Document:

INFORMATION
        MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
        TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE SECURITIES
        AND
        EXCHANGE COMMISSION.

    

     

    EXHIBIT
      10.7

    

    SECOND
      AMENDMENT TO

     

      
        

      

    

     

    LICENSE
      AND DEVELOPMENT AGREEMENT

     

    
      
        

      

    

     

    THIS
      SECOND AMENDMENT TO LICENSE AND DEVELOPMENT AGREEMENT (this "Agreement"),
      effective as of June 22, 2004 (the "Effective Date"), is entered into by and
      between NOVADEL PHARMA INC., a Delaware corporation ("NOVADEL"), and THE
      VETERINARY COMPANY, 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
      pursuant to certain patents) with respect to buccal 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 certain pharmaceutical products
      that will be administered to non-human animals using the Technology on the
      terms
      and conditions set forth herein; and

     

    WHEREAS,
      Licensee and NovaDel entered into a License and Development Agreement as of
      October 23, 2003 outlining terms of the foregoing (the "Original
      Agreement);

     

    WHEREAS,
      the Original Agreement was amended as of October 24, 2003 (the "First
      Amendment");

     

    WHEREAS,
      the Licensee and NovaDel wish to amend the Original Agreement, as amended by
      the
      First Amendment, with this Agreement, and the parties hereby intend that the
      Original Agreement and the First Amendment shall be, as of the date hereof,
      null
      and void and that this Agreement shall supersede both the Original Agreement
      and
      the First Amendment in their entirety as of the date hereof;

     

    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:

     

    
      
        
        

      

      
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    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 Article 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.

     

    1.3  "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.

     

    1.4  "CONFIDENTIAL
      INFORMATION" shall have the meaning set forth in Article 16.

     

    1.5  "CONTROL"
      shall mean, with respect to any item of Information and Inventions, Patent
      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.

     

    1.6  "DESIGNATED
      COMPOUND" shall mean a separate chemical active ingredient collectively, the
      "Designated Compounds" which are each of the First Designated Compound, Second
      Designated Compound, Third Designated Compound, Fourth Designated Compound
      and
      Additional Designated Compounds listed on Exhibit 3 when such compound(s) are
      added to Exhibit 3. For clarity, it is acknowledged that a Designated Compound
      is not a new formulation, salt or ester of a previously identified Designated
      Compound. The "First Designated Compound" shall mean the compound designated
      as
      the "First Designated Compound" on Exhibit 3 when and if such compound is added
      to Exhibit 3 in accordance with Article 3. The "Second Designated Compound"
      shall mean the compound containing a different active ingredient than the First
      Designated Compound designated as the "Second Designated Compound" on Exhibit
      3
      when and if such compound is added to Exhibit 3 in accordance with Article
      3.
      The "Third Designated Compound" shall mean the compound containing a different
      active ingredient than either the First Designated Compound or the Second
      Designated Compound designated as the "Third Designated Compound " on Exhibit
      3
      when and if such compound is added to Exhibit 3 in accordance with Article
      3.
      The "Fourth Designated Compound" shall mean the compound containing a different
      active ingredient than either the First Designated Compound, the Second
      Designated Compound or the Third Designated Compound designated as the "Fourth
      Designated Compound " on Exhibit 3 when and if such compound is added to Exhibit
      3 in accordance with Article 3. The "Additional Designated Compound" shall
      refer
      to each Designated Compound Exhibit 3 other than the First Designated Compound,
      Second Designated Compound, Third Designated Compound, or Fourth Designated
      Compound.

     

    
      
        
        

      

      
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    1.7  "CANDIDATE
      COMMITTEE" shall have the meaning set forth in Article 3.2.1.

     

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

     

    1.9  "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.

     

    1.10  "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.

     

    1.11  "EXPLOITATION"
      shall mean the making, having made, importation, use, sale, offering for sale
      of
      a licensed product or process, including the research, development,
      registration, modification, improvement, manufacture, storage, optimization,
      import, export, transport, distribution, promotion, marketing, sale or other
      disposition of a licensed product or process.

     

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

     

    1.13  "FIELD
      OF
      USE" shall mean all commercial applications of buccal sprays for the metered
      delivery of pharmaceutical materials for the treatment, prevention, or diagnosis
      of diseases in non-human animals.

     

    1.14  "FIRST
      COMMERCIAL SALE" shall mean the first sale of the Licensed Product in a country
      under this agreement in an arms' length transaction to an unaffiliated third
      party.

     

    1.15  "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 and which is necessary or useful to commercialize the Licensed
      Process or Licensed product in the Field Improvement shall not include those
      Improvements, inventions, conceptions, or reductions to practice by Licensee
      that are applicable solely to the veterinary industry, or which did not rely
      on
      Licensed Technology.

     

    
      
        
        

      

      
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    1.16  "INADA"
      shall mean an investigational new animal drug application filed with the FDA
      or
      any equivalent application required by any Regulatory Authority for approval
      to
      commence testing a Licensed Product in animals. 

     

    1.17  "INDEMNIFICATION
      CLAIM NOTICE" shall have the meaning set forth in Article 10.3.1.

     

    1.18  "INDEMNIFIED
      PARTY" shall have the meaning set forth in Article 10.3.1.

     

    1.19  "INFRINGEMENT
      SUIT" shall have the meaning set forth in Article 6.9.2.

     

    1.20  "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) relating to a Licensed Technology, Licensed Product or Licensed
      Process.

     

    1.21  "JOINT
      PATENTS" shall mean the patents and patent applications jointly invented and/or
      owned by Licensee and NovaDel that are filed during the Term.

     

    1.22  ."JOINT
      IMPROVEMENTS" shall be those Improvements (that include Joint Patents and Joint
      Technology) that are made and owned together by NovaDel and
      Licensee.

     

    1.23  "JOINT
      TECHNOLOGY" shall be Technology that is made and owned together by NovaDel
      and
      Licensee.

     

    1.24  "LICENSED
      PROCESS" shall mean the proprietary buccal spray technology for the delivery
      of
      active pharmaceutical compounds through the mucosal membrane of the mouth or
      using an aerosol or pump spray device that is under the Control of NovaDel
      as of
      the Effective Date and any Improvements thereto by NovaDel during the term
      of
      this Agreement.

     

    1.25  "LICENSED
      PRODUCT(S)" shall mean buccal sprays for the metered delivery of pharmaceutical
      products within the Field of Use.

     

    1.26  "LICENSED
      TECHNOLOGY" shall mean the NovaDel
      Patents and the NovaDel Know-How and any Drug Master File or its equivalent
      submitted
      to a
      regulatory agency by NovaDel, collectively, but only with respect to the
      Exploitation of Licensed Products within the Field of Use.

     

    1.27  "LICENSED
      TRADEMARK" shall mean those Trademarks Controlled by NovaDel as of the execution
      date and during the term of this agreement which cover licensed products 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.

     

    
      
        
        

      

      
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    1.28  "LICENSEE"
      shall mean The Veterinary Company, Inc., a Delaware corporation.

     

    1.29  "MANUFACTURING
      AGREEMENT" shall mean the Manufacturing and Formulation Agreement for clinical
      trial material referred to Article 3.1.

     

    1.30  MATERIAL
      IMPROVEMENT shall mean a Joint Patent which was not directly envisioned or
      directly foreshadowed by NovaDel Patents as of the date of execution of this
      Agreement.

     

    1.31  "MINIMUM
      FINANCING" shall mean [***].

     

    1.32  "NADA"
      shall mean any New Animal Drug Application (or an Abbreviated New Animal Drug
      Application) filed pursuant to the requirements of the FDA, and any equivalent
      application required by any Regulatory Authority for the marketing, sale or
      use
      of the Licensed Products in the Territory.

     

    1.33  "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.

     

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

     

    1.35  "NOVADEL
      KNOW-HOW" shall mean all Information and Inventions Controlled by 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 Licensed Products
      or
      (ii) relate to Improvements to the Licensed Product, during the term of this
      Agreement and (b) are not generally known, but excluding any Information and
      Inventions to the extent covered by or claimed by any NovaDel
      Patents.

     

    1.36  "NOVADEL
      PATENTS" shall mean the Patents and patent applications that NovaDel Controls
      (a) as of the Effective Date, (b) that are filed during the Term by NovaDel
      and
      describe or claim the Licensed Process or Licensed Product or its use or
      manufacture, (c) any Improvements to the Licensed Products or Licensed Process
      that are conceived and reduced to practice during the term of the Agreement
      or
      (d) any Patents owned or controlled by NovaDel that the manufacturing, use,
      sale, or commercialization of a Licensed Product by the Licensee or its
      Sublicensee would infringe upon but for this Agreement. 

     

    
      
        
        

      

      
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    1.37  "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 foreign or international
      equivalent of any of the foregoing relating to the Technology.

     

    1.38  "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 Products in a country
      in the Territory, including (a) any approval of any Licensed Product (including
      any INADAs, NADAs, 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.

     

    1.39  "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
      Products in the Territory.

     

    1.40  "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 Products, and all data contained in any of
      the
      foregoing, including all regulatory drug lists, advertising and promotion
      documents, adverse event files and complaint files.

     

    1.41  "SUBLICENSEE"
      shall mean any Third Party to which Licensee grants a sublicense pursuant to
      Article 2.

     

    1.42  "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 Articles 4.4 and 4.5.

     

    1.43  "TECHNOLOGY"
      shall mean buccal sprays for the metered delivery of pharmaceutical
      products.

     

    1.44  "TERM"
      shall have the meaning set forth in Article 7.

     

    1.45  "TERRITORY"
      shall mean the entire world.

     

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

     

    1.47  "THIRD
      PARTY CLAIM" shall have the meaning set forth in Article 10.3.2.

     

    
      
        
        

      

      
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    1.48  "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.

     

    1.49  "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, and
      (c) in the case of a patent application claim, has not been pending for more
      than seven years.

     

    ARTICLE 2

    GRANT
      OF
      RIGHTS

     

    2.1  LICENSE
      GRANTS TO LICENSEE.

     

    2.1.1  Subject
      to Article 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 Article 2),
      royalty-bearing, exclusive right and license under the Licensed Technology,
      Improvements, Patents, Joint Technology, Joint Improvements and Joint Patents
      within the Field of Use to Exploit Licensed Products in the Territory, to the
      full end of the Term for which the Licensed Technology is licensed, unless
      sooner terminated as hereinafter provided. For purposes of clarity, the License
      granted hereunder shall in no way be interpreted to preclude NovaDel or any
      Affiliate, licensee or sub-licensee of the NovaDel Patents and/or Licensed
      Technology in pre-clinical animal testing of a compound ultimately intended
      for
      human use.

     

    2.1.2  
      Subject
      to Article 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 Article 2.5), 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 Products
      licensed under Article 2.1.1 in the Territory, to the full end of the Term
      for
      which the Licensed Products are licensed, unless sooner terminated as
      hereinafter provided.

     

    2.1.3  As
      partial consideration for the grant of this license, Licensee shall not enter
      into an Agreement to sell Licensed Products with a Third Party, that is a direct
      competitor of NovaDel, which develops, manufactures or sells buccal spray to
      treat animals without the consent of NovaDel for the term of this
      agreement.

     

    2.1.4  Neither
      Party shall take any action against a Third Party, including but not limited
      to
      bringing an infringement proceeding, pertaining to Joint Patents without the
      consent of the other Party, which shall not be unreasonably
      withheld.

     

    
      
        
        

      

      
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    2.2  RETAINED
      RIGHTS. NovaDel retains all right, title and interest, including the right
      to
      grant licenses to Third Parties, in and to the Licensed Technology not
      specifically granted to the Licensee under this Agreement, other than those
      rights Controlled or co-owned by Licensee. Licensee shall have no rights,
      express or implied, with respect to the Licensed Technology or the Licensed
      Trademarks, except as expressly set forth in Article 2, 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 in
      connection with the development or Exploitation of Licensed Products, or the
      Licensed Trademarks, directly or indirectly, for any purpose other than the
      Exploitation of Licensed Products hereunder.

     

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

     

    2.3.1  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
      hereunder and shall deliver copies of all reports (including relating to
      royalties and other payments) received by Licensee from such
      Sublicensees.

     

    2.3.2  Termination
      of this Agreement by NovaDel pursuant to Article 8 with respect to Licensee
      shall not terminate any sublicense granted by Licensee pursuant to this Article
      2.3 with respect to a Sublicensee, provided that (a) such Sublicensee is not
      in
      breach of any provision of this Agreement; provided however, if Sublicensee
      is
      in breach, NovaDel shall give Licensee written notice of breach and 60 days
      to
      cure. In such case, NovaDel shall assume and perform all obligations of Licensee
      under the sublicense agreement.

     

    2.3.3  Licensee
      shall not grant a Sublicense to Joint Patents outside of the Field of Use
      without the consent of NovaDel. Licensee may grant a sublicense to Joint Patents
      in the Field.

     

    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 Products in the Territory. NovaDel shall
      perform or cause to be performed, on behalf of Licensee, certain development
      activities in accordance with a Manufacturing Agreement to provide Licensed
      Product for use in clinical trials. Within thirty days of the execution of
      this
      Agreement, the parties hereto shall execute such Manufacturing Agreement that
      is
      not inconsistent with the terms herein and which shall govern the manufacture
      of
      Licensed Product for clinical trials.. The Parties within sixty days of the
      execution of this Agreement shall execute a Second Manufacturing Agreement
      for
      the production of Licensed Product for commercial purposes. Except as set forth
      herein and in the Manufacturing Agreements, Licensee shall be solely responsible
      for all costs and expenses in connection with all development and
      commercialization activities.

     

    3.2  CANDIDATE
      COMMITTEE.

     

    3.2.1  FORMATION
      AND AUTHORITY OF CANDIDATE COMMITTEE. NovaDel and Licensee shall establish
      a
      candidate committee (the "Candidate Committee"), which shall approve the
      selection of each product candidate that Licensee intends to license under
      this
      Agreement. Upon approval of each product candidate, such compound shall be
      listed on Exhibit 3 to this Agreement as the Candidate Committee deems
      appropriate. The Candidate Committee may not unreasonably withhold consent
      to
      the Licensee to add a compound to Exhibit 3. 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. From time to time, each Party
      may substitute its representatives on written notice to the other
      Party.

     

    3.2.2  PROCEDURAL
      RULES OF CANDIDATE COMMITTEE. The Candidate Committee shall meet prior to the
      commencement of the development of a product candidate or as otherwise agreed
      to
      by the Parties, at the offices of NovaDel. The Candidate Committee shall adopt
      such standing rules as shall be necessary for its work. A quorum of the
      Candidate Committee shall exist whenever there is present at a meeting at least
      one representative appointed by each Party. Members of the Candidate 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 Candidate
      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.

     

    
      
        
        

      

      
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    3.2.3  DISPUTE
      RESOLUTION. If the Candidate 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 in good faith. 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, then Chief Executive Officer of the Licensee shall have the
      sole right to choose a product candidate, and such product candidate shall
      be
      added to Exhibit 3 as a Designated Compound. Full consideration will be given
      to
      NovaDel's goodwill when making this decision for a product candidate under
      a
      good faith dispute.

     

    3.2.4  LIMITATIONS
      ON AUTHORITY OF CANDIDATE 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
      Candidate Committee unless such delegation or vesting of rights is expressly
      provided for in this Agreement or the Parties expressly so agree in writing.
      The
      Candidate Committee shall not have the power to amend or modify this Agreement,
      which may only be amended or modified as provided in Article 17.4. 

     

    3.3  Formulation
      Activities. NovaDel shall manufacture and supply Licensee with Licensed Product
      for clinical development of the Licensed Product. As such NovaDel shall present
      Licensee with a suitable formulation for a Designated Compound approved by
      Candidate Committee no later than the targeted timeframes for formulation of
      Designated Compound as presented in Exhibit 1. Furthermore, the cost for
      development of such Designated Compound shall be determined by the schedule
      of
      expenses presented in Exhibit 2 and the cost of all materials needed to
      formulate the Designated Compound which shall include, but not exclusively;
      active and inactive ingredients, components, bottles, caps etc. presented below
      and. All such reasonable and customary costs shall be paid by [***]. NovaDel
      shall formulate designated compounds sequentially while working solely in the
      labs located at 31 State Highway 12, Flemington, NJ and shall formulate no
      more
      than two designated compounds simultaneously when working at new labs at 25
      Minneakoning Road, Flemington, NJ. The first formulation will begin on payment
      of the upfront licensing fee as per 4.4.1. The new labs at 25 Minneakoning
      Road,
      Flemington, NJ will be completed no later than nine months from Effective
      Date.

     

    
      
        
        

      

      
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    3.4  NovaDel
      shall source the Designated Compound (i.e., active ingredient) for the
      manufacture of the clinical trial formulation. Licensee shall have input and
      shall be allowed to provide timely recommendations for potential sources of
      such
      active ingredient. NovaDel shall take into consideration the timing and cost
      of
      the material as well as the reliability of the supplier.

     

    3.5  REGULATORY
      APPROVALS. All INADAs, NADAs and other filings, applications or requests
      pursuant to or in connection with the Regulatory Approvals required to Exploit
      a
      Licensed Product 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 Products
      and
      any data included or referenced therein for all purposes in connection with
      the
      treatment of humans, unless such use would violate the exclusive rights granted
      to Licensee under this Agreement.

     

    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
      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 Products
      on a worldwide basis, provided that the product labeling and promotional
      materials disclose that the Licensed Products are delivered using the Licensed
      Process and include the Licensed Trademarks.

     

    3.8  DILIGENCE
      OBLIGATIONS. Licensee shall use Commercially Reasonable Efforts to (a) develop
      and commercialize the Licensed Products in the Territory in accordance with
      the
      terms and conditions of this Agreement; (b) obtain Regulatory Approval(s) with
      respect to each Licensed Product in the Territory; and (c) thereafter diligently
      and aggressively Exploit each 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. NovaDel shall use Commercially
      Reasonable Efforts to formulate and manufacture the Licensed Products requested
      by Licensee in accordance with the terms and conditions of this
      Agreement.

     

    
      
        
        

      

      
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    3.9  BREACH
      OF
      DILIGENCE OBLIGATIONS.

     

    3.9.1  NOTIFICATION
      AND MEETING. If at any time NovaDel has a reasonable basis to believe that
      Licensee is in breach of its obligations under Article 3.8 with respect to
      a
      country in the Territory, NovaDel shall notify Licensee thereof, specifying
      the
      basis for its belief, and the Parties shall meet within ten (10) days after
      such
      notice to discuss in good faith NovaDel's concerns and Licensee's activities
      with respect to the Licensed Products in such country.

     

    3.9.2  If
      at any
      time Licensee has a reasonable basis to believe that NovaDel is in breach of
      its
      formulation or manufacturing obligations under Article 3, Licensee shall provide
      NovaDel written notice thereof, specifying the basis for its belief, and the
      Parties shall meet within ten business days (10) days after such notice to
      discuss in good faith Licensee's concerns and NovaDel's activities with respect
      to such formulation or manufacturing activities. If the breach is due solely
      to
      a technical or scientific difficulty or to a situation that is not within the
      control of NovaDel, the Parties shall cooperate to address and overcome such
      difficulty, and Licensee shall agree to a reasonable extension to overcome
      such
      sole technical or scientific difficulty.

     

    3.10  RIGHT
      OF
      TERMINATION WITH RESPECT TO A LICENSED PRODUCT. If after good faith discussions
      pursuant to Article 3.9, Licensee does not take reasonable steps designed to
      rectify the breach of its obligations under Article 3.8 in such country within
      sixty (60) days of meeting with NovaDel pursuant to Article 3.9.1 or, if such
      failure cannot be rectified within such sixty (60)-day period, if Licensee
      does
      not commence actions to rectify such failure within such period and thereafter
      diligently pursue such actions, the license grants to Licensee under Article
      2.1
      with respect to such Licensed Product in such country shall terminate. Upon
      the
      termination of Licensee's rights with respect to a Licensed Product pursuant
      to
      the immediately preceding sentence, if NovaDel chooses, Licensee (a) shall,
      and
      shall cause its Affiliates and Sublicensees to, promptly disclose to NovaDel,
      in
      whatever form NovaDel may request, all Regulatory Documentation in the
      possession or Control of Licensee, its Affiliates or Sublicensees that relate
      to
      the Exploitation of such Licensed Product in such country; provided that [***],
      (b) Licensee shall, and will hereby, grant, and shall cause its Affiliates
      and
      Sublicensees to grant, to NovaDel, (i) in the case of a Joint Patent that is
      not
      a Material Improvement, an exclusive, transferable, sublicensable license to
      all
      of Licensee's respective rights, titles and interests in and to any and all
      Joint Patents in the Field of Use in the country at no additional cost; and
      in
      the case of a Joint Patent that is a Material Improvement, an exclusive,
      transferable, fully sublicenseable license in the Field of Use in that country
      under the same royalty and sublicense terms and costs as Licensee is required
      to
      pay for NovaDel Patents under this and (ii) other Information in the possession
      or Control of Licensee, its Affiliates or Sublicensees, in each case that relate
      to the Exploitation of such Licensed Product in such country (the
      "Product-Related Assets") and that solely relate to such country; provided
      that
      NovaDel reimburse Licensee for the cost of such Information and as long as
      the
      transfer of Information does not, in Licensee's reasonable opinion, place
      Licensee at a competitive disadvantage in that or another country and solely
      to
      the extent that the Product-Related Assets relate to such country and may be
      licensed or transferred under the terms set out herein without a legal
      impediment.

     

    
      
        
        

      

      
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    3.11  MANUFACTURING.

     

    3.11.1  Subject
      to Article 3, at Licensee's expense, NovaDel shall manufacture and supply
      Licensee with Licensed Product for clinical development of the Licensed Product
      not later than the timeframe given in Exhibit 1 pursuant to the clinical trial
      Manufacturing Agreement. The Manufacturing Agreement will include the following
      terms: (i) NovaDel shall present Licensee with a suitable formulation for a
      Designated Compound that delivers the target dosage(s) within the timeframe
      designated in Exhibit 1; and (ii) the cost of the clinical supplies to Licensee
      shall [***], and further provided that NovaDel shall return such capital,
      equipment upgrade or additional components to Licensee at the termination or
      expiration of this Agreement unless the parties agree that NovaDel shall retain
      such capital equipment or equipment upgrades on terms to be agreed between
      the
      parties.

     

    3.11.2  Following
      receipt of Regulatory Approval, NovaDel shall manufacture and supply Licensee
      with projected and approved needs for Licensed Product in the United States
      pursuant to the Second Manufacturing Agreement on commercially reasonable terms,
      which is intended to be [***] over the reasonable and competitive cost of
      manufacturing.

     

    3.11.3  The
      Manufacturing Agreements 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.

     

    3.11.4  It
      is the
      intent of the Parties that NovaDel manufacture and supply Licensee with 100%
      of
      its needs for Licensed Product in the United States pursuant to the terms of
      the
      Manufacturing Agreement. Licensee shall provide NovaDel with projections of
      Licensees commercial need and commercially reasonable time to prepare and
      manufacture the commercial product. Notwithstanding anything herein to the
      contrary, 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 use an
      alternate manufacturing source.. NovaDel shall promptly establish a contingency
      manufacturing plan so that in the event that NovaDel cannot or does not want
      to
      manufacture the Licensed Product in a commercially timely manner. NovaDel shall
      advise Licensee of the identity of the contingency manufacturer and provide
      confirmation of the ability and willingness of that manufacturer to act as
      the
      contingency 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 Controlled by NovaDel
      relating to the manufacture of the Licensed Product and the Licensed Technology.
      NovaDel will promptly notify Licensee of its inability to manufacture and supply
      Licensed Product according to agreed commercial projections by the Parties.
      Such
      notification shall be within a reasonable time period so that Product and
      Technology transfer may occur to an alternative manufacturing facility without
      significant disruption to commercial supply.

     

    
      
        
        

      

      
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    3.11.5  COMPLIANCE
      WITH APPLICABLE LAW. Both NovaDel and Licensee shall perform, or cause to be
      performed, any and all of its activities with respect to the Licensed Products
      in good scientific manner and in compliance in all material respects with all
      Applicable Law. NovaDel agrees that, at all times during the performance of
      the
      Development Activities, it will act in accordance with good manufacturing
      practices and all applicable laws, rules and regulations.

     

    ARTICLE 4

    ROYALTIES
      AND OTHER CONSIDERATION

     

    4.1  EQUITY.
      Simultaneously with the execution of this Agreement, Licensee shall issue to
      NovaDel 592,500 shares of its common stock, par value $0.001 per share (the
      "Common Stock") representing 15% of the outstanding shares of Common Stock
      of
      the Company as of October 23, 2003. NovaDel represents that it is acquiring
      the
      Common Stock for investment purposes only, for an indefinite period of time,
      for
      its own account, not as a nominee or agent for any other Entity, and not with
      a
      view to the sale or distribution of all or any part thereof, and NovaDel has
      no
      present intention of selling, granting any participation in, or otherwise
      distributing, any or all of the Common Stock. NovaDel does not have any
      contract, undertaking, agreement or arrangement with any Entity to sell,
      transfer or grant participation to such person, firm or corporation, with
      respect to any or all of the Common Stock.

     

    4.2  ROYALTIES.
      As partial consideration for the rights, privileges and licenses granted
      hereunder and the activities performed by NovaDel under the Manufacturing
      Agreements, Licensee shall make the following payments to NovaDel:

     

    4.2.1  Licensee
      shall pay to NovaDel royalties in an amount equal to [***] percent ([***])
      of
      worldwide aggregate Net Sales by Licensee or any Affiliate of Licensee of each
      Licensed Product during each calendar year.

     

    4.2.2  Licensee
      shall pay to NovaDel (1) [***] percent ([***]) of all royalties received by
      Licensee or its Affiliate from sales by any Sublicensee of Licensed Product
      unless Licensee is strictly passive with regard to the development and
      commercialization activities of such Sublicensee relating to the Licensed
      Product sublicensed, in which case Licensee shall pay NovaDel [***] percent
      ([***])of all royalties received by Licensee or its Affiliate from sales by
      any
      Sublicensee of Licensed Product. For the purpose of Article 4, Licensee is
      deemed passive if the Sublicense occurs within six months of the date of this
      Agreement, or if Licensee has not filed any Regulatory Documentation with an
      appropriate regulatory agency prior to entering into the
      Sublicense.

     

    4.2.3  Licensee
      shall pay to NovaDel [***] percent ([***]) of all Sublicensing Fees other than
      fees received by Licensee under 4.2.2 unless Licensee is strictly passive with
      regard to the development and commercialization activities of such Sublicensee
      relating to the Licensed Product sublicensed, in which case Licensee shall
      pay
      NovaDel [***] percent ([***]) of all Sublicense Fees received by Licensee or
      its
      Affiliate from sales by any Sublicensee of Licensed Product.

     

    4.2.4  ROYALTY
      TERM. Licensee's royalty obligations under Article 4.2 shall terminate, on
      a
      country-by-country basis, with respect to each Licensed Product on 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
      Article 4.2 in a country, the license grants to Licensee in Article 2.1 shall
      be
      reduced in accordance with terms respect to such Licensed Product in Article
      4.6.

     

    
      
        
        

      

      
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    4.3  ROYALTY
      PAYMENTS. Royalties under Article 4.2.1 and sublicensing royalties under 4.2.2
      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
      Article 4.2.2 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 a given 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. 

     

    4.4  LICENSE
      FEES.

     

    4.4.1  Licensee
      shall pay to NovaDel $1,500,000.00 as an upfront licensing fee, payable within
      10 Business Days of the first date on which the Licensee has received the
      Minimum Financing.

     

    4.4.2  Licensee
      shall pay to NovaDel $250,000.00 upon completion of the Company's first
      financing in excess of $10,000,000.

     

    4.4.3  Licensee
      shall pay NovaDel $50,000.00 promptly upon designation by the Candidate
      Committee of the First Designated Compound.

     

    4.4.4  Licensee
      shall pay NovaDel [***] promptly upon designation by the Candidate Committee
      of
      the Second Designated Compound.

     

    4.4.5  Licensee
      shall pay NovaDel [***] promptly upon designation by the Candidate Committee
      of
      the Third Designated Compound.

     

    4.4.6  Licensee
      shall pay NovaDel [***] promptly upon designation by the Candidate Committee
      of
      the Fourth Designated Compound.

     

    4.4.7  Licensee
      shall pay NovaDel [***] promptly upon designation by the Candidate Committee
      of
      each Additional Designated Compound. 

     

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

     

    4.5.1  (a)
      [***]
      within five Business Days from the date on which the Licensee's first filed
      NADA
      is accepted for review by the FDA for the first Licensed Product containing
      the
      First Designated Compound;

     

    
      
        
        

      

      
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    (b) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the first Licensed Product containing the First Designated
      Compound within the European Union is accepted for review by the appropriate
      Regulatory Authority

     

    (c) [***]
      promptly upon the date on which the Licensee's first filed NADA for the first
      Licensed Product containing the First Designated Compound is approved by the
      FDA;

     

    (d)
       [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the first Licensed Product containing the First Designated
      Compound in any country within the European Union is approved by the appropriate
      Regulatory Authority. 

     

    4.5.2  (a)
      [***]
      within five Business Days from the date on which the Licensee's first filed
      NADA
      is accepted for review by the FDA for the Licensed Product containing the Second
      Designated Compound;

     

    (b) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the Licensed Product containing the Second Designated Compound
      within the European Union is accepted for review by the appropriate Regulatory
      Authority

     

    (c) [***]
      promptly upon the date on which the Licensee's first filed NADA for the Licensed
      Product containing the Second Designated Compound is approved by the
      FDA;

     

    (d) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the Licensed Product containing the Second Designated Compound
      in any country within the European Union is approved by the appropriate
      Regulatory Authority.

     

    4.5.3  (a)
      [***]
      within five Business Days from the date on which the Licensee's first filed
      NADA
      is accepted for review by the FDA for the Licensed Product containing the Third
      Designated Compound;

     

    (b) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the Licensed Product containing the Third Designated Compound
      within the European Union is accepted for review by the appropriate Regulatory
      Authority

     

    (c) [***]
      promptly upon the date on which the Licensee's first filed NADA for the Licensed
      Product containing the Third Designated Compound is approved by the
      FDA;

     

    (d) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the Licensed Product containing the Third Designated Compound
      in
      any country within the European Union is approved by the appropriate Regulatory
      Authority; and

     

    4.5.4  (a)[***]
      within five Business Days from the date on which the Licensee's first filed
      NADA
      is accepted for review by the FDA for the first Licensed Product containing
      the
      Fourth Designated Compound;

     

    
      
        
        

      

      
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    (b) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the Licensed Product containing the Fourth Designated Compound
      within the European Union is accepted for review by the appropriate Regulatory
      Authority.

     

    (c) [***]
      promptly upon the date on which the Licensee's first filed NADA for the Licensed
      Product containing the Fourth Designated Compound is approved by the
      FDA;

     

    (d) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the Licensed Product containing the Fourth Designated Compound
      in any country within the European Union is approved by the appropriate
      Regulatory Authority; and

     

    4.5.5  (a)[***]
      within five Business Days from the date on which the Licensee's first filed
      NADA
      is accepted for review by the FDA for the Licensed Product containing each
      Additional Designated Compound;

     

    (b) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the first Licensed Product containing each Additional Designated
      Compound within the European Union is accepted for review by the appropriate
      Regulatory Authority

     

    (c) [***]
      promptly upon the date on which the Licensee's first filed NADA for the Licensed
      Product containing each Additional Designated Compound is approved by the
      FDA;

     

    (d) [***]
      promptly upon the date on which the Licensee's first filed European Marketing
      Application for the first Licensed Product containing each Additional Designated
      Compound in any country within the European Union is accepted for review by
      the
      appropriate Regulatory Authority; and

     

    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 Article 4.5 with respect
      to
      such Licensed Product, if any, and (ii) the royalty rate payable to NovaDel
      by
      Licensee under Article 4.2 with respect to sales of such Licensed Product in
      such country, each shall be reduced by [***] percent ([***]).

     

    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 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.

     

    
      
        
        

      

      
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    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 Products 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 Fees 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 ($150,000) or two percent (2%) of royalties, Milestone Payments or
      Sublicense Fees 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 Article 5.5. All payments required under this 

     

    
      
        
        

      

      
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    5.3  Article
      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.

     

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

     

    5.4.1  All
      Licensed Products used, leased or sold, by or for Licensee or its
      Affiliates.

     

    5.4.2  Total
      amounts invoiced for Licensed Products used, leased or sold, by or for Licensee
      or its Affiliates.

     

    5.4.3  Deductions
      applicable in computed "Net Sales" as defined in Article 1.33.

     

    5.4.4  Total
      milestone payments due based on achievement of milestones.

     

    5.4.5  Total
      Sublicense Fees owed by License from its Sublicensees.

     

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

     

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

     

    5.5  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.

     

    5.6  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 four percent (4%), but
      in
      no event exceeding the amount permitted by applicable law.

     

    5.7  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 Article 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 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. 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
      other
      than Joint Technology, Joint Improvements and Joint Patents, which shall be
      owned jointly by NovaDel and Licensee.

     

    
      
        
        

      

      
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    6.2  OWNERSHIP
      OF THE LICENSED PROCESS. Subject to the license grants to Licensee under Article
      2 and other than Joint Technology, Joint Improvements and Joint Patents, 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
      NovaDel, its Affiliates or Sublicensees, whether or not patented or patentable,
      and any and all Patent and other intellectual property rights with respect
      thereto. Licensee acknowledges and agrees that the licenses granted to it
      pursuant to Article 2.1 permit Licensee to use the Licensed Process solely
      for
      the Exploitation of Licensed Products as provided in this
      Agreement.

     

    6.3  OWNERSHIP
      OF JOINT TECHNOLOGY, JOINT IMPROVEMENTS AND JOINT PATENTS. Subject to Article
      6.2 and the license grants under Article 2, NovaDel and Licensee shall co-own
      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.
      NovaDel shall have the responsibility to file, prosecute and maintain all
      Patents derived from Joint Technology if the Joint Technology can be adapted
      to
      both human and veterinary uses, and Licensee shall have the responsibility
      to
      file, prosecute and maintain all Patents on Joint Technology directed
      exclusively to veterinary uses. Each Party shall keep the other reasonably
      informed about the status of the Joint Patents according to Article 6.6 and
      shall prosecute such Joint Patents with the goal of maximizing the value for
      both parties. Neither party shall enter into litigation on a Joint Patent
      without the consent and participation of the other, as further defined in
      Articles 6.7 and 6.8, unless required by law or court order.

     

    6.4  ALLOCATION
      OF OWNERSHIP INTEREST IN JOINT TECHNOLOGY, JOINT IMPROVEMENTS AND JOINT PATENTS.
      NOVADEL SHALL OWN THE EXCLUSIVE INTEREST IN HUMAN APPLICATIONS AND LICENSEE
      SHALL OWN THE EXCLUSIVE INTEREST IN NON-HUMAN APPLICATIONS OF JOINT TECHNOLOGY,
      JOINT IMPROVEMENTS, AND JOINT PATENTS.

     

    
      
        
        

      

      
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    6.5  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. NovaDel 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 Article 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 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 Article 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.

     

    6.6  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. 

     

    6.7  PROSECUTION
      OF PATENTS AND TRADEMARKS.

     

    6.7.1  PROSECUTION
      OF NOVADEL PATENTS AND TRADEMARKS. 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. 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,
      in
      sufficient time, but in any event not less than ten (10) 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, 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 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 Products or Processes,
      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 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, NovaDel shall assign
      such NovaDel Patent to Licensee at no additional consideration.

     

    
      
        
        

      

      
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    6.7.2  PROSECUTION
      OF JOINT PATENTS The party having the responsibility to file, prosecute and
      maintain Joint Patents under Article 6.3 shall comply with the procedure set
      out
      in Article 6.6.1, and the other Party shall cooperate as set out in Article
      6.6.1.

     

    6.8  ENFORCEMENT
      OF PATENTS AND TRADEMARKS.

     

    6.8.1  INFRINGEMENT
      OF NOVADEL OR JOINT TECHNOLOGY AND TRADEMARKS. 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 stop such infringement. NovaDel shall
      have the first right, but not the obligation, to stop such infringement at
      its
      sole cost and expense; provided, however, that Licensee shall reimburse NovaDel
      for [***] incurred by NovaDel with respect to actions taken to stop the
      infringement of Joint Patents or NovaDel Patents to the extent that such
      infringement would be a Licensed Product if sold by Licensee. In the 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 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 or Licensed Trademark without NovaDel's prior
      consent, which consent shall not be unreasonably withheld, and further provided
      that NovaDel shall not enter into a settlement or compromise of such
      infringement without Licensee's consent, which 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 Article, 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 Products, such amount shall be paid to Licensee and shall be treated
      as
      Net Sales on which royalties shall be due under Article 4.

     

    
      
        
        

      

      
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    6.9  POTENTIAL
      THIRD PARTY RIGHTS.

     

    6.9.1  THIRD-PARTY
      LICENSES. If (a) in the opinion of 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 suit is brought in a court
      of
      competent jurisdiction, 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 Products hereunder in such
      country. Licensee shall be solely responsible for [***] percent ([***]) of
      all
      royalty and other obligations with respect to the Exploitation of Licensed
      Products; provided, however, that Licensee shall have the right to credit [***]
      percent ([***]) of any royalties and other payments paid by Licensee, its
      Affiliates or Sublicensees under such license with respect to such country
      against the royalty payments or other payments to be paid by Licensee to NovaDel
      with respect to the sale of the Licensed Product(s) in that country ; provided,
      however, that no royalty or other 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 [***] percent ([***]) of the amounts otherwise owed
      in
      any calendar quarter. Credits not exhausted in any calendar quarter may be
      carried into future calendar quarters. Licensee agrees not to make statements
      against the interest of NovaDel or Joint Patents or reach written conclusions
      regarding the validity or enforceability of NovaDel or Joint Patents in any
      settlement agreement without the consent of NovaDel. . NovaDel agrees not to
      make statements against the interest of NovaDel or Joint Patents or reach
      written conclusions regarding the validity or enforceability of NovaDel or
      Joint
      Patents in any settlement agreement without the consent of
      Licensee.

     

    6.9.2  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. If NovaDel is named
      as
      a party to the litigation, and NovaDel determines that issues raised in the
      litigation adversely impact NovaDel Patents or Joint Patents, NovaDel shall
      have
      the right, not he obligation, to control that aspect of the litigation. Licensee
      shall cooperate with NovaDel in the defense of that aspect of the litigation.
      If
      NovaDel is not named as a party to the litigation and is not added as a party
      to
      the litigation, however, NovaDel determines that issues raised in the litigation
      adversely impact NovaDel Patents or Joint Patents, NovaDel shall have the right
      to consult with Licensee in the presentation of the defense. Licensee shall
      bear
      [***] percent ([***]) of its own costs and expenses associated with any such
      Infringement Suit to the extent that it relates to the Exploitation of any
      Licensed Product, and NovaDel shall bear [***] percent ([***]) of its own costs
      of cooperation and participation. If Licensee elects not to defend the Third
      Party Litigation, and NovaDel is named as a party to the litigation, NovaDel
      shall have the right, but not the responsibility, to do so at its own expense.
      In such case, Licensee shall bear [***] percent ([***]) of its own costs of
      cooperation and participation.

     

    
      
        
        

      

      
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    6.9.3  RETAINED
      RIGHTS. Nothing in this Article 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. After such
      termination, Licensee shall have the full right to exploit the Licensed Products
      and Licensed Processes without any further payments or responsibility to
      NovaDel.

     

    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
      in
      a country, NovaDel shall have the right to terminate this Agreement in that
      country within sixty (60) days after giving written notice of termination unless
      Licensee shall pay to NovaDel, within the 60-day period, all such amounts due
      and payable. Upon the expiration of the 60-day period, if Licensee shall 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 into an interest
      bearing escrow account, and shall provide NovaDel with written notice that
      such
      payment is being made into escrow subject to the outcome of such pending dispute
      resolution procedure. In the event such dispute is finally and conclusively
      resolved in favor of NovaDel, Licensee shall release such payment to NovaDel
      with any accrued interest.

     

    
      
        
        

      

      
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    8.3  TERMINATION
      FOR MATERIAL BREACH. Upon any material breach or default of this Agreement
      by
      either Party, other than as set forth in Article 8.1 or 8.2 above, the other
      Party shall have the right to terminate this Agreement and the rights,
      privileges and licenses granted hereunder upon giving thirty (60) days written
      notice to the breaching Party. Such termination shall become effective upon
      the
      expiration of such thirty (60)-day period unless the breaching Party shall
      have
      cured any such breach or default prior to the expiration of such thirty (60)
      day
      period. If the purported breaching party disputes that a breach has occurred,
      the dispute shall be settled according to the procedure of Article 9 and the
      license agreement shall stay in effect during the dispute resolution
      process.

     

    8.4  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 ninety (90) days
      notice thereof in writing to NovaDel, provided that Licensee satisfy any
      outstanding obligations to NovaDel.

     

    8.5  EFFECT
      ON
      JOINT PATENTS OF BREACH OR VOLUNTARY TERMINATION. If Licensee breaches this
      Agreement which results in termination or Licensee voluntarily terminates this
      Agreement, NovaDel shall have the right on written notice to prohibit Licensee
      and its Affiliates from further commercialization of a Licensed Product in
      a
      Joint Patent prior to the 20th anniversary of the Effective Date of this
      Agreement. If NovaDel breaches this Agreement which results in termination
      or
      NovaDel voluntarily terminates this Agreement, Licensee shall have the right
      on
      written notice to prohibit NovaDel and its Affiliates from commercialization
      of
      a Licensed Product in a Joint Patent prior to the 20th anniversary of the
      Effective Date of this Agreement.

     

    8.6  FAILURE
      TO OBTAIN FINANCING. Notwithstanding anything to the contrary herein, should
      Licensee fail to obtain the Minimum Financing by December 15, 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.

     

    8.7  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 5, 9, 10, 11, 14, 15 and 16 and
      Articles 8.5, 8.7, 8.8, 8.9, 17.1 and 17.7 shall survive the termination or
      expiration of this Agreement for any reason. Further, all obligations under
      Section 6 to cooperate on Joint Patents shall survive the termination of this
      Agreement, including being named as a Party to a lawsuit at the request of
      the
      other joint owner, at a minimum nominally participating in any legal proceeding
      to protect, defend or assert that Joint Patent right, and cooperating in the
      prosecution of the Joint Patents as necessary. 

     

    8.8  WORK-IN-PROGRESS.
      Licensee and/or any Sublicensee thereof may, after the effective date of a
      termination and continuing for a period not to exceed six (6) months thereafter,
      sell all completed Licensed Products, and any Licensed Products 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 Products.

     

    
      
        
        

      

      
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    8.9  RETURN
      OF
      INFORMATION; ASSIGNMENT AND LICENSE.

     

    8.9.1  Upon
      the
      termination of Licensee's rights with respect to a Licensed Product prior to
      the
      natural expiration date of this Agreement in a country, at NovaDel's choice,
      Licensee (a) shall, and shall cause its Affiliates and Sublicensees to, promptly
      disclose to NovaDel, in whatever form NovaDel may request, all Regulatory
      Documentation in the possession or Control of Licensee, its Affiliates or
      Sublicensees that relate to the Exploitation of such Licensed Product in such
      country; provided that NovaDel reimburses Licensee for the cost of such
      submissions and Regulatory Documentation, including the cost of clinical trials
      and data and document assembly, (b) shall, and will hereby, grant, and shall
      cause its Affiliates and Sublicensees to grant, to NovaDel, (i) in the case
      of a
      Joint Patent that is not a Material Improvement, an exclusive, transferable,
      sublicensable license to all of Licensee's respective rights, titles and
      interests in and to any and all Joint Patents in the Field of Use in the country
      at no additional cost; and in the case of a Joint Patent that is a Material
      Improvement, an exclusive, transferable, fully sublicenseable license in the
      Field of Use in that country under the same royalty and sublicense terms and
      costs as Licensee is required to pay for NovaDel Patents under this Agreement;
      and (ii) other Information in the possession or Control of Licensee, its
      Affiliates or Sublicensees, in each case that relate to the Exploitation of
      such
      Licensed Product in such country (the "Product-Related Assets") and that solely
      relate to such country; provided that NovaDel reimburse Licensee for the cost
      of
      such Information and as long as the transfer of Information does not, in
      Licensee's reasonable opinion, place Licensee at a competitive disadvantage
      in
      that or another country and (c) to the extent that the Product-Related Assets
      do
      not solely relate to such country or may not be licensed or transferred under
      the terms set out herein due to a legal impediment, NovaDel and Licensee shall
      use best efforts to agree on an alternative plan that would substantially
      accomplish the rights and obligations described herein.

     

    8.9.2  Notwithstanding
      anything contained in Article 8.9 , in the event that any sublicense granted
      by
      Licensee survives pursuant to Article 2.3.2, the Sublicensee may retain (a)
      the
      information and materials identified in Article 8.6.1 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.

     

    8.10  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.

     

    8.11  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.

     

    
      
        
        

      

      
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    ARTICLE 9

    ARBITRATION

     

    9.1  PROCEDURES.
      Any dispute other than a dispute pertaining to the validity or enforceability
      of
      a patent 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 fifteen
      (15) days of their selection. This Agreement shall stay in effect during the
      arbitration proceeding, and all rights and responsibilities of the Parties
      shall
      be honored and complied with during this dispute resolution period. The decision
      of the arbitration board shall be binding on both parties and
      nonappealable.

     

    9.2  ARBITRATION
      SHALL BE HANDLED WITH DISPATCH The arbitration proceeding shall be conducted
      in
      a manner that assure that it will be concluded within six months after the
      selection of the three arbitrators. The time period for arbitration may be
      extended by the agreement of both parties.

     

    9.3  PATENT
      DISPUTES. Any claim, dispute, or controversy concerning the validity,
      enforceability, or infringement of any Patent (including NovaDel or Joint
      Patents) 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 Patents
      licensed hereunder, the arbitrators 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
      Patents in any proceeding to enforce any arbitration award hereunder, or in
      any
      proceeding otherwise arising out of any such arbitration award. 

     

    9.4  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, unless the loss at is a result or partial result of the conduct
      of
      NovaDel, including in the manufacture of the Licensed Product or production
      of
      adulterated Licensed Product; (d) Exploitation of the Licensed Products by
      Licensee, its Affiliates, Sublicensees or permitted assignees or transferees,
      ,
      unless the loss at is a result or partial result of the conduct of NovaDel,
      including in the manufacture of the Licensed Product and except for those Losses
      for which NovaDel has an obligation to indemnify Licensee and its Affiliates
      pursuant to Article 10.2, as to which Losses each Party shall indemnify the
      other to the extent of their respective liability for the Losses.

     

    
      
        
        

      

      
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    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; (b) conduct of NovaDel, including in
      the
      manufacture of the Licensed Product or production of adulterated Licensed
      Product; (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 Article 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 Article 10.1 or Article 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 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 11
      with respect to Losses arising from claims of any Third Party that are subject
      to indemnification as provided for in Articles 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.

     

    
      
        
        

      

      
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    (b) RIGHT
      TO
      PARTICIPATE IN DEFENSE. Without limiting Article 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 Article 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 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 Article 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.

     

    
      
        
        

      

      
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    (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.
      Licensee shall have and maintain such type and amounts of liability insurance
      covering the manufacture, supply, use and sale of the Licensed Products 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. NovaDel shall maintain such type and amounts of liability insurance
      covering the manufacture, supply, use and sale of the Licensed Products as
      is
      normal and customary in the pharmaceutical industry for a manufacturer of
      products.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    11.1.6  ADDITIONAL
      REPRESENTATIONS AND WARRANTIES OF NOVADEL. 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 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.

     

    11.1.7  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.

     

    11.2  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 breach of contract, 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 Article 11.2, 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 Articles 8 and 9. 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.

     

    
      
        
        

      

      
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    11.3  NovaDel
      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 Licensee Patent declared invalid or
      unenforceable; provided, however, that nothing contained herein shall prohibit
      NovaDel 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 Licensee Patents, in any suit or proceeding brought
      against them alleging the infringement of any of the Licensee Patents or breach
      of contract, 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 NovaDel or its Affiliates or Sublicensees and a
      patent or patent application included within the definition of the Licensee
      Patents. In its agreements with each of its Sublicensees, NovaDel shall include
      provisions requiring a covenant, materially identical to that NovaDel is making
      in this Article, on the part of the Sublicensee, and shall provide that Licensee
      shall have march-in right to seek termination of such agreement in the event
      the
      Sublicensee breaches the covenant. Licensee'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
      Articles 8 and 9. NovaDel and its Affiliates will take all Reasonable action
      (including signing required documents) and offer full cooperation to allow
      Licensee 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 INARTICLES 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
      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.

     

    
      
        
        

      

      
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    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 prior written consent of the other Party, shall be null and of
      no
      effect. Notwithstanding the foregoing, Licensee may assign this Agreement to
      a
      purchaser, merging or consolidating corporation, or acquirer of substantially
      all of Licensee's assets or business or pursuant to any reorganization
      qualifying under Article 368 of the Internal Revenue Code of 1986, as amended,
      as may be in effect at such time.

     

    ARTICLE 13

    PAYMENT
      OF FEES AND EXPENSES

     

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

     

    ARTICLE 14

    USE
      OF
      NAMES AND PUBLICATION

     

    14.1  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 any Trademark 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.

     

    14.2  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.

     

    14.3  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
      thereto, then that Party shall notify the other Party 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. The disclosing Party 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. The non-disclosing Party may request that the disclosing party, no
      later than thirty (30) days following the receipt of such notice, delay such
      presentation, publication or disclosure in order to enable the filing of a
      patent application, copyright or other appropriate form of intellectual property
      protection related to the information to be disclosed. Upon receipt of such
      request to delay such presentation, publication or disclosure, the disclosing
      Party shall arrange for a delay of such presentation, publication or disclosure
      until such time as the appropriate Party 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 both
      Parties. If the disclosing Party does not receive any such request to delay
      such
      presentation, publication or disclosure, the disclosing Party may submit such
      material for presentation, publication or other form of disclosure.
      Notwithstanding the foregoing, in no event shall the disclosing Party have
      any
      right to publish or disclose the Licensed Process in the Field or any
      information or data related thereto without the prior written consent of the
      other Party, which consent the non-disclosing Party may not unreasonably
      withhold.

     

    
      
        
        

      

      
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    ARTICLE 15

    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.

    25
      Minneakoning Rd., Suite 101

    Flemington,,
      NJ 08822

    Attention:
      President

    908.806.7624
      (fax)

     

    with
      a
      copy (not constituting notice) to:

     

    Jones
      Day

    222
      East
      41st Street

    New
      York,
      New York 10017-6702

    TEL:
      1.212.326.3939

    FAX:
      1.212.755.7306

    

    If
      to
      Licensee to:

     

    The
      Veterinary Company, Inc.

    The
      Veterinary Company, Inc.

    201
      Corporate Dr., Langhorne, PA 19047-8007

    Attention:
      President

    Tel:
      215-579-8335

    

    
      
        
        

      

      
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    with
      a
      copy(not constituting notice) to:

     

    King
      & Spalding

    191
      Peachtree Street

    Atlanta,
      Georgia 30303-1763

    Attn:
      Sherry M. Knowles, Esq.

    Tel:
      404-572-3541

    Fax:
      404-572-5145

    

    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 16

    CONFIDENTIALITY

     

    16.1  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; 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.

     

    16.2  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 information or know-how: 

     

    16.2.1  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;

     

    16.2.2  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;

     

    16.2.3  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;

     

    
      
        
        

      

      
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    16.2.4  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

     

    16.2.5  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.

     

    16.3  DISCLOSURE
      AND USE RESTRICTION. Except as expressly provided herein, the Parties agree
      that, for the Term 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.

     

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

     

    16.4.1  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;

     

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

     

    
      
        
        

      

      
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    16.4.3  REQUIRED
      BY REGULATORY AUTHORITY. Made by such Party to he 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

     

    16.4.4  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 17.

     

    16.5  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 17

    MISCELLANEOUS
      PROVISIONS

     

    17.1  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.

     

    17.2  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.

     

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

     

    17.4  ENTIRE
      AGREEMENT. The Parties hereto acknowledge that this Agreement, including the
      Appendices and documents incorporated by reference set 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 communications, representations or
      understandings, either oral or written, between the Parties relating to the
      subject matter hereof.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    17.5  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.

     

    17.6  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.

     

    17.7  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 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.

     

    17.8  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.

     

    17.9  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.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    17.10  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.

     

    17.11  
      17.11
      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.

    

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

    

    
      	
              NOVADEL
                PHARMACEUTICAL CORPORATION

            	 	
              THE
                VETERINARY COMPANY

            	 
	 	 	 	 	 	 
	
              By:
                

            	
              /s/
                Gary Shangold

            	 	
              By:
                

            	
              /s/
                Dennis Steadman

            	 
	
              Name:

            	
              Gary
                Shangold, M.D.

            	 	
              Name:

            	
              Dennis
                Steadman

            	 
	
              Title:

            	
              President
                and CEO

            	 	
              Title:

            	
              CEO
                and President

            	 
	
              Date:

            	
              June
                22, 2004

            	 	
              Date:

            	
              June
                22, 2004

            	 

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      1

     

    MANUFACTURING
      AGREEMENT

    

    FORMULATION
      DEVELOPMENT TIMING FOR PROOF

    OF
      CONCEPT STAGE

    
      	 	 	 
	 	
              Activity

            	
              Estimated
                Time

            
	
              A

            	
              Formulation

            	
              5
                weeks

            
	 	
              Pre-formulation
                Study

              Formulation

              Pilot
                Stability

              Report

              Batches
                for Method

              development
                support

            	 
	
               

              B

            	
               

              Methods
                Development

              Analytical
                methods

              Other
                methods (spray

              Characterization)

              Report
                on method 

              Development

            	
               

              8
                weeks

            
	
               

              C.

            	
               

              Manufacturing

            	
               

              3
                to 5 weeks

            
	 	
              Raw
                materials and excipients

              Testing
                and releasing in-

              coming
                raw materials and 

              packaging
                components

              Manufacturing
                of batches for

              stability
                study & PK clinical

              trial

            	 
	
               

              D.

            	
               

              Sampling
                and testing stability

              samples/every
                month (AC) – 

              3
                month (CRT)

            	
               

              14
                week (at least 4

              weeks
                needed prior

              to
                PK study plus 2

              weeks
                for analysis)

            
	 	
              TOTAL

            	
              22
                - 24 weeks*

            

    

    *Assumptions

    

    
      	1.	
              Active
                ingredients, inactive ingredients and components are readily available
                from suppliers. Any delay to the expected date of receipt of ingredients
                and/or components may result in a further delay due availability
                of
                NovaDel resources and equipment.

            

    

     

    
      	2.	
              If
                a product fails stability testing or we do not achieve successful
                results
                in the PK clinical study, an assessment will be conducted and the
                reformation process will start at point
                A.

            

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      2

     

    NovaDel
      Pharma Inc.

    Project
      Employee Costs

    May
      2004

    

    
      	
              Employee
                Level/Function

            	 	
              $
                Per Hour

            	 
	 	 	 	 
	
              Vice
                President Pharmaceutical Development

            	 	
              $

            	
              [***

            	
              ]

            
	
              Director,
                Analytical

            	 	
              $

            	
              [***

            	
              ]

            
	
              Senior
                Scientist, Analytical

            	 	
              $

            	
              [***

            	
              ]

            
	
              Manager,
                Analytical

            	 	
              $

            	
              [***

            	
              ]

            
	
              Director,
                Regulatory Affairs & Quality Assurance

            	 	
              $

            	
              [***

            	
              ]

            
	
              Director,
                Project Management

            	 	
              $

            	
              [***

            	
              ]

            
	
              Director,
                Manufacturing

            	 	
              $

            	
              [***

            	
              ]

            
	
              Manager,
                Manufacturing

            	 	
              $

            	
              [***

            	
              ]

            
	
              Manager,
                Clinical

            	 	
              $

            	
              [***

            	
              ]

            

    

    

    Note:

    

    
      	1.	
              Hourly
                rates are subject to change based on raises, promotions,
                etc.

            

    

    

    
      	2.	
              Rates
                above include allocations for senior management and administrative
                support

            

    

    

    
      	3.	
              Temporary
                help is billed, at cost, to
                Licensee.

            

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    

    Intentionally
      Blank

    

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    EXHIBIT
      3

     

    DESIGNATED
      COMPOUNDS

     

    --------------------

     

    
      
        
        

      

      
        42SUBSCRIPTION
      AGREEMENT

     

    THIS
      SUBSCRIPTION AGREEMENT
      (this
“Agreement”),
      dated
      as of October __, 2007, by and among 3DIcon Corporation, an Oklahoma corporation
      (the “Company”),
      and
      the subscribers identified on the signature page hereto (each a “Subscriber”
and
      collectively “Subscribers”).

     

    WHEREAS,
      the
      Company and the Subscribers are executing and delivering this Agreement in
      reliance upon an exemption from securities registration afforded by the
      provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”).

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Subscribers, as provided herein,
      and the Subscribers, in the aggregate, shall purchase for a minimum of $250,000
      (the "Purchase
      Price")
      of
      shares of the Company's common stock, $.0002 par value (the "Common
      Stock")
      at a
      per share price equal to 75% of the average of the Average Closing Prices during
      the five (5) days prior to the Signing Date as reported by Bloomberg, L.P.,
      and
      share purchase warrants (the “Warrants”)
      in the
      form attached hereto as Exhibit
      A,
      to
      purchase shares of Common Stock (the “Warrant
      Shares”).
      The
      shares of Common Stock (the “Shares”),
      the
      Warrants and the Warrant Shares are collectively referred to herein as the
      "Securities";
      and

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Subscribers hereby agree as follows:

     

    1. Conditions
      To Closing.
      Subject
      to the satisfaction or waiver of the terms and conditions of this Agreement,
      on
      the “Closing
      Date”
(as
      defined in Section 2 below), each Subscriber shall purchase and the Company
      shall sell to each Subscriber the Shares and Warrants designated on the
      signature page hereto for the portion of the Purchase Price set forth on the
      signature page hereto. Each purchaser hereby acknowledges that he or she may
      be
      the sole Subscriber. On or before the Closing Date, each Subscriber shall
      deliver to the Company such Subscriber’s portion of the Purchase Price, an
      executed copy of this Agreement and a completed Investor Questionnaire. The
      payment will be delivered pursuant to the following wire transfer
      instructions:

    

    
      	
              Wire
                to:

            	
              Arvest
                Bank

            
	
               

            	
              Tulsa,
                OK 

            
	 	 
	
              Acount
                Name:

            	
              3DIcon
                Corporation

            
	
              Account
                #:

            	
              19499288

            
	
              Routing
                #:

            	
              103112976

            

    

     

    2. Closing.
      The
      consummation of the transactions contemplated herein shall take place upon
      the
      satisfaction of all conditions to Closing set forth in this Agreement
      (“Closing
      Date”),
      provided, however, that such Closing will occur on or before October 15,
      2007.

    

    3. Warrants.
      On the
      Closing Date, the Company will issue and deliver Warrants to the Subscribers.
      One Class A Warrant will be issued for each two Shares issued on the Closing
      Date. The
      per
      Warrant Share exercise price to acquire a Warrant Share upon exercise of a
      Class
      A Warrant shall be equal to $0.40 from September __, 2007 through September
      __,
      2008 and shall be equal to $0.50 from September __, 2008 through September
      __,
      2009. 

    
      
        
          (Subscription
            Agreement)

        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    4. Subscriber's
      Representations and Warranties.
      Each
      Subscriber hereby represents and warrants to and agrees with the Company only
      as
      to such Subscriber that:

    

    (a) Organization
      and Standing of the Subscribers.
      If the
      Subscriber is an entity, such Subscriber is a corporation, partnership or other
      entity duly incorporated or organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation or organization and
      has
      the requisite corporate power to own its assets and to carry on its
      business.

    

    (b) Authorization
      and Power.
      Each
      Subscriber has the requisite power and authority to enter into and perform
      this
      Agreement and to purchase the Shares and Warrants being sold to it hereunder.
      The execution, delivery and performance of this Agreement by such Subscriber
      and
      the consummation by it of the transactions contemplated hereby and thereby
      have
      been duly authorized by all necessary corporate or partnership action, and
      no
      further consent or authorization of such Subscriber or its Board of Directors,
      stockholders, partners, members, as the case may be, is required. This Agreement
      has been duly authorized, executed and delivered by such Subscriber and
      constitutes, or shall constitute when executed and delivered, a valid and
      binding obligation of the Subscriber enforceable against the Subscriber in
      accordance with the terms thereof.

    

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the consummation
      by
      such Subscriber of the transactions contemplated hereby or relating hereto
      do
      not and will not (i) result in a violation of such Subscriber’s charter
      documents or bylaws or other organizational documents or (ii) conflict with,
      or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of any agreement, indenture or
      instrument or obligation to which such Subscriber is a party or by which its
      properties or assets are bound, or result in a violation of any law, rule,
      or
      regulation, or any order, judgment or decree of any court or governmental agency
      applicable to such Subscriber or its properties (except for such conflicts,
      defaults and violations as would not, individually or in the aggregate, have
      a
      material adverse effect on such Subscriber). Such Subscriber is not required
      to
      obtain any consent, authorization or order of, or make any filing or
      registration with, any court or governmental agency in order for it to execute,
      deliver or perform any of its obligations under this Agreement or to purchase
      the Securities in accordance with the terms hereof, provided that for purposes
      of the representation made in this sentence, such Subscriber is assuming and
      relying upon the accuracy of the relevant representations and agreements of
      the
      Company herein.

     

    (d) Information
      on Company.
      The
      Subscriber has been furnished with or has had access at the EDGAR Website of
      the
      Commission to the Company's 424(b)(3) Prospectus, the Company’s Form 10-QSB for
      the period ended June 30, 2007 as filed with the Commission and all periodic
      reports with the Commission thereafter, but not later than five business days
      before the Closing Date (hereinafter referred to as the "Reports").
      In
      addition, the Subscriber has received in writing from the Company such other
      information concerning its operations, financial condition and other matters
      as
      the Subscriber has requested in writing (such other information is collectively,
      the "Other
      Written Information"),
      and
      considered all factors the Subscriber deems material in deciding on the
      advisability of investing in the Securities. 

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (e) Information
      on Subscriber.
      The
      Subscriber will be, on the Closing Date and upon exercise of the Warrants,
      an
      "accredited
      investor",
      as
      such term is defined in Regulation D promulgated by the Commission under the
      1933 Act, is experienced in investments and business matters, has made
      investments of a speculative nature and has purchased securities of United
      States publicly-owned companies in private placements in the past and, with
      its
      representatives, has such knowledge and experience
      in financial, tax and other business matters as to enable the Subscriber to
      utilize the information made available by the Company to evaluate the merits
      and
      risks of and to make an informed investment decision with respect to the
      proposed purchase, which represents a speculative investment. The Subscriber
      has
      the authority and is duly and legally qualified to purchase and own the
      Securities. The Subscriber is able to bear the risk of such investment for
      an
      indefinite period and to afford a complete loss thereof. The information set
      forth on the signature page hereto regarding the Subscriber is
      accurate. 
      The
      Subscriber is not required to be registered as a broker-dealer under Section
      15
      of the Securities Exchange Act of 1934, as amended (the "1934 Act") and the
      Subscriber is not a broker-dealer.

     

    (f) Investment
      Purpose.
      As of
      the date hereof, the Subscriber is purchasing the Securities for its own account
      and not with a present view towards the public sale or distribution thereof,
      except pursuant to sales registered or exempted from registration under the
      1933
      Act; provided,
      however,
      that by
      making the representations herein, the Subscriber does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act.

     

    (g) Reliance
      on Exemptions.
      The
      Subscriber understands that the Securities are being offered and sold to it
      in
      reliance upon specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying upon
      the truth and accuracy of, and the Subscriber’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      the Subscriber set forth herein in order to determine the availability of such
      exemptions and the eligibility of the Subscriber to acquire the
      Securities.

     

    (h) Purchase
      of Shares and Warrants.
      On the
      Closing Date, the Subscriber will purchase the Shares and Warrants as principal
      for its own account for investment only and not with a view toward, or for
      resale in connection with, the public sale or any distribution
      thereof.

     

    (i) Compliance
      with Securities Act.
      The
      Subscriber understands and agrees that the Securities have not been registered
      under the 1933 Act or any applicable state securities laws, by reason of their
      issuance in a transaction that does not require registration under the 1933
      Act
      (based in part on the accuracy of the representations and warranties of
      Subscriber contained herein), and that such Securities must be held indefinitely
      unless a subsequent disposition is registered under the 1933 Act or any
      applicable state securities laws or is exempt from such registration.
In
      any
      event, and subject to compliance with applicable securities laws, the Subscriber
      may enter into lawful hedging transactions with third parties, which may in
      turn
      engage in short sales of the Securities in the course of hedging the position
      they assume and the Subscriber may also enter into short positions or other
      derivative transactions relating to the Securities, or interests in the
      Securities, and deliver the Securities, or interests in the Securities, to
      close
      out their short or other positions or otherwise settle short sales or other
      transactions, or loan or pledge the Securities, or interests in the Securities,
      to third parties that in turn may dispose of these Securities.

     

     (j) Shares
      Legend.
      The
      Shares and the Warrant Shares shall bear the following or similar
      legend:

     

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
      OR AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO 3DICON CORPORATION THAT SUCH
      REGISTRATION IS NOT REQUIRED."

    
      
        
          (Subscription
            Agreement)

        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (k) Warrants
      Legend.
      The
      Warrants shall bear the following 

     

    or
      similar legend:

     

    "THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE
      STATE
      SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO 3DICON
      CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."

     

    (l) Communication
      of Offer.
      The
      offer to sell the Securities was directly communicated to the Subscriber by
      the
      Company. At no time was the Subscriber presented with or solicited by any
      leaflet, newspaper or magazine article, radio or television advertisement,
      or
      any other form of general advertising or solicited or invited to attend a
      promotional meeting.

     

    (m) Authority;
      Enforceability.
      This
      Agreement and other agreements delivered together with this Agreement or in
      connection herewith have been duly authorized, executed and delivered by the
      Subscriber and are valid and binding agreements enforceable in accordance with
      their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights generally and to general principles of equity;
      and Subscriber has full corporate power and authority necessary to enter into
      this Agreement and such other agreements and to perform its obligations
      hereunder and under all other agreements entered into by the Subscriber relating
      hereto.

    

    (n) Restricted
      Securities.
      Subscriber understands that the Securities have not been registered under the
      1933 Act and such Subscriber will not sell, offer to sell, assign, pledge,
      hypothecate or otherwise transfer any of the Securities unless pursuant to
      an
      effective registration statement under the 1933 Act. Notwithstanding anything
      to
      the contrary contained in this Agreement, such Subscriber may transfer (without
      restriction and without the need for an opinion of counsel) the Securities
      to
      its Affiliates (as defined below) provided that each such Affiliate is an
“accredited investor” under Regulation D and such Affiliate agrees to be bound
      by the terms and conditions of this Agreement. For the purposes of this
      Agreement, an “Affiliate”
of
      any
      person or entity means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      person or entity. For purposes of this definition, “control”
means
      the power to direct the management and policies of such person or firm, directly
      or indirectly, whether through the ownership of voting securities, by contract
      or otherwise.

    

    (o) No
      Governmental Review.
      Each
      Subscriber understands that no United States federal or state agency or any
      other governmental or state agency has passed on or made recommendations
      or endorsement of the Securities or the suitability of the investment in the
      Securities nor have such authorities passed upon or endorsed the merits of
      the
      offering of the Securities.

    
      
        
          (Subscription
            Agreement)

        

      

      
        4

        
          

        

      

      
        
        

      

    

    (p) Correctness
      of Representations.
      Each
      Subscriber represents as to such Subscriber that the foregoing representations
      and warranties are true and correct as of the date hereof and, unless a
      Subscriber otherwise notifies the Company prior to the Closing Date shall be
      true and correct as of the Closing Date.

    

    (q) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of three years.

     

    5. Company
      Representations and Warranties.
      The
      Company represents and warrants to and agrees with each Subscriber
      that:

     

    (a) Due
      Incorporation.
      Except
      as set forth on Schedule 5(a), the Company and each of its Subsidiaries is
      a
      corporation or other entity duly incorporated or organized, validly existing
      and
      in good standing under the laws of the jurisdiction of its incorporation or
      organization and has the requisite corporate power to own its properties and
      to
      carry on its business as presently
      conducted. The Company and each of its Subsidiaries is duly qualified as a
      foreign corporation to do business and is in good standing in each jurisdiction
      where the nature of the business conducted or property owned by it makes such
      qualification necessary, other than those jurisdictions in which the failure
      to
      so qualify would not have a Material Adverse Effect. For purposes of this
      Agreement, a “Material
      Adverse Effect”
shall
      mean a material adverse effect on the financial condition, results of
      operations, properties or business of the Company and its Subsidiaries taken
      as
      a whole. For purposes of this Agreement, “Subsidiary”
means,
      with respect to any entity at any date, any corporation, limited or general
      partnership, limited liability company, trust, estate, association, joint
      venture or other business entity of which more than 50% of (i) the
      outstanding capital stock having (in the absence of contingencies) ordinary
      voting power to elect a majority of the board of directors or other managing
      body of such entity, (ii) in the case of a partnership or limited liability
      company, the interest in the capital or profits of such partnership or limited
      liability company or (iii) in the case of a trust, estate, association,
      joint venture or other entity, the beneficial interest in such trust, estate,
      association or other entity business is, at the time of determination, owned
      or
      controlled directly or indirectly through one or more intermediaries, by such
      entity. All the Company’s Subsidiaries as of the Closing Date are set forth on
Schedule
      5(a)
      hereto.

     

    (b) Outstanding
      Stock.
      All
      issued and outstanding shares of capital stock of the Company has been duly
      authorized and validly issued and are fully paid and nonassessable.

     

    (c) Authority;
      Enforceability.
      This
      Agreement, the Shares, the Warrants,, and any other agreements delivered
      together with this Agreement or in connection herewith (collectively
“Transaction
      Documents”)
      have
      been duly authorized, executed and delivered by the Company and are valid and
      binding agreements enforceable in accordance with their terms, subject to
      bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
      similar laws of general applicability relating to or affecting creditors' rights
      generally and to general principles of equity. The Company has full corporate
      power and authority necessary to enter into and deliver the Transaction
      Documents and to perform its obligations thereunder.

     

     (d) Consents.
      No
      consent, approval, authorization or order of any court, governmental agency
      or
      body or arbitrator having jurisdiction over the Company, or any of its
      Affiliates, the Bulletin Board nor the Company's shareholders is required for
      the execution by the Company of the Transaction
      Documents and compliance and performance by the Company of its obligations
      under
      the Transaction Documents, including, without limitation, the issuance and
      sale
      of the Securities.

    
      
        
          (Subscription
            Agreement)

        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     (e) The
      Securities.
      The
      Securities upon issuance:

     

    (i) are,
      or
      will be, free and clear of any security interests, liens, claims or other
      encumbrances, subject to restrictions upon transfer under the 1933 Act and
      any
      applicable state securities laws;

    

    (ii) have
      been, or will be, duly and validly authorized and on the date of issuance of
      the
      Shares and upon exercise of the Warrants, the Shares and Warrant Shares will
      be
      duly and validly issued, fully paid and nonassessable or if registered pursuant
      to the 1933 Act, and resold pursuant to an effective registration statement
      will
      be free trading and unrestricted);

     

    (iii) will
      not
      have been issued or sold in violation of any preemptive or other similar rights
      of the holders of any securities of the Company;

     

    (iv) will
      not
      subject the holders thereof to personal liability by reason of being such
      holders; and

     

    (v) will
      not
      result in a violation of Section 5 under the Act.

     

    (f) Litigation.
      There
      is no pending or, to the best knowledge of the Company, threatened action,
      suit,
      proceeding or investigation before any court, governmental agency or body,
      or
      arbitrator having jurisdiction over the Company, or any of its Affiliates that
      would affect the execution by the Company or the performance by the Company
      of
      its obligations under the Transaction Documents. Except as disclosed on the
      Disclosure Schedule
      or in
      the Reports, there is no pending or, to the best knowledge of the Company,
      basis
      for or threatened action, suit, proceeding or investigation before any court,
      governmental agency or body, or arbitrator having jurisdiction over the Company,
      or any of its Affiliates which litigation if adversely determined would have
      a
      Material Adverse Effect.

     

     (g) No
      Market Manipulation.
      The
      Company and its Affiliates have not taken, and will not take, directly or
      indirectly, any action designed to, or that might reasonably be expected to,
      cause or result in stabilization or manipulation of the price of the Common
      Stock to
      facilitate the sale or resale of the Securities or affect the price at which
      the
      Securities may be issued or resold.

     

    (h) Information
      Concerning Company.
      Since
      the date of the financial statements included in the Reports (“Latest
      Financial Date”),
      and
      except as modified in the Other Written Information or in the Schedules hereto,
      there has been no Material Adverse Event relating to the Company's business,
      financial condition or affairs not disclosed in the Reports. The Reports,
      including the financial statements contained therein, do not contain any untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein not misleading in
      light of the circumstances when made.

     

    (i) Stop
      Transfer.
      The
      Company will not issue any stop transfer order or other order impeding the
      sale,
      resale or delivery of any of the Securities, except as may be required by any
      applicable federal or state securities laws and unless contemporaneous notice
      of
      such instruction is given to the Subscriber.

     

    (j) Defaults.
      The
      Company is not in violation of its articles of incorporation or bylaws. The
      Company is (i) not in default with respect to any order of any court, arbitrator
      or governmental body or subject to or party to any order of any court or
      governmental authority arising out of any action, suit or proceeding under
      any
      statute or other law respecting antitrust, monopoly, restraint of trade, unfair
      competition or similar matters, or (ii) to the Company’s knowledge not in
      violation of any statute, rule or regulation of any governmental authority
      which
      violation would have a Material Adverse Effect.

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (k) Not
      Integrated Offering.
      Neither
      the Company, nor any of its Affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offer of the Securities pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the 1933 Act or any applicable
      stockholder approval provisions, including, without limitation, under the rules
      and regulations of the OTC Bulletin Board (“Bulletin
      Board”)
      or any
      Principal Market [as defined in Section 9(b)] which would impair the exemptions
      relied upon in this Offering or the Company’s ability to timely comply with its
      obligations hereunder. Nor will the Company or any of its Affiliates take any
      action or steps that would cause the offer or issuance of the Securities to
      be
      integrated with other offerings which would impair the exemptions relied upon
      in
      this Offering or the Company’s ability to timely comply with its obligations
      hereunder. The Company will not conduct any offering other than the transactions
      contemplated hereby that will be integrated with the offer or issuance of the
      Securities, which would impair the exemptions relied upon in this Offering
      or
      the Company’s ability to timely comply with its obligations
      hereunder.

     

    (l) No
      General Solicitation.
      Neither
      the Company, nor any of its Affiliates, nor to its knowledge, any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the 1933 Act)
      in
      connection with the offer or sale of the Securities.

     

    (m) Listing.
      The
      Common Stock is quoted on the Bulletin Board under the symbol: TDCP.OB. The
      Company has not received any oral or written notice that the Common Stock is
      not
      eligible nor will become ineligible for quotation on the Bulletin Board nor
      that
      the Common Stock does not meet all requirements for the continuation of such
      quotation and the Company satisfies all the requirements for the continued
      quotation of the Common Stock on the Bulletin Board.

     

    (n) No
      Undisclosed Liabilities.
      The
      Company has no liabilities or obligations which are material, individually
      or in
      the aggregate, which are not disclosed in the Reports and Other Written
      Information, other than those incurred in the ordinary course of the Company’s
      businesses since the Latest Financial Date and which, individually or in the
      aggregate, would reasonably be expected to have a Material Adverse
      Effect,
      except
      as disclosed on Schedule
      5(q).

     

    (o) No
      Undisclosed Events or Circumstances.
      Since
      the Latest Financial Date, no event or circumstance has occurred or exists
      with
      respect to the Company or its businesses, properties, operations or financial
      condition, that, under applicable law, rule or regulation, requires public
      disclosure or announcement prior to the date hereof by the Company but which
      has
      not been so publicly announced or disclosed in the Reports.

     

    (p) Capitalization.
      The
      authorized and outstanding capital stock of the Company as of the date of this
      Agreement and the Closing Date (not including the Securities) are set forth
      on
Schedule
      5(d).
      Except
      as set forth on Schedule
      5(d),
      there
      are no options, warrants, or rights to subscribe
      to, securities, rights or obligations convertible into or exchangeable for
      or
      giving any right to subscribe for any shares of capital stock of the Company
      or
      any of its Subsidiaries. All of the outstanding shares of Common Stock of the
      Company have been duly and validly authorized and issued and are fully paid
      and
      nonassessable.

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (q) Dilution.
      The
      Company's executive officers and directors understand the nature of the
      Securities being sold hereby and recognize that the issuance of the Securities
      will have a potential dilutive effect on the equity holdings of other holders
      of
      the Company’s equity or rights to receive equity of the Company. The board of
      directors of the Company has concluded, in its good faith business judgment
      that
      the issuance of the Securities is in the best interests of the Company. The
      Company specifically acknowledges that its obligation to issue the Warrant
      Shares upon exercise of the Warrants is binding upon the Company and enforceable
      regardless of the dilution such issuance may have on the ownership interests
      of
      other shareholders of the Company or parties entitled to receive equity of
      the
      Company.

     

    (r) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company, including but not limited to
      disputes or conflicts over payment owed to such accountants and lawyers, nor
      have there been any such agreements during the two years prior to the Closing
      Date.

    

    (s) DTC
      Status.
      The
      Company’s transfer agent is a participant in and the Common Stock is eligible
      for transfer pursuant to the Depository Trust Company Automated Securities
      Transfer Program. The name, address, telephone number, fax number, contact
      person and email address of the Company transfer agent is set forth on
Schedule
      5(v)
      hereto.

    

    (t) Investment
      Company.
      Neither
      the Company nor any Affiliate is an “investment company” within the meaning of
      the Investment Company Act of 1940, as amended.

    

    (u) Subsidiary
      Representations.
      The
      Company makes each of the representations contained in Sections 5(a), (b),
      (d),
      (f), (h), (k), (m), (q) through (s), (u) and (w) of this Agreement, as same
      relate to each Subsidiary of the Company.

    

    (v) Company
      Predecessor.
      All
      representations made by or relating to the Company of a historical or
      prospective nature and all undertaking described in Sections 9.1(g) through
      9.1(l) shall relate and refer to the Company, its predecessors, and the
      Subsidiaries.

    

    (w) Correctness
      of Representations.
      The
      Company represents that the foregoing representations and warranties are true
      and correct as of the date hereof in all material respects, and, unless the
      Company otherwise notifies the Subscribers prior to the Closing Date, shall
      be
      true and correct in all material respects as of the Closing Date.

     

    (x) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of three years.

     

    6. Regulation
      D Offering.
      The
      offer and issuance of the Securities to the Subscribers is being made pursuant
      to the exemption from the registration provisions of the 1933 Act afforded
      by
      Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation
      D
      promulgated thereunder. On the Closing Date, the Company will provide an opinion
      reasonably acceptable to Subscriber
      from the Company's legal counsel opining on the availability of an exemption
      from registration under the 1933 Act as it relates to the offer and issuance
      of
      the Securities and other matters reasonably requested by Subscribers. A form
      of
      the legal opinion is annexed hereto as Exhibit
      B.
      The
      Company will provide, at the Company's expense, such other legal opinions in
      the
      future as are reasonably necessary for the issuance and/or resale of the Shares
      and Warrant Shares pursuant to an effective registration statement, Rule 144
      under the 1933 Act, or an exemption from registration.

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      7. Reserved.
        

       

      8. Reserved

       

    

    9. Covenants
      of the Company.
      The
      Company covenants and agrees with the Subscribers as follows:

     

    (a) Stop
      Orders.
      The
      Company will advise the Subscribers within two hours after it receives notice
      of
      issuance by the Commission, any state securities commission or any other
      regulatory authority of any stop order or of any order preventing or suspending
      any offering of any securities of the Company, or of the suspension of the
      qualification of the Common Stock of the Company for offering or sale in any
      jurisdiction, or the initiation of any proceeding for any such
      purpose.

     

    (b) Listing.
      The
      Company shall promptly secure the listing of the Shares and the Warrant Shares
      upon each national securities exchange, or electronic or automated quotation
      system upon which they are or become eligible for listing and shall maintain
      such listing so long as any Shares or Warrants are outstanding. The Company
      will
      maintain the listing of its Common Stock on the American Stock Exchange, Nasdaq
      SmallCap Market, Nasdaq National Market System, Bulletin Board, or New York
      Stock Exchange (whichever of the foregoing is at the time the principal trading
      exchange or market for the Common Stock (the “Principal
      Market”)),
      and
      will comply in all respects with the Company's reporting, filing and other
      obligations under the bylaws or rules of the Principal Market, as applicable.
      The Company will provide the Subscribers copies of all notices it receives
      notifying the Company of the threatened and actual delisting of the Common
      Stock
      from any Principal Market. As of the date of this Agreement and the Closing
      Date, the Bulletin Board is and will be the Principal Market.

     

    (c) Market
      Regulations.
      The
      Company shall notify the Commission, the Principal Market and applicable state
      authorities, in accordance with their requirements, of the transactions
      contemplated by this Agreement, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Securities to the
      Subscribers and promptly provide copies thereof to Subscriber.

     

    (d) Filing
      Requirements.
      From
      the date of this Agreement and until the sooner of (i) three (3) years after
      the
      Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
      or transferred by all the Subscribers pursuant to the Registration Statement
      or
      pursuant to Rule 144, the Company will (A) cause its Common Stock to continue
      to
      be subject to the reporting obligations of Section 15(d), 12(b) or 12(g) of
      the
      1934 Act, (B) comply in all respects with its reporting and filing obligations
      under the 1934 Act, (C) comply with all reporting requirements that are
      applicable to an issuer subject to Section 15(d) of the 1934 Act, or, if a
      class
      of its securities is registered under Section 12(b) or 12(g) of the 1934 Act,
      to
      all reporting requirements that are applicable to an issuer with a class of
      shares registered pursuant to Section 12(b) or 12(g) of the 1934 Act, as
      applicable, and (D) comply with all requirements related to any registration
      statement filed pursuant to this Agreement. The Company will use its
      best
      efforts not to take any action or file any document (whether or not permitted
      by
      the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend
      such registration or to terminate or suspend its reporting and filing
      obligations under said acts or until three (3) years after the Closing Date.
      Until the earlier of the resale of the Common Stock and the Warrant Shares
      by
      each Subscriber or three (3) years after the Warrants have been exercised,
      the
      Company will use its best efforts to continue the listing or quotation of the
      Common Stock on a Principal Market and will comply in all respects with the
      Company's reporting, filing and other obligations under the bylaws or rules
      of
      the Principal Market. The Company agrees to timely file a Form D with respect
      to
      the Securities if required under Regulation D and to provide a copy thereof
      to
      each Subscriber promptly after such filing.

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (e) Use
      of
      Proceeds.
      The
      proceeds of the Offering will be employed by the Company for the purposes set
      forth on Schedule
      9(e)
      hereto.

     

    (f) Reservation.
      Prior
      to the Closing Date, the Company undertakes to reserve, pro rata,
      on
      behalf of each holder of Shares or Warrants, from its authorized but unissued
      common stock, a number of common shares equal to the Shares and Warrant Shares
      issuable upon exercise of the Warrants. Failure to have sufficient shares
      reserved pursuant to this Section 9(f) for three (3) consecutive business days
      or ten (10) days in the aggregate shall be a material default of the Company’s
      obligations under this Agreement.

     

    (g) Non-Public
      Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf will provide any Subscriber or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Subscriber shall have agreed in writing to receive such
      information. The Company understands and confirms that each Subscriber shall
      be
      relying on the foregoing representations in effecting transactions in securities
      of the Company. The Company will offer to the Subscriber an opportunity to
      review and comment on the Registration Statement thereto between three and
      five
      business days prior to the proposed filing date thereof. 

     

    10. Covenants
      of the Company and Subscriber Regarding Indemnification.

     

    (a) The
      Company agrees to indemnify, hold harmless, reimburse and defend the
      Subscribers, the Subscribers' officers, directors, agents, Affiliates, control
      persons, and principal shareholders, against any claim, cost, expense,
      liability, obligation, loss or damage (including reasonable legal fees) of
      any
      nature, incurred by or imposed upon the Subscriber or any such person which
      results, arises out of or is based upon (i) any material misrepresentation
      by
      Company or breach of any warranty by Company in this Agreement or in any
      Exhibits or Schedules attached hereto, or other agreement delivered pursuant
      hereto; or (ii) after any applicable notice and/or cure periods, any breach
      or
      default in performance by the Company of any material covenant or undertaking
      to
      be performed by the Company hereunder, or any other agreement entered into
      by
      the Company and Subscriber relating hereto. Any or all of the foregoing are
      deemed Events of Default.

     

    (b) Each
      Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
      and each of the Company’s officers, directors, agents, Affiliates, control
      persons against any claim, cost, expense, liability, obligation, loss or damage
      (including reasonable legal fees) of any nature, incurred by or imposed upon
      the
      Company or any such person which results, arises out of or is based upon (i)
      any
      material misrepresentation by such Subscriber in this Agreement or in any
      Exhibits or Schedules
      attached hereto, or other agreement delivered pursuant hereto; or (ii) after
      any
      applicable notice and/or cure periods, any breach or default in performance
      by
      such Subscriber of any covenant or undertaking to be performed by such
      Subscriber hereunder, or any other agreement entered into by the Company and
      Subscribers, relating hereto.

     

    (c) In
      no
      event shall the liability of any Subscriber or permitted successor hereunder
      or
      under any Transaction Document or other agreement delivered in connection
      herewith be greater in amount than the dollar amount of the net proceeds
      actually received by such Subscriber upon the sale of Registrable Securities
      (as
      defined herein).

    

    
      
        
          (Subscription
            Agreement)

        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      (d) The
        procedures set forth in Section 11.6 shall apply to the indemnification set
        forth in Sections 10(a) and 10(b) above.

       

      11. Reserved.

       

    

    12. Reserved.

     

    13. Miscellaneous.

     

    (a) Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Company, to: 3DIcon Corporation, 7507
      S.
      Sandusky, Tulsa, OK, 74136, Attn: Martin Keating, Chief Executive Officer,
      telecopier: (918) 492-5367, with a copy by telecopier only to: Sichenzia Ross
      Friedman Ference LLP, 61 Broadway, New York, NY 10006, Attn: Gregory Sichenzia,
      Esq., telecopier: (212) 930-9725, (ii) if to the Subscribers, to: the one or
      more addresses and telecopier numbers indicated on the signature pages
      hereto.

     

    (b) Nothing
      contained herein or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum permitted by
      applicable law. In the event that the rate of interest or dividends required
      to
      be paid or other charges hereunder exceed the maximum permitted by such law,
      any
      payments in excess of such maximum shall be credited against amounts owed by
      the
      Company to the Subscriber and thus refunded to the Company.

     

    (c) Entire
      Agreement; Assignment.
      This
      Agreement and other documents delivered in connection herewith represent the
      entire agreement between the parties hereto with respect to the subject matter
      hereof and may be amended only by a writing executed by both parties. Neither
      the Company
      nor the Subscribers have relied on any representations not contained or referred
      to in this Agreement and the documents delivered herewith. No right or
      obligation of the Company shall be assigned without prior notice to and the
      written consent of the Subscribers. 

     

    (d) 
      Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by facsimile signature
      and delivered by facsimile transmission.

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (e) Law
      Governing this Agreement.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to conflicts
      of laws principles
      that would result in the application of the substantive laws of another
      jurisdiction. Any action brought by either party against the other concerning
      the transactions contemplated by this Agreement shall be brought only in the
      state courts of New York or in the federal courts located in the state of New
      York. The
      parties and the individuals executing this Agreement and other agreements
      referred to herein or delivered in connection herewith on behalf of the Company
      agree to submit to the jurisdiction of such courts and waive trial by
      jury.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any
      agreement.

     

    (f) Specific
      Enforcement, Consent to Jurisdiction.
      The
      Company and Subscriber acknowledge and agree that irreparable damage would
      occur
      in the event that any of the provisions of this Agreement were not performed
      in
      accordance with their specific terms or were otherwise breached. It is
      accordingly agreed that the parties shall be entitled to one or more preliminary
      and final injunctions to prevent or cure breaches of the provisions of this
      Agreement and to enforce specifically the terms and provisions hereof, this
      being in addition to any other remedy to which any of them may be entitled
      by
      law or equity. Subject to Section 13(e) hereof, each of the Company, Subscriber
      and any signator hereto in his personal capacity hereby waives, and agrees
      not
      to assert in any such suit, action or proceeding, any claim that it is not
      personally subject to the jurisdiction in New York of such court, that the
      suit,
      action or proceeding is brought in an inconvenient forum or that the venue
      of
      the suit, action or proceeding is improper. Nothing in this Section shall affect
      or limit any right to serve process in any other manner permitted by
      law.

     

    (g) Independent
      Nature of Subscribers.  
        The
      Company acknowledges that the obligations of each Subscriber under the
      Transaction Documents are several and not joint with the obligations of any
      other Subscriber, and no Subscriber shall be responsible in any way for the
      performance of the obligations of any other Subscriber under the Transaction
      Documents. The
      Company acknowledges that each Subscriber has represented that the decision
      of
      each Subscriber to purchase Securities has been made by such Subscriber
      independently of any other Subscriber and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company which may have been made or given by
      any
      other Subscriber or by any agent or employee of any other Subscriber, and no
      Subscriber or any of its agents or employees shall have any liability to any
      Subscriber (or any other person) relating to or arising from any such
      information, materials, statements or opinions.  The
      Company acknowledges that nothing
      contained in any Transaction Document, and no action taken by any Subscriber
      pursuant hereto or thereto shall be deemed to constitute the Subscribers as
      a
      partnership, an association, a joint venture or any other kind of entity, or
      create a presumption that the Subscribers are in any way acting in concert
      or as
      a group with respect to such obligations or the transactions contemplated by
      the
      Transaction Documents.  The Company acknowledges that each Subscriber shall
      be entitled to independently protect and enforce its rights, including without
      limitation, the rights arising out of the Transaction Documents, and
      it shall not be necessary for any other Subscriber to be joined as an additional
      party in any proceeding for such purpose.  The Company acknowledges that it
      has elected to provide all Subscribers with the same terms and Transaction
      Documents for the convenience of the Company and not because Company was
      required or requested to do so by the Subscribers.  The Company
      acknowledges that such procedure with respect to the Transaction Documents
      in no
      way creates a presumption that the Subscribers are in any way acting in concert
      or as a group with respect to the Transaction Documents or the transactions
      contemplated thereby.

     

     

    
      
        
          (Subscription
            Agreement)

        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      (f) Damages.
        In the
        event the Subscriber is entitled to receive any liquidated damages pursuant
        to
        the Transactions, the Subscriber may elect to receive the greater of actual
        damages or such liquidated damages.

       

    

    (g) Consent.
      As used
      in the Agreement and except as otherwise specifically stated, “consent of the
      Subscribers” or similar language means the consent of holders of not less than
      50.1% of the total of the Shares issued owned by Subscribers on the date consent
      is requested.

     

    (h) Equal
      Treatment.
      No
      consideration shall be offered or paid to any person to amend or consent to
      a
      waiver or modification of any provision of the Transaction Documents unless
      the
      same consideration is also offered and paid to all the Subscribers and their
      permitted successors and assigns.

    

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

    
      
        
          (Subscription
            Agreement)

        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT 

     

    

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    
      	
              3DIcon
                Corporation

            
	
              an
                Oklahoma corporation

            
	 	 
	
              By:

            	 
	
              Name:

            	
              Martin
                Keating

            
	
              Title:

            	
              CEO

            
	 	 
	
              Dated:
                September ___, 2007

            

    

     

    
      	
              SUBSCRIBER

            	 	
              PURCHASE
                

              PRICE

            	 	
              SHARES
                OF COMMON STOCK

            	 	
              CLASS
                E 

              WARRANTS

            	 	
              CLASS
                F 

              WARRANTS

            
	
              Name
                of Subscriber:  ________________________________

               

              Address:
                ________________________________

               

              ________________________________

               

              Fax
                No.: ________________________________

               

              ________________________________

              (Signature)

              By:
                

               

            	 	 	 	 	 	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LIST
      OF EXHIBITS AND SCHEDULES

     

    
      	
              Attachment
                1

            	
              Disclosure
                Schedule

            
	 	 
	
              Exhibit
                A

            	
              Form
                of Class A Warrants

            
	 	 
	 	 
	
              Schedule
                5(a)

            	
              Subsidiaries

            
	 	 
	
              Schedule
                5(d)

            	
              Additional
                Issuances / Capitalization

            
	 	 
	
              Schedule
                5(q)

            	
              Undisclosed
                Liabilities

            
	 	 
	
              Schedule
                5(v)

            	
              Transfer
                Agent

            
	 	 
	
              Schedule
                9(e)

            	
              Use
                of Proceeds

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