Document:

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Exhibit 10.27                               ***TEXT OMITTED AND FILED SEPARATELY
                                            CONFIDENTIAL TREATMENT REQUESTED
                                            UNDER 17 C.F.R. SECTIONS
                                            200.80(B)(4), 200.83 AND 240.24B-2

                               LICENSE AGREEMENT

                                    BETWEEN

                        SHEFFIELD PHARMACEUTICALS, INC.

                                      AND

                            SHEFFIELD NEWCO LIMITED
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                               TABLE OF CONTENTS

1.        DEFINITIONS
2.        SHEFFIELD LICENSE TO NEWCO
3.        INTELLECTUAL PROPERTY
4.        NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
5.        FINANCIAL PROVISIONS
6.        RIGHT OF INSPECTION AND AUDIT
7.        REPRESENTATIONS AND WARRANTIES
8.        TERM AND TERMINATION
9.        CONFIDENTIAL INFORMATION
10.       GOVERNING LAW AND JURISDICTION
11.       IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
12.       ASSIGNMENT
13.       NOTICES
14.       MISCELLANEOUS

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THIS AGREEMENT made this 19 October 1999

between:

(1)    Sheffield Pharmaceuticals, Inc., a corporation duly incorporated and
       validly existing under the laws of Delaware and having its principal
       place of business at 425 S. Woodsmill Road, Suite 270, St. Louis, MO
       63017, USA("Sheffield");

(2)    Newco Limited, a private limited company incorporated under the laws of
       Bermuda and having its registered office at Clarendon House, 2 Church
       Street, Hamilton, Bermuda ("Newco"); and

(3)    Elan Pharma International Limited incorporated under the laws of Ireland,
       and having its registered office at WIL House, Shannon Business Park,
       Shannon, County Clare, Ireland ("EPIL").

RECITALS:

A.     Simultaneously herewith, Sheffield, Elan, EIS, and Newco are entering
       into the JDOA for the purpose of recording the terms and conditions of
       the joint venture and of regulating their relationship with each other
       and certain aspects of the affairs of, and their dealings with Newco.

B.     Newco desires to enter into this Agreement with Sheffield so as to permit
       Newco to utilize the Sheffield Intellectual Property in making, having
       made, importing, using, offering for sale and selling the Products in
       Field B and Formulations in Field C in the Territory in accordance with
       the terms of this Agreement.

C.     Simultaneously herewith Newco and EPIL are entering into the Elan License
       Agreement relating to Newco's use of the Elan Intellectual Property.

1      DEFINITIONS

1.1    In this Agreement unless the context otherwise requires:

       "Affiliate" shall mean any corporation or entity controlling, controlled
       or under the common control of Elan or Sheffield, as the case may be,
       excluding Systemic Pulmonary Delivery Ltd.. For the purpose of this
       definition, "control" shall mean direct or indirect ownership of fifty
       percent (50%) or more of the stock or shares entitled to vote for the
       election of directors. Newco is not an Affiliate of Sheffield.

       "Agreement" shall mean this license agreement (which expression shall be
       deemed to include the Recitals and Schedules hereto).

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       "Business Plan" shall have the meaning, as such term is defined in the
       JDOA.

       "Combined Fields" shall mean Field A, Field B and Field C.

       "Compounds" shall mean the Field A Compound, the Field B Compound and/or
       the Field C Compound.

       "Confidential Information" shall have the meaning, as such term is
       defined in Clause 9.

       "Definitive Documents" shall mean the definitive agreements relating to
       the transaction including finance, stock purchase, research and license
       agreements.

       "Elan" shall mean EPIL and Affiliates and subsidiaries of Elan
       Corporation, Plc. within the division of Elan Corporation, Plc. carrying
       on business as Elan Pharmaceutical Technologies but shall not include
       Affiliates and subsidiaries (present or future) of Elan Corporation Plc
       within the division of Elan Corporation, Plc carrying on business as Elan
       Pharmaceuticals which incorporates, inter alia, Targon Corporation,
       Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan Diagnostics,
       Carnrick Laboratories, and Elan Europe Limited. "EIS" shall mean Elan
       International Services, Limited, a private limited company incorporated
       under the laws of Bermuda and having its registered office at St James
       Court, Flatts, Smiths, FL04 Bermuda.

       "Effective Date" shall mean the date of this Agreement.

       "Elan Intellectual Property" shall mean the Elan Know-How, the Elan
       Patents and the Elan Improvements, as such terms are defined in the Elan
       License Agreement.

       "Elan Patents" shall have the meaning as such term is defined in the Elan
       License Agreement.

       "Elan Improvements" shall have the meaning as such term is defined in the
       Elan License Agreement.

       "Elan Licenses" shall have the meaning set forth in Clause 2.1 of the
       Elan License Agreement.

       "Elan License Agreement" shall mean that certain license agreement, of
       even date herewith, entered into between Elan and Newco.

       "Field A" shall mean the topical pulmonary delivery of Formulations of
       the Field A Compound by means of the Field A Device.

       "Field B" shall mean the topical pulmonary delivery of Formulations of
       the Field B Compound by means of the Field B Device.

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       "Field C" shall mean the topical pulmonary delivery of Formulations of
       the Field C Compound by means of the Field C Device.

       "Field A Device" shall mean a third party table top unit dose nebulizer
       having a reservoir capable of holding a unit dose (a device and the
       compressor to nebulize a unit dose shall be deemed a device), which is a
       device having any one the following characteristics:

       (i)    [REDACTED]

       (ii)   [REDACTED]

       (iii)  [REDACTED]

       (iv)   [REDACTED]

       (v)    [REDACTED]

       For the avoidance of doubt, the Field A Device does not include
       [REDACTED].

       "Field B Device" shall mean the Aerosol Drug Delivery System ("ADDS"),
       owned by Systemic Pulmonary Delivery Limited and exclusively licensed to
       Sheffield for topical pulmonary applications.

       "Field C Device" shall mean the handheld multi-dose nebulizer ("MSI")
       which was licensed exclusively by Siemens to Sheffield pursuant to the
       Siemens Agreements and which was subsequently sub-licensed by Sheffield
       to Zambon (on an exclusive basis for delivery of various medicines for
       humans in treating respiratory disease and/or other lung diseases
       including, but not limited to, anti-infectives) provided that Newco,
       through the Management Committee, is successful in obtaining a sub-
       license from Zambon to Newco enabling the development and use of the
       Field C Compound for use with the Field C Device , as described in more
       detail in Clause 2.2.

       "Field A Compound" shall mean [REDACTED].

       "Field B Compound" shall mean [REDACTED] for therapeutic use to be
       nominated by the Management Committee pursuant to the JDOA and with
       reference to the JDOA, any Substitute Field B Compound.

       "Field C Compound" shall mean [REDACTED] and with reference to the JDOA,
       any Substitute Field C Compound and/or any Additional Field C Compound.

       "Financial Year" shall mean each year commencing on 1 January (or in the
       case of the first Financial Year, the Effective Date) and expiring on 31
       December of each year.

       "Formulations" shall mean Nanocrystal(TM) Technology formulations of
       Compounds for use in Field A, Field B or Field C, as applicable.

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       "JDOA" shall mean that certain joint development and operating agreement,
       of even date herewith, by and between Elan, Sheffield, EIS and Newco.

       "Licensed Technologies" shall mean the Elan Intellectual Property and the
       Sheffield Intellectual Property.

       "Licenses" shall mean the Elan License and the Sheffield License.
       "Management Committee" shall have the meaning, as such term is defined in
       the JDOA.

       "Nanocrystal(TM) Technology" shall mean the Elan proprietary technology
       directed to nanoparticulate formulations of compounds used in the
       manufacturing and/or formulation process, and methods of making the same.

       "Newco Intellectual Property" shall mean all rights to patents, know-how
       and other intellectual property arising out of the conduct of the Project
       by any person, including any technology acquired by Newco from a third
       party, that does not constitute Elan Intellectual Property or Sheffield
       Intellectual Property.

       "Newco Patents" shall mean any and all patents now existing, currently
       pending or hereafter filed or obtained relating to the Newco Intellectual
       Property, and any foreign counterparts thereof and all divisionals,
       continuations, continuations-in-part, any foreign counterparts thereof
       and all patents issuing on, any of the foregoing, together with all
       registrations, reissues, re-examinations or extensions thereof.

       "Party" shall mean Sheffield or Newco, as the case may be, and "Parties"
       shall mean Sheffield and Newco.

       "Products" shall mean the Field A Products, the Field B Products and/or
       the Field C Products, as follows:

       "Field A Products" shall mean Formulations of the Field A Compound
       delivered by means of any Field A Device in Field A.

       "Field B Products" shall mean Formulations of the Field B Compound
       delivered by means of the Field B Device in Field B.

       "Field C Products" shall mean Formulations of the Field C Compound
       delivered by means of the Field C Device in Field C.

       "Project" shall mean all activities as undertaken by Elan, Sheffield and
       Newco in order to develop the Products.

       "R&D Committee" shall have the meaning, as such term is defined in the
       JDOA.

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       "R&D Plan" shall have the meaning, as such term is defined in the JDOA.

       "R&D Program" shall mean any research and development program commenced
       by Newco pursuant to the Project.

       "Sheffield" shall mean Sheffield Pharmaceuticals, Inc and its Affiliates,
       excluding Newco.

       "Sheffield Devices" shall mean the Field B Device and the Field C Device.

       "Sheffield  Intellectual  Property" shall mean the Sheffield  Know-How,
       the Sheffield Patents and the Sheffield Improvements.

       "Sheffield Know-How" shall mean any and all rights owned, licensed or
       controlled by Sheffield to any discovery, invention (whether patentable
       or not), know-how, substances, data, techniques, processes, systems,
       formulations and designs relating exclusively to the Sheffield Devices.

       "Sheffield Licenses" shall have the meaning set forth in Clause 2.1.

       "Sheffield Patents" shall mean any and all rights under any and all
       patents applications and/or patents, now existing, currently pending or
       hereafter filed or obtained by Sheffield relating to the Sheffield
       Devices and all divisionals, continuations, continuations-in-part, any
       foreign counterparts thereof and all patents issuing on, any of the
       foregoing, together with all registrations, reissues, re-examinations or
       extensions thereof.

       "Sheffield Improvements" shall mean improvements relating to the
       Sheffield Patents and/or the Sheffield Know-How, developed (i) by
       Sheffield whether or not pursuant to the Project, (ii) by Newco or Elan
       or by a third party (under contract with Newco) whether or not pursuant
       to the Project, and/or (iii) jointly by any combination of Sheffield,
       Elan or Newco pursuant to the Project, except as limited by agreements
       with third Parties.

       Subject to third party agreements, Sheffield Improvements shall
       constitute part of Sheffield Intellectual Property and be included in the
       license of the Sheffield Intellectual Property pursuant to Clause 2.1
       solely for the purposes set forth therein. If the inclusion of a
       Sheffield Improvement in the license of Sheffield Intellectual Property
       is restricted or limited by a third party agreement, Sheffield shall use
       reasonable commercial efforts to minimize any such restriction or
       limitation.

       "Siemens" shall mean Siemens Aktiengesellschaft.

       "Siemens Agreements" shall mean the License Agreement dated 21 March 1997
       and the Basic Supply Agreement dated 21 March 1997, both between
       Sheffield Medical Technologies Inc. and Siemens Aktiengesellschaft.

       "Technological Competitor of Sheffield" shall mean a company, corporation
       or person listed in Schedule 1 and successors thereof or

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       any additional broad-based technological competitor of Sheffield added to
       such Schedule 1 from time to time upon mutual agreement of the Parties.

       "Term" shall have the meaning set forth in Clause 8.

       "Territory" shall mean all the countries of the world.

       "United States Dollar" and "US$" shall mean the lawful currency for the
       time being of the United States of America.

       "Zambon" shall mean Inpharzam International, S.A.

       "Zambon Agreement" shall mean the agreement dated 15 June 1998 between
       Sheffield and Zambon.

1.2    In this Agreement:

       1.2.1   The singular includes the plural and vice versa, and the
               masculine includes the feminine and vice versa and the neuter
               includes the masculine and the feminine.

       1.2.2   Any reference to a Clause or Schedule shall, unless otherwise
               specifically provided, be to a Clause or Schedule of this
               Agreement.

       1.2.3   The headings of this Agreement are for ease of reference only and
               shall not affect its construction or interpretation.

2.     SHEFFIELD LICENSE TO NEWCO

2.1.   Sheffield hereby grants to Newco for the Term the following licenses:

       2.1.1   a non-exclusive license (including the right to grant sublicenses
               subject to the limitations of Clause 2.7) of the Sheffield
               Intellectual Property solely to make, have made, import, use,
               offer for sale and sell the Field B Products in the Territory in
               Field B;

       2.1.2   subject to the execution by Newco of a written sub-license with
               Zambon as more fully described in Clause 2.2 for the development
               by Newco of the Field C Formulations in accordance with Clause
               2.2, a non-exclusive license (including the right to grant
               sublicenses subject to the limitations of Clause 2.7 and the
               Zambon Agreement) of the Sheffield Intellectual Property solely
               to make and have made, import, use, offer for sale and sell the
               Field C Products in the Territory in Field C

       (the "Sheffield Licenses").

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2.2    On the date which is 180 days following the Effective Date, or such
       extended date as may be agreed in writing by Elan and Newco pursuant to
       Clause 2.2 of the Elan License Agreement, Sheffield shall, at its sole
       discretion, be entitled forthwith to terminate the license to Newco
       described in Clause 2.1.2, upon notice in writing to Newco, in the event
       that Newco has not, prior to such date, executed a written sub-license
       with Zambon for the development by Newco of the Field C Formulations in
       Field C.

       Sheffield shall use reasonable commercial efforts to procure that Zambon
       executes such written sub-license with Newco in a timely manner and in
       any event within 180 days following the Effective Date, or such extended
       date as may be agreed in writing by Elan and Newco pursuant to Clause 2.2
       of the Elan License Agreement.

       Such written sub-license will be subject to the approval of the
       Management Committee and will include authority from Zambon to Newco to
       the extent necessary for Newco to develop, make, have made and use the
       Field C Formulations in the Territory, general financial terms,
       development schedule, and terms governing the funding by Zambon of any
       R&D Program(s) in Field C, together with such other substantive issues as
       the Management Committee shall deem appropriate and customary terms. For
       the avoidance of doubt, to the extent royalty or other compensation
       obligations are payable to Zambon in respect of any license or sub-
       license from Zambon to Newco of intellectual property rights necessary
       for Newco to develop, make, have made and use the Field C Formulations in
       the Territory, Sheffield shall be responsible for same and shall
       indemnify Newco in respect of any such royalty or other compensation
       obligations payable to Zambon.

2.3    Sheffield shall be responsible for payments related to the financial
       provisions and obligations of any third party agreement with respect to
       the Sheffield Intellectual Property to which it is a party on the
       Effective Date (including amendments thereto) (the "Sheffield Effective
       Date Agreements"), including without limitation, any royalty or other
       compensation obligations triggered thereunder on the Effective Date, or
       triggered thereunder after the Effective Date.

       For the avoidance of doubt, royalties, milestones or other payments which
       arise from the process of the commercialization or exploitation of
       products under the Sheffield Effective Date Agreements (for example, a
       milestone payment payable upon successful completion of Phase II clinical
       trials, the filing of an NDA application, obtaining NDA approval, or
       first commercial sale) shall be payments for which Sheffield will be
       responsible under this Clause 2.1.

2.4    Subject to Sheffield's obligations and indemnity set forth in Clause 2.2
       to the extent royalty or other compensation obligations are payable to
       Zambon in respect of any license or sub-license from Zambon to Newco of
       intellectual property rights necessary for Newco to develop, make, have
       made and use the Field C Formulations in the Territory, to the extent
       royalty or other compensation obligations that are payable to third
       parties with respect to the Sheffield Intellectual Property would

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       be triggered after the Effective Date under any third party agreement
       entered into by Sheffield after the Effective Date (the "Sheffield Post-
       Effective Date Agreements"), by a proposed use of such Sheffield
       Intellectual Property in connection with the Project, Sheffield will
       inform Newco of such royalty or compensation obligations. If Newco agrees
       to utilise such Sheffield Intellectual Property in connection with the
       Project, Newco will be responsible for the payment of such royalty or
       other compensation obligations relating thereto. For the avoidance of
       doubt, royalties, milestones or other payments which arise from the
       process of the commercialization or exploitation of products under the
       Sheffield Post-Effective Date Agreements (for example, a milestone
       payment payable upon successful completion of Phase II clinical trials,
       the filing of an NDA application, obtaining NDA approval, or first
       commercial sale) shall be payments for which Newco will be responsible
       under this Clause 2.4.

2.5    Elan shall be a third party beneficiary under this Agreement and shall
       have the right to cause Newco to enforce Newco's rights under this
       Agreement against Sheffield.

2.6    Notwithstanding anything contained in this Agreement to the contrary,
       Sheffield shall have the right outside the Field B and Field C and
       subject to the non-competition provisions of Clause 4 to exploit and
       grant licenses and sublicenses of the Sheffield Intellectual Property.
       For the avoidance of doubt, Newco shall have no right to use the
       Sheffield Intellectual Property outside Field B or Field C.

2.7    Newco shall not be permitted to assign or sublicense any of its rights
       under the Sheffield Intellectual Property without the prior written
       consent of Sheffield, which consent shall not be unreasonably withheld or
       delayed provided that Sheffield shall in all cases, in its sole
       discretion, be entitled to withhold its consent in the case of a proposed
       sublicense to any Technological Competitor to Sheffield.

2.8    Any agreement between Newco and any permitted third party for the
       development or exploitation of the Sheffield Intellectual Property shall
       require such third party to maintain the confidentiality of all
       information concerning the Sheffield Intellectual Property.

       Insofar as the obligations owed by Newco to Sheffield are concerned,
       Newco shall remain responsible for all acts and omissions of any
       permitted sub-licensee, including Elan, as if they were acts and
       omissions by Newco.

3      INTELLECTUAL PROPERTY

3.1    Ownership of Intellectual Property:

       3.1.1   Newco shall own the Newco Intellectual Property.

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         3.1.2    Sheffield shall own the Sheffield Intellectual Property.

3.2      Trademarks:

         3.2.1    Sheffield hereby grants to Newco for the Term a non-exclusive,
                  royalty free license in the Territory to use and display the
                  Sheffield Trademarks to promote, offer for sale and sell the
                  Products in Field B in the Territory and the following
                  provisions shall apply as regards the use of the Sheffield
                  Trademarks by Newco hereunder:

                  (1)   Newco shall ensure that each reference to and use of an
                        Sheffield Trademark by Newco is in a manner approved by
                        Sheffield and accompanied by an acknowledgement, in a
                        form approved by Sheffield, that the same is a trademark
                        (or registered trademark) of Sheffield. From time to
                        time, upon the reasonable request of Sheffield, Newco
                        shall submit samples of the Product to Sheffield or its
                        duly appointed agent to ensure compliance with quality
                        standards and specifications. Sheffield, or its duly
                        appointed agent, shall have the right to inspect the
                        premises of Newco where the Products are manufactured,
                        held or stored, and Newco shall permit such inspection,
                        upon advance notice at any reasonable time, of the
                        methods and procedures used in the manufacture, storage
                        and sale of the Product. Newco shall not sell or
                        otherwise dispose of any Product under the Sheffield
                        Trademarks that fails to comply with the quality
                        standards and specifications referred to in this Clause
                        3.2, as determined by Sheffield.

                  (2)   Newco shall not use an Sheffield Trademark in any way
                        which might materially prejudice its distinctiveness or
                        validity or the goodwill of Sheffield therein.

                  (3)   The parties recognize that the Sheffield Trademarks have
                        considerable goodwill associated therewith. Newco shall
                        not use in relation to the Products any trademarks other
                        than the Sheffield Trademarks (except the Elan
                        Trademarks (as defined in the Elan License Agreement)
                        licensed to Newco under the Elan License Agreement)
                        without obtaining the prior consent in writing of
                        Sheffield, which consent may not be unreasonably
                        withheld. However, such use must not conflict with the
                        use and display of the Sheffield Trademark and such use
                        and display must be approved by Sheffield.

                  (4)   Newco shall not use in the Territory any trademarks or
                        trade names so resembling the Sheffield Trademark as to
                        be likely to cause confusion or deception.

                  (5)   Newco shall promptly notify Sheffield in writing of any
                        alleged infringement or unauthorised use of which it

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                        becomes aware by a third party of the Sheffield
                        Trademarks and provide Sheffield with any applicable
                        evidence of infringement or unauthorised use.

                  (6)   Newco shall not be permitted to assign or sublicense any
                        of its rights under the Sheffield Trademarks without the
                        prior written consent of Sheffield, which consent shall
                        not be unreasonably withheld or delayed.

         3.2.2    Sheffield shall, at its expense and sole discretion, file and
                  prosecute applications to register and maintain registrations
                  of the Sheffield Trademarks in the Territory. Newco shall
                  reasonably co-operate with Sheffield in such efforts. In the
                  event Sheffield decides not to file or prosecute such
                  Sheffield Trademark, Newco may request Sheffield to do the
                  same at Newco's expense, and Sheffield shall file or prosecute
                  such Sheffield Trademark at Newco's request and expense unless
                  Sheffield believes such action is without merit.

         3.2.3    Sheffield will be entitled to conduct all enforcement
                  proceedings relating to the Sheffield Trademarks and shall at
                  its sole discretion decide what action, if any, to take in
                  respect to any enforcement proceedings of the Sheffield
                  Trademarks or any other claim or counter-claim brought in
                  respect to the use or registration of the Sheffield
                  Trademarks. Any such proceedings shall be conducted at
                  Sheffield's expense and for its own benefit. Newco and
                  Sheffield shall reasonably cooperate with Sheffield in such
                  efforts. In the event Sheffield decides not to engage in
                  enforcement proceedings of the Sheffield Trademarks, Newco may
                  request Sheffield to do the same at Newco's expense unless
                  Sheffield believes the basis for such enforcement proceedings
                  is without merit. In such a case, Sheffield shall have the
                  sole discretion not to engage in any such enforcement
                  proceedings

         3.2.4    Save where Newco adopts its own mark under Clause 3.2.4, in
                  the event Newco becomes aware that any Sheffield Trademark has
                  been challenged by a third party in a judicial or
                  administrative proceeding in a country in the Territory as
                  infringing on the rights of a third party Newco shall promptly
                  notify Sheffield in writing and Sheffield shall have the first
                  right to decide whether or not to defend such allegations, or
                  to adopt an alternative mark, or allow Newco to adopt an
                  alternative mark. If Sheffield decides not defend the
                  Sheffield Trademark, then Newco may request Sheffield to
                  defend the Sheffield Trademark, at Newco's expense, unless
                  such requested defense is reasonably believed by Sheffield to
                  be unsubstantiated and without merit. In such a case,
                  Sheffield may elect not to initiate defence proceedings.

         3.2.5    Newco will have no ownership rights in respect of the
                  Sheffield Trademarks or of the goodwill associated therewith,
                  and Newco hereby acknowledges that, except as expressly
                  provided in this Agreement, it shall not acquire any rights in
                  respect thereof and that all such rights and goodwill are, and
                  will remain, vested in Sheffield.

         3.2.6    Nothing in this Agreement shall be construed as a warranty on
                  the part of Sheffield regarding the Sheffield Trademarks,

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                  including without limitation, that use of the Sheffield
                  Trademarks in the Territory will not infringe the rights of
                  any third parties. Accordingly, Newco acknowledges and agrees
                  that Sheffield makes no such warranty.

         3.2.7    Sheffield assumes no liability to Newco or to any third
                  parties with respect to the quality, performance or
                  characteristics of any of the goods manufactured or sold by
                  Newco under the Sheffield Trademarks pursuant to this
                  Agreement.

4        NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY

4.1      Subject to Clause 4.2 and Clause 8.6, during the period during which
         the license described in Clause 2.1.1 of the Elan License Agreement has
         not been terminated, Sheffield shall not, alone or in conjunction with
         a third party, develop or commercialize any unit dose steroid listed in
         Schedule 2 for topical pulmonary delivery using a Field A Device,
         subject to written agreements between Sheffield and unaffiliated third
         parties in effect on the Effective Date.

         Sheffield hereby confirms that no such agreements are in effect on the
         date hereof between Sheffield and an unaffiliated third party.

4.2      If, after the Effective Date, Sheffield acquires know-how or patent
         rights relating to the Field A, Field B or Field C (in the case of
         Field C, subject to the Zambon Agreement), or acquires or merges with a
         third party entity that has know-how or patent rights relating to the
         Field A, Field B or Field C (in the case of Field C, subject to the
         Zambon Agreement), Sheffield shall offer to license such know-how and
         patent rights to Newco (subject to existing contractual obligations),
         on commercially reasonable terms on an arm's length basis for a
         reasonable period under the prevailing circumstances.

         If Newco determines that Newco should not acquire such license,
         Sheffield shall be free to fully exploit such know-how and patent
         rights with the Sheffield Intellectual Property then licensed to Newco,
         whether inside or outside the Field A, Field B or Field C, as
         applicable, and to grant to third parties licenses and sublicenses with
         respect thereto.

5        FINANCIAL PROVISIONS

5.1      Royalties:

         Prior to the commercialization of the Products, the Management
         Committee shall consider and if appropriate, determine reasonable
         royalties with respect to the commercialization of the Products by
         Newco that shall be payable by Newco to Elan and Sheffield, and shared
         by Elan and Sheffield equally.

         At such time, the Management Committee will agree an appropriate
         definition of "Net Sales" as such term is used in this Agreement.

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5.2      Payment of any royalties pursuant to Clause 5.1 shall be made quarterly
         in arrears during each Financial Year within 30 days after the expiry
         of the calendar quarter. The method of payment shall be by wire
         transfer to an account specified by Sheffield. Each payment made to
         Sheffield shall be accompanied by a true accounting of all Products
         sold by Newco's permitted sublicensees, if any, during such quarter.

         Such accounting shall show, on a country-by-country and Product-by-
         Product basis, Net Sales (and the calculation thereof) and each
         calculation of royalties with respect thereto, including the
         calculation of all adjustments and currency conversions.

5.3      Newco shall maintain and keep clear, detailed, complete, accurate and
         separate records for a period of 3 years:

         5.3.1    to enable any royalties on Net Sales that shall have accrued
                  hereunder to be determined; and

         5.3.2    to enable any deductions made in the Net Sales calculation to
                  be determined.

5.4      All payments due hereunder shall be made in United States Dollars.
         Payments due on Net Sales of any Product for each calendar quarter made
         in a currency other than United States Dollars shall first be
         calculated in the foreign currency and then converted to United States
         Dollars on the basis of the exchange rate in effect on the last working
         day for such quarter for the purchase of United States Dollars with
         such foreign currency quoted in the Wall Street Journal (or comparable
         publication if not quoted in the Wall Street Journal) with respect to
         the currency of the country of origin of such payment, determined by
         averaging the rates so quoted on each business day of such quarter.

5.5      If, at any time, legal restrictions in the Territory prevent the prompt
         payment when due of royalties or any portion thereof, the Parties shall
         meet to discuss suitable and reasonable alternative methods of paying
         Sheffield the amount of such royalties. In the event that Newco is
         prevented from making any payment under this Agreement by virtue of the
         statutes, laws, codes or government regulations of the country from
         which the payment is to be made, then such payments may be paid by
         depositing them in the currency in which they accrue to Sheffield's
         account in a bank acceptable to Sheffield in the country the currency
         of which is involved or as otherwise agreed by the Parties.

5.6      Sheffield and Newco agree to co-operate in all respects necessary to
         take advantage of any double taxation agreements or similar agreements
         as may, from time to time, be available.

5.7      Any taxes payable by Sheffield on any payment made to Sheffield
         pursuant to this Agreement shall be for the account of Sheffield. If so
         required by applicable law, any payment made pursuant to this Agreement
         shall be made by Newco after deduction of the appropriate withholding
         tax, in which event the Parties shall co-operate to obtain the
         appropriate tax clearance as soon as is practicable. On receipt of such
         clearance, Newco shall forthwith arrange payment to Sheffield of the
         amount so withheld.

                                       14
<PAGE>

6        RIGHT OF INSPECTION AND AUDIT

6.1      Once during each Financial Year, or more often not to exceed quarterly
         as reasonably requested by Sheffield, Newco shall permit Sheffield or
         its duly authorised representatives, upon reasonable notice and at any
         reasonable time during normal business hours, to have access to inspect
         and audit the accounts and records of Newco and any other book, record,
         voucher, receipt or invoice relating to the calculation of the royalty
         payments on Net Sales submitted to Sheffield.

         Any such inspection of Newco's records shall be at the expense of
         Sheffield, except that if any such inspection reveals a deficiency in
         the amount of the royalty actually paid to Sheffield hereunder in any
         Financial Year quarter of [REDACTED] or more of the amount of any
         royalty actually due to Sheffield hereunder, then the expense of such
         inspection shall be borne solely by Newco. Any amount of deficiency
         shall be paid promptly to Sheffield by Newco.

         If such inspection reveals a surplus in the amount of royalties
         actually paid to Sheffield by Newco, Sheffield shall reimburse Newco
         the surplus within 15 days after determination.

6.2      In the event of any unresolved dispute regarding any alleged deficiency
         or overpayment of royalty payments hereunder, the matter will be
         referred to an independent firm of chartered accountants chosen by
         agreement of Sheffield and Elan for a resolution of such dispute. Any
         decision by the said firm of chartered accountants shall be binding on
         the Parties.

 7       REPRESENTATIONS AND WARRANTIES

7.1      Sheffield represents and warrants to Newco and Elan, as of the
         Effective Date, as follows:

         7.1.1    Sheffield has the right to grant the Sheffield Licenses
                  subject to the Zambon Agreement in the case of the license
                  described in Clause 2.1.2;

         7.1.2    there are no agreements with any third parties that conflict
                  with the Sheffield Licenses.

7.2      Sheffield further agrees and represents and warrants to Newco and Elan
         as follows:

         7.2.1    as of the Effective Date, each of the Siemens Agreements is
                  valid and in full force and effect;

         7.2.2    as of the Effective Date, there are no existing or claimed
                  defaults by Sheffield, and to Sheffield's best knowledge by

                                       15
<PAGE>

                  any other party, under any of the Siemens Agreements and no
                  event, act or omission has occurred which (with or without
                  notice, lapse of time or the happening or occurrence of any
                  other event) would result in a default under the Siemens
                  Agreements by Sheffield, or to Sheffield's best knowledge by
                  any other party;

         7.2.3    during the Term, Sheffield will fully comply with all of the
                  terms and conditions of the Siemens Agreements. Sheffield will
                  enforce its rights under the Siemens Agreements and save with
                  the prior approval in writing of the Management Committee
                  which shall not unreasonably be withheld, Sheffield will not
                  assign its rights under the Siemens Agreements; and

         7.2.4    during the Term, Sheffield will keep Newco and Elan fully
                  informed with respect to Sheffield's transactions,
                  arrangements and business under the Siemens Agreements that
                  relate to Newco and/or the transactions contemplated
                  hereunder, and Sheffield shall provide Newco and Elan with any
                  written notices delivered by any party thereunder that relate
                  to Newco and/or the transactions contemplated hereunder, or
                  that may affect Newco.

7.3      During the Term, Sheffield shall not terminate, amend, modify, or waive
         any of its rights under the Siemens Agreements without the prior
         written consent of the Management Committee (by the unanimous vote of
         its members) provided, however, that such consent will not be required
         if such termination, amendment, modification, or waiver would not have
         a material adverse effect, individually or in the aggregate, on the
         financial condition, results of operation, business and/or assets of
         Newco.

7.4      Sheffield shall indemnify Newco and Elan against all costs claims and
         liabilities which may arise in any way in relation to or in connection
         with the Siemens Agreements and/or any sub-license agreement or
         agreements entered into by Newco pursuant to Clause 2.2.

7.5      In addition to any other indemnities provided for herein, Sheffield
         shall indemnify and hold harmless Newco and its Affiliates and their
         respective employees, agents, officers and directors from and against
         any claims, losses, liabilities or damages (including reasonable
         attorney's fees and expenses) incurred or sustained by Newco arising
         out of or in connection with any:

         7.5.1    breach of any representation, covenant, warranty or obligation
                  by Sheffield hereunder; or

         7.5.2    act or omission on the part of Sheffield or any of its
                  respective employees, agents, officers and directors in the
                  performance of this Agreement.

7.6      In addition to any other indemnities provided for herein, Newco shall
         indemnify and hold harmless Sheffield and its Affiliates and their
         respective employees, agents, officers and directors from and against
         any claims, losses, liabilities or damages (including reasonable
         attorney's fees and expenses) incurred or sustained by Sheffield
         arising out of or in connection with any:

                                       16
<PAGE>

         7.6.1    breach of any representation, covenant, warranty or obligation
                  by Newco hereunder; or

         7.6.2    act or omission on the part of Newco or any of its agents or
                  employees in the performance of this Agreement.

7.7      The Party seeking an indemnity shall:

         7.7.1    fully and promptly notify the other Party of any claim or
                  proceeding, or threatened claim or proceeding;

         7.7.2    permit the indemnifying Party to take full care and control of
                  such claim or proceeding;

         7.7.3    co-operate in the investigation and defence of such claim or
                  proceeding;

         7.7.4    not compromise or otherwise settle any such claim or
                  proceeding without the prior written consent of the other
                  Party, which consent shall not be unreasonably withheld
                  conditioned or delayed; and

         7.7.5    take all reasonable steps to mitigate any loss or liability in
                  respect of any such claim or proceeding.

7.8      EXCEPT AS SET FORTH IN THIS CLAUSE 7, SHEFFIELD IS GRANTING THE
         LICENSES HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR
         WARRANTY WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF
         MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF
         THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.

7.9      EXCEPT AS SET FORTH IN CLAUSE 7.4, NOTWITHSTANDING ANYTHING TO THE
         CONTRARY IN THIS AGREEMENT, SHEFFIELD AND NEWCO SHALL NOT BE LIABLE TO
         THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR
         OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF
         THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR
         PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF PROFITS OR OTHERWISE) AND
         WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR
         EMPLOYEES OR AGENTS OR OTHERWISE.

                                       17
<PAGE>

8.       TERM AND TERMINATION

8.1      The term of this Agreement shall commence as of the Effective Date and
         shall, subject to the rights of termination outlined in this Clauses 8,
         expire on a Product-by-Product basis and on a country-by-country basis
         on the last to occur of:

         8.1.1    15 years starting from the date of the first commercial sale
                  of the Product in the country concerned; or

         8.1.2    the date of expiration of the last to expire of the patents
                  included in the Elan Patents and/or the Elan Improvements
                  and/or the Sheffield Patents and/or the Elan Improvements that
                  relate to the Product.

         ("the Term")

8.2      If either Party commits a Relevant Event, the other Party shall have,
         in addition to all other legal and equitable rights and remedies
         hereunder, the right to terminate this Agreement upon 30 days' prior
         written notice to the defaulting Party.

8.3      For the purpose of this Clause 8, a "Relevant Event" is committed or
         suffered by a Party if:

         8.3.1    it commits a material breach of its obligations under this
                  Agreement and fails to remedy it within 60 days of being
                  specifically required in writing to do so by the other Party;
                  provided, that if the breaching Party has proposed a course of
                  action to rectify the breach and is acting in good faith to
                  rectify same but has not cured the breach by the 60th day,
                  such period shall be extended by such period as is reasonably
                  necessary to permit the breach to be rectified;

         8.3.2    a distress, execution, sequestration or other process is
                  levied or enforced upon or sued out against a material part of
                  its property which is not discharged or challenged within 30
                  days;

         8.3.3    it is unable to pay its debts in the normal course of
                  business;

         8.3.4    it ceases wholly or substantially to carry on its business,
                  otherwise than for the purpose of a reconstruction or
                  amalgamation, without the prior written consent of the other
                  Party (such consent not to be unreasonably withheld);

         8.3.5    the appointment of a liquidator, receiver, administrator,
                  examiner, trustee or similar officer of such Party or over all
                  or substantially all of its assets under the law of any
                  applicable jurisdiction, including without limitation, the
                  United States of America, Bermuda or Ireland;

         8.3.6    an application or petition for bankruptcy, corporate re-
                  organisation, composition, administration, examination,
                  arrangement or any other procedure similar to any of the
                  foregoing under the law of any applicable jurisdiction,
                  including without limitation, the United States of America,
                  Bermuda or Ireland, is filed, and is not discharged within 60
                  days, or a Party applies for or consents to the appointment of
                  a receiver, administrator, examiner or similar officer of it
                  or of all or a material part of its assets, rights or revenues
                  or the assets and/or the business of a Party are for any
                  reason seized, confiscated or condemned.

                                       18
<PAGE>

8.4      Sheffield shall be entitled to forthwith terminate this Agreement if
         Elan elects to terminate the Elan License Agreement under Clause 8.4 of
         the Elan License Agreement.

8.5      Upon expiration or termination of the Agreement:

         8.5.1.   any sums that were due from Newco to Sheffield on Net Sales in
                  the Territory or in such particular country or countries in
                  the Territory (as the case may be) prior to the expiration or
                  termination of this Agreement as set forth herein shall be
                  paid in full within 60 days after the expiration or
                  termination of this Agreement for the Territory or for such
                  particular country or countries in the Territory (as the case
                  may be);

         8.5.2    any provisions that expressly survive termination or
                  expiration of this Agreement, including without limitation
                  this Clause 8, shall remain in full force and effect;

         8.5.3    all representations, warranties and indemnities shall insofar
                  as are appropriate remain in full force and effect;

         8.5.4    the rights of inspection and audit set out in Clause 6 shall
                  continue in force for a period of one year; and

         8.5.5    all rights and licenses granted pursuant to this Agreement and
                  to the Sheffield Intellectual Property pursuant to the JDOA
                  (including the rights of Newco pursuant to Clause 11 of the
                  JDOA) shall cease for the Territory or for such particular
                  country or countries in the Territory (as the case may be) and
                  shall revert to or be transferred to Sheffield, and Newco
                  shall not thereafter use in the Territory or in such
                  particular country or countries in the Territory (as the case
                  may be) any rights covered by this Agreement;

         8.5.6    subject to Clause 8.5.7 and to such license, if any, granted
                  by Newco to Sheffield pursuant to the provisions of Clause 12
                  of the JDOA, all rights to Newco Intellectual Property shall
                  be transferred to and jointly owned by Sheffield and Elan and
                  may only be exploited by either Elan or Sheffield with the
                  consent of the other Party pursuant to a written agreement to
                  be negotiated in good faith;

         8.5.7    the rights of permitted third party sub-licensees in and to
                  the Sheffield Intellectual Property shall survive the
                  termination of the license and sublicense agreements granting
                  said intellectual property rights to Newco; and Newco, Elan
                  and Sheffield shall in good faith agree upon the form most
                  advantageous to Elan and Sheffield in which the rights of
                  Newco under any such licenses and sublicenses are to be held
                  (which form may include continuation of Newco solely as the
                  holder of such licenses or assignment of such rights to a
                  third party or parties, including an assignment to both Elan
                  and Sheffield).

                                       19
<PAGE>

                  Any sublicense agreement between Newco and such permitted
                  sublicensee shall permit an assignment of rights by Newco and
                  shall contain appropriate confidentiality provisions.

8.6      In the event that the Parties and Elan mutually agree to terminate the
         portion of the Project (as defined in the JDOA) which relates to Field
         A, the provisions of Clause 4.1 and the provisions of Clause 4.2
         (insofar as the provisions of Clause 4.2 relate to Field A) shall
         automatically terminate.

9        CONFIDENTIAL INFORMATION

9.1      The Parties agree that it will be necessary, from time to time, to
         disclose to each other confidential and proprietary information,
         including without limitation, inventions, works of authorship, trade
         secrets, specifications, designs, data, know-how and other proprietary
         information relating to the Combined Fields, the Products, processes,
         services and business of the disclosing Party.

         The foregoing shall be referred to collectively as "Confidential
         Information".

9.2      Any Confidential Information disclosed by one Party to another Party
         shall be used by the receiving Party exclusively for the purposes of
         fulfilling the receiving Party's obligations under this Agreement and
         the JDOA and for no other purpose.

9.3      Each Party shall disclose Confidential Information of the other Party
         only to those employees, representatives and agents requiring knowledge
         thereof in connection with fulfilling the Party's obligations under
         this Agreement. Each Party further agrees to inform all such employees,
         representatives and agents of the terms and provisions of this
         Agreement and their duties hereunder and to obtain their agreement
         hereto as a condition of receiving Confidential Information. Each Party
         shall exercise the same standard of care as it would itself exercise in
         relation to its own confidential information (but in no event less than
         a reasonable standard of care) to protect and preserve the proprietary
         and confidential nature of the Confidential Information disclosed to it
         by the other Party. Each Party shall, upon request of the other Party,
         return all documents and any copies thereof containing Confidential
         Information belonging to, or disclosed by, such other Party.

9.4      Any breach of this Clause 9 by any person informed by one of the
         Parties is considered a breach by the Party itself.

9.5      Confidential Information shall not be deemed to include:

         9.5.1    information that is in the public domain;

         9.5.2    information which is made public through no breach of this
                  Agreement;

                                       20
<PAGE>

     9.5.3  information which is independently developed by a Party as evidenced
            by such Party's records;

     9.5.4  information that becomes available to a Party on a non-confidential
            basis, whether directly or indirectly, from a source other than a
            Party, which source did not acquire this information on a
            confidential basis; or

     9.5.5  information which the receiving Party is required to disclose
            pursuant to:

            (i)   a valid order of a court or other governmental body; or
            (ii)  any other requirement of law;

            provided that if the receiving Party becomes legally required to
            disclose any Confidential Information, the receiving Party shall
            give the disclosing Party prompt notice of such fact so that the
            disclosing Party may obtain a protective order or other appropriate
            remedy concerning any such disclosure. The receiving Party shall
            fully co-operate with the disclosing Party in connection with the
            disclosing Party's efforts to obtain any such order or other remedy.
            If any such order or other remedy does not fully preclude
            disclosure, the receiving Party shall make such disclosure only to
            the extent that such disclosure is legally required.

9.6  The provisions relating to confidentiality in this Clause 9 shall remain in
     effect during the term of this Agreement, and for a period of 7 years
     following the expiration or earlier termination of this Agreement.

9.7  The Parties agree that the obligations of this Clause 9 are necessary and
     reasonable in order to protect the Parties' respective businesses, and each
     Party agrees that monetary damages would be inadequate to compensate a
     Party for any breach by the other Party of its covenants and agreements set
     forth herein.

     Accordingly, the Parties agree that any such violation or threatened
     violation shall cause irreparable injury to a Party and that, in addition
     to any other remedies that may be available, in law and equity or
     otherwise, each Party shall be entitled to obtain injunctive relief against
     the threatened breach of the provisions of this Clause 9, or a continuation
     of any such breach by the other Party, specific performance and other
     equitable relief to redress such breach together with its damages and
     reasonable counsel fees and expenses to enforce its rights hereunder,
     without the necessity of proving actual or express damages.

10   GOVERNING LAW AND JURISDICTION

10.1 This Agreement shall be governed by and construed in accordance with the
     laws of the State of New York.

                                       21
<PAGE>

10.2      The Parties will attempt in good faith to resolve any dispute arising
          out of or relating to this Agreement promptly by negotiation between
          executives of the Parties. In the event that such negotiations do not
          result in a mutually acceptable resolution, the Parties agree to
          consider other dispute resolution mechanisms including mediation.

          In the event that the Parties fail to agree on a mutually acceptable
          dispute resolution mechanism, any such dispute shall be finally
          settled by the courts of competent jurisdiction. For the purposes of
          this Agreement the parties submit to the non-exclusive jurisdiction of
          the courts of the State of New York.

11        IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE

          Neither Sheffield nor Newco shall be liable for delay in the
          performance of any of its obligations hereunder if such delay results
          from causes beyond its reasonable control, including, without
          limitation, acts of God, fires, strikes, acts of war, intervention of
          a government authority, but any such delay or failure shall be
          remedied by such Party as soon as practicable.

12        ASSIGNMENT

          This Agreement may not be assigned by either Party without the prior
          written consent of the other, save that either Party may assign this
          Agreement to its Affiliates or subsidiaries without such prior written
          consent provided that such assignment does not have any adverse tax
          consequences on the other Party.

13        NOTICES

13.1      Any notice to be given under this Agreement shall be sent in writing
          in English by registered airmail or telefaxed to the following
          addresses: If to Newco at:

          102 St. James Court
          Flatts,
          Smiths FL04
          Bermuda
          Attention:  Secretary
          Telephone:  441 292 9169
          Fax:        441 292 2224

          with a copy to Elan and Sheffield at the addresses listed below:

                                       22
<PAGE>

          If to Sheffield at:
          Sheffield Pharmaceuticals, Inc.
          425 S. Woodsmill Road
          Suite 270
          St Louis
          MO 63017

          USA.

          Attn: Chief Executive Officer
          Telephone  001 314 579 9899
          Fax:       001 314 579 9799

          with a copy to:

          Daniel Gallagher, Esq.
          Olshan, Grundman, Trome
          Rosenzeig, LLP
          505 Park Avenue
          New York, NY 10022

          Telephone   002 212 753 7200
          Fax:        001 212 935 1787

          If to Elan at:

          Elan Corporation, plc
          Lincoln House,
          Lincoln Place,
          Dublin 2,
          Ireland.

          Attention: Vice President, General Counsel,
          Elan Pharmaceutical Technologies,
          a division of Elan Corporation, plc
          Telephone:  + 353 1 709 4000
          Telefax:      + 353 1 709 4124

          or to such other address(es) and telefax numbers as may from time to
          time be notified by either Party to the other hereunder.

13.2      Any notice sent by mail shall be deemed to have been delivered within
          seven 7 working days after dispatch and any notice sent by telex or
          telefax shall be deemed to have been delivered within twenty 24 hours
          of the time of the dispatch. Notice of change of address shall be
          effective upon receipt.

                                       23
<PAGE>

14        MISCELLANEOUS

14.1      Waiver:

          No waiver of any right under this Agreement shall be deemed effective
          unless contained in a written document signed by the Party charged
          with such waiver, and no waiver of any breach or failure to perform
          shall be deemed to be a waiver of any other breach or failure to
          perform or of any other right arising under this Agreement.

14.2      Severability:

          If any provision in this Agreement is agreed by the Parties to be, or
          is deemed to be, or becomes invalid, illegal, void or unenforceable
          under any law that is applicable hereto:

          14.2.1   such provision will be deemed amended to conform to
                   applicable laws so as to be valid and enforceable; or

          14.2.2   if it cannot be so amended without materially altering the
                   intention of the Parties, it will be deleted, with effect
                   from the date the Parties may agree, and the validity,
                   legality and enforceability of the remaining provisions of
                   this Agreement shall not be impaired or affected in any way.

14.3      Further Assurances:

          At the request of any of the Parties, the other Party or Parties shall
          (and shall use reasonable efforts to procure that any other necessary
          parties shall) execute and perform all such documents, acts and things
          as may reasonably be required subsequent to the signing of this
          Agreement for assuring to or vesting in the requesting Party the full
          benefit of the terms hereof.

14.4      Successors:

          This Agreement shall be binding upon and enure to the benefit of the
          Parties hereto, their successors and permitted assigns.

14.5      No Effect on Other Agreements/Conflict:

          No provision of this Agreement shall be construed so as to negate,
          modify or affect in any way the provisions of any other agreement
          between the Parties unless specifically referred to, and solely to the
          extent provided herein.

          In the event of a conflict between the provisions of this Agreement
          and the provisions of the JDOA, the terms of the JDOA shall prevail
          unless this Agreement specifically provides otherwise.

                                       24
<PAGE>

14.6      Amendments:

          No amendment, modification or addition hereto shall be effective or
          binding on any Party unless set forth in writing and executed by a
          duly authorised representative of each Party.

14.7      Counterparts:

          This Agreement may be executed in any number of counterparts, each of
          which when so executed shall be deemed to be an original and all of
          which when taken together shall constitute this Agreement.

14.8      Good Faith:

          Each Party undertakes to do all things reasonably within its power
          which are necessary or desirable to give effect to the spirit and
          intent of this Agreement.

14.9      No Reliance:

          Each Party hereby acknowledges that in entering into this Agreement it
          has not relied on any representation or warranty save as expressly set
          out herein or in any document referred to herein.

14.10     Relationship of the Parties:

          Nothing contained in this Agreement is intended or is to be construed
          to constitute Sheffield and Newco as partners, or Sheffield as an
          employee of Newco, or Newco as an employee of Sheffield.

          Neither Party hereto shall have any express or implied right or
          authority to assume or create any obligations on behalf of or in the
          name of the other Party or to bind the other Party to any contract,
          agreement or undertaking with any third party.

                                       25
<PAGE>

                                  SCHEDULE 1

                    TECHNOLOGICAL COMPETITORS OF SHEFFIELD

[REDACTED]
<PAGE>

                                  SCHEDULE 2

                        List of Steroids for Clause 4.1

[REDACTED]
<PAGE>

IN WITNESS WHEREOF the Parties hereto have executed this Agreement.

/s/
SIGNED BY
for and on behalf of
SHEFFIELD PHARMACEUTICALS, INC.

/s/
SIGNED BY
For and on behalf of
SHEFFIELD NEWCO LIMITED

/s/
AGREED TO AND ACCEPTED BY
ELAN PHARMA INTERNATIONAL LIMITED<PAGE>

Exhibit 10.28                               ***TEXT OMITTED AND FILED SEPARATELY
                                            CONFIDENTIAL TREATMENT REQUESTED
                                            UNDER 17 C.F.R. SECTIONS
                                            200.80(B)(4), 200.83 AND 240.24B-2

                               LICENSE AGREEMENT

                                    BETWEEN

                       ELAN PHARMA INTERNATIONAL LIMITED

                                      AND

                            SHEFFIELD NEWCO LIMITED
<PAGE>

                               TABLE OF CONTENTS

1.    DEFINITIONS
2.    ELAN LICENSE TO NEWCO
3.    INTELLECTUAL PROPERTY
4.    NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
5.    FINANCIAL PROVISIONS
6.    RIGHT OF INSPECTION AND AUDIT
7.    REPRESENTATIONS AND WARRANTIES
8.    TERM AND TERMINATION
9.    CONFIDENTIAL INFORMATION
10.   GOVERNING LAW AND JURISDICTION
11.   IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
12.   ASSIGNMENT
13.   NOTICES
14.   MISCELLANEOUS
<PAGE>

THIS AGREEMENT made this 20 October 1999

between:

(1)      Elan Pharma International Limited incorporated under the laws of
         Ireland, and having its registered office at WIL House, Shannon
         Business Park, Shannon, County Clare, Ireland ("EPIL");

(2)      Newco Limited, a private limited company incorporated under the laws of
         Bermuda and having its registered office at Clarendon House, 2 Church
         Street, Hamilton, Bermuda ("Newco"); and

(3)      Sheffield Pharmaceuticals, Inc., a corporation duly incorporated and
         validly existing under the laws of Delaware and having its principal
         place of business at 425 S. Woodsmill Road, Suite 270, St. Louis, MO
         63017, USA("Sheffield").

RECITALS:

A.       Simultaneously herewith, Sheffield, Elan, EIS, and Newco are entering
         into the JDOA for the purpose of recording the terms and conditions of
         the joint venture and of regulating their relationship with each other
         and certain aspects of the affairs of, and their dealings with Newco.

B.       Newco desires to enter into this Agreement with Elan so as to permit
         Newco to utilize the Elan Intellectual Property in making, having made,
         importing, using, offering for sale and selling the Products in Field A
         and Field B and Formulations in Field C in the Territory in accordance
         with the terms of this Agreement.

C.       Simultaneously herewith Newco and Sheffield are entering into the
         Sheffield License Agreement relating to Newco's use of the Sheffield
         Intellectual Property.

1        DEFINITIONS

1.1      In this Agreement unless the context otherwise requires:

         "Affiliate" shall mean any corporation or entity controlling,
         controlled or under the common control of Elan or Sheffield, as the
         case may be, excluding Systemic Pulmonary Delivery Ltd.. For the
         purpose of this definition, "control" shall mean direct or indirect
         ownership of fifty percent (50%) or more of the stock or shares
         entitled to vote for the election of directors. Newco is not an
         Affiliate of Sheffield.

         "Agreement" shall mean this license agreement (which expression shall
         be deemed to include the Recitals and Schedules hereto).

                                       3
<PAGE>

         "Business Plan" shall have the meaning, as such term is defined in the
         JDOA.

         "Change of Control of Sheffield/Newco" shall mean circumstances where:

         (i)      a Technological Competitor of Elan shall, directly or
                  indirectly, acquire [REDACTED] or more of the voting stock of
                  Sheffield or Newco, or otherwise control or influence in any
                  material respect their management or business or otherwise
                  have entered into any joint venture, collaboration, license or
                  other arrangement with Sheffield or Newco, as the case may be,
                  to such an extent that such a Technological Competitor of Elan
                  is materially engaged or involved with the business or
                  development of Sheffield or Newco, as the case may be; or

         (ii)     any person other than a Technological Competitor of Elan
                  shall, directly or indirectly, acquire [REDACTED] or more of
                  the then voting stock of Sheffield or Newco, or otherwise
                  merge, consolidate or enter into any similar transaction (or
                  binding agreement in respect thereof) with Sheffield or Newco.

         "Combined Fields" shall mean Field A, Field B and Field C.

         "Compounds" shall mean the Field A Compound, the Field B Compound
         and/or the Field C Compound.

         "Confidential Information" shall have the meaning, as such term is
         defined in Clause 9.

         "Definitive Documents" shall mean the definitive agreements relating to
         the transaction including finance, stock purchase, research and license
         agreements.

         "Elan" shall mean EPIL and Affiliates and subsidiaries of Elan
         Corporation, Plc. within the division of Elan Corporation, Plc.
         carrying on business as Elan Pharmaceutical Technologies but shall not
         include Affiliates and subsidiaries (present or future) of Elan
         Corporation Plc within the division of Elan Corporation, Plc carrying
         on business as Elan Pharmaceuticals which incorporates, inter alia,
         Targon Corporation, Athena Neurosciences, Inc., Elan Pharmaceuticals,
         Inc., Elan Diagnostics, Carnrick Laboratories, and Elan Europe Limited.

         "EIS" shall mean Elan International Services, Limited, a private
         limited company incorporated under the laws of Bermuda and having its
         registered office at Clarendon House, 2 Church Street, Hamilton,
         Bermuda.

         "Effective Date" shall mean the date of this Agreement.
         "Elan Intellectual Property" shall mean the Elan Know-How, the Elan
         Patents and the Elan Improvements.

         For the avoidance of doubt, Elan Intellectual Property shall exclude
         (i) Elan's patent rights and know-how relating to protein or peptide
         agents or peptodomimetics, derivatives or analogs thereof, designed to

                                       4
<PAGE>

         target a pharmaceutically active agent to a certain site or sites in
         the body (targeting technology) and (ii) inventions, patents and know-
         how owned, licensed or controlled by Axogen Limited and Neuralab
         Limited, and by all Affiliates and subsidiaries (present or future) of
         Elan Corporation, Plc. carrying on business as Elan Pharmaceuticals
         which incorporates, inter alia, Targon Corporation, Athena
         Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan Diagnostics,
         Carnrick Laboratories, and Elan Europe Limited.

         "Elan Know-How" shall mean any and all rights owned, licensed or
         controlled by Elan to any discovery, invention (whether patentable or
         not), know-how, substances, data, techniques, processes, systems,
         formulations and designs relating to Nanocrystal(TM) Technology.

         "Elan Licenses" shall have the meaning set forth in Clause 2.1.

         "Elan Patents" shall mean any and all rights under any and all patents
         applications and/or patents, now existing, currently pending or
         hereafter filed or obtained by Elan relating to Nanocrystal(TM)
         Technology as set forth in Schedule 1, and any foreign counterparts
         thereof and all divisionals, continuations, continuations-in-part, any
         foreign counterparts thereof and all patents issuing on, any of the
         foregoing, together with all registrations, reissues, re-examinations
         or extensions thereof.

         "EPIL Patents" shall mean the Elan Patents owned by EPIL.

         "Elan Improvements" shall mean improvements relating to the Elan
         Patents and/or the Elan Know-How, developed (i) by Elan whether or not
         pursuant to the Project, (ii) by Newco or Sheffield or by a third party
         (under contract with Newco) whether or not pursuant to the Project,
         and/or (iii) jointly by any combination of Elan, Sheffield or Newco
         pursuant to the Project, except as limited by agreements with third
         Parties.

         Subject to third party agreements, Elan Improvements shall constitute
         part of Elan Intellectual Property and be included in the license of
         the Elan Intellectual Property pursuant to Clause 2.1 solely for the
         purposes set forth therein. If the inclusion of an Elan Improvement in
         the license of Elan Intellectual Property is restricted or limited by a
         third party agreement, Elan shall use reasonable commercial efforts to
         minimize any such restriction or limitation.

         "Elan Trademark(s)" shall mean one or more trademarks, trade names, or
         service marks that are owned or licensed by or on behalf of Elan which
         Elan may nominate and approve in writing from time to time for use in
         connection with the sale or promotion of the Products by Newco.

         "Field A" shall mean the topical pulmonary delivery of Formulations of
         the Field A Compound by means of the Field A Device.

         "Field B" shall mean the topical pulmonary delivery of a Formulations
         of the Field B Compound by means of the Field B Device.

                                       5
<PAGE>

         "Field C" shall mean the topical pulmonary delivery of a Formulations
         of the Field C Compound by means of the Field C Device.

         "Field A Device" shall mean a third party table top unit dose nebulizer
         having a reservoir capable of holding a unit dose (a device and the
         compressor to nebulize a unit dose shall be deemed a device), which is
         a device having any one the following characteristics:

         (i)      [REDACTED]

         (ii)     [REDACTED]

         (iii)    [REDACTED]

         (iv)     [REDACTED]

         (v)      [REDACTED]

         For the avoidance of doubt, the Field A Device does not include
         [REDACTED]

         "Field B Device" shall mean the Aerosol Drug Delivery System ("ADDS"),
         owned by Systemic Pulmonary Delivery Limited and exclusively licensed
         to Sheffield for topical pulmonary applications.

         "Field C Device" shall mean the handheld multi-dose nebulizer ("MSI")
         which was licensed exclusively by Siemens to Sheffield pursuant to the
         Siemens Agreements and which was subsequently sub-licensed by Sheffield
         to Zambon (on an exclusive basis for delivery of various medicines for
         humans in treating respiratory disease and/or other lung diseases
         including, but not limited to, anti-infectives) provided that Newco,
         through the Management Committee, is successful in obtaining a sub-
         license from Zambon to Newco enabling the development of the Field C
         Compound for use with the Field C Device, as described in more detail
         in Clause 2.2.

         "Field A Compound" shall mean [REDACTED]

         "Field B Compound" shall mean [REDACTED] for therapeutic use to be
         nominated by the Management Committee pursuant to the JDOA and with
         reference to the JDOA, any Substitute Field B Compound.

         "Field C Compound" shall mean [REDACTED] and with reference to the
         JDOA, any Substitute Field C Compound and/or any Additional Field C
         Compound.

         "Financial Year" shall mean each year commencing on 1 January (or in
         the case of the first Financial Year, the Effective Date) and expiring
         on 31 December of each year.

         "Formulations" shall mean Nanocrystal(TM) Technology formulations of
         Compounds for use in Field A, Field B or Field C, as applicable.

                                       6
<PAGE>

         "JDOA" shall mean that certain joint development and operating
         agreement, of even date herewith, by and between Elan, Sheffield, EIS
         and Newco.

         "Licensed Technologies" shall mean the Elan Intellectual Property and
         the Sheffield Intellectual Property.

         "Licenses" shall mean the Elan License and the Sheffield License.
         "Management Committee" shall have the meaning, as such term is defined
         in the JDOA.

         "Nanocrystal(TM) Technology" shall mean the Elan proprietary technology
         directed to nanoparticulate formulations of compounds used in the
         manufacturing and/or formulation process, and methods of making the
         same.

         "Newco Intellectual Property" shall mean all rights to patents, know-
         how and other intellectual property arising out of the conduct of the
         Project by any person, including any technology acquired by Newco from
         a third party, that does not constitute Elan Intellectual Property or
         Sheffield Intellectual Property.

         "Newco Patents" shall mean any and all patents now existing, currently
         pending or hereafter filed or obtained relating to the Newco
         Intellectual Property, and any foreign counterparts thereof and all
         divisionals, continuations, continuations-in-part, any foreign
         counterparts thereof and all patents issuing on, any of the foregoing,
         together with all registrations, reissues, re-examinations or
         extensions thereof.

         "Party" shall mean Elan or Newco, as the case may be, and "Parties"
         shall mean Elan and Newco.

         "Products" shall mean the Field A Products, the Field B Products and/or
         the Field C Products, as follows:

         "Field A Products" shall mean Formulations of the Field A Compound
         delivered by means of any Field A Device in Field A.

         "Field B Products" shall mean Formulations of the Field B Compound
         delivered by means of the Field B Device in Field B.

         "Field C Products" shall mean Formulations of the Field C Compound
         delivered by means of the Field C Device in Field C.

         "Project" shall mean all activities as undertaken by Elan, Sheffield
         and Newco in order to develop the Products.

         "R&D Committee" shall have the meaning, as such term is defined in the
         JDOA.

                                       7
<PAGE>

         "R&D Plan" shall have the meaning, as such term is defined in the JDOA.

         "R&D Program" shall mean any research and development program commenced
         by Newco pursuant to the Project.

         "Sheffield" shall mean Sheffield Pharmaceuticals, Inc and its
         Affiliates, excluding Newco.

         "Sheffield Intellectual Property" shall mean the Sheffield Know-How,
         the Sheffield Patents and the Sheffield Improvements, as such terms are
         defined in the Sheffield License Agreement.

         "Sheffield License" shall have the meaning set forth in Clause 2.1 of
         the Sheffield License Agreement.

         "Sheffield License Agreement" shall mean that certain license
         agreement, of even date herewith, entered into between Sheffield and
         Newco.

         "Sheffield Patents" shall have the meaning as such term is defined in
         the Sheffield License Agreement.

         "Sheffield Improvements" shall have the meaning as such term is defined
         in the Sheffield License Agreement.

         "Siemens" shall mean Siemens Aktiengesellschaft.

         "Siemens Agreements" shall mean the License Agreement dated 21 March
         1997 and the Basic Supply Agreement dated 21 March 1997, both between
         Sheffield Medical Technologies Inc. and Siemens Aktiengesellschaft.

         "Technological Competitor of Elan" shall mean a company, corporation or
         person listed in Schedule 2 and successors thereof or any additional
         broad-based technological competitor of Elan added to such Schedule
         from time to time upon mutual agreement of the Parties.

         "Term" shall have the meaning set forth in Clause 8.

         "Territory" shall mean all the countries of the world.

         "United States Dollar" and "US$" shall mean the lawful currency for the
         time being of the United States of America.

         "Zambon" shall mean Inpharzam International, S.A.

                                       8
<PAGE>

1.2      In this Agreement:

         1.2.1   The singular includes the plural and vice versa, and the
                 masculine includes the feminine and vice versa and the neuter
                 includes the masculine and the feminine.

         1.2.2   Any reference to a Clause or Schedule shall, unless otherwise
                 specifically provided, be to a Clause or Schedule of this
                 Agreement.

         1.2.3   The headings of this Agreement are for ease of reference only
                 and shall not affect its construction or interpretation.

2.       ELAN LICENSE TO NEWCO

2.1.     Elan hereby grants to Newco for the Term the following licenses subject
         to any contractual obligations that Elan has as of the Effective Date,
         including but not limited to the Development License and Supply
         Agreement dated 26 July 1999 between EPIL and Merck Corporation:

         2.1.1    an exclusive license (including the right to grant sublicenses
                  subject to the limitations of Clause 2.7) of the Elan
                  Intellectual Property solely to make, have made, import, use,
                  offer for sale and sell the Field A Products in the Territory
                  in Field A;

         2.1.2    a non-exclusive license (including the right to grant
                  sublicenses subject to the limitations of Clause 2.7) of the
                  Elan Intellectual Property solely to make, have made, import,
                  use, offer for sale and sell the Field B Products in the
                  Territory in Field B;

         2.1.3    subject to the execution by Newco of a written sub-license
                  with Zambon as more fully described in Clause 2.2 for the
                  development by Newco of the Field C Formulations in accordance
                  with Clause 2.2, a non-exclusive license (including the right
                  to grant sublicenses subject to the limitations of Clause 2.7)
                  of the Elan Intellectual Property solely to make, have made,
                  import, use, offer for sale and sell the Field C Formulations
                  in the Territory in Field C;

         (the "Elan Licenses").

2.2      On the date which is 180 days following the Effective Date, or such
         extended date as may be agreed in writing by Elan and Newco, Elan
         shall, at its sole discretion, be entitled forthwith to terminate the
         license to Newco described in Clause 2.1.3, upon notice in writing to
         Newco, in the event that Newco has not, prior to such date, executed a
         written sub-license with Zambon for the development by Newco of the
         Field C Formulations in Field C.

         Such written sub-license will be subject to the approval of the
         Management Committee and will include authority from Zambon to Newco to

                                       9
<PAGE>

         the extent necessary for Newco to develop, make, have made and use the
         Field C Formulations in the Territory, general financial terms,
         development schedule, and terms governing the funding by Zambon of any
         R&D Program(s) in Field C, together with such other substantive issues
         as the Management Committee shall deem appropriate and customary terms.
         For the avoidance of doubt, to the extent royalty or other compensation
         obligations are payable to Zambon in respect of any license or sub-
         license from Zambon to Newco of intellectual property rights necessary
         for Newco to develop, make, have made the Field C Formulations in the
         Territory, Sheffield shall be responsible for same and shall indemnify
         Newco in respect of any such royalty or other compensation obligations
         payable to Zambon.

2.3      Elan shall be responsible for payments related to the financial
         provisions and obligations of any third party agreement with respect to
         the Elan Intellectual Property to which it is a party on the Effective
         Date (including amendments thereto) (the "Elan Effective Date
         Agreements"), including without limitation, any royalty or other
         compensation obligations triggered thereunder on the Effective Date, or
         triggered thereunder after the Effective Date.

         For the avoidance of doubt, royalties, milestones or other payments
         which arise from the process of the commercialization or exploitation
         of products under the Elan Effective Date Agreements (for example, a
         milestone payment payable upon successful completion of Phase II
         clinical trials, the filing of an NDA application, obtaining NDA
         approval, or first commercial sale) shall be payments for which Elan
         will be responsible under this Clause 2.1.

2.4      To the extent royalty or other compensation obligations that are
         payable to third parties with respect to the Elan Intellectual Property
         would be triggered after the Effective Date under any third party
         agreement entered into by Elan after the Effective Date (the "Elan
         Post-Effective Date Agreements"), by a proposed use of such Elan
         Intellectual Property in connection with the Project, Elan will inform
         Newco of such royalty or compensation obligations. If Newco agrees to
         utilise such Elan Intellectual Property in connection with the Project,
         Newco will be responsible for the payment of such royalty or other
         compensation obligations relating thereto.

         For the avoidance of doubt, royalties, milestones or other payments
         which arise from the process of the commercialization or exploitation
         of products under the Elan Post-Effective Date Agreements (for example,
         a milestone payment payable upon successful completion of Phase II
         clinical trials, the filing of an NDA application, obtaining NDA
         approval, or first commercial sale) shall be payments for which Newco
         will be responsible under this Clause 2.2.

2.5      Sheffield shall be a third party beneficiary under this Agreement and
         shall have the right to cause Newco to enforce Newco's rights under
         this Agreement against Elan.

2.6      Notwithstanding anything contained in this Agreement to the contrary,
         Elan shall have the right outside the Field A, Field B and Field C and

                                       10
<PAGE>

         subject to the non-competition provisions of Clause 4 to exploit and
         grant licenses and sublicenses of the Elan Intellectual Property. For
         the avoidance of doubt, Newco shall have no right to use the Elan
         Intellectual Property outside Field A, Field B or Field C.

2.7      Newco shall not be permitted to assign or sublicense any of its rights
         under the Elan Intellectual Property without the prior written consent
         of Elan, which consent shall not be unreasonably withheld or delayed
         provided that Elan shall in all cases, in its sole discretion, be
         entitled to withhold its consent in the case of a proposed sublicense
         to any Technological Competitor to Elan.

2.8      Any agreement between Newco and any permitted third party for the
         development or exploitation of the Elan Intellectual Property shall
         require such third party to maintain the confidentiality of all
         information concerning the Elan Intellectual Property.

         Insofar as the obligations owed by Newco to Elan are concerned, Newco
         shall remain responsible for all acts and omissions of any permitted
         sub-licensee, including Sheffield, as if they were acts and omissions
         by Newco.

3        INTELLECTUAL PROPERTY

3.1      Ownership of Intellectual Property:

         3.1.1     Newco shall own the Newco Intellectual Property.

         3.1.2     Elan shall own the Elan Intellectual Property.

3.2      Trademarks:

         3.2.1     Elan hereby grants to Newco for the Term a non-exclusive,
                   royalty free license in the Territory to use and display the
                   Elan Trademarks to promote, offer for sale and sell the
                   Products in Field A, Field B and the Formulations in Field C
                   in the Territory and the following provisions shall apply as
                   regards the use of the Elan Trademarks by Newco hereunder:

                   (1)   Newco shall ensure that each reference to and use of an
                         Elan Trademark by Newco is in a manner approved by Elan
                         and accompanied by an acknowledgement, in a form
                         approved by Elan, that the same is a trademark (or
                         registered trademark) of Elan.

                         From time to time, upon the reasonable request of Elan,
                         Newco shall submit samples of the Product to Elan or
                         its duly appointed agent to ensure compliance with
                         quality standards and specifications. Elan, or its duly
                         appointed agent, shall have the right to inspect the
                         premises of Newco where the Products are manufactured,
                         held or stored, and Newco shall permit such inspection,

                                       11
<PAGE>

                         upon advance notice at any reasonable time, of the
                         methods and procedures used in the manufacture, storage
                         and sale of the Product. Newco shall not sell or
                         otherwise dispose of any Product under the Elan
                         Trademarks that fails to comply with the quality
                         standards and specifications referred to in this Clause
                         3.2, as determined by Elan.

                   (2)   Newco shall not use an Elan Trademark in any way which
                         might materially prejudice its distinctiveness or
                         validity or the goodwill of Elan therein.

                   (3)   The parties recognize that the Elan Trademarks have
                         considerable goodwill associated therewith. Newco shall
                         not use in relation to the Products any trademarks
                         other than the Elan Trademarks (except the Sheffield
                         Trademarks (as defined in the Sheffield License
                         Agreement) licensed to Newco under the Sheffield
                         License Agreement) without obtaining the prior consent
                         in writing of Elan, which consent may not be
                         unreasonably withheld. However, such use must not
                         conflict with the use and display of the Elan Trademark
                         and such use and display must be approved by Elan.

                   (4)   Newco shall not use in the Territory any trademarks or
                         trade names so resembling the Elan Trademark as to be
                         likely to cause confusion or deception.

                   (5)   Newco shall promptly notify Elan in writing of any
                         alleged infringement or unauthorised use of which it
                         becomes aware by a third party of the Elan Trademarks
                         and provide Elan with any applicable evidence of
                         infringement or unauthorised use.

                   (6)   Newco shall not be permitted to assign or sublicense
                         any of its rights under the Elan Trademarks without the
                         prior written consent of Elan, which consent shall not
                         be unreasonably withheld or delayed.

         3.2.2     Elan shall, at its expense and sole discretion, file and
                   prosecute applications to register and maintain registrations
                   of the Elan Trademarks in the Territory. Newco shall
                   reasonably co-operate with Elan in such efforts. In the event
                   Elan decides not to file or prosecute such Elan Trademark,
                   Newco may request Elan to do the same at Newco's expense, and
                   Elan shall file or prosecute such Elan Trademark at Newco's
                   request and expense unless Elan believes such action is
                   without merit.

         3.2.3     Elan will be entitled to conduct all enforcement proceedings
                   relating to the Elan Trademarks and shall at its sole
                   discretion decide what action, if any, to take in respect to
                   any enforcement proceedings of the Elan Trademarks or any
                   other claim or counter-claim brought in respect to the use or
                   registration of the Elan Trademarks. Any such proceedings
                   shall be conducted at Elan's expense and for its own benefit.
                   Newco and Sheffield shall reasonably cooperate with Elan in

                                       12
<PAGE>

                   such efforts. In the event Elan decides not to engage in
                   enforcement proceedings of the Elan Trademarks, Newco may
                   request Elan to do the same at Newco's expense unless Elan
                   believes the basis for such enforcement proceedings is
                   without merit. In such a case, Elan shall have the sole
                   discretion not to engage in any such enforcement proceedings

         3.2.4     Save where Newco adopts its own mark under Clause 3.2.4, in
                   the event Newco becomes aware that any Elan Trademark has
                   been challenged by a third party in a judicial or
                   administrative proceeding in a country in the Territory as
                   infringing on the rights of a third party Newco shall
                   promptly notify Elan in writing and Elan shall have the first
                   right to decide whether or not to defend such allegations, or
                   to adopt an alternative mark, or allow Newco to adopt an
                   alternative mark. If Elan decides not defend the Elan
                   Trademark, then Newco may request Elan to defend the Elan
                   Trademark, at Newco's expense, unless such requested defense
                   is reasonably believed by Elan to be unsubstantiated and
                   without merit. In such a case, Elan may elect not to initiate
                   defence proceedings.

         3.2.5     Newco will have no ownership rights in respect of the Elan
                   Trademarks or of the goodwill associated therewith, and Newco
                   hereby acknowledges that, except as expressly provided in
                   this Agreement, it shall not acquire any rights in respect
                   thereof and that all such rights and goodwill are, and will
                   remain, vested in Elan.

         3.2.6     Nothing in this Agreement shall be construed as a warranty on
                   the part of Elan regarding the Elan Trademarks, including
                   without limitation, that use of the Elan Trademarks in the
                   Territory will not infringe the rights of any third parties.
                   Accordingly, Newco acknowledges and agrees that Elan makes no
                   such warranty.

         3.2.7     Elan assumes no liability to Newco or to any third parties
                   with respect to the quality, performance or characteristics
                   of any of the goods manufactured or sold by Newco under the
                   Elan Trademarks pursuant to this Agreement.

4        NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY

4.1      Subject to Clause 4.2 and Clause 4.3 and Clause 8.6, during the period
         during which the license described in Clause 2.1.1 has not been
         terminated, Elan shall not, alone or in conjunction with a third party,
         develop or commercialize any of the unit dose steroids listed in
         Schedule 3 for topical pulmonary delivery using a Field A Device and
         utilizing the Nanocrystal(TM)Technology, subject to written agreements
         between Elan and unaffiliated third parties on the Effective Date,
         including but not limited to the Development License and Supply
         Agreement dated 26 July 1999 between EPIL and Merck Corporation. For
         the avoidance of doubt, the non-compete obligation set forth in this
         Clause 4 shall not prevent or restrict EPIL (as the owner of
         intellectual property related to Nanocrystal(TM) Technology) from
         entering into any agreement with any third party to license the
         Nanocrystal(TM) Technology, such license being limited to compounds

                                       13
<PAGE>

         owned, acquired, in-licensed or otherwise proprietary to such third
         party but not including any of the unit dose steroids listed in
         Schedule 3 for topical pulmonary delivery using a Field A Device and
         utilizing the Nanocrystal(TM) Technology.

         The provisions of this Clause 4.1 shall only act as a restriction upon
         Affiliates and subsidiaries of Elan Corporation, Plc. within the
         division of Elan Corporation, Plc. carrying on business as Elan
         Pharmaceutical Technologies and shall not act as a restriction upon,
         nor in any way affect, Affiliates and subsidiaries (present or future)
         of Elan Corporation Plc within the division of Elan Corporation, Plc
         carrying on business as Elan Pharmaceuticals which incorporates, inter
         alia, Targon Corporation, Athena Neurosciences, Inc., Elan
         Pharmaceuticals, Inc., Elan Diagnostics, Carnrick Laboratories, and
         Elan Europe Limited.

4.2      Notwithstanding the provisions of Clause 4.1, the non-competition
         obligations of Elan set forth in Clause 4.1 shall not restrict Elan
         from entering into an agreement with [REDACTED] during the period of
         [REDACTED] following the Effective Date, or such longer period as may
         be agreed by Elan and Newco, for the development of a unit dose of
         [REDACTED], for topical pulmonary delivery using a Field A Device and
         utilizing the Nanocrystal(TM)Technology subject to the following
         conditions:

         4.2.1   if such agreement is not executed by Elan and [REDACTED] within
                 the period of [REDACTED] following the Effective Date, or such
                 longer period as may be agreed by Elan and Newco, this
                 exception to the non-competition obligations of Elan set forth
                 in Clause 4.1 shall expire and be of no further force or
                 effect;

         4.2.2   if such agreement is agreed for execution by Elan and [REDATED]
                 within the period of [REDACTED] following the Effective Date,
                 or such longer period as may be agreed by Elan and Newco, Newco
                 and Sheffield shall forthwith sign an amendment to this License
                 Agreement (and any of the other Definitive Documents, if
                 necessary) terminating the non-competition obligations of Elan
                 set forth in Clause 4.1 insofar as such obligations relate to
                 [REDACTED] and the Parties shall agree in good faith and on
                 reasonable commercial and customary terms what portion of the
                 royalties payable by [REDACTED] to Elan under the agreement
                 proposed for execution should be payable to Newco in return for
                 such amendment to this License Agreement (and any of the other
                 Definitive Documents, if necessary).

4.3      If, after the Effective Date, Elan acquires know-how or patent rights
         relating to the Field A, Field B or Field C, or acquires or merges with
         a third party entity that has know-how or patent rights relating to the
         Field A, Field B or Field C, Elan shall offer to license such know-how
         and patent rights to Newco (subject to existing contractual
         obligations), on commercially reasonable terms on an arm's length basis
         for a reasonable period under the prevailing circumstances. If Newco
         determines that Newco should not acquire such license, Elan shall be
         free to fully exploit such know-how and patent rights with the Elan
         Intellectual Property then licensed to Newco, whether inside or outside
         the Field A, Field B or Field C, as applicable, and to grant to third
         parties licenses and sublicenses with respect thereto.

                                       14
<PAGE>

5        FINANCIAL PROVISIONS

5.1      License Fee:

         In consideration of the license by EPIL to Newco of the EPIL Patents
         under Clause 2, Newco shall pay to EPIL a non-refundable license fee of
         $15 million in cash (the "License Fee"), the receipt of which is hereby
         acknowledged by EPIL.

         The License Fee shall not be subject to future performance obligations
         of Elan to Newco or Sheffield and shall not be applicable against
         future services provided by Elan to Newco or Sheffield. For the
         avoidance of doubt, in the event that Elan terminates the license to
         Newco described in Clause 2.1.3 pursuant to the provisions of Clause
         2.2, no part of the License Fee described in this Clause 5.1 shall
         become refundable to Sheffield.

5.2      Royalties:

         Prior to the commercialization of the Products, the Management
         Committee shall consider and if appropriate, determine reasonable
         royalties with respect to the commercialization of the Products by
         Newco that shall be payable by Newco to Elan and Sheffield, and shared
         by Elan and Sheffield equally.

         At such time, the Management Committee will agree an appropriate
         definition of "Net Sales" as such term is used in this Agreement.

5.3      Payment of any royalties pursuant to Clause 5.2 shall be made quarterly
         in arrears during each Financial Year within 30 days after the expiry
         of the calendar quarter. The method of payment shall be by wire
         transfer to an account specified by Elan. Each payment made to Elan
         shall be accompanied by a true accounting of all Products sold by
         Newco's permitted sublicensees, if any, during such quarter.

         Such accounting shall show, on a country-by-country and Product-by-
         Product basis, Net Sales (and the calculation thereof) and each
         calculation of royalties with respect thereto, including the
         calculation of all adjustments and currency conversions.

5.4      Newco shall maintain and keep clear, detailed, complete, accurate and
         separate records for a period of 3 years:

         5.4.1   to enable any royalties on Net Sales that shall have accrued
                 hereunder to be determined; and

         5.4.2   to enable any deductions made in the Net Sales calculation to
                 be determined.

                                       15
<PAGE>

5.5      All payments due hereunder shall be made in United States Dollars.
         Payments due on Net Sales of any Product for each calendar quarter made
         in a currency other than United States Dollars shall first be
         calculated in the foreign currency and then converted to United States
         Dollars on the basis of the exchange rate in effect on the last working
         day for such quarter for the purchase of United States Dollars with
         such foreign currency quoted in the Wall Street Journal (or comparable
         publication if not quoted in the Wall Street Journal) with respect to
         the currency of the country of origin of such payment, determined by
         averaging the rates so quoted on each business day of such quarter.

5.6      If, at any time, legal restrictions in the Territory prevent the prompt
         payment when due of royalties or any portion thereof, the Parties shall
         meet to discuss suitable and reasonable alternative methods of paying
         Elan the amount of such royalties. In the event that Newco is prevented
         from making any payment under this Agreement by virtue of the statutes,
         laws, codes or government regulations of the country from which the
         payment is to be made, then such payments may be paid by depositing
         them in the currency in which they accrue to Elan's account in a bank
         acceptable to Elan in the country the currency of which is involved or
         as otherwise agreed by the Parties.

5.7      Elan and Newco agree to co-operate in all respects necessary to take
         advantage of any double taxation agreements or similar agreements as
         may, from time to time, be available.

5.8      Any taxes payable by Elan on any payment made to Elan pursuant to this
         Agreement shall be for the account of Elan. If so required by
         applicable law, any payment made pursuant to this Agreement shall be
         made by Newco after deduction of the appropriate withholding tax, in
         which event the Parties shall co-operate to obtain the appropriate tax
         clearance as soon as is practicable. On receipt of such clearance,
         Newco shall forthwith arrange payment to Elan of the amount so
         withheld.

6        RIGHT OF INSPECTION AND AUDIT

6.1      Once during each Financial Year, or more often not to exceed quarterly
         as reasonably requested by Elan, Newco shall permit Elan or its duly
         authorised representatives, upon reasonable notice and at any
         reasonable time during normal business hours, to have access to inspect
         and audit the accounts and records of Newco and any other book, record,
         voucher, receipt or invoice relating to the calculation of the royalty
         payments on Net Sales submitted to Elan.

         Any such inspection of Newco's records shall be at the expense of Elan,
         except that if any such inspection reveals a deficiency in the amount
         of the royalty actually paid to Elan hereunder in any Financial Year
         quarter of [REDACTED] or more of the amount of any royalty actually due
         to Elan hereunder, then the expense of such inspection shall be borne
         solely by Newco. Any amount of deficiency shall be paid promptly to
         Elan by Newco.

         If such inspection reveals a surplus in the amount of royalties
         actually paid to Elan by Newco, Elan shall reimburse Newco the surplus
         within 15 days after determination.

                                       16
<PAGE>

6.2      In the event of any unresolved dispute regarding any alleged deficiency
         or overpayment of royalty payments hereunder, the matter will be
         referred to an independent firm of chartered accountants chosen by
         agreement of Sheffield and Elan for a resolution of such dispute. Any
         decision by the said firm of chartered accountants shall be binding on
         the Parties.

 7       REPRESENTATIONS AND WARRANTIES

7.1      Elan represents and warrants to Newco and Sheffield, as of the
         Effective Date, as follows:

         7.1.1    Elan has the right to grant the Elan Licenses;

         7.1.2    there are no agreements with any third parties that conflict
                  with the Elan Licenses.

7.2      In addition to any other indemnities provided for herein, Elan shall
         indemnify and hold harmless Newco and its Affiliates and their
         respective employees, agents, officers and directors from and against
         any claims, losses, liabilities or damages (including reasonable
         attorney's fees and expenses) incurred or sustained by Newco arising
         out of or in connection with any:

         7.2.1    breach of any representation, covenant, warranty or obligation
                  by Elan hereunder; or

         7.2.2    act or omission on the part of Elan or any of its respective
                  employees, agents, officers and directors in the performance
                  of this Agreement.

7.3      In addition to any other indemnities provided for herein, Newco shall
         indemnify and hold harmless Elan and its Affiliates and their
         respective employees, agents, officers and directors from and against
         any claims, losses, liabilities or damages (including reasonable
         attorney's fees and expenses) incurred or sustained by Elan arising out
         of or in connection with any:

         7.3.1    breach of any representation, covenant, warranty or obligation
                  by Newco hereunder; or

         7.3.2    act or omission on the part of Newco or any of its agents or
                  employees in the performance of this Agreement.

7.4      The Party seeking an indemnity shall:

         7.4.1    fully and promptly notify the other Party of any claim or
                  proceeding, or threatened claim or proceeding;

         7.4.2    permit the indemnifying Party to take full care and control of
                  such claim or proceeding;

                                       17
<PAGE>

         7.4.3    co-operate in the investigation and defence of such claim or
                  proceeding;

         7.4.4    not compromise or otherwise settle any such claim or
                  proceeding without the prior written consent of the other
                  Party, which consent shall not be unreasonably withheld
                  conditioned or delayed; and

         7.4.5    take all reasonable steps to mitigate any loss or liability in
                  respect of any such claim or proceeding.

7.5      EXCEPT AS SET FORTH IN THIS CLAUSE 7, ELAN IS GRANTING THE LICENSES
         HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR WARRANTY
         WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY OR
         FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY
         RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.

7.6      NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND
         NEWCO SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION
         OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR
         UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL,
         SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF
         PROFITS OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE
         RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.

8.       TERM AND TERMINATION

8.1      The term of this Agreement shall commence as of the Effective Date and
         shall, subject to the rights of termination outlined in this Clauses 8,
         expire on a Product-by-Product basis and on a country-by-country basis
         on the last to occur of:

         8.1.1    [REDACTED] years starting from the date of the first
                  commercial sale of the Product in the country concerned; or

         8.1.2    the date of expiration of the last to expire of the patents
                  included in the Elan Patents and/or the Elan Improvements
                  and/or the Sheffield Patents and/or the Elan Improvements that
                  relate to the Product.

         ("the Term")

8.2      If either Party commits a Relevant Event, the other Party shall have,
         in addition to all other legal and equitable rights and remedies
         hereunder, the right to terminate this Agreement upon 30 days' prior
         written notice to the defaulting Party.

                                       18
<PAGE>

8.3      For the purpose of this Clause 8, a "Relevant Event" is committed or
         suffered by a Party if:

         8.3.1    it commits a material breach of its obligations under this
                  Agreement and fails to remedy it within 60 days of being
                  specifically required in writing to do so by the other Party;
                  provided, that if the breaching Party has proposed a course of
                  action to rectify the breach and is acting in good faith to
                  rectify same but has not cured the breach by the 60th day,
                  such period shall be extended by such period as is reasonably
                  necessary to permit the breach to be rectified;

         8.3.2    a distress, execution, sequestration or other process is
                  levied or enforced upon or sued out against a material part of
                  its property which is not discharged or challenged within 30
                  days.

         8.3.3    it is unable to pay its debts in the normal course of
                  business;

         8.3.4    it ceases wholly or substantially to carry on its business,
                  otherwise than for the purpose of a reconstruction or
                  amalgamation, without the prior written consent of the other
                  Party (such consent not to be unreasonably withheld);

         8.3.5    the appointment of a liquidator, receiver, administrator,
                  examiner, trustee or similar officer of such Party or over all
                  or substantially all of its assets under the law of any
                  applicable jurisdiction, including without limitation, the
                  United States of America, Bermuda or Ireland;

         8.3.6    an application or petition for bankruptcy, corporate re-
                  organisation, composition, administration, examination,
                  arrangement or any other procedure similar to any of the
                  foregoing under the law of any applicable jurisdiction,
                  including without limitation, the United States of America,
                  Bermuda or Ireland, is filed, and is not discharged within 60
                  days, or a Party applies for or consents to the appointment of
                  a receiver, administrator, examiner or similar officer of it
                  or of all or a material part of its assets, rights or revenues
                  or the assets and/or the business of a Party are for any
                  reason seized, confiscated or condemned.

8.4      Elan shall be entitled to forthwith terminate this Agreement in the
         event of a Change of Control of Sheffield/Newco.

         As provided in Clause 8.4 of the Sheffield License Agreement, Sheffield
         shall be entitled to terminate the Sheffield License Agreement if Elan
         elects to terminate the Elan Licenses hereunder.

8.5      Upon expiration or termination of the Agreement:

         8.5.1.   any sums that were due from Newco to Elan on Net Sales in the
                  Territory or in such particular country or countries in the
                  Territory (as the case may be) prior to the expiration or
                  termination of this Agreement as set forth herein shall be
                  paid in full within 60 days after the expiration or

                                       19
<PAGE>

                  termination of this Agreement for the Territory or for such
                  particular country or countries in the Territory (as the case
                  may be);

         8.5.2    any provisions that expressly survive termination or
                  expiration of this Agreement, including without limitation
                  this Clause 8, shall remain in full force and effect;

         8.5.3    all representations, warranties and indemnities shall insofar
                  as are appropriate remain in full force and effect;

         8.5.4    the rights of inspection and audit set out in Clause 6 shall
                  continue in force for a period of one year; and

         8.5.5    all rights and licenses granted pursuant to this Agreement and
                  to the Elan Intellectual Property pursuant to the JDOA
                  (including the rights of Newco pursuant to Clause 11 of the
                  JDOA) shall cease for the Territory or for such particular
                  country or countries in the Territory (as the case may be) and
                  shall revert to or be transferred to Elan, and Newco shall not
                  thereafter use in the Territory or in such particular country
                  or countries in the Territory (as the case may be) any rights
                  covered by this Agreement;

         8.5.6    subject to Clause 8.5.7 and to such license, if any, granted
                  by Newco to Elan pursuant to the provisions of Clause 12 of
                  the JDOA, all rights to Newco Intellectual Property shall be
                  transferred to and jointly owned by Sheffield and Elan and may
                  only be exploited by either Elan or Sheffield with the consent
                  of the other Party pursuant to a written agreement to be
                  negotiated in good faith;

         8.5.7    the rights of permitted third party sub-licensees in and to
                  the Elan Intellectual Property shall survive the termination
                  of the license and sublicense agreements granting said
                  intellectual property rights to Newco; and Newco, Elan and
                  Sheffield shall in good faith agree upon the form most
                  advantageous to Elan and Sheffield in which the rights of
                  Newco under any such licenses and sublicenses are to be held
                  (which form may include continuation of Newco solely as the
                  holder of such licenses or assignment of such rights to a
                  third party or parties, including an assignment to both Elan
                  and Sheffield).

                  Any sublicense agreement between Newco and such permitted
                  sublicensee shall permit an assignment of rights by Newco and
                  shall contain appropriate confidentiality provisions.

8.6      In the event that the Parties and Sheffield mutually agree to terminate
         the portion of the Project (as defined in the JDOA) which relates to
         Field A, the license described in Clause 2.1.1, the provisions of
         Clause 4.1 and the provisions of Clause 4.3 (insofar as the provisions
         of Clause 4.3 relate to Field A) shall automatically terminate.

                                       20
<PAGE>

9        CONFIDENTIAL INFORMATION

9.1      The Parties agree that it will be necessary, from time to time, to
         disclose to each other confidential and proprietary information,
         including without limitation, inventions, works of authorship, trade
         secrets, specifications, designs, data, know-how and other proprietary
         information relating to the Combined Fields, the Products, processes,
         services and business of the disclosing Party.

         The foregoing shall be referred to collectively as "Confidential
         Information".

9.2      Any Confidential Information disclosed by one Party to another Party
         shall be used by the receiving Party exclusively for the purposes of
         fulfilling the receiving Party's obligations under this Agreement and
         the JDOA and for no other purpose.

9.3      Each Party shall disclose Confidential Information of the other Party
         only to those employees, representatives and agents requiring knowledge
         thereof in connection with fulfilling the Party's obligations under
         this Agreement. Each Party further agrees to inform all such employees,
         representatives and agents of the terms and provisions of this
         Agreement and their duties hereunder and to obtain their agreement
         hereto as a condition of receiving Confidential Information. Each Party
         shall exercise the same standard of care as it would itself exercise in
         relation to its own confidential information (but in no event less than
         a reasonable standard of care) to protect and preserve the proprietary
         and confidential nature of the Confidential Information disclosed to it
         by the other Party. Each Party shall, upon request of the other Party,
         return all documents and any copies thereof containing Confidential
         Information belonging to, or disclosed by, such other Party.

9.4      Any breach of this Clause 9 by any person informed by one of the
         Parties is considered a breach by the Party itself.

9.5      Confidential Information shall not be deemed to include:

         9.5.1    information that is in the public domain;

         9.5.2    information which is made public through no breach of this
                  Agreement;

         9.5.3    information which is independently developed by a Party as
                  evidenced by such Party's records;

         9.5.4    information that becomes available to a Party on a non-
                  confidential basis, whether directly or indirectly, from a
                  source other than a Party, which source did not acquire this
                  information on a confidential basis; or

         9.5.5    information which the receiving Party is required to disclose
                  pursuant to:

                  (i)   a valid order of a court or other governmental body; or
                  (ii)  any other requirement of law;

                                       21
<PAGE>

                  provided that if the receiving Party becomes legally required
                  to disclose any Confidential Information, the receiving Party
                  shall give the disclosing Party prompt notice of such fact so
                  that the disclosing Party may obtain a protective order or
                  other appropriate remedy concerning any such disclosure. The
                  receiving Party shall fully co-operate with the disclosing
                  Party in connection with the disclosing Party's efforts to
                  obtain any such order or other remedy. If any such order or
                  other remedy does not fully preclude disclosure, the receiving
                  Party shall make such disclosure only to the extent that such
                  disclosure is legally required.

9.6      The provisions relating to confidentiality in this Clause 9 shall
         remain in effect during the term of this Agreement, and for a period of
         7 years following the expiration or earlier termination of this
         Agreement.

9.7      The Parties agree that the obligations of this Clause 9 are necessary
         and reasonable in order to protect the Parties' respective businesses,
         and each Party agrees that monetary damages would be inadequate to
         compensate a Party for any breach by the other Party of its covenants
         and agreements set forth herein.

         Accordingly, the Parties agree that any such violation or threatened
         violation shall cause irreparable injury to a Party and that, in
         addition to any other remedies that may be available, in law and equity
         or otherwise, each Party shall be entitled to obtain injunctive relief
         against the threatened breach of the provisions of this Clause 9, or a
         continuation of any such breach by the other Party, specific
         performance and other equitable relief to redress such breach together
         with its damages and reasonable counsel fees and expenses to enforce
         its rights hereunder, without the necessity of proving actual or
         express damages.

9.8      For the avoidance of doubt, all Confidential Information of Newco
         received by Elan hereunder shall not be disclosed by Elan to Affiliates
         and/or subsidiaries (present or future) of Elan Corporation, Plc.
         within the division of Elan Corporation, Plc. carrying on business as
         Elan Pharmaceuticals which incorporates, inter alia, Targon
         Corporation, Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc.,
         Elan Diagnostics, Carnrick Laboratories, and Elan Europe Limited.

10       GOVERNING LAW AND JURISDICTION

10.1     This Agreement shall be governed by and construed in accordance with
         the laws of the State of New York.

10.2     The Parties will attempt in good faith to resolve any dispute arising
         out of or relating to this Agreement promptly by negotiation between
         executives of the Parties. In the event that such negotiations do not
         result in a mutually acceptable resolution, the Parties agree to
         consider other dispute resolution mechanisms including mediation. In
         the event that the Parties fail to agree on a mutually acceptable

                                       22
<PAGE>

         dispute resolution mechanism, any such dispute shall be finally settled
         by the courts of competent jurisdiction. For the purposes of this
         Agreement the parties submit to the non-exclusive jurisdiction of the
         courts of the State of New York.

11       IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE

         Neither Elan nor Newco shall be liable for delay in the performance of
         any of its obligations hereunder if such delay results from causes
         beyond its reasonable control, including, without limitation, acts of
         God, fires, strikes, acts of war, intervention of a government
         authority, but any such delay or failure shall be remedied by such
         Party as soon as practicable.

12       ASSIGNMENT

         This Agreement may not be assigned by either Party without the prior
         written consent of the other, save that either Party may assign this
         Agreement to its Affiliates or subsidiaries without such prior written
         consent provided that such assignment does not have any adverse tax
         consequences on the other Party.

13       NOTICES

13.1     Any notice to be given under this Agreement shall be sent in writing in
         English by registered airmail or telefaxed to the following addresses:
         If to Newco at:

         Clarendon House,
         2 Church Street,
         Hamilton,
         Bermuda
         Attention:   Secretary
         Telephone:   441 292 9169
         Fax:         441 292 2224

         with a copy to Elan and Sheffield at the addresses listed below:
         If to Sheffield at:
         Sheffield Pharmaceuticals, Inc.
         425 S. Woodsmill Road
         Suite 270
         St Louis
         MO 63017
         USA.

                                       23
<PAGE>

         Attn: Chief Executive Officer
         Telephone   001 314 579 9899
         Fax:        001 314 579 9799

         with a copy to:

         Daniel Gallagher, Esq.
         Olshan, Grundman, Trome
         Rosenzeig, LLP
         505 Park Avenue
         New York, NY 10022
         Telephone    002 212 753 7200
         Fax:         001 212 935 1787

         If to Elan at:

         Elan Corporation, plc
         Lincoln House,
         Lincoln Place,
         Dublin 2,
         Ireland.
         Attention: Vice President, General Counsel,
         Elan Pharmaceutical Technologies,
         a division of Elan Corporation, plc
         Telephone:  + 353 1 709 4000
         Telefax:      + 353 1 709 4124

         or to such other address(es) and telefax numbers as may from time to
         time be notified by either Party to the other hereunder.

13.2     Any notice sent by mail shall be deemed to have been delivered within
         seven 7 working days after dispatch and any notice sent by telex or
         telefax shall be deemed to have been delivered within twenty 24 hours
         of the time of the dispatch. Notice of change of address shall be
         effective upon receipt.

14       MISCELLANEOUS

14.1     Waiver:

         No waiver of any right under this Agreement shall be deemed effective
         unless contained in a written document signed by the Party charged with
         such waiver, and no waiver of any breach or failure to perform shall be
         deemed to be a waiver of any other breach or failure to perform or of
         any other right arising under this Agreement.

                                       24
<PAGE>

14.2     Severability:

         If any provision in this Agreement is agreed by the Parties to be, or
         is deemed to be, or becomes invalid, illegal, void or unenforceable
         under any law that is applicable hereto:

         14.2.1   such provision will be deemed amended to conform to applicable
                  laws so as to be valid and enforceable; or

         14.2.2   if it cannot be so amended without materially altering the
                  intention of the Parties, it will be deleted, with effect from
                  the date the Parties may agree, and the validity, legality and
                  enforceability of the remaining provisions of this Agreement
                  shall not be impaired or affected in any way.

14.3     Further Assurances:

         At the request of any of the Parties, the other Party or Parties shall
         (and shall use reasonable efforts to procure that any other necessary
         parties shall) execute and perform all such documents, acts and things
         as may reasonably be required subsequent to the signing of this
         Agreement for assuring to or vesting in the requesting Party the full
         benefit of the terms hereof.

14.4     Successors:

         This Agreement shall be binding upon and enure to the benefit of the
         Parties hereto, their successors and permitted assigns.

14.5     No Effect on Other Agreements/Conflict:

         No provision of this Agreement shall be construed so as to negate,
         modify or affect in any way the provisions of any other agreement
         between the Parties unless specifically referred to, and solely to the
         extent provided herein.

         In the event of a conflict between the provisions of this Agreement and
         the provisions of the JDOA, the terms of the JDOA shall prevail unless
         this Agreement specifically provides otherwise.

14.6     Amendments:

         No amendment, modification or addition hereto shall be effective or
         binding on any Party unless set forth in writing and executed by a duly
         authorised representative of each Party.

14.7     Counterparts:

         This Agreement may be executed in any number of counterparts, each of
         which when so executed shall be deemed to be an original and all of
         which when taken together shall constitute this Agreement.

                                       25
<PAGE>

14.8     Good Faith:

         Each Party undertakes to do all things reasonably within its power
         which are necessary or desirable to give effect to the spirit and
         intent of this Agreement.

14.9     No Reliance:

         Each Party hereby acknowledges that in entering into this Agreement it
         has not relied on any representation or warranty save as expressly set
         out herein or in any document referred to herein.

14.10    Relationship of the Parties:

         Nothing contained in this Agreement is intended or is to be construed
         to constitute Elan and Newco as partners, or Elan as an employee of
         Newco, or Newco as an employee of Elan.

         Neither Party hereto shall have any express or implied right or
         authority to assume or create any obligations on behalf of or in the
         name of the other Party or to bind the other Party to any contract,
         agreement or undertaking with any third party.

                                       26
<PAGE>

                                  SCHEDULE 1

                                 ELAN PATENTS

                                  [REDACTED]
<PAGE>

                                  SCHEDULE 2

                       TECHNOLOGICAL COMPETITORS OF ELAN

                                  [REDACTED]
<PAGE>

                                  SCHEDULE 3

                        List of Steroids for Clause 4.1

                                  [REDACTED]
<PAGE>

IN WITNESS WHEREOF the Parties hereto have executed this Agreement.

/S/
SIGNED BY
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED

/S/
SIGNED BY
For and on behalf of
SHEFFIELD NEWCO LIMITED

/S/
AGREED TO AND ACCEPTED BY
SHEFFIELD PHARMACEUTICALS, INC.

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