance  of more than five  percent  (5%) from the  reported
results,  in which case  audited  party  shall  bear the cost of the audit.  The
results of such accounting firm shall be final, absent manifest error.

                  3.8  COOPERATION.  Each Party shall cooperate with any and all
reasonable  requests  for  assistance  from the other Party with  respect to the
Development Activities, including by making its employees, consultants and other
scientific  staff available upon reasonable  notice during normal business hours
at their  respective  places of  employment  to consult with such other Party on
issues  arising  in  connection  with  the   performance  of  such   Development
Activities.



                                    Page 11
<PAGE>

                  3.9 DEVELOPMENT AND USE OF TRADEMARKS. Licensee shall have the
sole  right  to  determine  the  Trademarks  to be  used  with  respect  to  the
Exploitation  of the Licensed  Product on a worldwide  basis,  provided that the
product  labeling and promotional  materials  disclose that the Licensed Product
are delivered using the Licensed Process and include the Licensed Trademarks.

                  3.10 DILIGENCE  OBLIGATIONS.  Licensee shall use  Commercially
Reasonable  Efforts to (a) develop and commercialize the Licensed Product in the
entire  Territory in accordance with the terms and conditions of this Agreement;
(b) obtain  Regulatory  Approval(s)  with respect to the Licensed Product in the
Territory;  and (c) thereafter  diligently and aggressively Exploit the Licensed
Product in the  Territory  to maximize  sales.  Licensee  shall  ensure that any
Sublicense  be  terminable  at the  option of the  Licensee  in the event that a
Sublicensee  fails to maintain active,  diligent  marketing efforts for Licensed
Product.

                  3.11 MANUFACTURING.

                       3.11.1   Subject  to  section   3.11.4,   NovaDel   shall
manufacture and supply Licensee with Licensed Product on commercially reasonable
terms  for  clinical   development  of  the  Licensed   Product  pursuant  to  a
manufacturing  agreement  (the  "Manufacturing  Agreement")  to be entered  into
following execution of this Agreement.

                       3.11.2 Subject to section  3.11.4,  following  receipt of
Regulatory Approval, NovaDel shall manufacture and supply Licensee with Licensed
Product  on  commercially   reasonable  terms  pursuant  to  the   Manufacturing
Agreement.

                       3.11.3  NovaDel  agrees  that,  at all times  during  the
performance of the  Development  Activities,  it will act in accordance with GMP
and all applicable laws, rules and regulations.

                       3.11.4 The  manufacturing  agreement  will provide  among
other  things that in the event that  Licensee  enters into a  Sublicense  for a
Licensed  Product and such  Sublicensee  desires to obtain rights to manufacture
such Licensed Product,  then NovaDel will not unreasonably  withhold its consent
to transfer the manufacturing rights to such Sublicensee, provided that measures
are incorporated  into the  sublicensing  agreement to continue to safeguard the
confidentiality  of NovaDel Know-how and technology with respect to the Licensed
Product as set forth in section 3.11.5

                       3.11.5 It is the intent of the  Parties  that  NovaDel be
the exclusive  manufacturer of the Licensed Product pursuant to the terms of the
Manufacturing  Agreement;  provided,  however, that in the event that NovaDel is
unable or unwilling to provide clinical or commercial supply of Licensed Product
within a reasonable  period of time upon  commercially  reasonable  terms,  then
Licensee  shall be  entitled to seek  alternate  manufacturing  source.  In such
event,  Licensee shall use  commercially  reasonable  efforts to ensure that any
such  alternate   manufacturing  source  agree  (a)  to  maintain  in  strictest
confidence all information  relating to the manufacture of the
Licensed Product and the Licensed  Technology,  (b) not to file any intellectual
property  protection  relating to inventions that may arise from the manufacture
of the



                                    Page 12
<PAGE>

Licensed Product and Licensed  Technology,  and (c) that any intellectual
property  that does arise out of the  manufacture  of the  Licensed  Product and
Licensed Technology belong to NovaDel.

                                    ARTICLE 4
                        ROYALTIES AND OTHER CONSIDERATION

                  4.1  ROYALTIES.  As  partial  consideration  for  the  rights,
privileges  and  licenses  granted  hereunder  and  the  Development  Activities
performed by Licensor  pursuant to Article 3, Licensee  shall make the following
payments to NovaDel:

                       4.1.1  Licensee  shall  pay to  NovaDel  royalties  in an
amount equal to the greater of (i) *** percent (***%) of worldwide aggregate Net
Sales by Licensee or any Affiliate of Licensee of each Licensed  Product  during
each calendar year and (ii) *** percent (***%) of worldwide aggregate Net Profit
by Licensee or any  Affiliate of Licensee of each Licensed  Product  during each
calendar year.

                       4.1.2  Licensee  shall  pay to  NovaDel  (1) ***  percent
(***%) of all royalties  received by Licensee or its Affiliate from sales by any
Sublicensee of Licensed Product until such time as Licensee has recovered all of
its out-of-pocket costs incurred directly in connection with the development and
commercialization of the Licensed Product, and thereafter (2) *** percent (***%)
of all  royalties  received  by  Licensee  or its  Affiliate  from  sales by any
Sublicensee of Licensed Product;

                       4.1.3  Licensee  shall  pay to  NovaDel  (1) ***  percent
(***%) of all Sublicensing Fees until such time as Licensee has recovered all of
its out-of-pocket costs incurred directly in connection with the development and
commercialization of the Licensed Product, and thereafter (2) *** percent (***%)
of all Sublicensing Fees.

                  4.2 ROYALTY TERM. Licensee's royalty obligations under Section
4.1  shall  terminate,  on a  country-by-country  basis,  with  respect  to each
Licensed  Product upon the expiration date in such country of the last to expire
of any issued NovaDel Patent that includes at least one Valid Claim covering the
sale of such Licensed  Product in such country.  Upon termination of the royalty
obligations under this Section 4.2 in a country,  the license grants to Licensee
in Section 2.1 shall be reduced in accordance with terms in Section 4.6.

                  4.3 ROYALTY PAYMENTS.  Royalties under Section 4.1.1 and Other
Income under 4.1.2(a) shall be payable to NovaDel on a quarterly  basis,  within
forty-five (45) days after the end of each calendar quarter; provided,  however,
at the end of a calendar year Licensee  shall  determine the actual amounts owed
to NovaDel under Section  4.1.2 and any  additional  amounts owed to NovaDel for
the first three  calendar  quarters of such calendar year shall be paid with the
royalty  payment  for the last  calendar  quarter  of such  calendar  year,  and
provided  further  in the  event  that  Licensee's  payments  for such  calendar
quarters exceed the actual royalties owed for such calendar  quarters,  Licensee
shall have the right to offset such excess payments  against the royalty payment
for the last calendar  quarter of such calendar year.  Only one royalty  payment
will be due on Net Sales of the Licensed  Product  even though the  manufacture,
sale  or  use of  such  Licensed  Product  may  be  covered  by  more  than  one
intellectual property right in a country.



                                    Page 13
<PAGE>

                  4.4 LICENSEE  FEE.  Licensee  shall pay to NovaDel $500,000 as
an  up-front  licensing  fee for the  Designated  Compound,  payable  in cash as
follows:

                       4.4.1 $250,000 within 10 Business  Days of the first date
on which the Licensee has received an aggregate of $5,000,000  through an equity
financing or otherwise  (including  receipt of any  milestone  payments or other
revenues); and

                       4.4.2 $250,000 within 10 Business  Days of the first date
on which the Licensee has received an aggregate of $10,000,000 through an equity
financing or otherwise  (including  receipt of any  milestone  payments or other
revenues).

                  4.5 MILESTONE PAYMENTS. Licensee shall also pay to NovaDel the
following Milestone Payments:

                       4.5.1 $1,000,000 within five (5)  Business  Days from the
date on which the  Company's  first filed NDA is accepted  for review by the FDA
for a Licensed Product; and

                       4.5.2 $1,000,000 within five (5)  Business  Days from the
date on which the Company's  first filed European  Marketing  Application  for a
Licensed Product in any country within the European Union is accepted for review
by the appropriate Regulatory Authority; and

                       4.5.3 $2,000,000 within five (5)  Business  Days from the
date on which the Company's  first filed NDA for a Licensed  Product is approved
by the FDA; and

                       4.5.4 $2,000,000 within five (5)  Business  Days from the
date on which the Company's  first filed European  Marketing  Application  for a
Licensed Product in any country within the European Union is accepted for review
by the appropriate Regulatory Authority; and

                       4.5.5 $1,000,000 within five (5)  Business  Days from the
date on which the application for commercial  approval for the Licensed  Product
with the appropriate  Regulatory  Authority is approved in each Secondary Market
Country

                       4.5.6 $50,000 within five (5)  Business  Days from the
date on which the Company's  application  for regulatory  approval of a Licensed
Product is approved by the appropriate Regulatory Authority in any country other
than Major Market Countries or Secondary Market Countries.

                  4.6  REDUCTION  OF  PAYMENTS.  In the event that,  or from and
after  the date on which,  (a) no Valid  Claim of a NovaDel  Patent  covering  a
Licensed  Product  exists in a country and (b) no  regulatory  exclusivity  with
respect to such Licensed  Product exists in such country (whether as a result of
expiration of the exclusivity  period or otherwise),  (i) the milestone payments
set forth in Section 4.5 with respect to such Licensed Product, if any, and (ii)
the royalty rate payable to NovaDel by Licensee  under  Section 4.1 with respect
to sales of such  Licensed  Product  in such  country,  each shall be reduced by
seventy-five percent (75%).

                  4.7 MODE OF  PAYMENT.  All  payments  to  NovaDel  under  this
Agreement shall be paid in United States Dollars to a bank account in the United
States  as  NovaDel  may  reasonably  designate.  Any  withholding  taxes  which
Licensee, its Affiliates or any Sublicensee



                                    Page 14
<PAGE>

shall be required by  applicable  law to withhold on  remittance of the payments
shall be deducted  from such payment to NovaDel and remitted to the  appropriate
Regulatory Authority. Licensee shall furnish NovaDel with the original copies of
all  official  receipts  for such taxes.  If any  currency  conversion  shall be
required in connection with the payments  hereunder,  such  conversion  shall be
made by using the average of the exchange rates prevailing at Citibank,  N.A. in
New York,  New York on the first  business  day of each  month in the  reporting
period to which such payments relate.

                  4.8  NON-REFUNDABLE,   NON-CREDITABLE.  The  amounts  paid  or
payable under this Article 4 shall be non-refundable and non-creditable  against
any other amounts due NovaDel under this Agreement.

                                    ARTICLE 5
                               REPORTS AND RECORDS

                  5.1  RECORD  RETENTION.  Licensee  shall  maintain  (and shall
ensure  that its  Affiliates  and  Sublicensees  shall  maintain)  complete  and
accurate  books,  records and accounts that fairly reflect their  respective Net
Sales,  Other Income and any milestones payable with respect to Licensed Product
in sufficient detail to confirm the accuracy of any payments required  hereunder
and in accordance with GAAP, which books, records and accounts shall be retained
by  Licensee  until the later of (a) three (3) years after the end of the period
to which such books, records and accounts pertain, and (b) the expiration of the
applicable tax statute of limitations (or any extensions  thereof),  or for such
longer period as may be required by Applicable Law.

                  5.2 AUDIT. NovaDel shall have the right to have an independent
certified public accounting firm of nationally  recognized standing,  reasonably
acceptable to Licensee,  to have access during normal business  hours,  and upon
reasonable  prior  written  notice,  to such of the records of Licensee (and its
Affiliates  and  Sublicensees)  as may be  reasonably  necessary  to verify  the
accuracy  of such Net Sales,  Milestone  Payments or  Sublicense  Income for any
calendar  quarter ending not more than  thirty-six (36) months prior to the date
of such  request;  provided,  however,  that NovaDel shall not have the right to
conduct more than one such audit in any twelve (12)-month period. The accounting
firm shall  disclose  to each Party  whether  such Net  Sales,  Other  Income or
milestone  payments are correct or incorrect and the specific details concerning
any  discrepancies.  NovaDel  shall bear the cost of such audit unless the audit
reveals  an  under-reporting  or  underpayment  in excess of the  greater of one
hundred thousand dollars ($100,000) or two percent (2%) of royalties,  Milestone
Payments or Sublicense  Income  payable for such period,  in which case Licensee
shall bear the cost of the audit,  rectify  such  underpayment  and pay  NovaDel
applicable interest as required by Section 5.5. All payments required under this
Section 5.2 shall be due within  thirty (30) days of the date  NovaDel  provides
Licensee notice of the payment due. The results of such accounting firm shall be
final, absent manifest error.

                  5.3  REPORTS.  Within  thirty  (30)  days  of the  end of each
quarter of each calendar year,  Licensee  shall deliver to NovaDel  complete and
accurate reports,  giving such particulars of the business conducted by Licensee
during the preceding  quarter  under this



                                    Page 15
<PAGE>

Agreement  as shall be  pertinent  to an  accounting  for  royalties,  milestone
payments and Other Income hereunder. These shall include at least the following:

                       5.3.1 All Licensed  Product  used,  leased or sold, by or
for Licensee or its Affiliates.

                       5.3.2 Total amounts  invoiced for Licensed  Product used,
leased or sold, by or for Licensee or its Affiliates.

                       5.3.3  Deductions  applicable  in computed "Net Sales" as
defined in Section 1.33.

                       5.3.4 Total  milestone  payments due based on achievement
of milestones.

                       5.3.5 Total Sublicensing  Income owed by License from its
Sublicensees.

                       5.3.6  Total  royalties  due based on Net Sales by or for
Licensee or its Affiliates  and  Sublicensing  Income owed by its  Sublicensees,
including any adjustments pursuant to Section 4.3.

                       5.3.7  Names  and  addresses  of  all   Sublicensees  and
Affiliates of Licensee.

                  5.4 FINANCIAL STATEMENTS. Within one hundred twenty (120) days
of the end of each fiscal year of Licensee,  Licensee shall provide NovaDel with
a copy of Licensee's audited financial statements for such year to NovaDel.

                  5.5  INTEREST.  Amounts  which are not paid when due and which
are not the subject of a bona fide dispute  shall accrue  interest  from the due
date until paid, at a rate equal to the then prevailing  prime rate of Citibank,
N.A., plus six percent (6%), but in no event  exceeding the amount  permitted by
applicable law.

                  5.6 CONFIDENTIALITY.  Each report received by NovaDel shall be
treated by NovaDel as if it were "Confidential Information" subject to the terms
of Article 16.

                                    ARTICLE 6
                              PATENT AND TRADEMARK
                           PROSECUTION AND MAINTENANCE

                  6.1  OWNERSHIP  OF  INFORMATION  AND  INVENTIONS.  Subject  to
Section 6.2 and the license grants under Article 2, as between the Parties, each
Party shall own and retain all right,  title and interest in and to any and all:
(a)  Information  and Inventions  that are conceived,  discovered,  developed or
otherwise  made  by or on  behalf  of  such  Party  (or  its  Affiliates  or its
Sublicensees  (other than the other Party and its  Affiliates)),  whether or not
patented or patentable,  and any and all Patent and other intellectual  property
rights with respect  thereto;  and (b) other  Information  and  Inventions,  and
Patent and other  intellectual  property rights that are Controlled  (other than
pursuant  to the  license  grants  set forth in Article  2) by such  Party,  its


                                    Page 16
<PAGE>

Affiliates  or  Sublicensees  (other than the other  Party and its  Affiliates).
Subject to the  license  grants to  Licensee  under  Article  2, as between  the
Parties,  NovaDel  shall own and retain all right,  title and interest in and to
all Licensed Technology.

                  6.2 OWNERSHIP OF THE LICENSED PROCESS.  Subject to the license
grants to Licensee  under  Article 2, as between the Parties,  NovaDel shall own
and  retain  all  right,  title and  interest  in and to the  Licensed  Process,
including any and all  Information  and Inventions  with respect to the Licensed
Process  (including any  Improvements  thereto) that are conceived,  discovered,
developed or otherwise  made,  by or on behalf of Licensee,  its  Affiliates  or
Sublicensees (other than NovaDel and its Affiliates), whether or not patented or
patentable,  and any and all Patent and other intellectual  property rights with
respect thereto.  Licensee acknowledges and agrees that (a) the licenses granted
to it pursuant to Section 2.1 permit Licensee to use the Licensed Process solely
for the  Exploitation  of Licensed  Product as provided in this  Agreement,  (b)
Licensee  has no right to use the Licensed  Process or to  discover,  develop or
otherwise  make  Improvements  with respect to the Licensed  Process  under such
grants,  and (c) neither it, nor any of its  Affiliates  or  Sublicensees,  will
engage,  directly  or  indirectly,  in  activities  designed  to,  or  otherwise
undertake  or  attempt,  either on behalf of  itself or  another,  to  discover,
develop or make any  Information  and  Inventions  that  relate to the  Licensed
Process.  Accordingly,  Licensee shall promptly  disclose to NovaDel in writing,
the conception or reduction to practice, or the discovery, development or making
of any such  Information and Inventions that relate to the Licensed  Process and
shall, and does hereby,  assign, and shall cause its Affiliates and Sublicensees
to so  assign,  to  NovaDel,  without  additional  compensation,  all  of  their
respective  rights,  titles and  interests  in and to any such  Information  and
Inventions.

                  6.3 OWNERSHIP OF JOINT TECHNOLOGY.  Subject to Section 6.2 and
the  license  grants  under  Article  2, the  Parties  shall  each own an equal,
undivided  interest  in and to any  and  all  (a)  Information  and  Inventions,
conceived,  discovered,  developed or otherwise made, jointly by or on behalf of
NovaDel (or its Affiliates or its  sublicensees),  on the one hand, and Licensee
(or its Affiliates or  Sublicensees),  on the other hand, in connection with the
work  conducted  under or in  connection  with this  Agreement,  whether  or not
patented  or  patentable;  and (b)  Patents  (the  "Joint  Patents")  and  other
intellectual  property  rights with respect  thereto  (collectively,  the "Joint
Technology").  Each Party shall promptly disclose to the other Party in writing,
and shall cause its Affiliates,  licensees and sublicensees to so disclose,  the
development,   making,   conception  or  reduction  to  practice  of  any  Joint
Technology.

                  6.4 OWNERSHIP OF LICENSED  TRADEMARKS.  Subject to the license
grants under Article 2, as between the Parties, NovaDel shall own and retain all
right,  title and interest in and to the Licensed  Trademarks.  Licensee  hereby
acknowledges  and affirms (a) that to the best of its  knowledge,  the  Licensed
Trademarks and the  registrations  thereof are valid and (b) that NovaDel or its
Affiliates,  as the case may be,  are the  owners  of all right and title to and
interest in the Licensed Trademarks and the registrations thereof, including any
form or embodiment thereof,  and the goodwill now and hereafter  associated with
the  Licensed  Trademarks.  Licensee  (on its own  behalf  and on  behalf of its
Affiliates)  expressly  disclaims  any  right  or title  to or  interest  in the
Licensed  Trademarks  and the  registrations  thereof,  except  for the  license
granted in Section 2.1.2.  Licensee  hereby agrees and  undertakes  that it will
not, and it will cause its  Affiliates  not to,  contest or dispute the validity
of, or the rights of NovaDel and its Affiliates,  as the case may be, in and to,
the Licensed Trademarks,  or any part thereof, or the registrations thereof, nor




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knowingly  impair or endanger  the  validity of any of the  foregoing.  Licensee
acknowledges that all use of the Licensed Trademarks by or on behalf of Licensee
or its Affiliates shall inure to the benefit of NovaDel and its Affiliates. Upon
termination of the license granted in Section 2.1.2, Licensee and its Affiliates
shall not be entitled to any  compensation  for any increase in the value of the
Licensed Trademarks or for any goodwill associated  therewith.  If so requested,
Licensee  shall,  and shall  cause its  Affiliates  to,  assist  NovaDel and its
Affiliates  to  safeguard  their full  right,  title and  interest in and to the
Licensed Trademarks and the registrations thereof.

                  6.5  UNITED   STATES  LAW.   The   determination   of  whether
Information  and Inventions are  conceived,  discovered,  developed or otherwise
made by a Party for the  purpose of  allocating  proprietary  rights  (including
Patent,  copyright or other  intellectual  property rights) therein,  shall, for
purposes of this Agreement,  be made in accordance with applicable United States
law.

                  6.6 PROSECUTION OF PATENTS AND TRADEMARKS.

                       6.6.1  PROSECUTION OF NOVADEL PATENTS AND TRADEMARKS.  As
between the Parties, NovaDel shall have the sole right, at its cost and expense,
to obtain,  prosecute and maintain  throughout the world the NovaDel Patents and
Licensed Trademarks;  provided,  however,  that Licensee shall reimburse NovaDel
for one hundred percent (100%) of the reasonable out-of-pocket costs incurred by
NovaDel for filing,  prosecuting  and  maintaining  such NovaDel  Patents to the
extent that they claim or cover solely the Exploitation of the Licensed Product.
Licensee shall, and shall cause its Affiliates and Sublicensees,  as applicable,
to, cooperate fully with NovaDel in the preparation,  filing,  prosecution,  and
maintenance  of  NovaDel's  Patents.  Such  cooperation  includes  (a)  promptly
executing all papers and  instruments  and  requiring  employees to execute such
papers and  instruments as reasonable and appropriate so as to enable NovaDel to
file,  prosecute,  and  maintain  its Patents in any  country;  and (b) promptly
informing   NovaDel  of  matters  that  may  affect  the  preparation,   filing,
prosecution,  or maintenance of any such Patents. NovaDel shall provide Licensee
with drafts of all patent  applications  and other  material  submissions to and
correspondence  with any patent  authorities to the extent such  applications or
submissions relate to the Licensed Technology (other than the Licensed Process),
in sufficient time, but in any event not less than thirty (30) days prior to the
date a reply is required by the relevant patent authorities, to allow for review
and comment by Licensee.  In addition,  NovaDel shall  provide  Licensee with an
opportunity  to consult  with NovaDel  regarding  the filing and contents of any
such application,  submission or correspondence. If Licensee provides to NovaDel
comments with respect to any such application,  submission or correspondence, to
the extent  such  comments  relate to any  Licensed  Technology  (other than the
Licensed Process), NovaDel agrees to reasonably consider such comments, it being
understood that NovaDel retains the right to determine whether to comply with or
incorporate  such  comments,  if at all. If (x) NovaDel elects not to pursue the
filing,  prosecution or maintenance of a NovaDel Patent in a particular country,
or to take any other  action with  respect to a NovaDel  Patent in a  particular
country that is necessary or useful to establish or preserve rights with respect
to the  Licensed  Product,  and (y)  such  Patent  does not  claim or cover  the
Licensed Process,  then NovaDel shall so notify Licensee promptly in writing and
in good time to enable Licensee to meet any deadlines by which an action must be
taken to establish  or preserve  any such rights in such NovaDel  Patent in such
country.  Upon receipt of any such notice by NovaDel or if, at any time, NovaDel
fails to  initiate  any such action  within



                                    Page 18
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thirty  (30) days  after a request  by  Licensee  that it do so (and  thereafter
diligently  pursue  such  action),  Licensee  shall have the right,  but not the
obligation,  to pursue the filing or  registration,  or  support  the  continued
prosecution  or  maintenance,  of such  NovaDel  Patent at its  expense  in such
country.  If Licensee elects to pursue such filing or registration,  as the case
may be, or continue such support,  then  Licensee  shall notify  NovaDel of such
election and NovaDel  shall,  and shall cause its  Affiliates to, (x) reasonably
cooperate  with  Licensee in this regard,  and (y)  promptly  grant to Licensee,
without  additional  consideration,   an  exclusive,   perpetual,   irrevocable,
royalty-free license in such country under such NovaDel Patent.

                       6.6.2 JOINT  PATENTS.  The Parties shall  cooperate,  and
shall cause their  respective  Affiliates and  Sublicensees,  as applicable,  to
cooperate,  with  one  another  with  respect  to the  filing,  prosecution  and
maintenance  of all Joint  Patents,  including  by  selecting  outside  counsel,
reasonably  acceptable to the Parties,  to handle such filing,  prosecution  and
maintenance. The Parties shall share equally in the expenses associated with the
filing,  prosecution  (including  any  interferences,  reissue  proceedings  and
reexaminations)  and maintenance of all Joint Patents.  If a Party elects not to
pursue the filing,  prosecution or maintenance of a Joint Patent in a particular
country,  or to take any other  action  with  respect to Joint  Technology  in a
particular  country  that is  necessary  or  reasonably  useful to  establish or
preserve rights  thereto,  then in each such case such Party shall so notify the
other  Party  promptly in writing and in good time to enable such other Party to
meet any deadlines by which an action must be taken to establish or preserve any
such rights in such Joint Technology in such country.  Upon receipt of each such
notice by such other Party or if, at any time,  such Party fails to initiate any
such action  within thirty (30) days after a request by such other Party that it
do so (or thereafter diligently pursue such action), such other Party shall have
the right,  but not the  obligation,  to pursue the filing or  registration,  or
support the continued prosecution or maintenance,  of such Patent at its expense
in  such  country.  If  such  other  Party  elects  to  pursue  such  filing  or
registration,  as the case may be, or  continue  such  support,  then such other
Party shall notify such Party of such  election and such Party shall,  and shall
cause its  Affiliates,  licensees  and  sublicensees,  as  applicable,  to,  (x)
reasonably  cooperate  with such other Party in this  regard,  and (y)  promptly
release or assign to such other Party,  without  compensation,  all right, title
and interest in and to such Patent in such country.

                  6.7 ENFORCEMENT OF PATENTS AND TRADEMARKS.

                       6.7.1  TECHNOLOGY  AND  TRADEMARKS OF NOVADEL.  If either
Party  determines  that any  Technology  or  Trademark  of  NovaDel or any Joint
Technology  is being  infringed  by a Third  Party's  activities  and that  such
infringement could affect the exercise by the Parties of their respective rights
and obligations under this Agreement,  it shall promptly notify such other Party
in writing and provide such other Party with any  evidence of such  infringement
that is reasonably available. Promptly after the receipt of such written notice,
the  Parties  shall  meet  and  discuss  in  good  faith  the  removal  of  such
infringement.  NovaDel  shall  consider in good faith any comments from Licensee
and shall keep  Licensee  reasonably  informed of any steps taken to remove such
infringement.  NovaDel shall have the first right,  but not the  obligation,  to
remove such infringement at its sole cost and expense;  provided,  however, that
Licensee  shall  reimburse  NovaDel  for  one  hundred  percent  (100%)  of  the
reasonable  out-of-pocket  costs incurred by NovaDel with respect to the removal
of any such infringement to the extent that such infringement  adversely affects
the Exploitation of the Licensed Product. In the



                                    Page 19
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event that  NovaDel  fails  within  ninety  (90) days  following  notice of such
infringement, or earlier notifies Licensee in writing of its intent not, to take
commercially appropriate steps to remove any infringement of any NovaDel Patent,
Joint  Patent or Licensed  Trademark  that is likely to have a material  adverse
effect on the sale of a Licensed Product, Licensee shall have the right to do so
at  Licensee's  expense;  provided,  however,  that  if  NovaDel  has  commenced
negotiations with an alleged  infringer for  discontinuance of such infringement
within such ninety (90) day period, NovaDel shall have an additional ninety (90)
days to  conclude  its  negotiations  before  Licensee  may bring  suit for such
infringement,  and  provided  further  that  Licensee  shall not enter  into any
settlement or  compromise  with respect to any NovaDel  Patent,  Joint Patent or
Licensed  Trademark without NovaDel's prior consent,  which consent shall not be
unreasonably  withheld.  Each Party shall provide  reasonable  assistance to the
other  Party,  including  providing  access  to  relevant  documents  and  other
evidence,  making its employees  available at  reasonable  business  hours,  and
joining  the  action to the extent  necessary  to allow the  enforcing  Party to
maintain the action.  Any amounts recovered by a Party pursuant to this Section,
whether by  settlement  or judgment,  shall be used to reimburse the Parties for
their reasonable costs and expenses in making such recovery (which amounts shall
be allocated pro rata if  insufficient  to cover the totality of such expenses),
with any  remainder  being  retained by the Party that  brought the  enforcement
action; provided,  however, that to the extent that any award is attributable to
the loss of sales of Licensed Product, such amount shall be paid to Licensee and
shall be treated as Net Sales on which royalties shall be due under Article 4.

                  6.8 POTENTIAL THIRD PARTY RIGHTS.

                       6.8.1  THIRD-PARTY  LICENSES.  If (a) in the  opinion  of
outside  patent  counsel to  Licensee,  Licensee,  or any of its  Affiliates  or
Sublicensees,  cannot  Exploit a Licensed  Product in a country in the Territory
without infringing one or more Patents that have issued to a Third Party in such
country,  or (b) as a result of any claim  made  against a Party,  or any of its
Affiliates or Sublicensees, alleging that the Exploitation of a Licensed Product
infringes or misappropriates any Patent or any other intellectual property right
of a Third Party in a country in the Territory, a judgment is entered by a court
of  competent  jurisdiction  from  which  no  appeal  is taken  within  the time
permitted for appeal, such that Licensee cannot Exploit such Licensed Product in
such country without  infringing the Patent or other proprietary  rights of such
Third Party, then, in either case,  Licensee shall have the first right, but not
the  obligation  to  negotiate  and to obtain a license from such Third Party as
necessary  for  the  Exploitation  of any  Licensed  Product  hereunder  in such
country;  provided,  however, that NovaDel shall have the sole right to seek any
such license with  respect to the  Licensed  Process and shall use  commercially
reasonable  efforts  to obtain  such a license  in its own name from such  Third
Party in such country,  under which  NovaDel  shall,  to the extent  permissible
under such  license,  grant a sublicense  to Licensee as necessary for Licensee,
and any of its Affiliates and  Sublicensees,  to Exploit the Licensed Product as
provided hereunder in such country. Licensee shall be solely responsible for one
hundred percent (100%) of all royalty and other  obligations with respect to the
Exploitation of the Licensed  Product;  provided,  however,  that Licensee shall
have the right to credit fifty percent (50%) any royalties paid by Licensee, its
Affiliates  or  Sublicensees  under such  license  with  respect to such country
against the royalty  payments to be paid by Licensee to NovaDel  with respect to
the sale of the Licensed Product(s) under Section 4.1; provided,  however,  that
no  royalty  payment  when due,  regardless  of the  amount or number of credits
available to Licensee in  accordance  with this  Agreement,  shall be reduced by
more than fifty



                                    Page 20
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percent  (50%) of the  amounts  otherwise  owed  pursuant  to Section 4.1 in any
calendar  quarter.  Credits not exhausted in any calendar quarter may be carried
into future calendar quarters.

                       6.8.2 THIRD PARTY  LITIGATION.  In the event that a Third
Party institutes a patent,  trademark or other  infringement suit (including any
suit alleging the  invalidity or  unenforceability  of the Patents of a Party or
its  Affiliates,  or claiming  confusion,  deception or dilution of a Trademark)
against either Party or its  respective  Affiliates,  licensees or  Sublicensees
during the Term, alleging use of the Licensed Technology, Licensed Trademarks or
any other activities hereunder, infringes one or more patent, trademark or other
intellectual  property rights held by such Third Party (an "Infringement Suit"),
the Parties shall  cooperate  with one another in defending  such suit.  NovaDel
shall have the first right to direct and control  any  Infringement  Suit to the
extent  that it  relates to the use of the  Licensed  Technology,  the  Licensed
Trademarks  or the  Licensed  Process;  provided  that  Licensee  shall bear one
hundred  percent  (100%)  of the  costs and  expenses  associated  with any such
Infringement  Suit to the  extent  that it relates  to the  Exploitation  of the
Licensed Product.

                       6.8.3 RETAINED RIGHTS.  Nothing in this Section 6.8 shall
prevent Licensee, at its own expense, from obtaining any license or other rights
from  Third  Parties  it  deems  appropriate  in order  to  permit  the full and
unhindered exercise of its rights under this Agreement.

                                    ARTICLE 7
                              TERM OF THE AGREEMENT

                  7.1 TERM. Unless otherwise  terminated  pursuant to Article 8,
this Agreement shall enter into effect on the Effective Date and shall remain in
full force and effect on a  country-by-country  basis until the later of (a) the
expiration date of the last to expire of any issued NovaDel Patent that includes
at least  one  Valid  Claim  and (b) the  twentieth  (20th)  anniversary  of the
Effective Date.

                                    ARTICLE 8
                                   TERMINATION

                  8.1  TERMINATION  UPON  INSOLVENCY.  If Licensee  shall become
bankrupt,  or  shall  file  a  petition  in  bankruptcy  or  insolvency  or  for
reorganization  or for an  arrangement  or for the  appointment of a receiver or
trustee or of its assets, or if an involuntary petition for any of the foregoing
shall be filed with  respect to Licensee  and not  dismissed  within  sixty (60)
days, or if the business of Licensee shall be placed in the hands of a receiver,
assignee or trustee for the benefit of  creditors,  whether by the voluntary act
of Licensee or otherwise, this Agreement shall automatically terminate.

                  8.2 TERMINATION FOR PAYMENT  DEFAULT.  Should Licensee fail to
make payment to NovaDel of royalties or other amounts due in accordance with the
terms of this  Agreement,  NovaDel  shall  have  the  right  to  terminate  this
Agreement  within ten (10) days after giving said notice of  termination  unless
Licensee shall pay to NovaDel,  within the 10-day  period,  all such amounts due
and payable.  Upon the  expiration of the 10-day  period,  if Licensee shall



                                    Page 21
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not have paid all such  amounts  due and  payable,  the rights,  privileges  and
licenses  granted  hereunder  shall,  at  the  option  of  NovaDel,  immediately
terminate.  In the event a payment is the subject of a bona fide dispute between
NovaDel and Licensee  that is being  pursued by a Party  pursuant to the dispute
resolution  mechanism in Article 9, then Licensee  shall make such payment,  but
shall  provide  NovaDel  with  written  notice  that such  payment is being made
subject to the outcome of such pending dispute  resolution  procedure and in the
event such  dispute is finally and  conclusively  resolved in favor of Licensee,
NovaDel shall refund such payment to Licensee with interest  calculated pursuant
to Section 5.5 from the date of such payment.

                  8.3 TERMINATION FOR MATERIAL BREACH.  Upon any material breach
or  default  of this  Agreement  by  either  Party,  other  than as set forth in
Sections 8.1 or 8.2 above,  and subject to Section 2.4.3,  the other Party shall
have the right to  terminate  this  Agreement  and the  rights,  privileges  and
licenses granted  hereunder upon giving thirty (30) days notice to the breaching
Party.  Such  termination  shall become  effective  upon the  expiration of such
thirty  (30)-day  period  unless the  breaching  Party shall have cured any such
breach or default prior to the expiration of such thirty (30) day period.

                  8.4 FAILURE TO OBTAIN FINANCING.  Notwithstanding  anything to
the contrary  herein,  should Licensee fail to obtain financing in the amount of
Five Million Dollars (US$5,000,000) (the "Minimum Financing") by March 31, 2004,
NovaDel  shall have the right,  which  right shall  continue  until such time as
Licensee obtains the Minimum Financing,  but not the obligation,  to immediately
terminate this Agreement upon written notice to Licensee.

                  8.5  TERMINATION BY THE LICENSEE.  The Licensee shall have the
right at any time to  terminate  this  Agreement  in whole or as to any Licensed
Product by giving 90 days notice thereof in writing to NovaDel.

                  8.6 SURVIVAL.  Any expiration or termination of this Agreement
shall not affect the rights and obligations of the Parties accrued prior to such
expiration or termination.  Without limiting the foregoing, Articles 4, 5, 6, 9,
10, 11, 14, 15 and 16 and Sections 8.6, 8.7, 8.8, 16.1,  16.7 and this 8.6 shall
survive the termination or expiration of this Agreement for any reason.

                  8.7 WORK-IN-PROGRESS.  Licensee and/or any Sublicensee thereof
may, however,  after the effective date of such termination and continuing for a
period not to exceed  six (6) months  thereafter,  sell all  completed  Licensed
Product,  and any Licensed  Product in the process of manufacture at the time of
such termination,  and sell the same,  provided that Licensee shall pay or cause
to be paid to NovaDel  the  royalties  thereon as  required by Article 4 of this
Agreement and shall submit the reports required by Article 5 hereof on the sales
of Licensed Product.

                  8.8 RETURN OF INFORMATION; ASSIGNMENT AND LICENSE.

                       8.8.1 Upon termination of this Agreement, Licensee shall,
and shall cause its Affiliates  and  Sublicensees,  as applicable,  to return to
NovaDel any and all data,  files,  records and other materials in its possession
or control  that  relate to the  Licensed  Technology  or  contain  or  comprise
NovaDel's  Information and Inventions or other Confidential  Information (except
one copy of each that may be retained for archival purposes).



                                    Page 22
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                       8.8.2 Upon the  termination of this  Agreement,  Licensee
(a) shall,  and shall  cause its  Affiliates  and,  subject  to  Section  8.8.3,
Sublicensees  to,  promptly  disclose to NovaDel,  in whatever  form NovaDel may
request,  all Regulatory  Documentation and all other Information and Inventions
in the possession or Control of Licensee,  its Affiliates or  Sublicensees  that
relate to the Exploitation of such Licensed Product, (b) shall, and does hereby,
assign,   and  shall  cause  its  Affiliates  and,  subject  to  Section  8.8.3,
Sublicensees to assign,  to NovaDel,  without  additional  compensation,  all of
their respective rights,  titles and interests in and to any and all (i) patent,
trademark,  copyright or other  intellectual  property  rights,  (ii) Regulatory
Documentation  and all data  included  or  referenced  therein,  and (iii) other
Information  and  Inventions  in the  possession  or  Control of  Licensee,  its
Affiliates or Sublicensees, in each case that relate to the Exploitation of such
Licensed  Product  (the  "Agreement-Related  Assets")  and are  permitted  to be
assigned,  and (c) to the extent  that the  Agreement-Related  Assets may not be
assigned,  shall,  and does hereby,  grant,  and shall cause its Affiliates and,
subject to Section 8.8.3,  Sublicensees to grant, to NovaDel, without additional
compensation, a perpetual, irrevocable,  royalty-free, exclusive, sublicenseable
through  multiple  tiers of  sublicensees,  right and  license to  Exploit  such
Licensed Product in the Territory.

                       8.8.3 Notwithstanding anything contained in Section 8.8.1
or 8.8.2, in the event that any sublicense granted by Licensee survives pursuant
to Section 2.4.3,  the  Sublicensee may retain (a) the information and materials
identified  in  Section  8.8.1 that are  rightfully  in its  possession  and (b)
Agreement-Related Assets, in each case until the termination of such sublicense,
whereupon such Sublicensee shall return such materials to NovaDel,.

                  8.9 CUMULATIVE REMEDIES.  The rights and remedies set forth in
this  Article 8 are  cumulative  and in addition to any other rights that may be
available to the Parties.

                  8.10  NON-REFUNDABILITY  OF MILESTONES AND DEVELOPMENT  COSTS.
Any and all Milestone  Payments made to NovaDel by Licensee under Article 4.5 of
this  Agreement  shall be  non-refundable  in the event of  termination  of this
Agreement  by either party under any of the  provisions  of Article 8 other than
Article 8.5.

                                    ARTICLE 9
                                   ARBITRATION

                  9.1  PROCEDURES.  Any dispute arising from or relating to this
Agreement  shall be  determined  before a tribunal of three  arbitrators  in New
York,  New York in  accordance  with  the  Commercial  Arbitration  Rules of the
American  Arbitration  Association (the "AAA"). One arbitrator shall be selected
by  NovaDel,  one  arbitrator  shall  be  selected  by  Licensee  and the  third
arbitrator shall be selected by mutual agreement of the first two arbitrators or
by the AAA, if the  arbitrators  appointed by the Parties are unable to select a
third arbitrator within thirty (30) days.

                  9.2  PATENT  DISPUTES.  Any  claim,  dispute,  or  controversy
concerning the validity, enforceability, or infringement of any patent contained
in the NovaDel Patents licensed  hereunder shall be resolved in any court having
jurisdiction  thereof.  In the event that, in any  arbitration  proceeding,  any
issue shall arise  concerning the validity,  enforceability,  or infringement of
any patent contained in the NovaDel Patents licensed hereunder,  the arbitrators




                                    Page 23
<PAGE>

shall,  to  the  extent  possible,  resolve  all  issues  other  than  validity,
enforceability,  and infringement; in any event, the arbitrators shall not delay
the  arbitration  proceeding  for the purpose of obtaining or permitting  either
Party to obtain judicial resolution of such issues,  unless an order staying the
arbitration  proceeding  shall be entered by a court of competent  jurisdiction.
Neither Party shall raise any issue concerning the validity,  enforceability, or
infringement of any patent contained in the NovaDel Patents licensed  hereunder,
in  any  proceeding  to  enforce  any  arbitration  award  hereunder,  or in any
proceeding otherwise arising out of any such arbitration award.

                  9.3  COSTS.  The  costs  of such  arbitration  shall  be borne
proportionate  to the finding of fault as determined by the  arbitration  panel.
Judgment  on the  arbitration  award may be  entered  by any court of  competent
jurisdiction.

                                   ARTICLE 10
                          INDEMNIFICATION AND INSURANCE

                  10.1  INDEMNIFICATION  OF  NOVADEL.   Licensee  shall  defend,
indemnify and hold NovaDel,  its  Affiliates,  and their  respective  directors,
officers, employees and agents harmless from and against all liability, demands,
damages,  including expenses or losses including death, personal injury, illness
or property damage  (collectively,  "Losses") arising directly or indirectly out
of any: (a) breach of this Agreement by Licensee,  its Affiliates,  Sublicensees
or  permitted  assigns or  transferees;  (b) actual or  asserted  violations  of
Applicable Law by Licensee, its Affiliates,  Sublicensees or permitted assignees
or transferees;  (c) use by Licensee, its Affiliates,  Sublicensees or permitted
assignees or transferees of the Licensed  Technology or (d)  Exploitation of the
Licensed  Product  by  Licensee,  its  Affiliates,   Sublicensees  or  permitted
assignees  or  transferees,  except for those  Losses for which  NovaDel  has an
obligation to indemnify Licensee and its Affiliates pursuant to Section 10.2, as
to which  Losses  each Party  shall  indemnify  the other to the extent of their
respective  liability  for the Losses  and other  than as a result of  NovaDel's
gross negligence, recklessness or willful misconduct.

                  10.2  INDEMNIFICATION  OF  LICENSEE.   NovaDel  shall  defend,
indemnify and hold Licensee,  its Affiliates,  and their  respective  directors,
officers,  employees  and agents  harmless  from and against all Losses  arising
directly or  indirectly  out of any: (a) breach of this  Agreement by NovaDel or
its  Affiliates;  or (b) actual or  asserted  violations  of  Applicable  Law by
NovaDel or its  Affiliates,  except for those  Losses for which  Licensee has an
obligation to indemnify NovaDel and its Affiliates  pursuant to Section 10.1, as
to which  Losses  each Party  shall  indemnify  the other to the extent of their
respective liability for the Losses.

                  10.3 INDEMNIFICATION PROCEDURE.

                       10.3.1 NOTICE OF CLAIM. The indemnified  Party shall give
the indemnifying Party prompt written notice (an "Indemnification Claim Notice")
of any Losses or discovery of fact upon which such indemnified  Party intends to
base a request for indemnification under Section 10.1 or Section 10.2, but in no
event shall the indemnifying Party be liable for any Losses that result from any
delay in providing such notice. Each Indemnification Claim Notice must contain a
description  of the claim and the  nature and amount



                                    Page 24
<PAGE>

of such Loss (to the extent  that the nature and amount of such Loss is known at
such time).  The indemnified  Party shall furnish  promptly to the  indemnifying
Party  copies of all papers and  official  documents  received in respect of any
Losses.  All  indemnification  claims in respect of a Party,  its  Affiliates or
their respective directors,  officers, employees and agents shall be made solely
by such Party to this Agreement (the "Indemnified Party").

                       10.3.2  THIRD  PARTY  CLAIMS.   The   obligations  of  an
indemnifying  Party under this  Article 10 with  respect to Losses  arising from
claims of any Third Party that are subject to indemnification as provided for in
Sections  10.1 or 10.2 (a  "Third  Party  Claim")  shall be  governed  by and be
contingent upon the following additional terms and conditions:

                            (A)   CONTROL  OF  DEFENSE.   At  its  option,   the
indemnifying  Party may assume the  defense of any Third  Party  Claim by giving
written  notice to the  Indemnified  Party  within  thirty  (30) days  after the
indemnifying Party's receipt of an Indemnification  Claim Notice. The assumption
of the  defense of a Third Party  Claim by the  indemnifying  Party shall not be
construed  as an  acknowledgment  that  the  indemnifying  Party  is  liable  to
indemnify any indemnified  Party in respect of the Third Party Claim,  nor shall
it constitute a waiver by the  indemnifying  Party of any defenses it may assert
against any  indemnified  Party's claim for  indemnification.  Upon assuming the
defense of a Third  Party  Claim,  the  indemnifying  Party may  appoint as lead
counsel in the defense of the Third Party  Claim any legal  counsel  selected by
the indemnifying  Party. In the event the indemnifying Party assumes the defense
of a Third Party Claim, the Indemnified Party shall  immediately  deliver to the
indemnifying  Party all original notices and documents  (including court papers)
received by any  indemnified  Party in  connection  with the Third Party  Claim.
Should the  indemnifying  Party assume the defense of a Third Party  Claim,  the
indemnifying  Party  shall not be liable to the  Indemnified  Party or any other
indemnified  Party  for  any  legal  expenses   subsequently  incurred  by  such
indemnified Party in connection with the analysis,  defense or settlement of the
Third  Party  Claim.  In the event  that it is  ultimately  determined  that the
indemnifying  Party is not  obligated to  indemnify,  defend or hold harmless an
Indemnified  Party from and against the Third Party Claim, the Indemnified Party
shall  reimburse  the  indemnifying  Party for any and all  costs  and  expenses
(including  attorneys'  fees and costs of suit) and any Losses  incurred  by the
indemnifying  Party in its defense of the Third Party Claim with respect to such
Indemnified Party.

                            (B)  RIGHT  TO  PARTICIPATE   IN  DEFENSE.   Without
limiting  Section  10.3.2(a),   any  Indemnified  Party  shall  be  entitled  to
participate  in, but not  control,  the defense of such Third Party Claim and to
employ  counsel of its choice for such  purpose;  provided,  however,  that such
employment  shall be at the  Indemnified  Party's  own  expense  unless  (i) the
employment thereof has been specifically authorized by the indemnifying Party in
writing or (ii) the  indemnifying  Party has failed to assume  the  defense  and
employ  counsel  in  accordance  with  Section  10.3.2(a)  (in  which  case  the
Indemnified Party shall control the defense).

                            (C) SETTLEMENT.  With respect to any Losses relating
solely to the payment of money  damages in  connection  with a Third Party Claim
and that  will  not  result  in the  Indemnified  Party's  becoming  subject  to
injunctive  or other  relief or otherwise  adversely  affect the business of the
Indemnified  Party in any manner,  and as to which the indemnifying  Party shall
have  acknowledged in writing the obligation to indemnify the Indemnified  Party
hereunder,  the  indemnifying  Party shall have the sole right to consent to the
entry of any



                                    Page 25
<PAGE>

judgment,  enter into any settlement or otherwise  dispose of such Loss, on such
terms as the indemnifying Party, in its sole discretion, shall deem appropriate.
With respect to all other Losses in connection  with Third Party  Claims,  where
the  indemnifying  Party has  assumed  the  defense of the Third  Party Claim in
accordance with Section  10.3.2(a),  the indemnifying Party shall have authority
to consent to the entry of any judgment,  enter into any settlement or otherwise
dispose  of such Loss  provided  it  obtains  the prior  written  consent of the
Indemnified Party (which consent shall not be unreasonably withheld or delayed).
The  indemnifying  Party  shall  not be  liable  for  any  settlement  or  other
disposition  of a Loss by an  indemnified  Party  that is  reached  without  the
written  consent  of  the   indemnifying   Party.   Regardless  of  whether  the
indemnifying  Party  chooses to defend or prosecute  any Third Party  Claim,  no
indemnified  Party  shall  admit any  liability  with  respect  to,  or  settle,
compromise or discharge, any Third Party Claim without the prior written consent
of the indemnifying Party.

                            (D)   COOPERATION.   Regardless   of   whether   the
indemnifying  Party  chooses to defend or prosecute  any Third Party Claim,  the
Indemnified  Party  shall,  and shall  cause  each other  indemnified  Party to,
cooperate in the defense or prosecution  thereof and shall furnish such records,
information and testimony,  provide such witnesses and attend such  conferences,
discovery  proceedings,  hearings,  trials  and  appeals  as may  be  reasonably
requested in connection therewith.  Such cooperation shall include access during
normal  business  hours  afforded  to  indemnifying  Party  to,  and  reasonable
retention  by the  Indemnified  Party  of,  records  and  information  that  are
reasonably  relevant to such Third Party Claim, and making  indemnified  Parties
and other  employees  and agents  available  on a mutually  convenient  basis to
provide  additional   information  and  explanation  of  any  material  provided
hereunder,  and the indemnifying Party shall reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith.

                            (E) EXPENSES.  Except as provided  above,  the costs
and  expenses,  including  fees and  disbursements  of counsel,  incurred by the
Indemnified Party in connection with any claim shall be reimbursed on a calendar
quarter basis by the indemnifying  Party,  without prejudice to the indemnifying
Party's right to contest the Indemnified  Party's right to  indemnification  and
subject to refund in the event the indemnifying  Party is ultimately held not to
be obligated to indemnify the Indemnified Party.

                  10.4 INSURANCE.

                       10.4.1 Prior to entering human clinical trials,  Licensee
shall have and maintain  such type and amounts of liability  insurance  covering
the manufacture,  supply,  use and sale of the Licensed Product as is normal and
customary  in  the  pharmaceutical  industry  generally  for  parties  similarly
situated,  and shall upon request provide NovaDel with a copy of its policies of
insurance in that regard, along with any amendments and revisions thereto.

                       10.4.2 At all times  during the  Development  Activities,
NovaDel  shall have and maintain  such type and amounts of  liability  insurance
covering the  manufacture,  supply,  use and sale of the Licensed  Product as is
normal and  customary  in the  pharmaceutical  industry  generally  for  parties
similarly  situated,  and shall upon request provide the Licensee with



                                    Page 26
<PAGE>

a copy of its policies of insurance  in that regard,  along with any  amendments
and revisions thereto.

                                   ARTICLE 11
                         REPRESENTATIONS AND WARRANTIES;
                             LIMITATION OF LIABILITY

                  11.1  REPRESENTATIONS,  WARRANTIES AND  COVENANTS.  Each Party
hereby  represents  and warrants to the other Party as of the Effective  Date as
follows:

                       11.1.1 DULY ORGANIZED.  Such Party is a corporation  duly
organized,  validly existing and in good standing under the laws of the state in
which it is  incorporated,  and has full  corporate  power and authority and the
legal  right to own and  operate  its  property  and  assets and to carry on its
business as it is now being  conducted and as is contemplated to be conducted by
this Agreement.

                       11.1.2 CORPORATE AUTHORITY.  Such Party (a) has the power
and authority  and the legal right to enter into this  Agreement and perform its
obligations  hereunder,  and (b) has  taken  all  necessary  action  on its part
required to  authorize  the  execution  and delivery of this  Agreement  and the
performance of its obligations  hereunder.  The Agreement has been duly executed
and  delivered  on  behalf  of  such  Party  and is  enforceable  against  it in
accordance with its terms,  subject to the effects of bankruptcy,  insolvency or
other laws of general  application  affecting the enforcement of creditor rights
and judicial principles  affecting the availability of specific  performance and
general  principles  of  equity,  whether  enforceability  is  considered  in  a
proceeding at law or in equity.

                       11.1.3 LITIGATION. Such Party is not aware of any pending
or threatened  litigation (and has not received any communication)  that alleges
that such Party's activities related to this Agreement have violated, or that by
conducting the activities as contemplated  herein such Party would violate,  any
of the intellectual property rights of any other Person.

                       11.1.4 CONSENTS,  APPROVALS, ETC. All necessary consents,
approvals and authorizations of all regulatory and governmental  authorities and
other  Persons  required  to be obtained  by such Party in  connection  with the
execution and delivery of this Agreement and the  performance of its obligations
hereunder have been obtained.

                       11.1.5  CONFLICTS.  The  execution  and  delivery of this
Agreement and the performance of such Party's  obligations  hereunder (a) do not
conflict with or violate any  requirement of applicable law or regulation or any
provision of the articles of incorporation,  bylaws, or any similar constitutive
document of such Party,  as  applicable,  in any  material  way,  and (b) do not
conflict with, violate, or breach or constitute a default or require any consent
under, any contractual obligation or court or administrative order by which such
Party is bound.

                  11.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NOVADEL.

                       11.2.1 NovaDel  represents and warrants to Licensee that,
to  its  Knowledge,   as  of  the  Effective  Date,  NovaDel  is  the  owner  or
(sub)licensee  (with the right to



                                    Page 27
<PAGE>

grant  sublicenses  to Licensee as  contemplated  under this  Agreement)  of the
NovaDel  Patents,  and has all right,  title, and interest in and to the NovaDel
Patents,  including exclusive,  absolute,  irrevocable right, title and interest
thereto,  free  and  clear  of  all  liens,   charges,   encumbrances  or  other
restrictions  or  limitations  of any  kind  whatsoever  and  to  the  NovaDel's
knowledge and belief there are no licenses, options, restrictions, liens, rights
of third parties, disputes, royalty obligations,  proceedings or claims relating
to,  affecting,  or limiting its rights or the rights of the Licensee under this
Agreement  with  respect  to,  or which may lead to a claim of  infringement  or
invalidity  regarding,  any part or all of the Licensed Technology and their use
as contemplated in the underlying patent applications as presently drafted.  The
NovaDel  Patents  have not, as of the  Effective  Date,  been held by a court of
competent jurisdiction to be invalid or unenforceable, in whole or in part.

                       11.2.2 To  NovaDel's  knowledge  and  belief  there is no
claim,  pending or  threatened,  of  infringement,  interference  or  invalidity
regarding,  any  part  or  all of  the  Licensed  Technology  and  their  use as
contemplated in the underlying patent applications as presently drafted.

                  11.3 ADDITIONAL  COVENANTS OF LICENSEE.  Licensee on behalf of
itself and its  Affiliates  agrees and  covenants  to the  extent  permitted  by
applicable law, never, in any country,  region or jurisdiction in the Territory,
to institute or prosecute any claim,  action or suit at law or in equity seeking
to have  any  claim in a  NovaDel  Patent  declared  invalid  or  unenforceable;
provided, however, that nothing contained herein shall prohibit Licensee and its
Affiliates  and  Sublicensees  from either (a)  asserting  any and all  defenses
available to it, including assertions relating to the validity or enforceability
of the NovaDel Patents,  in any suit or proceeding brought against them alleging
the  infringement  of any of the NovaDel  Patents,  or (b) asserting any and all
defenses, evidence and arguments, including lack of patentability of the subject
matter of a count or claim  and lack of  support  for a count or  claim,  in any
interference  involving a patent or patent  application owned by Licensee or its
Affiliates or Sublicensees  and a patent or patent  application  included within
the  definition  of the  NovaDel  Patents.  In its  agreements  with each of its
Sublicensees, Licensee shall include provisions requiring a covenant, materially
identical to that  Licensee is making in this Section  11.3,  on the part of the
Sublicensee,  and shall provide that NovaDel  shall have march-in  right to seek
termination  of  such  agreement  in the  event  the  Sublicensee  breaches  the
covenant.  NovaDel's  right  to seek  termination  of such  agreement  with  the
Sublicensee shall be subject to notice, cure and dispute resolutions  provisions
materially identical to the provision set forth in Section 7.2. Licensee and its
Affiliates  will  take  all  reasonable  action   (including   signing  required
documents) and offer full  cooperation to allow NovaDel to exercise the march-in
rights provided herein, to the extent permitted by law.

                  11.4 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES
SET FORTH IN SECTIONS 11.1 AND 11.2, NOVADEL MAKES NO REPRESENTATIONS AND GRANTS
NO  WARRANTIES,  EXPRESS OR IMPLIED,  EITHER IN FACT OR BY  OPERATION OF LAW, BY
STATUTE OR OTHERWISE,  UNDER THIS AGREEMENT,  AND NOVADEL SPECIFICALLY DISCLAIMS
ANY OTHER WARRANTIES,  WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING
ANY  WARRANTY OF QUALITY,  MERCHANTABILITY  OR FITNESS FOR A  PARTICULAR  USE OR
PURPOSE  OR  ANY   WARRANTY   AS  TO



                                    Page 28
<PAGE>

THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES UNDER THIS AGREEMENT.

                  11.5  LIMITATION OF  LIABILITY.  NONE OF NOVADEL OR ANY OF ITS
AFFILIATES  SHALL BE LIABLE FOR SPECIAL,  INDIRECT,  INCIDENTAL OR CONSEQUENTIAL
DAMAGES (INCLUDING FOR LOST PROFITS), WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE,
TORT, STRICT LIABILITY OR OTHERWISE,  ARISING OUT OF (A) THE USE OF THE LICENSED
TECHNOLOGY OR LICENSED TRADEMARKS OR (B) ANY BREACH OF OR FAILURE TO PERFORM ANY
OF THE PROVISIONS OF THIS AGREEMENT.

                                   ARTICLE 12
                                   ASSIGNMENT

                  This Agreement and the rights and duties  appertaining  hereto
may not be assigned by either party without first  obtaining the written consent
of the  other  which  consent  shall  not be  unreasonably  withheld.  Any  such
purported  assignment,  without the written consent of the other party, shall be
null and of no effect.  Notwithstanding  the  foregoing,  the Company may assign
this  Agreement (i) to a purchaser,  merging or  consolidating  corporation,  or
acquiror  of  substantially  all of the  Company's  assets  or  business  and/or
pursuant to any  reorganization  qualifying  under  section 368 of the  Internal
Revenue Code of 1986 as amended, as may be in effect at such time, or (ii) to an
Affiliate of the Company  subject to the consent of the Licensors  which consent
shall not be unreasonably withheld.
ARTICLE 13
                          USE OF NAMES AND PUBLICATION

                  13.1 USE OF NAME. Nothing contained in this Agreement shall be
construed as granting any right to Licensee,  its Affiliates or  Sublicensees to
use in  advertising,  publicity,  or other  promotional  activities  the name of
NovaDel or any of its units (including  contraction,  abbreviation or simulation
of any of  the  foregoing)  without  the  prior,  written  consent  of  NovaDel;
provided,  however,  that NovaDel  acknowledges and agrees that Licensee may use
the names of NovaDel in various  documents used by Licensee for capital  raising
and financing without such prior written consent to the limited extent that such
use may be required by law,  and  provided  further  that all such uses shall be
factually accurate and not misleading.

                  13.2  RELATIONSHIP  OF THE  PARTIES.  Nothing  herein shall be
deemed to establish a  relationship  of principal and agent between  NovaDel and
Licensee, nor any of their agents or employees for any purpose whatsoever.  This
Agreement  shall not be construed as creating a partnership  between NovaDel and
Licensee,  or as creating  any other form of legal  association  or  arrangement
which would impose liability upon one Party for the act or failure to act of the
other Party.

                  13.3  PUBLICATIONS.  In the event that either party desires to
publish or disclose, by written, oral or other presentation, Licensed Technology
or any material  information  related



                                    Page 29
<PAGE>

thereto,  then such party shall notify the other in writing of its  intention at
least  sixty (60) days prior to any speech,  lecture or other oral  presentation
and at least  sixty  (60)  days  before  any  written  or other  publication  or
disclosure,  and shall  include with such notice a  description  of any proposed
oral  presentation or, with respect to any proposed written or other disclosure,
a current  draft of such proposed  disclosure  or abstract.  NovaDel may request
that  Licensee,  no later than  thirty (30) days  following  the receipt of such
notice,  delay such  presentation,  publication or disclosure in order to enable
NovaDel to file, or have filed on its behalf or jointly, as applicable, a patent
application,  copyright  or  other  appropriate  form of  intellectual  property
protection  related to the  information to be disclosed or request that Licensee
do so. Upon receipt of such request to delay such  presentation,  publication or
disclosure, Licensee shall arrange for a delay of such presentation, publication
or disclosure  until such time as Licensee or NovaDel has filed, or had filed on
its behalf,  such patent  application,  copyright or other  appropriate  form of
intellectual   property   protection   in  form  and  in  substance   reasonably
satisfactory  to NovaDel.  If Licensee  does not receive any such  request  from
NovaDel to delay such  presentation,  publication  or  disclosure,  Licensee may
submit such material for presentation,  publication or other form of disclosure.
Notwithstanding  the  foregoing,  in no event shall  Licensee  have any right to
publish or disclose  the  Licensed  Process or any  information  or data related
thereto without the prior written consent of NovaDel,  which consent NovaDel may
withhold in its sole discretion.

                                   ARTICLE 14
                   PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

                  All  notices  or other  communications  that are  required  or
permitted  hereunder  shall be in  writing  and  delivered  personally,  sent by
telecopier (and promptly confirmed by personal delivery, registered or certified
mail or overnight  courier as provided  herein),  sent by  nationally-recognized
overnight  courier or sent by registered  or certified  mail,  postage  prepaid,
return receipt requested, addressed as follows:

If to NovaDel to:

         NovaDel Pharma Inc.
         31 State Highway 12
         NovaDel, NJ  08822
         Attention:  President
         908.782.3431 (fax)

         with a copy (not constituting notice) to:

         Covington & Burling
         1201 Pennsylvania Avenue, NW
         Washington, DC  20004
         Attention:  John A. Hurvitz, Esq.
         202.662.6291 (fax)



                                    Page 30
<PAGE>

If to Licensee to:

         Manhattan Pharmaceuticals, Inc.
         787 Seventh Avenue, 48th Floor
         New York, NY 10019
         Attention: President
         212.554.4355 (fax)

         with a copy (not constituting notice) to:

or to such  other  address  as the Party to whom  notice is to be given may have
furnished  to the  other  Party in  writing  in  accordance  herewith.  Any such
communication  shall  be  deemed  to have  been  given  (a) when  delivered,  if
personally  delivered  or sent  by  telecopier  on a  business  day,  (b) on the
business day after dispatch, if sent by nationally-recognized overnight courier,
and (c) on the third  business  day  following  the date of mailing,  if sent by
mail. It is understood and agreed that this Article 16 is not intended to govern
the  day-to-day  business  communications   necessary  between  the  Parties  in
performing their duties, in due course, under the terms of this Agreement.

                                   ARTICLE 15
                                 CONFIDENTIALITY

                  15.1 DEFINITION.  "Confidential  Information" of a Party shall
mean all information and know-how and any tangible  embodiments thereof provided
by or on behalf of such Party to the other Party either in  connection  with the
discussions and negotiations pertaining to, or in the course of performing, this
Agreement,  including the terms of this  Agreement;  the  Designated  Compounds;
data;  knowledge;  practices;  processes;  ideas;  research  plans;  engineering
designs and drawings;  research data;  manufacturing  processes and  techniques;
scientific,  manufacturing,  marketing  and business  plans;  and  financial and
personnel  matters  relating to the disclosing Party or to its present or future
products,  sales, suppliers,  customers,  employees,  investors or business. For
purposes  of this  Agreement,  notwithstanding  the Party  that  disclosed  such
information or know-how, all NovaDel Know-How and all Information and Inventions
with  respect to the  Licensed  Process  shall be  Confidential  Information  of
NovaDel.

                  15.2 EXCLUSIONS. Notwithstanding the foregoing, information or
know-how of a Party shall not be deemed Confidential Information with respect to
a receiving  Party for purposes of this  Agreement if such  receiving  party can
affirmatively  demonstrate through the production of written  documentation that
such information or know-how:

                       15.2.1 was already  known to the  receiving  Party or its
Affiliates, other than under an obligation of confidentiality or non-use, at the
time of disclosure to such receiving Party;

                       15.2.2  was  generally  available  or  known  to  parties
reasonably  skilled in the field to which such information or know-how pertains,
or was otherwise  part of the public  domain,  at the time of its  disclosure to
such receiving Party;


                                    Page 31
<PAGE>

                       15.2.3  became  generally  available  or known to parties
reasonably  skilled in the field to which such information or know-how pertains,
or otherwise  became part of the public  domain,  after its  disclosure  to such
receiving  Party  through no fault of a Party other than the Party that Controls
such information and know-how;

                       15.2.4  was  disclosed  to such  receiving  Party  or its
Affiliates,  other than under an obligation of confidentiality or non-use,  by a
Third Party who had no obligation  to the Party that  Controls such  information
and know-how not to disclose such information or know-how to others; or

                       15.2.5 was independently  discovered or developed by such
receiving  Party or its  Affiliates,  as  evidenced  by their  written  records,
without the use of Confidential Information belonging to the Party that Controls
such information and know-how,  except with respect to the NovaDel Know-How with
respect  to  the  Licensed  Process,  which  shall  be and  remain  Confidential
Information of NovaDel.

Specific aspects or details of Confidential  Information  shall not be deemed to
be within the public domain or in the  possession of a Party merely  because the
Confidential  Information is embraced by more general  information in the public
domain  or in  the  possession  of  such  Party.  Further,  any  combination  of
Confidential  Information shall not be considered in the public domain or in the
possession of a Party merely because  individual  elements of such  Confidential
Information  are in the public domain or in the  possession of such Party unless
the combination and its principles are in the public domain or in the possession
of such Party.

                  15.3  DISCLOSURE  AND USE  RESTRICTION.  Except  as  expressly
provided herein,  the Parties agree that during the Term of this Agreement,  and
for five (5) years  thereafter,  each Party and its Affiliates and  sublicensees
shall keep completely  confidential and shall not publish or otherwise  disclose
and shall not use for any purpose except for the purposes  contemplated  by this
Agreement any  Confidential  Information  of the other Party,  its Affiliates or
Sublicensees.

                  15.4   AUTHORIZED   DISCLOSURE.   Each   Party  may   disclose
Confidential  Information of the other Party to the extent that such  disclosure
is:

                       15.4.1 REQUIRED BY GOVERNMENTAL  ORDER.  Made in response
to a valid order of a court of competent  jurisdiction or other  supra-national,
federal,  national,   regional,  state,  provincial  or  local  governmental  or
regulatory body of competent  jurisdiction;  provided,  however, that such Party
shall  first have given  notice to such other Party and given such other Party a
reasonable  opportunity  to quash  such order and to obtain a  protective  order
requiring that the  Confidential  Information and documents that are the subject
of such order be held in confidence by such court or agency or, if disclosed, be
used only for the purposes for which the order was issued;  and provided further
that if a disclosure order is not quashed or a protective order is not obtained,
the Confidential Information disclosed in response to such court or governmental
order  shall be limited to that  information  which is  legally  required  to be
disclosed in response to such court or governmental order;

                       15.4.2  REQUIRED  BY  LAW.  Otherwise  required  by  law;
provided,  however,  that the disclosing Party shall (a) provide the other Party
with  reasonable  advance



                                    Page 32
<PAGE>

notice of and an opportunity to comment on any such required disclosure,  (b) if
requested by such other Party, seek  confidential  treatment with respect to any
such  disclosure  to the extent  available,  and (c) use good  faith  efforts to
incorporate  the comments of such other Party in any such  disclosure or request
for confidential treatment;

                       15.4.3  REQUIRED BY  REGULATORY  AUTHORITY.  Made by such
Party to the Regulatory  Authorities as required in connection  with any filing,
application  or  request  for  Regulatory  Approval;   provided,  however,  that
reasonable  measures  shall be taken to assure  confidential  treatment  of such
information; or

                       15.4.4  REQUIRED BY  AGREEMENT.  Made by such  Party,  in
connection with the performance of this Agreement, to Affiliates,  Sublicensees,
research parties,  employees,  consultants,  representatives or agents,  each of
whom prior to disclosure  must be bound by  obligations of  confidentiality  and
non-use at least equivalent in scope to those set forth in this Article 16.

                  15.5 PRESS  RELEASES.  Press  releases or other similar public
communication  by either Party relating to this Agreement,  shall be approved in
advance by the other Party, which approval shall not be unreasonably withheld or
delayed, except for those communications required by Applicable Law (which shall
be  provided  to the other  Party as soon as  practicable  after the  release or
communication  thereof),  disclosures  of  information  for  which  consent  has
previously been obtained,  and information of a similar nature to that which has
been previously disclosed publicly with respect to this Agreement, each of which
shall not require advance approval.

                                   ARTICLE 16
                            MISCELLANEOUS PROVISIONS

                  16.1 GOVERNING  LAW. This  Agreement  shall be governed by and
construed in  accordance  with the laws of the State of New York,  excluding any
conflicts  or  choice  of law  rule or  principle  that  might  otherwise  refer
construction  or  interpretation  of this  Agreement to the  substantive  law of
another jurisdiction.

                  16.2  REGISTRATION.   If  this  Agreement  or  any  associated
transaction  is  required  by the law of any  nation  to be either  approved  or
registered  with any  governmental  agency,  Licensee  shall  assume  all  legal
obligations to do so and the costs in connection therewith.

                  16.3 TRADE REGULATIONS.  Licensee shall observe all applicable
United States and foreign laws with respect to the transfer of Licensed  Product
and related  technical data to foreign  countries,  including the  International
Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.

                  16.4 ENTIRE  AGREEMENT.  The Parties hereto  acknowledge  that
this  Agreement,   including  the  Appendices  and  documents   incorporated  by
reference,  sets forth the entire  agreement  and  understanding  of the Parties
hereto as to the subject matter  hereof,  and shall not be subject to any change
of modification except by the execution of a written instrument subscribed to by
the Parties hereto. This Agreement shall supersede all previous



                                    Page 33
<PAGE>

communications,  representations  or  understandings,  either  oral or  written,
between the Parties relating to the subject matter hereof.

                  16.5 SEVERABILITY.  If any provision of this Agreement is held
to be illegal,  invalid or unenforceable under any present or future law, and if
the rights or  obligations  of either  Party  under this  Agreement  will not be
materially and adversely  affected  thereby,  (a) such provision  shall be fully
severable,  (b)  this  Agreement  shall be  construed  and  enforced  as if such
illegal,  invalid or unenforceable  provision had never comprised a part hereof,
(c) the remaining  provisions of this  Agreement  shall remain in full force and
effect  and shall not be  affected  by the  illegal,  invalid  or  unenforceable
provision or by its severance herefrom, and (d) in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement a legal,  valid and enforceable  provision as similar in terms to such
illegal,  invalid or  unenforceable  provision as may be possible and reasonably
acceptable to the Parties herein.  To the fullest extent permitted by applicable
law,  each Party  hereby  waives  any  provision  of law that  would  render any
provision prohibited or unenforceable in any respect.

                  16.6  WAIVER.  The  failure of either  Party to assert a right
hereunder  or to  insist  upon  compliance  with any term or  condition  of this
Agreement  shall  not  constitute  a waiver  of that  right or  excuse a similar
subsequent failure to perform any such term or condition by the other Party.

                  16.7 EQUITABLE RELIEF. Each Party acknowledges and agrees that
the restrictions set forth in Articles 6 and 16 of this Agreement are reasonable
and  necessary to protect the  legitimate  interests of the other Party and that
such other Party would not have  entered  into this  Agreement in the absence of
such  restrictions,  and that  any  violation  or  threatened  violation  of any
provision  of  Article 6 and 16 may result in  irreparable  injury to such other
Party.  Each Party also acknowledges and agrees that in the event of a violation
or  threatened  violation of any  provision of Article 6 and 16, the other Party
shall be entitled to seek preliminary and permanent  injunctive relief,  without
the necessity of having to post a bond, as well as to an equitable accounting of
all earnings,  profits and other benefits  arising from any such violation.  The
rights provided in the immediately preceding sentence shall be cumulative and in
addition to any other  rights or remedies  that may be  available  to such other
Party.  Nothing in this  Section 16.7 is intended,  or should be  construed,  to
limit such other Party's right to preliminary and permanent injunctive relief or
any other remedy for breach of any other provision of this Agreement.

                  16.8 FORCE  MAJEURE.  Neither  Party  shall be held  liable or
responsible to the other Party or be deemed to have defaulted  under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement  when such failure or delay is caused by or results from causes beyond
the reasonable control of the  non-performing  Party,  including fires,  floods,
earthquakes,  embargoes,  shortages,  epidemics,  quarantines,  war, acts of war
(whether war be declared or not), acts of terrorism, insurrections, riots, civil
commotion,  strikes, lockouts or other labor disturbances,  acts of God or acts,
omissions or delays in acting by any governmental authority.  The non-performing
Party shall  notify the other Party of such force  majeure  within ten (10) days
after such  occurrence by giving  written  notice to the other Party stating the
nature of the event,  its  anticipated  duration,  and any action being taken to
avoid or minimize  its effect.  The  suspension  of  performance  shall be of no
greater scope and no longer  duration  than is



                                    Page 34
<PAGE>

necessary and the non-performing Party shall use commercially reasonable efforts
to remedy its  inability to perform;  provided,  however,  that in the event the
suspension of performance  continues for one-hundred and eighty (180) days after
the date of the  occurrence,  and such  failure to perform  would  constitute  a
material  breach of this  Agreement  in the absence of such force  majeure,  the
non-performing  Party may terminate this Agreement pursuant by written notice to
the other Party.

                  16.9   CONSTRUCTION.   Except  where  the  context   otherwise
requires,  wherever used, the singular shall include the plural,  the plural the
singular,  the use of any gender shall be applicable to all genders and the word
"or" is used in the inclusive sense (and/or). The captions of this Agreement are
for  convenience  of reference  only and in no way define,  describe,  extend or
limit  the  scope or intent of this  Agreement  or the  intent of any  provision
contained  in this  Agreement.  The term  "including"  as used herein shall mean
including,  without  limiting the generality of any  description  preceding such
term. The language of this Agreement shall be deemed to be the language mutually
chosen  by the  Parties  and no rule of  strict  construction  shall be  applied
against either Party hereto.

                  16.10  FURTHER  ASSURANCE.  Each Party shall duly  execute and
deliver,  or cause to be duly executed and delivered,  such further  instruments
and do and cause to be done such further acts and things,  including  the filing
of such assignments,  agreements, documents and instruments, as may be necessary
or as the other Party may reasonably  request in connection  with this Agreement
or to carry out more  effectively  the  provisions  and  purposes,  or to better
assure and  confirm  unto such other  Party its rights and  remedies  under this
Agreement.

                  16.11  EXPENSES.   Each  of  Licensee  and  NovaDel  shall  be
responsible for their own expenses  relating to the  negotiation,  execution and
performance of this Agreement.

                  16.12  COUNTERPARTS.  This Agreement may be executed in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.

                  16.13 BINDING.  This  Agreement  shall not be binding upon the
Parties until it has been signed below on behalf of each Party,  in which event,
it shall be effective as of the Effective Date.


                                    Page 35
<PAGE>

     IN WITNESS  WHEREOF,  the duly  authorized  officers  of the  Parties  have
executed  this  Agreement  as of the  dates  set forth  below  their  respective
signatures.

<TABLE>
<CAPTION>
<S>                                            <C>
NOVADEL PHARMA INC.                            MANHATTAN PHARMACEUTICALS, INC.



By: /s/  Gary A. Shangold                     By: /s/  Leonard Firestone
   -----------------------------------------    -------------------------------------------
Name: Gary A. Shangold                        Name: Leonard Firestone

Title: President and Chief Executive Officer  Title: President and Chief Executive Officer

Date: April 8, 2003                           Date: April 4, 2003

</TABLE>

     [Pursuant  to  Item 601(b)(2) of Regulation S-K, the exhibits and schedules
     have  been  omitted from this agreement. The Registrant will furnish a copy
     of  any  omitted  schedule  or  exhibit  to  the  Commission upon request.]

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