Document:

Exhibit 10.36

EMPLOYMENT AGREEMENT

 

        AGREEMENT (the “Agreement”), dated as of December 21, 2004, by and between NOVADEL PHARMA, INC., a [Delaware] corporation with principal executive offices at 25 Minneakoning Road, Flemington, New Jersey 08822 (the “Company”), and Henry Kwan, residing at
37 Knob Hill Drive, Summit, NJ 07901(the “Executive”).

W I T N E S S E T H :

        WHEREAS, the Company desires to employ the Executive as Head of Pharmaceutical Sciences for the Company, and the Executive desires to serve the Company in those capacities, upon the terms and subject to the conditions contained in this Agreement;

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

    1.  Employment.

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

    2.  Term.

        The employment of the Executive by the Company as provided in Section 1 shall be for a period of three (3) years commencing on December 6, 2004, unless sooner terminated in accordance with the provisions of Section 8 below (the “Term”).

    3.  Duties; Best Efforts; Place of Performance.

        (a)  The Executive shall serve as Head of Pharmaceutical Sciences for the Company and shall perform, subject to the direction of the President & Chief Executive Officer of the Company, such duties as are customarily performed by the Head of Pharmaceutical Sciences. The Executive shall also have such other powers and duties as may be from time to time prescribed by the President & CEO of the Company, provided that the nature of the Executive’s powers and duties so prescribed shall not be inconsistent with the
Executive’s position and duties hereunder.

	 
	 	 	 
	

	
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        (b)  The Executive shall devote all of his business time, attention and energies to the business and affairs of the Company, shall use his best efforts to advance the best interests of the Company and shall not during the Term be actively engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage, that will interfere with the performance by the Executive of his duties hereunder or the Executive’s availability to perform such duties or that will adversely
affect, or negatively reflect upon, the Company.
        (c)  The duties to be performed by the Executive hereunder shall be performed primarily at the offices and laboratories of the Company in Flemington, New Jersey, subject to reasonable travel requirements on behalf of the Company.

    4.  Compensation.

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

        (a)  Base Salary. The Company shall pay the Executive a base salary (the “Base Salary”) at a rate of $235,000 per annum, payable in equal bi-weekly installments during the Term. Base Salary shall be subject to customary periodic
review for increase by the Company.

Bonus. At the completion of each full year of Executive’s employment, the Company shall pay the Executive a cash bonus equal to 35% (thirty percent) of his base salary, that is, the sum of $82,250, provided, however, that such bonus shall be payable only upon the successful achievement of certain performance milestones related to the Executive’s role in the Company, which milestones shall be defined and enumerated by mutual agreement between the Executive and the President & CEO of the Company within the first four weeks of Executive’s term of employment, and again at the same time in each succeeding year of Executive’s term of employment with the Company.

 

	 
	 	 	 
	

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

        (c)  Stock Options. Promptly after the date hereof, and as additional compensation for the services to be rendered by the Executive pursuant to this Agreement, the Company shall grant the Executive [non-qualified] stock options (“Stock Options”) to purchase 150,000 (one hundred fifty thousand) shares of Common Stock of the Company pursuant to the Company’s [1998 Stock Option Plan]. Such stock options shall vest ratably over a three-year period ending on the third anniversary of the initial date of Executive’s employment by NovaDel, so that 50,000 shares of the Company’s Common Stock will vest on each of December 6, 2005, December 6, 2006, and on December 6, 2007, subject to the provisions of Section 9 below. The exercise price of said 150,000 shares shall be equal to 110% of the average Fair Market Value (trading price) on the ten days immediately preceding the signing of this Employment Agreement by the Executive. In connection with such grant, the Executive shall enter into the Company’s standard stock option agreement which will incorporate the foregoing vesting schedule and the Stock Option related provisions contained in Section 9 below. All Options will have a 10 year expiration period. 

 

	 
	 	 	 
	

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

        (e)  Other Benefits. The Executive shall be entitled to all rights and benefits for which he shall be eligible under any benefit or other plans (including, without limitation, dental, medical, medical reimbursement and hospital plans, pension plans, employee stock purchase plans, profit sharing plans, bonus plans and other so-called "fringe" benefits) as the Company shall make available to its senior executives from time to
time.

        (f)      Vacation. The Executive shall, during the Term, be entitled to a vacation of four (4) weeks per annum. The Executive shall not be entitled to carry any vacation forward to the next year of employment, as defined in the terms of this Agreement, and shall not receive any compensation for unused vacation days. In addition, the Executive shall be entitled to participate in such Company Holidays and in the number of Sick/Personal/Bereavement days
as may be allotted to its employees from time to time.

        (g)    Moving/relocation Expenses. The Company will provide the Executive with a sum to reimburse him, upon presentation of valid receipts, for various relocation expenses for Executive and his family from their current domicile in Ohio to his home in New Jersey. The Company will also pay for the costs of transporting one vehicle from Ohio to New Jersey. The Company will further reimburse Executive for the unpaid balance of the lease on his apartment in Ohio. All
amounts provided for under the aegis of Moving/relocation Expenses as heretofore written are subject to full restitution by Executive to the Company in the event that Executive leaves the Company before the completion of one (1) year of service.

 

	 
	 	 	 
	

	
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        5.  Confidential Information and Inventions

        (a)  The Executive recognizes and acknowledges that in the course of his duties he is likely to receive confidential or proprietary information owned by the Company, its affiliates or third parties with whom the Company or any such affiliates has an obligation of confidentiality. Accordingly, during and after the Term, the Executive agrees to keep confidential and not disclose or make accessible to any other person or use for any other purpose other than in connection with the fulfillment of his duties under this Agreement, any
Confidential and Proprietary Information (as defined below) owned by, or received by or on behalf of, the Company or any of its affiliates. “Confidential and Proprietary Information” shall include, but shall not be limited to, confidential or proprietary scientific or technical information, data, formulas and related concepts, business plans (both current and under development), client lists, promotion and marketing programs, trade secrets, or any other confidential or proprietary business information relating to development programs, costs, revenues, marketing, investments, sales activities, promotions, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of the Company or of any affiliate or client of the Company. The Executive expressly acknowledges the trade secret status of the Confidential and Proprietary Information and that the Confidential and Proprietary Information constitutes a protectable business interest of the Company. The
Executive agrees: (i) not to use any such Confidential and Proprietary Information for himself or others; and (ii) not to take any Company material or reproductions (including but not limited to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof from the Company’s offices at any time during his employment by the Company, except as required in the execution of the Executive’s duties to the Company. The Executive agrees to return immediately all Company material and reproductions (including but not limited, to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof in his possession to the Company upon request and in any event immediately upon termination of employment.

 

	 
	 	 	 
	

	
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        (b)  Except with prior written authorization by the Company, the Executive agrees not to disclose or publish any of the Confidential and Proprietary Information, or any confidential, scientific, technical or business information of any other party to whom the Company or any of its affiliates owes an obligation of confidence, at any time during or after his employment with the Company.

        (c)  The Executive agrees that all inventions, discoveries, improvements and patentable or copyrightable works (“Inventions”) initiated, conceived or made by him, either alone or in conjunction with others, during the Term shall be the sole property of the Company to the maximum extent permitted by applicable law and, to the
extent permitted by law, shall be “works made for hire” as that term is defined in the United States Copyright Act (17 U.S.C.A., Section 101). The Company shall be the sole owner of all patents, copyrights, trade secret rights, and other intellectual property or other rights in connection therewith. The Executive hereby assigns to the Company all right, title and interest he may have or acquire in all such Inventions. The Executive further agrees to assist the Company in every proper way (but at the Company’s expense) to obtain and from time to time enforce patents, copyrights or other rights on such Inventions in any and all countries, and to that end the Executive will execute all documents necessary:

 

	 
	 	 	 
	

	
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            (i)  to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

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

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

        (e)  The provisions of this Section 5 shall survive any termination of this Agreement. 

 

	 
	 	 	 
	

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

        (a)  The Executive understands and recognizes that his services to the Company are special and unique and that in the course of performing such services the Executive will have access to and knowledge of Confidential and Proprietary Information (as defined in Section 6) and the Executive agrees that, during the Term and for a period of [two (2)] years thereafter, he shall not in any manner, directly or indirectly, on behalf of himself or any person, firm, partnership, joint venture, corporation or other business entity
(“Person”), enter into or engage in any business which is engaged in any business competitive with the business of the Company, either as an individual for his own account, or as a partner, joint venturer, owner, executive, employee, independent contractor, principal, agent, consultant, salesperson, officer, director or shareholder of a Person in a business competitive with the Company within the geographic area of the Company’s business, which is deemed by the parties hereto to be worldwide. The Executive acknowledges that, due to the unique nature of the Company’s business, the loss of any of its clients or business flow or the improper use of its Confidential and Proprietary Information could create significant instability and cause substantial damage to the Company and its
affiliates and therefore the Company has a strong legitimate business interest in protecting the continuity of its business interests and the restriction herein agreed to by the Executive narrowly and fairly serves such an important and critical business interest of the Company. For purposes of this Agreement, the Company shall be deemed to be actively engaged on the date hereof in the development of novel application drug delivery systems for presently marketed prescription and over-the-counter drugs and providing consulting services in connection therewith, and in the future in any other business in which it actually devotes substantive resources to study, develop or pursue. Notwithstanding the foregoing, nothing contained in this Section 6(a) shall be deemed to prohibit the Executive from acquiring or holding, solely for investment, publicly traded securities of any corporation, some or all of the activities of which are competitive with the business of the Company so long as such securities do
not, in the aggregate, constitute more than five percent (5%) of any class or series of outstanding securities of such corporation. 

 

	 
	 	 	 
	

	
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        (b)  During the Term and for two (2) years thereafter, the Executive shall not, directly or indirectly, without the prior written consent of the Company:

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

            (ii)  solicit or accept employment or be retained by any Person who, at any time during the term of this Agreement, was an agent, client or customer of the Company or any of its affiliates where his position would be in direct competition with the lingual spray business of the Company or any such affiliate; or

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

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

 

	 
	 	 	 
	

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

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

 

	 
	 	 	 
	

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

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

    7.  Representations and Warranties by the Executive

The Executive hereby represents and warrants to the Company as follows:

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

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

 

	 
	 	 	 
	

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

        (a)  The Executive’s employment hereunder may be terminated by the Company for Cause. Any of the following actions by the Executive shall constitute “Cause”:

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

            (ii)  Any willful, intentional or grossly negligent act by the Executive having the effect of injuring, in a material way (whether financial or otherwise and as determined in good-faith by the President of the Company), the business or reputation of the Company or any of its affiliates, including but not limited to, any officer, director, executive or shareholder of the Company or any of its affiliates; 

            (iii)  Willful misconduct by the Executive, including insubordination, in respect of the duties or obligations of the Executive under this Agreement;

            (iv)  The Executive’s indictment of any felony or a misdemeanor involving moral turpitude (including entry of a nolo contendere plea);

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

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

 

	 
	 	 	 
	

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

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

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

        (c)  The Executive’s employment hereunder may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” means a breach by the Company of its material obligations under Section 4 of this Agreement which is not cured by the Company within thirty (30) days after notice thereof is given by
the Executive to the Company. 

 

	 
	 	 	 
	

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

    9.  Compensation upon Termination.

        (a)  If the Executive’s employment is terminated as a result of his death, the Company shall (i) pay to the Executive’s estate his Base Salary and any accrued and unpaid Bonus and expense reimbursement amounts through the date of his death and (ii) for the shorter of six (6) months following his death or the balance of the Term (as if such termination had not occurred) provide continuation coverage to the members of the Executive’s family under all major medical and other health, accident, life or other disability
plans and programs in which such family members participated immediately prior to his death. Any Stock Options that have not vested as of the date of the Executive’s death shall be deemed to have expired as of such date.

 

	 
	 	 	 
	

	
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        (b)  If the Executive’s employment is terminated by the Company due to Disability, the Company shall pay to the Executive his Base Salary and any accrued Bonus and expense reimbursement amounts through the date of his termination. In addition, for the shorter of six (6) months following any such termination or the balance of the Term (as if such termination had not occurred), the Company shall (i) continue to pay the Executive the Base Salary in effect at the time of such termination less the amount, if any, then payable to the
Executive under any disability benefits of the Company and (ii) provide the Executive continuation coverage under all major medical and other health, accident, life or other disability plans and programs in which the Executive participated immediately prior to such termination. All Stock Options that have not vested as of the date of termination due to the Executive’s Disability shall be deemed to have expired as of such date.

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

        (d)  If the Executive’s employment is terminated by the Company (or its successor) upon the occurrence of a Change of Control, the Company (or its successor, as applicable) shall (i) continue to pay to the Executive his Base Salary for a period of six (6) months following such termination, and (ii) pay the Executive any prorated accrued and unpaid Bonus and expense reimbursement amounts through the date of termination. The Company’s obligation under clause (i) in the preceding sentence shall be reduced, however, by amounts
otherwise actually earned by the Executive resulting solely from his employment and/or in exchange for services rendered during the six month period following the termination of his employment. All Stock Options that have not vested as of the date of such termination shall be accelerated and deemed to have vested as of such date. 

 

	 
	 	 	 
	

	
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        (e)  If (i) the Executive’s employment is terminated by the Company other than as a result of the Executive’s death and other than for reasons specified in Sections 10(b), (c) or (d), or (ii) the Executive’s employment is terminated by the Executive for Good Reason, the Company shall continue to pay to the Executive his Base Salary for a period of six (6) months following such termination and the Company shall pay the Executive any accrued and unpaid Bonus and expense reimbursement amounts through the date of termination. The
Company’s obligation under clause (i) in the preceding sentence shall be reduced, however, by any amounts otherwise actually earned by the Executive resulting solely from his employment and/or in exchange for services rendered during the six month period following the termination of his employment. In addition, for the shorter of twelve (12) months following any such termination or the balance of the Term (as if such termination had not occurred), the Company shall provide the Executive continuation coverage under all major medical and other health, accident, life or other disability plans or
programs in which the Executive participated immediately prior to such termination. All Stock Options that have not vested as of the date of termination shall be deemed to have expired as of such date.

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

 

	 
	 	 	 
	

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

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

    10.  Miscellaneous.

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

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

 

	 
	 	 	 
	

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

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

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

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

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

 

	 
	 	 	 
	

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

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

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

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

 

	 
	 	 	 
	

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

	
By:
	
/s/ Gary A. Shangold, M.D.

	
    Gary A. Shangold, M.D.

    President & CEO

    NovaDel Pharma Inc.

	

	
Date: 12-22-04    

 

 

	
By:
	
/s/ Henry Kwan

	
    Henry Kwan, Ph.D.

	 
	
Date: 12-21-04Exhibit 10.35

                              EMPLOYMENT AGREEMENT

      AGREEMENT  (the  "AGREEMENT"),  effective as of December 20, 2004,  by and
between NOVADEL PHARMA, INC., a [Delaware]  corporation with principal executive
offices at 25 Minneakoning Road,  Flemington,  New Jersey 08822 (the "COMPANY"),
and MICHAEL E.B.  SPICER,  residing at 25 Princess Pine Lane,  Easton,  CT 06612
(the "EXECUTIVE").

                              W I T N E S S E T H :

      WHEREAS,  the Company  desires to employ the Executive as Chief  Financial
Officer of the Company,  and the Executive desires to serve the Company in those
capacities,  upon the terms and  subject  to the  conditions  contained  in this
Agreement;

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

      1. Employment.

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

      2. Term.

            The  employment  of the  Executive  by the  Company as  provided  in
Section 1 shall be for a period of three (3) years  commencing  on December  20,
2004,  unless sooner  terminated in accordance  with the provisions of Section 8
below (the "TERM").

<PAGE>
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      3. Duties; Best Efforts; Place of Performance.

            (a) The  Executive  shall  serve as Chief  Financial  Officer of the
Company and shall  perform,  subject to the  direction of the  President & Chief
Executive  Officer of the Company,  such duties as are customarily  performed by
the Chief Financial Officer. The Executive shall also have such other powers and
duties  as may be from time to time  prescribed  by the  President  & CEO of the
Company,  provided  that the  nature of the  Executive's  powers  and  duties so
prescribed  shall not be inconsistent  with the Executive's  position and duties
hereunder.

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

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

      4. Compensation.

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

<PAGE>
                                                                               3

            (a) Base Salary.  The Company  shall pay the Executive a base salary
(the "BASE SALARY") at a rate of $235,000 per annum,  payable in equal bi-weekly
installments during the Term. Base Salary shall be subject to customary periodic
review for increase by the Company.

Bonus.  At the  completion  of each full  year of  Executive's  employment,  the
Company  shall pay the  Executive a cash bonus equal to 30% (thirty  percent) of
his base salary, that is, the sum or $70,500, provided, however, that such bonus
shall be payable only upon the  successful  achievement  of certain  performance
milestones  related to the  Executive's  role in the Company,  which  milestones
shall be defined and  enumerated by mutual  agreement  between the Executive and
the  President  & CEO of the Company  within the first two weeks of  Executive's
term of  employment,  and  again at the  same  time in each  succeeding  year of
Executive's term of employment with the Company.

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

            (c) Stock Options. Promptly after the date hereof, and as additional
compensation  for the services to be rendered by the Executive  pursuant to this
Agreement,  the Company shall grant the Executive  [non-qualified] stock options
("STOCK  OPTIONS")  to purchase  100,000  shares of Common  Stock of the Company
pursuant to the  Company's  [1998 Stock Option  Plan].  Such stock options shall
vest ratably over a three-year  period  ending on the third  anniversary  of the
initial date of Executive's  employment by NovaDel, so that 33,333 shares of the
Company's  Common  Stock will vest on each of December 20, 2005 and December 20,
2006, and 33,334 shares of the Company's  Common Stock will vest on December 20,
2007,  subject to the provisions of Section 9 below.  The exercise price of said
100,000  shares shall be equal to 110% of the average Fair Market Value (trading
price) on the ten days  immediately  preceding  the  signing of this  Employment
Agreement by the Executive.  In connection with such grant,  the Executive shall
enter into the Company's  standard stock option agreement which will incorporate
the foregoing vesting schedule and the Stock Option related provisions contained
in Section 9 below. All Options will have a 10 year expiration period,  provided
that this is pursuant to the Company's [1998 Stock Option Plan].

<PAGE>
                                                                               4

            (d)  Expenses.  The Company  shall  reimburse  the Executive for all
normal, usual and necessary expenses incurred by the Executive in furtherance of
the  business  and  affairs  of the  Company,  including  reasonable  travel and
entertainment,  upon timely  receipt by the Company of  appropriate  vouchers or
other proof of the Executive's expenditures and otherwise in accordance with any
expense reimbursement policy as may from time to time be adopted by the Company.
The Company shall also reimburse the Executive for all  reasonable  professional
fees,  including but not limited to, the annual  licensing  fees for a certified
public accountant.

            (e) Other  Benefits.  The Executive  shall be entitled to all rights
and  benefits  for which he shall be  eligible  under any benefit or other plans
(including,  without  limitation,  dental,  medical,  medical  reimbursement and
hospital plans,  pension plans,  employee stock purchase  plans,  profit sharing
plans,  bonus plans and other so-called  "fringe" benefits) as the Company shall
make available to its senior executives from time to time.

<PAGE>
                                                                               5

            (f) Vacation. The Executive shall, during the Term, be entitled to a
vacation  of four (4) weeks per annum.  The  Executive  shall not be entitled to
carry any  vacation  forward to the next year of  employment,  as defined in the
terms of this  Agreement,  and shall not  receive  any  compensation  for unused
vacation  days. In addition,  the Executive  shall be entitled to participate in
such Company Holidays and in the number of Sick/Personal/Bereavement days as may
be allotted to its employees from time to time.

            (g)  Moving/relocation   Expenses.  The  Company  will  provide  the
Executive  with a sum not to  exceed  twenty-five  thousand  dollars  ($25,000),
either as one lump sum to be used at his discretion, or alternatively reimbursed
(upon presentation of valid receipts),  to cover various relocation expenses for
Executive  and his family  from their  current  domicile to a location in closer
proximity to the  Company.  The Company will also pay for up to ninety (90) days
of storage of household  goods,  if  necessary.  Until  Executive is prepared to
relocate his family,  the Company will  reimburse  Executive for his rent on his
current  apartment in Princeton,  NJ for a period of six (6) months,  as well as
for commutation  expenses from Connecticut (tolls & mileage) for six (6) months.
All  amounts  provided  for  under the aegis of  Moving/relocation  Expenses  as
heretofore  written are subject to full  restitution by Executive to the Company
in the event that Executive  leaves the Company before the completion of one (1)
year of service.

      5. Confidential Information and Inventions

            (a) The Executive  recognizes and acknowledges that in the course of
his duties he is likely to receive confidential or proprietary information owned
by the Company,  its  affiliates  or third  parties with whom the Company or any
such affiliates has an obligation of  confidentiality.  Accordingly,  during and
after the Term, the Executive agrees to keep

<PAGE>
                                                                               6

confidential and not disclose or make accessible to any other person or use for
any other purpose other than in connection with the fulfillment of his duties
under this Agreement, any Confidential and Proprietary Information (as defined
below) owned by, or received by or on behalf of, the Company or any of its
affiliates. "Confidential and Proprietary Information" shall include, but shall
not be limited to, confidential or proprietary scientific or technical
information, data, formulas and related concepts, business plans (both current
and under development), client lists, promotion and marketing programs, trade
secrets, or any other confidential or proprietary business information relating
to development programs, costs, revenues, marketing, investments, sales
activities, promotions, credit and financial data, manufacturing processes,
financing methods, plans or the business and affairs of the Company or of any
affiliate or client of the Company. The Executive expressly acknowledges the
trade secret status of the Confidential and Proprietary Information and that the
Confidential and Proprietary Information constitutes a protectable business
interest of the Company. The Executive agrees: (i) not to use any such
Confidential and Proprietary Information for himself or others; and (ii) not to
take any Company material or reproductions (including but not limited to
writings, correspondence, notes, drafts, records, invoices, technical and
business policies, computer programs or disks) thereof from the Company's
offices at any time during his employment by the Company, except as required in
the execution of the Executive's duties to the Company. The Executive agrees to
return immediately all Company material and reproductions (including but not
limited, to writings, correspondence, notes, drafts, records, invoices,
technical and business policies, computer programs or disks) thereof in his
possession to the Company upon request and in any event immediately upon
termination of employment.
<PAGE>
                                                                               7

            (b) Except with prior  written  authorization  by the  Company,  the
Executive  agrees  not to  disclose  or  publish  any of  the  Confidential  and
Proprietary Information, or any confidential,  scientific, technical or business
information of any other party to whom the Company or any of its affiliates owes
an obligation of confidence, at any time during or after his employment with the
Company.

            (c)  The  Executive   agrees  that  all   inventions,   discoveries,
improvements and patentable or  copyrightable  works  ("INVENTIONS")  initiated,
conceived or made by him, either alone or in conjunction with others, during the
Term shall be the sole property of the Company to the maximum  extent  permitted
by applicable law and, to the extent  permitted by law, shall be "works made for
hire" as that term is defined in the United  States  Copyright Act (17 U.S.C.A.,
Section 101).  The Company  shall be the sole owner of all patents,  copyrights,
trade  secret  rights,  and  other  intellectual  property  or other  rights  in
connection  therewith.  The Executive  hereby  assigns to the Company all right,
title and interest he may have or acquire in all such Inventions.  The Executive
further  agrees to assist the Company in every proper way (but at the  Company's
expense) to obtain and from time to time enforce  patents,  copyrights  or other
rights  on  such  Inventions  in any  and all  countries,  and to  that  end the
Executive will execute all documents necessary:

                  (i) to apply for,  obtain and vest in the name of the  Company
alone (unless the Company otherwise directs) letters patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and

<PAGE>
                                                                               8

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

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

            (e) The  provisions of this Section 5 shall survive any  termination
of this Agreement.

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

            (a) The Executive  understands  and recognizes  that his services to
the Company are  special  and unique and that in the course of  performing  such
services the  Executive  will have access to and knowledge of  Confidential  and
Proprietary Information (as defined in Section 6) and the Executive agrees that,
during the Term and for a period of [two (2)] years

<PAGE>
                                                                               9

thereafter, he shall not in any manner, directly or indirectly, on behalf of
himself or any person, firm, partnership, joint venture, corporation or other
business entity ("PERSON"), enter into or engage in any business which is
engaged in any business competitive with the business of the Company, either as
an individual for his own account, or as a partner, joint venturer, owner,
executive, employee, independent contractor, principal, agent, consultant,
salesperson, officer, director or shareholder of a Person in a business
competitive with the Company within the geographic area of the Company's
business, which is deemed by the parties hereto to be worldwide. The Executive
acknowledges that, due to the unique nature of the Company's business, the loss
of any of its clients or business flow or the improper use of its Confidential
and Proprietary Information could create significant instability and cause
substantial damage to the Company and its affiliates and therefore the Company
has a strong legitimate business interest in protecting the continuity of its
business interests and the restriction herein agreed to by the Executive
narrowly and fairly serves such an important and critical business interest of
the Company. For purposes of this Agreement, the Company shall be deemed to be
actively engaged on the date hereof in the development of novel application drug
delivery systems for presently marketed prescription and over-the-counter drugs
and providing consulting services in connection therewith, and in the future in
any other business in which it actually devotes substantive resources to study,
develop or pursue. Notwithstanding the foregoing, nothing contained in this
Section 6(a) shall be deemed to prohibit the Executive from acquiring or
holding, solely for investment, publicly traded securities of any corporation,
some or all of the activities of which are competitive with the business of the
Company so long as such securities do not, in the aggregate, constitute more
than five percent (5%) of any class or series of outstanding securities of such
corporation.

<PAGE>
                                                                              10

            (b) During the Term and for two (2) years thereafter,  the Executive
shall not,  directly or  indirectly,  without the prior  written  consent of the
Company:

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

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

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

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

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

<PAGE>
                                                                              11

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

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

<PAGE>
                                                                              12

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

      7. Representations and Warranties by the Executive

The Executive hereby represents and warrants to the Company as follows:

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

                  (ii)  The  Executive  has the  full  right,  power  and  legal
capacity to enter and deliver this Agreement and to perform his duties and other
obligations  hereunder.  This Agreement constitutes the legal, valid and binding
obligation  of the  Executive  enforceable  against him in  accordance  with its
terms.  No approvals or consents of any persons or entities are required for the
Executive to execute and deliver this  Agreement or perform his duties and other
obligations hereunder.
<PAGE>
                                                                              13

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

            (a) The  Executive's  employment  hereunder may be terminated by the
Company  for  Cause.  Any of  the  following  actions  by  the  Executive  shall
constitute "CAUSE":

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

                  (ii) Any willful,  intentional or grossly negligent act by the
Executive having the effect of injuring, in a material way (whether financial or
otherwise and as determined in good-faith by the President of the Company),  the
business or  reputation of the Company or any of its  affiliates,  including but
not limited to, any officer,  director,  executive or shareholder of the Company
or any of its affiliates;

                  (iii)   Willful   misconduct  by  the   Executive,   including
insubordination,  in respect of the duties or obligations of the Executive under
this Agreement;

                  (iv) The Executive's indictment of any felony or a misdemeanor
involving moral turpitude (including entry of a nolo contendere plea);

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

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

<PAGE>
                                                                              14

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

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

            (b) The  Executive's  employment  hereunder may be terminated by the
Company due to the Executive's  Disability.  For purposes of this  Agreement,  a
termination  for  "DISABILITY"  shall occur (i) when the Company has  provided a
written  termination  notice to the Executive  supported by a written  statement
from a reputable  independent  physician to the effect that the Executive  shall
have become so physically or mentally  incapacitated  as to be unable to resume,
within the ensuing  twelve (12) months,  his  employment  hereunder by reason of
physical  or mental  illness  or  injury,  or (ii) upon  rendering  of a written
termination  notice  by the  Company  after  the  Executive  has been  unable to
substantially  perform his duties hereunder for 90 or more consecutive  days, or
more than 120 days in any  consecutive  twelve  month  period,  by reason of any
physical or mental  illness or injury.  For purposes of this Section  8(b),  the
Executive  agrees to make himself  available and to cooperate in any  reasonable
examination by a reputable independent physician retained by the Company.

            (c) The  Executive's  employment  hereunder may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "GOOD REASON" means a
breach  by the  Company  of its  material  obligations  under  Section 3 of this
Agreement which is not cured by the Company within thirty (30) days after notice
thereof is given by the Executive to the Company.

<PAGE>
                                                                              15

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

      9. Compensation upon Termination.

            (a) If the  Executive's  employment is terminated as a result of his
death,  the Company shall (i) pay to the Executive's  estate his Base Salary and
any accrued and unpaid Bonus and expense  reimbursement amounts through the date
of his death and (ii) for the shorter of six (6) months  following  his death or
the  balance  of the  Term (as if such  termination  had not  occurred)  provide
continuation  coverage to the members of the Executive's  family under all major
medical and other health,  accident, life or other disability plans and programs
in which such family members  participated  immediately  prior to his death. Any
Stock Options that have not vested as of the date of the Executive's death shall
be deemed to have expired as of such date.

<PAGE>
                                                                              16

            (b) If the  Executive's  employment is terminated by the Company due
to  Disability,  the Company  shall pay to the Executive his Base Salary and any
accrued  Bonus  and  expense  reimbursement  amounts  through  the  date  of his
termination.  In addition,  for the shorter of six (6) months following any such
termination  or the  balance  of  the  Term  (as if  such  termination  had  not
occurred),  the Company  shall (i) continue to pay the Executive the Base Salary
in effect at the time of such termination less the amount,  if any, then payable
to the Executive  under any disability  benefits of the Company and (ii) provide
the Executive  continuation  coverage  under all major medical and other health,
accident,  life or other  disability  plans and programs in which the  Executive
participated immediately prior to such termination.  All Stock Options that have
not vested as of the date of termination due to the Executive's Disability shall
be deemed to have expired as of such date.

            (c) If the  Executive's  employment is terminated by the Company for
Cause or by the Executive  other than for Good Reason,  the Company shall pay to
the  Executive  his Base  Salary  through  the date of his  termination  and the
Executive  shall  have no  further  entitlement  to any  other  compensation  or
benefits from the Company. All Stock Options that have not vested as of the date
of any such termination  shall be deemed to have expired as of such date and, in
addition,  the  Executive's  right to exercise  any vested Stock  Options  shall
terminate as of such date.

            (d) If the  Executive's  employment is terminated by the Company (or
its successor)  upon the occurrence of a Change of Control,  the Company (or its
successor,  as  applicable)  shall (i) continue to pay to the Executive his Base
Salary for a period of one (1) year following such termination, and (ii) pay the
Executive  any  prorated  accrued  and unpaid  Bonus and  expense  reimbursement
amounts through the date of termination.  The Company's  obligation under clause
(i) in the preceding  sentence shall be reduced,  however,  by amounts otherwise
actually earned by the Executive resulting solely from his employment, and/or in
exchange  for  services  rendered,  during  the one year  period  following  the
termination of his employment.  All Stock Options that have not vested as of the
date of such  termination  shall be accelerated  and deemed to have vested as of
such date.

<PAGE>
                                                                              17

            (e) If (i) the  Executive's  employment is terminated by the Company
other  than as a result of the  Executive's  death and  other  than for  reasons
specified in Sections 10(b),  (c) or (d), or (ii) the Executive's  employment is
terminated by the Executive for Good Reason,  the Company shall  continue to pay
to the  Executive  his Base Salary for a period of one (1) year  following  such
termination and the Company shall pay the Executive any accrued and unpaid Bonus
and expense reimbursement amounts through the date of termination. The Company's
obligation under clause (i) in the preceding sentence shall be reduced, however,
by any amounts otherwise actually earned by the Executive  resulting solely from
his employment,  and/or in exchange for services  rendered,  during the one year
period following the termination of his employment. In addition, for the shorter
of twelve (12) months  following any such termination or the balance of the Term
(as if such  termination  had not  occurred),  the  Company  shall  provide  the
Executive  continuation  coverage  under all  major  medical  and other  health,
accident,  life or other  disability  plans or programs  in which the  Executive
participated immediately prior to such termination.  All Stock Options that have
not vested as of the date of  termination  shall be deemed to have expired as of
such date.

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

<PAGE>
                                                                              18

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

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

      10. Miscellaneous.

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

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

<PAGE>
                                                                              19

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

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

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

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

<PAGE>
                                                                              20

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

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

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

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

<PAGE>
                                                                              21

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

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

By:      /s/ Gary A. Shangold, M.D.
         --------------------------
         Gary A. Shangold, M.D.
         President & CEO
         NovaDel Pharma Inc.

Date:  12-22-04
       --------
By: /s/ Michael E. B. Spicer
    ------------------------
        Michael E. B. Spicer

Date:
     -----------------------

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