Document:

OPTION AGREEMENT

THIS AGREEMENT made as of the 12 day of May, 2004

BETWEEN:

Richard Nemis “In Trust”

a private individual resident of Ontario

(hereinafter referred to as the "Optionor")

OF THE FIRST PART

- and -

Hawk Precious Minerals Inc.

a company incorporated under the laws of the Province of Ontario, Canada

(hereinafter referred to as the "Optionee")

OF THE SECOND PART

WHEREAS:

A.   Optionor is the legal and beneficial owner of certain mining claims;

B.   Optionee wishes to acquire an interest in said mining claims from Optionor on the terms and conditions herein contained;

NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the premises and the mutual covenants herein contained, the parties agree as follows:

1.   THE CLAIMS

1.1   This Agreement shall cover those mining claims more particularly described in Schedule B attached hereto (hereinafter called the "Claims").

2.   REPRESENTATIONS AND WARRANTIES BY OPTIONOR

2.1   Optionor represents and warrants to Optionee that:

(a)   Optionor is the legal and beneficial owner (subject to this Agreement) of a one hundred percent (100%) interest in the Claims as they exist at the date hereof and is the recorded owner of the Claims, free and clear of any liens, charges, encumbrances, or surface rights restrictions whatsoever.

	

	 	 	 
	

	

(b)   Optionor is a resident of Canada for the purposes of the Income Tax Act of Canada;

(c)   Optionor has the full power and capacity to hold its legal and beneficial interest in the Claims, to acquire and hold recorded title to the Claims and to enter into and to carry out all the terms of this Agreement;

(d)   The Claims are validly staked, located, duly recorded in the name of Optionor and in good standing pursuant to all applicable Laws (as hereinafter defined) and all taxes, rents, charges and assessments with respect thereto have been paid in full as of the date hereof;

(e)   There are no adverse claims or challenges against, or to the ownership of, or title to, the Claims or substances thereon, therein or therefrom nor to the knowledge of Optionor, is there any basis therefor;

(f)   All necessary information and data (including, without limitation, all geological, geophysical and assay results and maps) concerning the Claims and prior exploration and development work carried out thereon and within its knowledge has been disclosed and provided to Optionee;

(g)   Optionor has no information or knowledge of any facts pertaining to the Claims or substances thereon, therein or therefrom not disclosed in writing to Optionee which, if known to Optionee, might reasonably be expected to deter Optionee from completing the transactions contemplated hereby on the terms and conditions contained herein;

(h)   Optionor has not directly or indirectly caused, permitted or allowed any contaminants as defined in the Environmental Protection Act (Ontario), pollutants, wastes or toxic substances (collectively "Hazardous Substances") to be released, discharged, placed, escaped, leached or disposed of on, into, under or through the lands (including watercourses, improvements thereon and contents thereof) comprising the Claims or nearby areas and, so far as Optionor is aware, no Hazardous Substances or underground storage tanks are contained, harbored or otherwise present in or upon such lands (including watercourses, improvements thereon and contents thereof) or nearby areas;

(i)   To the best of our knowledge at this time there are no obligations or commitments for reclamation, closure or other environmental corrective, clean-up or remediation action directly or indirectly relating to the Claims;

(j)   There are no actions, suits, investigations or proceedings before any court, arbitrator, administrative agency or other tribunal or governmental authority, whether current, pending or threatened, which directly or indirectly relate to or affect the Claims (including the ownership and existing or past uses thereof and the compliance with Laws of the lands comprising the Claims) nor is Optionor' aware of any facts which would lead Optionor to suspect that the same might be initiated or threatened;

	

	 	 	 
	

	

(k)   The activities directly or indirectly in relation to the Claims and use of the lands comprising the Claims by Optionor and, to the best of Optionor's knowledge, by any other person have been in compliance with all Laws and Optionor has not received any notice nor is Optionor aware after reasonable inquiry of any such breach or violation having been alleged; and

(l)   No environmental audit, assessment, study or test has been conducted in relation to the lands comprising the Claims by or on behalf of Optionor nor is Optionor aware of any of the same having been conducted by or on behalf of any other person (including any governmental authority).

2.2   The representations and warranties contained in this section 2 are provided for the exclusive benefit of Optionee and shall survive the execution of this Agreement for a period of two years or until termination of the option, whichever shall first occur, and Optionee shall be entitled to rely upon the same notwithstanding any independent investigations Optionee may make or could have made at any time, unless specifically waived by Optionee. The breach of any representation, warranty or covenant contained in this Agreement may be waived by Optionee, either in whole or in part, at any time without prejudice to Optionee's rights in respect of any other or continuing breach of the same or any other representation, warranty or covenant. No waiver by Optionee of any breach of any representation, warranty or covenant shall be binding unless in writing. Any waiver shall be limited to the specific purpose for which it is given.

2.3   For the purposes of this Agreement, "Laws" means all federal, provincial, territorial,

municipal or local statutes, regulations and by-laws applicable to the parties hereto or to the Claims or to any activities thereon, including all orders, notices, rules, decisions, codes, guidelines, policies, directions, permits, approvals, licenses and similar authorizations issued, rendered or imposed by any level of government including any ministry, department or administrative or regulatory agency or authority.

3.   REPRESENTATIONS AND WARRANTIES BY OPTIONEE

Optionee represents and warrants to Optionor that:

(a)   Optionee is a company duly incorporated under the laws of Ontario;

	

	 	 	 
	

	

(b)   Optionee has the full power and capacity to enter into this Agreement and to carry out all the terms hereof; and

(c)   Optionee has full power and capacity to hold its interest in the Claims, and to acquire and hold recorded title to the Claims.

4.   GRANT OF OPTION TO EARN INTEREST

4.1   In consideration of Optionee agreeing (i) to pay to Optionor a total of $50,000 in 2 equal instalments at the times and in the amounts set forth in section 4.2(a) and issue treasury shares of the Optionor to the Optionee a total of 300,000 shares in 2 equal installments at the times and in the amounts set forth in section 4.2(a)(i)(ii); and to incur costs for exploration and/or development work, including any remediation, on or for the benefit of the Claims as provided herein ("Work Costs") of at least Cdn$200,000 in 2 unequal instalments at the times and in the amounts set forth in section 4.2(b), subject to the terms and conditions herein contained, Optionor hereby grants to Optionee the sole, exclusive and irrevocable option to acquire a one hundred percent (100%) interest in the Claims free and clear of any liens, charges and encumbrances.Save and except that the Optionor herein shall retain a 2% NSR (Net Smelter Royalty) on all or any metal production and a 2% production royalty on any diamond production subject to the terms and conditions of this agreement.See Schedule A.It being understood and agreed however that prior to production, the Optionee shall have the right to purchase from the Optionor1% of either royalty hereinbefore set out in consideration of the sum of $1 million.

4.2    In order to maintain its Option to acquire a one hundred percent (100%) interest in the Claims, Optionee shall: 

(a)   make option payments to Optionor in the following amounts at the following times:

   (i)   $25,000 on signing of this Agreement and issue 150,000 treasury shares

   (ii)   $25,000 on or before June 1, 2004 and issue 150,000 treasury shares

It is understood and agreed that the consideration called for in this paragraph 4.2 (a)(i)(ii) is a firm commitment and payable should the work costs be made or not.

(b)   incur Work Costs in the following amounts at the following times:

   (i)   before November 1, 2004   Cdn$100,000 (to include the purchase of existing airbourne geophysics) 

   (ii)   before May 1, 2005       Cdn$100,000

	

	 	 	 
	

	

Work Costs incurred by any date in excess of the minimum required to be incurred by such date to maintain Optionee's interest hereunder shall carry forward to the following period. Ifany of the minimum Work Costs have not been incurred for the immediately preceding year, Optionee may maintain its interest in the Claims by paying the deficiency in cash to Optionor within 2 months of the close of the period in which the deficiency occurred, and such payment shall be deemed to be Work Costs incurred by Optionee for the purposes of this Agreement.

4.3   In addition to and notwithstanding anything herein contained, the parties hereto acknowledge and agree that if, subsequent to the date or dates on or before which the Work Costs referred to in section 4.2(b) are required to be either incurred by Optionee or paid by Optionee to Optionor pursuant to section 4.2(b), it is determined upon examination or audit, whether by Optionee or Optionor, that such Work Costs have not been incurred or paid to Optionor, Optionee shall not lose any of its rights hereunder and the Option shall not terminate provided Optionee pays to Optionor 100% of such deficiency in Work Costs:

(a)   if Optionee determines such deficiency, within thirty (30) days following such determination; or

(b)   if Optionor determines such deficiency, within thirty (30) days following notice to Optionee of such determination;

4.4   Notwithstanding anything herein contained and in addition to any other rights Optionee may have in this circumstance, in the event exploration and development work intended to be conducted on or for the benefit of the Claims is mistakenly conducted outside the Claim boundaries as a consequence of it being subsequently discovered or determined by survey or otherwise that the Claim boundaries are not located where the parties understood them to be on the date of this Agreement, such exploration and development work shall constitute Work Costs hereunder and Optionee shall suffer no forfeiture with respect to any interest earned or to be earned hereunder. 

4.5   "Work Costs" means all costs including all reasonable payments, expenses, obligations and liabilities of whatsoever kind or nature made or incurred, directly or indirectly, by Optionor which relate directly to the exploration, evaluation, development and operation of the Claims or any portion thereof excluding any management fees during the earn-in period but including, without limiting the generality of the foregoing, monies expended:

(a)   to determine the existence, location, extent or quality of a mineral resource on the Property;

(b)   to carry out any survey or do any geophysical, geochemical or geological work or drilling, assaying, testing or bulk sampling on the Claims;

	

	 	 	 
	

	

(c) 
     to pay for taxes, fees, charges, rentals

(d)   to pay the fees, wages, salaries, travelling expenses and fringe benefits of persons engaged in work in respect of or for the benefit of the Claims or any portion thereof and in paying for the food, lodging and other reasonable needs of such persons.

For greater certainty, the option payment made hereunder, shall be excluded from the definition of "Expenditures".

4.6    Optionee shall maintain proper books and records to reflect all Expenditures incurred by Optionee and same shall be available for inspection by Optionor, its servants and agents, during normal business hours from time to time.

  

4.7   The obligations of a party shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseeable or unforeseeable, beyond its reasonable control, including, without limitation, labour disputes (however arising and whether or not employee demands are reasonable or within the power of the party to grant); acts of God; laws, regulations, orders, proclamations, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private licence, permit or other authorization, curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of federal, provincial, or local environmental standards; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot, civil strike, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse weather condition; delay or failure by suppliers or transporters of materials, parts, supplies, services, or equipment or by contractors' or subcontractors' shortage of, or inability to obtain, labour, transportation, materials, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; or any other cause where similar or dissimilar to the foregoing.The affected party shall promptly give notice to the other party of the suspension of performance, stating therein the nature of the suspension, the reasons therefor, and the expected duration thereof.The affected party shall resume performance as soon as reasonably possible.

A lack of available capital shall not constitute a sufficient basis for suspending the obligations of a party to this Agreement.

4.8   The parties agree that this Agreement constitutes only an option to purchase and that nothing herein shall obligate Optionee to make theWork Costs outlined in 4.2(b) (i) (ii) however, the Optionee shall be obligated to pay a total of $50,000 and issue 300,000 shares and shall be obligated to incur Work Costs in the amount of $25,000 in the acquisition of the existing airbourne geophysics in the absence of force majeure as described in section 4.7 hereof.The $25,000 deposit with the execution of this Agreement will at all times, be treated as non refundable.The parties herein acknowledge and agree that should the payments and shares to be issued as called for in 4.2 (a)(ii)not be made on or before June 1, 2004 this Agreement shall be considered null and void and the Optionor shall be considered free of all liabilities of whatsoever nature and can deal in all respects with the claims.The Optionor however at its sole option may extend the time limits called for in paragraph 4.2 (a)(ii) and paragraph 4.2(b)(i) and (ii).

	

	 	 	 
	

	

5.   EXERCISE OF OPTION

5.1   Upon Optionee having made option payments to Optionor totalling Fifty Thousand Dollars ($50,000) and issued 300,000 treasury shares and completed its Work Costs the Option shall be deemed to have been fully and properly exercised and a 100% right, title and interest in and to the Claims shall vest in and be owned by Optionee absolutely free and clear of any liens, charges and encumbrances subject to the royalties as defined in Schedule B.

5.2   No interest shall be earned by the Optionee until the Optionee is totally vested, ie completed requirements contained in clauses 4.2 (a) and (b).

5.3   Notwithstanding the schedule for option payments set out in section 4, Optionee may, if it so elects, make its total option payments and/or complete its Work Costs at any time prior to the dates therein specified, in which case Optionee's 100% interest shall vest in and be owned by Optionee immediately upon Optionee making its total option payments and Work Costs.

  5.4 
     Notwithstanding anything to the contrary
    contained herein, Optionee shall not be obligated to make any option payments
    or complete any Work Costs unless it wishes to maintain its option in good
    standing.

6.   POSSESSION OF CLAIMS

6.1   Optionor shall:

(a)   have the sole and exclusive possession, supervision, management and control of the Claims including any access, water, surface or other rights appurtenant thereto or associated therewith with full power and authority to its servants, agents and contractors to sample, survey, examine, diamond drill, prospect, explore, and do other investigative work on the Claims in search of minerals in such manner as Optionor after consultation and agreement with the Optionee may in its sole discretion determine, including the right to erect, bring and install thereon and remove therefrom all such buildings, machinery, equipment and supplies as Optionor shall deem reasonable and proper and to remove therefrom reasonable quantities of ores, minerals or metals for assay and testing purposes; and

(b)   do all work on the Claims in a good and miner-like fashion in accordance with recognized engineering practices and in accordance with all applicable Laws.

	

	 	 	 
	

	

7.    EXECUTION AND DELIVERY OF TRANSFERS

7.1   Optionor shall hold all claims In Trust for parties as their interest appear to this agreement until Joint Venture is formed after which the claims will be transferred as the Joint Venture parties direct.

8.    NO ENCUMBRANCE OR TRANSFER OF CLAIMS

Optionor shall not:

(a)   mortgage, hypothecate, charge or otherwise encumber; or

(b)   sell, assign, transfer or otherwise dispose of its interest in or title to the Claims without the prior written consent of Optionee.

  

9.   INFORMATION TO BE SUPPLIED TO OPTIONOR

9.1   The Optionee will provide the Optionor with copies of reports of work completed on the Property and copies of all data collected on the Property on an annual basis during the Option period.During the option period all such information shall be on a confidential basis and shall not be disclosed to a third party save and except any obligation pursuant to any underlying property agreement to related parties without the Optionor’s written consent.

10.   MAINTENANCE AND ABANDONMENT OF THE CLAIMS

10.1   The Optionee shall maintain the Claims in good standing during the currency of its option.

10.2   The Optionee shall be responsible and hold the Optionor harmless for all environmental liabilities incurred or created by the Optionee’s activities during the currency of the Option. 

11.    REMOVAL OF ASSETS FROM CLAIMS

11.1   If this Agreement is terminated prior to the exercise of the Option, Optionee shall have the right to remove from the Claims within the twelve (12) month period next following such termination all machinery, buildings, structures, equipment, supplies and any other property and assets placed by Optionee, its agents and contractors thereon and shall, if requested by Optionor within such period, remove such property and assets at Optionee's expense. Optionee's interest in any such property and assets not removed by Optionee within the said twelve (12) month period shall be deemed to have been conveyed by Optionee to Optionor.

	

	 	 	 
	

	

12.    ARBITRATION

12.1   All disputes which arise between the parties hereto in connection with this Agreement which, in the opinion of either party, cannot be resolved informally between them, shall be settled by arbitration pursuant to the provisions of the Arbitrations Act (Ontario) except as otherwise provided in this section. Any party desiring arbitration shall make a written demand for the same and within thirty (30) days after such written demand is received by the other party, the parties hereto shall agree upon and appoint a single arbitrator. In the event the parties shall fail to agree upon and appoint a single arbitrator within the time period set forth herein, each party shall within seven (7) days thereafter designate an arbitrator and both arbitrators shall within thirty (30) days after their designation, jointly designate a third arbitrator satisfactory to them who shall be chairman of the arbitration panel. If a party fails to appoint an arbitrator or the arbitrators designated by the parties are unable to agree upon the selection of the third arbitrator within the time periods set forth above, such arbitrator shall be appointed by a Justice of the Ontario Court of Justice. The expenses of the arbitrators shall be paid as the arbitrators shall decide in the award.All arbitration proceedings shall be in the City of Toronto, Ontario, Canada, or elsewhere as the arbitrators shall decide.The decision of the arbitrators shall be final and binding on the parties hereto and judgment upon any award rendered may be entered in any court of competent jurisdiction.

13.    AREA OF INFLUENCE

13.1   During the term of the Option, if either party acquires by staking, claims, which are immediately contiguous with the Claims, the newly acquired claims will be added to this agreement without modification to payments, work commitments or NSR or production royalties due or purchase clauses relating thereto. The Optionee herein shall be however responsible to pay the actual out of pocket costs of staking only. 

14.    FURTHER ASSURANCES

14.1   Each party hereto shall promptly do and provide all acts and things and shall promptly execute and deliver such deeds, bills of sale, assignments, endorsements and instruments and evidences of transfer and other documents and shall give such further assurances as shall be necessary or appropriate in connection with the performance of this Agreement.

	

	 	 	 
	

	

15.   AMENDMENTS

No alteration, amendment, modification or interpretation of any provision of this Agreement shall be binding unless in writing and executed by each of the parties hereto.

16.    BUSINESS DAYS

In the event that any date on or by which any payment is required to be made or any action is required to be taken hereunder by any of the parties hereto is not a "Business Day", being a day other than a Saturday, Sunday or a day on which banks in Toronto, Ontario are generally authorized or obligated by law to close, such payment shall be required to be made or such action shall be required to be taken on the next succeeding day which is a Business Day.

17.   OPERATORSHIP

The parties hereto acknowledge and agree that the Optionee shall act as Operator during the Optionees earn-in period charging no management fees and after the earn-in period, Operatorship will be governed by the proposed Joint Venture Agreement.

18.    NOTICES

Any notice, commitment, election, consent or any communication required or permitted to be given hereunder by either party hereto to the other party, in any capacity (hereinafter called a "Notice") shall be in writing and shall be deemed to have been well and sufficiently given if mailed by prepaid registered mail return receipt requested, telefaxed or delivered, to the address of such other party hereinafter set forth:

  	If to Optionor: 	Richard Nemis in trust 
	 	347 Bay Street 
	 	Suite 700 
	 	Toronto, Ontario M5H 2R7 
	 	 
	 	Fax Number: 416-367-5444 
	 	 
	If to Optionee: 	Hawk Precious Minerals Inc. 
	 	347 Bay Street 
	 	Suite 404 
	 	Toronto, Ontario M5H 2R7 
	 	 
	 	Fax Number: 416-214-5599 

or to such substitute address as such party may from time to time direct in writing, and any such Notice shall be deemed to have been received, if mailed, on the date noted on the return receipt, if telefaxed, on the first Business Day after the date of transmission, and if delivered, upon the day of delivery.

	

	 	 	 
	

	

19.    SCHEDULES

All Schedules attached to this Agreement are deemed to form part of this Agreement.

20.    COUNTERPARTS AND HEADINGS

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. Section headings and subheadings are inserted for convenience only and are not to be taken into account in interpreting this Agreement.

21.    GOVERNING LAW

This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the Province of Ontario, Canada.

22.    TIME OF ESSENCE

Time shall be of the essence of this Agreement.

23.    ENUREMENT

This Agreement shall enure to and be binding upon the parties hereto and their respective successors and assigns.

24.    ENTIREAGREEMENT

This Agreement contains the entire understanding between the parties hereto dealing with the subject matter hereof and supersedes all negotiations, correspondence, letters of intent, letters of agreement, and prior agreements or understandings relating thereto.

25.    RELATIONSHIP OP PARTIES

Nothing contained herein, nor the holding of any interest acquired hereunder, shall be deemed to constitute Optionee or Optionor the partner, agent or legal representative of the other or to create any fiduciary relationship between them for any purpose whatsoever.

	

	 	 	 
	

	

26.    SEVERABILITY/LEGALITY

If one or more provisions of this Agreement shall be invalid, illegal or unenforceable in any respect under any applicable Law, the validity, legality and enforceability of the remaining terms or provisions hereof shall not be affected or impaired by reason thereof.

27.    ASSIGNMENT

Optionee may sell, assign, transfer or otherwise dispose of the whole or any part of its interest hereunder at any time upon notice to Optionor, provided that any such sale, assignment, transfer or other disposition shall carry the rights, and shall delegate and make the interest subject to, all the liabilities and obligations of Optionee under this Agreement. Each transferee of such interest shall, by written agreement with and for the benefit of Optionor, assume and agree to pay and perform such liabilities and obligations. Such assumption shall not serve to release or discharge Optionee from any of the said liabilities and obligations theretofore accrued with respect to the interest or portion thereof being transferred, but shall release and discharge Optionee from all of the said liabilities and obligations thereafter accruing with respect to the interest or portion thereof being transferred.

  

28.   CONDITIONS PRECEDENT

This Agreement shall be subject to an investigation by Optionee of the title and environmental condition of the Claims which shall be satisfactory to Optionee, in its sole discretion, and without waiver of any rights it shall otherwise have in this regard arising from Optionor's representations and warranties, which investigation shall be completed as to title and as to environmental condition within sixty (10) days from the date this Agreement is executed by both parties. Should such investigation not be acceptable to Optionee, Optionee shall so advise Optionor and in such event, this Agreement shall terminate and the parties shall have no further rights against or liabilities to one another except that Optionor shall immediately return to Optionee the option payment referred to in section 4(i) if the same has been made.

	 
	 	 	 
	

	 

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their proper officers duly authorized in that behalf.

WITNESSED

  	 	Richards Nemis In Trust
	 	 
	 	By: /s/ Richard Nemis
	 	 
	 	 
	 	Hawk Precious Minerals Inc.
	 	 
	 	By: /s/ H. Vance White
	 	 
	 	By: /s/ Walter E. Brooks

	 
	 	 	 
	

	 

SCHEDULE “A” to the Option Agreement

dated May 12 , 2004 between

  Hawk
    Precious Minerals Inc., (“Optionee”) and

Richard Nemis “in trust” (“Optionor”)

Definition of Royalties

ROYALTY

1.   For all diamonds, gems and other precious and semi-precious stones ("Stone Products") mined or produced from the Lands, the Optionee shall pay to the Optionor a Royalty equal to a percentage of the net sales returns ("NSAR") realized from the sale or disposition of the Stone Products.

2.   For all gold, silver, platinum and palladium of merchantable form and quantity ("GSPP Products") and all other ores and minerals of merchantable form and quantity ("Other Products") mined or produced from the Lands, the Optionee shall pay to the Optionor a Royalty equal to a percentage of the net smelter returns ("NSMR") realized or deemed to be realized as hereinafter provided, from the sale or disposition of the GSPP Products and Other Products.

3.   The aforementioned percentage of the NSAR and percentage of the NSMR shall be that determined in accordance with the provisions of paragraph 4 of the Option Agreement to which this Schedule "B" forms a part; and in the calculation of Royalty, said percentage is applied to 2% of the NSAR or NSMR, whichever, regardless of any dilution of the Optionee's working interest or entitlement with respect to the Option Agreement, the Lands or the Products. 

4.   For the purposes of this Schedule "B", the term "Products" shall be interpreted as a collective reference to Stone Products, GSPP Products and Other Products and the term "Royalty" shall be interpreted as a collective reference to the NSAR Royalty and the NSMR Royalty.

5.         Net Sales Returns Royalty - Stone Products

(a) Net sales returns means the gross proceeds from the sale or disposition of Stone Products to an independent purchaser, less deductions therefrom for the costs of valuation, sorting, shipping and insurance in connection with the Stone Products as well as any sales, excise, production, export and other duties, levies, assessments and taxes (except income taxes) payable on the production or sale of Stone Products (but not income taxes), and for the purposes hereof:

	 
	 	 	 
	

	 

(i) "valuation" means the establishing of a value for each lot or group of sorted Stone Products for purposes of reference when negotiating with a potential purchaser of the same;

(ii) "sorting" means separation of Stone Products' from waste materials and dividing them into groups according to quality, size, or other characteristics, and then the dividing of such groups into appropriate lots or groups for valuing and/or sale, it being acknowledged that in the case of gem quality Stone Products, a group or lot may be a single stone;

(iii) "shipping" means all methods of transportation or places of storage of Stone Products from the moment they leave the Lands until the passing of title thereto or risks therefor (whichever is the later) to an independent purchaser, including, without limitation, any cost that may be incurred by reason of such methods or places used or any sorting or valuation facilities being situated off the Lands; and

(iv) "insurance" means all insurance that the Optionee considers advisable to protect all or part of the Stone Products in the possession or control of the Optionee (including, without limitation, during shipping) until the passing of title thereto or risks therefor (whichever is the later) and including, without limitation, the insurance or bonding of any person who does or may come into contact with any such Stone Products at any point during the operations of the Optionee whether such person is an employee of the Optionee or otherwise.

(b) If Stone Products are sold to any entity with which the Optionee does not deal at arm's length, the Stone Products shall for the purposes hereofbe deemed to have been sold at prices determined by an independent evaluator.

(c) The Optionee shall not have the right to commingle Stone Products produced from the Lands with similar products produced from other properties.

6.   Net Smelter Returns Royalty - GSPP Products and Other Products

(a) Net smelter returns means the gross proceeds from the sale or disposition of Other Products to an independent smelter, refinery or other unaffiliated purchaser or, with respect to GSPP Products, the deemed gross proceeds from deemed sales or dispositions as provided in paragraphs 6(b) and 6( c) following, less deductions therefrom for total actual costs incurred by the Optionee attributed to the following treatment, handling and sale of said GSPP Products or Other Products:

i) All smelting, refining, treatment, assay, umpiring, sampling, selling and other costs, charges and penalties charged by any independent refinery, smelter or other unaffiliated purchaser of GSPP Products or Other Products;

	 
	 	 	 
	

	 

ii) All costs of loading, securing, transporting and insuring GSPP Products or Other Products from the Lands to any independent refinery, smelter or other unaffiliated purchaser; and

iii) All sales, excise, production, export and other duties, levies, assessments and taxes (except income taxes) paid on the production or sale of GSPP Products or Other Products.

(b) The gross sale proceeds for GSPP Products shall be deemed gross proceeds from deemed sales of GSPP Products, and sales of GSPP Products shall be deemed to have occurred, without regard to when or to whom they actually are made, upon the earliest of the following:

i) When GSPP Products are shipped by the Optionee from the Lands to an indcpcndcnt refinery, smelter or other unaffiliated purchaser; or

ii) With respect to bullion produced by the Optionee, the day the final, refined bullion has been produced by the Optionee; or

iii) With respect to dore produced by the Optionee, three (3) business days after the dore has been produced by the Optionee; or

iv) With respect to concentrates produced by the Optionee, thirty (30) days after those concentrates have been produced by the Optionee.

(c) The total deemed gross proceeds of all such deemed sales occurring within a single calendar quarter shall be determined by multiplying the total number of troy ounces of the particular GSPP Product deemed sold within that quarter by the following:

i) For gold, platinum or palladium, the arithmetic mean of the daily London P.M. fixing (per ounce of the respective Product) for the quarter.

    ii) For silver, the arithmetic mean of the weekly Handy & Harman base price per troy ounce as quoted in Metals Week for the weeks which conclude within that quarter, but in the event Metals Week is not published or if for any other reason such quotation is not available, the arithmetic mean of the daily Handy & Harman base price quote as published in the Wall Street Journal for the quarter will be utilized.

(d) If smelting, refining, treatment, assay or sampling of GSPP Products or Other Products is performed by facilities owned or controlled by the Optionee or any of its affiliates, all charges, costs and penalties therefor to be deducted pursuant to the foregoing paragraph shall be equal to and not exceed actual costs incurred by the Optionee in carrying out such processes and shall not exceed such amounts which the Optionee would have incurred if such operations were conducted at facilities operating at arm's length to the Optionee, and which were then offering comparable services for comparable quantities and quality of GSPP Products or Other Products.

	 
	 	 	 
	

	 

(e) The Optionee shall have the right to commingle GSPP Products or Other Products produced from the Lands with ores and minerals produced from other properties. Before commingling, GSPP Products or Other Products from the Lands shall be weighed, sampled, assayed, measured or gauged by the Optionee in accordance with sound mining and metallurgical practices for moisture, penalty substances and payable content. Records shall be kept by the Optionee for a reasonable time showing weights, moisture and assays of payable content. Prior to commingling, the Optionee shall give thirty (30) days notice to the Optionor specifying its decision to commingle and outlining the procedures it proposes to follow.

7.   General

    (a) Royalties shall accrue at the time of sale or deemed sale, as applicable, and they shall become due and payable in cash on a calendar quarter basis, on the twentieth (20th) day of the month next following the calendar quarter in which they accrue.

    (b) At the time of making each Royalty payment to the Optionor, the Optionee shall provide the Optionor with a certificate of a senior officer of the Optionee certifying as to the accuracy of the calculations of the Royalty payment and setting out the method of the calculation thereof to which shall be attached a true copy of the related smelter or sales receipt or receipts.

    (c) Net sales returns and net smelter returns upon the respective Products shall be calculated exclusively as provided herein, and the Royalty computed thereon shall be determined without regard to any "hedging", "forward", "futures" or comparable sales (collectively referred to as "future trading") of such Products by or on behalf of the Optionee. The Optionor shall not be entitled to any benefit of or be subject to any loss attributable to such future trading by the Optionee.

	 
	 	 	 
	

	 

    (d) The Optionee shall cause to be kept proper books of account, records and supporting materials covering all matters relevant to the calculation of Royalties payable to the Optionor, and the reasonable verification thereof; and the Optionor shall have, from time to time, the unfettered right, during regular business hours and on reasonable notice, to carry out at its sole cost and expense an audit by established independent professionals chosen by the Optionor, of the methodology and manner of calculating all Royalty payments hereunder and the Optionee shall provide, during regular business hours and on reasonable notice, unrestricted access to its books, accounts, records, vouchers, smelter settlements, sales receipts and related documentation for this purpose. Should there be any difference in the amount of the Royalty payment or payments which are ultimately determined by arbitration to be in the Optionor's favour, which exceed five (5%) percent of the amount of the Royalty paid to the Optionor, then the cost of said audit, to the extent reasonable, shall be reimbursed to the Optionor by the Optionee.

    (e) Any dispute relating to the quantum or methodology of calculating all Royalties payable hereunder shall be settled by arbitration pursuant to the provisions of paragraph 12 of the Option Agreement to which this Schedule "B" forms a part.

	 
	 	 	 
	

	 

Schedule “B”

To Agreement between Richard Nemis In Trust and Hawk Precious Minerals Inc. dated May 12, 2004

Claims located in the McFaulds Lake area

	
Claim Numbers
	
Number of Units

	

	

	
3019423
	
16

	

	

	
3019424
	
16

	

	

	
3019425
	
16

	

	

	
3019426
	
16

	

	

	
3011945
	
16Exhibit 10.32
                       Amendment to Mohammed ABD El Shafy
                              EMPLOYMENT AGREEMENT

         EMPLOYMENT  AGREEMENT  (the  "Agreement")  dated  as of the  9th day of
April, 2004, between NOVADEL PHARMA INC., a Delaware corporation  (together with
its  successors  and  assigns  referred  to herein as the  "Corporation"),  with
principal executive offices located 25 Minneakoning Road, Flemington, New Jersey
08822  and  MOHAMMED  ABD  EL-SHAFY,  PHD.,  residing  at 428  Town  Line  Road,
Hauppauge, Long Island, New York 11788 (the "Executive").

          WHEREAS,  the Corporation  desires to continue to employ Executive and
to have him continue to render  services under the terms and  conditions  hereof
and has authorized and approved the execution of this Agreement; and

         WHEREAS,   Executive   desires  to  continue  to  be  employed  by  the
Corporation under the terms and conditions hereinafter provided;

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

         1.       EMPLOYMENT, DUTIES AND ACCEPTANCE.

                  1.1   SUPERCESSION   OF  FORMER   AGREEMENT.   This  Agreement
supercedes, and replaces, in its entirety, a former Employment Agreement between
the parties dated May 15, 2002.

                  1.2 SERVICES.  During  employment  hereunder,  Executive shall
hold  the  position  of  Vice  President  -  Pharmaceutical  Development  of the
Corporation, and shall have the responsibilities and authority as established by
the Board of Directors of the Corporation  (the "Board") and shall report to the
President of the Corporation. Executive shall devote Executive's entire business
time, attention, knowledge and skills faithfully,  diligently and to the best of
Executive's  ability  in  furtherance  of the  business  and  activities  of the
Corporation (the "Services"). The principal place of performance by Executive of
services  hereunder shall be at the principal offices of the Corporation or such
other place as the President may designate.

                  1.3 ACCEPTANCE.  Executive  hereby accepts such employment and
agrees to render the Services.

         2.       TERM OF EMPLOYMENT.

                  2.1 TERM. The Executive's employment under this Agreement (the
"Term") shall begin as of the Effective Date (as hereinafter  defined) and shall
continue for a term of three (3) years,  unless  sooner  terminated  pursuant to
Sections 5 or 9 of this  Agreement.  Notwithstanding  anything  to the  contrary
contained  herein,  the  provisions of this  Agreement  governing  Protection of
Confidential  Information  shall  continue in effect as  specified in Section 10
hereof and survive the expiration or termination  hereof. Upon the expiration of
the Term of the Agreement,  it shall  automatically  renew itself for additional
successive one-year periods,  unless the Corporation shall give Executive ninety
days notice of  non-renewal  in advance of the expiration of the initial Term or
any subsequent renewal period.

                  2.2 EFFECTIVE  DATE.  The effective  date of this Agreement is
January 1, 2004.

         3.       BASE SALARY AND EXPENSE REIMBURSEMENT.

                  3.1 BASE SALARY.  As of the Effective  Date,  the  Corporation
shall pay  Executive  a salary (the "Base  Salary") at the rate of $200,000  per
year.  Within  ten (10) days of the date of  execution  of this  Agreement,  any
difference  between  the Base  Salary  set  forth  herein  and the  remuneration
actually paid to Executive  between the Effective Date and the date of execution
shall be paid to Executive by the Corporation in a lump sum.

<PAGE>

                  3.2  EXPENSE  REIMBURSEMENT.  All  travel  and other  expenses
reasonably incurred by Executive  incidental to the rendering of Services to the
Corporation  hereunder  shall  be  paid  by the  Corporation  or  reimbursed  to
Executive  upon receipt and  approval of expense  reports on  Corporation  forms
supported  by  appropriate  documentation.  From time to time,  Executive  shall
submit,  and obtain  approval for,  proposed  expense  budgets.  All  unbudgeted
expenses in excess of $1,000.00 (individually,  or collectively if in connection
with a single  related  subject or project  within a given month) shall  require
advance approval.

                  3.3  BONUSES.  In  addition,  Executive  shall be  entitled to
receive an incentive cash bonus of $10,000 for each lingual spray pharmaceutical
compound  formulation  developed by him  (multiple  dosage  strengths of a given
compound shall be deemed to be a single  formulation  unless otherwise agreed to
in writing) which  proceeds into a  company-sponsored  clinical  pharmacokinetic
study and  successfully  demonstrates  therapeutic  blood  levels  or  otherwise
successfully  enables the study to meet its stated  objective(s).  In  addition,
Executive may receive bonuses and other compensation in the form of stock, stock
options or other  property  or rights as may from time to time be awarded by the
Board in connection with Executive's employment.

                  3.4  STOCK  OPTIONS.  As of the  date  of  execution  of  this
Agreement,  the Corporation grants Executive Options under its 1997 Stock Option
Plan, to purchase 50,000 shares of the Corporations  common stock at an exercise
price equal to the closing  price of the  Corporation's  common  stock as of the
date of grant.  Such Options shall have a term of ten (10) years, and shall vest
in three equal annual  installments,  beginning on the first anniversary date of
this Agreement.

         4. Confidential Information.

                  4.1 Corporation  Information.  In connection with  Executive's
employment,  the  Corporation  has  made  and will  make  available  to him that
Confidential Information of the Corporation that will enable him to optimize the
performance of his duties to the Corporation.  In exchange,  Executive agrees to
use  such  Confidential   Information  solely  for  the  Corporation's  benefit.
Notwithstanding  the  preceding   sentence,   Executive  agrees  that  upon  the
termination  of his  employment for any reason,  the  Corporation  shall have no
obligation to provide or otherwise make available to him any of its Confidential
Information.  Executive  understands that  "Confidential  Information" means any
Corporation proprietary information,  technical data, trade secrets or know-how,
including,  but not limited to,  research,  product plans,  products,  services,
customer lists and customers  (including,  but not limited to,  customers of the
Corporation on whom Executive  called or with whom he became  acquainted  during
the  term  of his  employment),  markets,  software,  developments,  inventions,
processes,  formulas,  technology,  designs,  drawings,  engineering,   hardware
configuration  information,  marketing,  finances or other business  information
disclosed to Executive  by the  Corporation  either  directly or  indirectly  in
writing,  orally or by drawings or observation of parts or equipment.  Executive
further  understand that  Confidential  Information  does not include any of the
foregoing  items which has become  publicly known and made  generally  available
through no wrongful  act or omission  of  Executive  or of others who were under
confidentiality  obligations as to the item or items involved or improvements or
new versions thereof.

<PAGE>

                  Executive   agrees  at  all  times  during  the  term  of  his
employment  and  thereafter,  to hold in strictest  confidence,  and not to use,
except for the  exclusive  benefit of the  Corporation,  or to  disclose  to any
person,  firm or corporation  without written  authorization of the President of
the Corporation, any Confidential Information of the Corporation.

                  4.2 FORMER EMPLOYER INFORMATION. Executive agrees that he will
not, during his employment with the Corporation,  improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other  person or  entity  and that he will not bring  onto the  premises  of the
Corporation any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.

                  4.3 THIRD PARTY  INFORMATION.  Executive  recognizes  that the
Corporation has received and in the future will receive from third parties their
confidential or proprietary  information  subject to a duty on the Corporation's
part to maintain the  confidentiality of such information and to use it only for
certain  limited  purposes.  Executive  agrees to hold all such  confidential or
proprietary  information  in the strictest  confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in carrying out
his work for the Corporation  consistent with the  Corporation's  agreement with
such third party.

         5.       VOLUNTARY SEVERANCE.

                  5.1  TERMINATION BY EXECUTIVE FOR GOOD REASON.  If Executive's
employment  hereunder  shall be  terminated  by  Executive  for Good  Reason (as
defined  in  Section  9.4  hereof)  at any time  prior  to the end of the  Term,
Executive shall be entitled to receive from the Corporation,  in addition to any
Base Salary earned to the date of termination,  a severance payment in an amount
equal to one  year's  Executive's  Base  Salary,  payable  to the  Executive  in
biweekly increments. In the event of such termination, the amounts due hereunder
shall be payable without offset or defense or any obligation of the Executive to
mitigate damages.

                  5.2  TERMINATION  BY EXECUTIVE  WITHOUT  GOOD  REASON.  If the
Executive  terminates  employment without Good Reason (as defined in Section 9.4
hereof) at any time prior to the end of the Term, Executive shall be entitled to
receive from the  Corporation  payment of any unpaid  accrued Base Salary earned
through  the  date  of  termination.  In the  event  of  such  termination,  all
obligations  of  the  Corporation  hereunder  shall  terminate  on the  date  of
termination and the Executive's  termination  without Good Reason shall act as a
waiver of all claims to  compensation  which would have otherwise  accrued after
the date of termination.

         6.       ADDITIONAL BENEFITS.

         During Executive's employment, the Corporation shall cause Executive to
be covered by all the Corporation's  employee benefit plans, in effect from time
to time, for which  Executive is eligible,  including  without  limitation,  any
retirement plan or group insurance.

         7.       VACATION.

         Executive  shall be entitled to such  holidays as are in effect for all
of the  Corporation's  employees,  and to  personal  leave  in  accordance  with
Corporation policy as in effect from time to time. In addition,  Executive shall
be entitled to four weeks  vacation days (twenty  business  days) per year.  The
timing  of the  taking  of  vacation  is left to the  discretion  of  Executive,
provided the same is not inconsistent with the reasonable business  requirements
of the Corporation.  Vacation days not used by Executive during a given year may
be  accumulated  and carried  forward  only in accord  with the  policies of the
Corporation.

         8.       INDEMNIFICATION.

         The Corporation shall indemnify  Executive and hold Executive  harmless
against any and all expenses  reasonably  incurred by him in connection  with or
arising  out of (a) the  defense  of any  action,  suit or  proceeding  to which
Executive  is a named party,  or (b) any claim  asserted or  threatened  against
Executive,  provided,  in either  case,  the matter has arisen  because of or in
connection  with  Executive's  being or  having  been an  employee,  officer  or

<PAGE>

director of the Corporation,  whether or not he continues to be such at the time
the  expenses  indemnified  against  are  incurred,  except  insofar as (a) such
indemnification  may be  prohibited  by law, (b) the expenses  were  incurred in
connection  with a matter  where  the  Corporation  is or was in an  adversarial
position to Executive and the Corporation  prevailed  against  Executive in such
matter,  or (c) the expenses were incurred in connection  with a matter  arising
out a  material  breach  by  Executive  of  this  Agreement  or  of  Executive's
obligations to the Corporation.  Expenses  indemnified against include,  without
limitation,  reasonable  attorneys fees, money judgments and money  settlements,
provided the Corporation's  advance approval has been sought and obtained.  This
Section 8 is independent of any similar indemnification  obligation which may be
contained in the  Corporation's  Certificate of  Incorporation  or By-laws,  and
applies  as  well to  matters  attributable  to  Executive's  employment  by the
Corporation before the Effective Date of this Agreement, if applicable.

         9.       TERMINATION.

                  9.1  DEATH.   If  Executive  dies  during  the  Term  of  this
Agreement,  Executive's  employment hereunder shall terminate upon his death and
all  obligations  of the  Corporation  hereunder  shall  terminate on such date,
except that Executive's  estate or his designated  beneficiary shall be entitled
to payment of any unpaid accrued Base Salary through the date of his death.

                  9.2  DISABILITY.  If  Executive  shall be unable to  perform a
significant  part of his  duties and  responsibilities  in  connection  with the
conduct of the business and affairs of the  Corporation and such inability lasts
for a period of at least 180 consecutive days by reason of Executive's  physical
or mental  disability,  whether by reason of injury,  illness or similar  cause,
Executive shall be deemed disabled,  and the Corporation any time thereafter may
terminate Executive's  employment hereunder by reason of the disability.  During
such 180 day period,  the Base Salary and other  benefits  payable to  Executive
hereunder shall not be suspended or diminished,  except to the extent equivalent
to the extent of any  Corporation-provided  disability insurance in effect. Upon
delivery to Executive of notice to terminate, all obligations of the Corporation
hereunder shall terminate, except that Executive shall be entitled to payment of
any unpaid accrued Base Salary through the date of termination.  The obligations
of Executive under Section 10 hereof shall continue notwithstanding  termination
of Executive's employment pursuant to this Section 9.2.

                  9.3  TERMINATION  FOR CAUSE.  The  Corporation may at any time
during the Term, with 30 days prior written notice, terminate this Agreement and
discharge  Executive for Cause,  whereupon the  Corporation's  obligation to pay
compensation  or  other  amounts  payable  hereunder  to or for the  benefit  of
Executive shall terminate on the date of such discharge. As used herein the term
"Cause" shall be deemed to mean and include:  (i) a material breach by Executive
of this  Agreement  including  without  limitation  a breach by Executive of the
obligations  set  forth  in  Section  10  hereof;  (ii)  excessive  absenteeism,
alcoholism or drug abuse; (iii) substantial  neglect or inattention by Executive
of or to his duties  hereunder;  (iv)  willful  violation of specific and lawful
written or oral  direction  from the Board of Directors or the  President of the
Corporation  provided such direction is not  inconsistent  with the  Executive's
duties and  responsibilities  as Vice President - Pharmaceutical  Development of
the Corporation;  or (v) fraud, criminal conduct or embezzlement.  The following
shall be deemed a material breach for the purposes of Subsection (i) hereof: (a)
the  Executive's  conviction for, or a plea of nolo contendere to, a felony or a
crime involving moral turpitude (which,  through lapse of time or otherwise,  is
not  subject  to  appeal);   (b)  willful  misconduct  as  an  employee  of  the
Corporation;  or (c) willful or reckless disregard of his responsibilities under
this Agreement. The obligations of the Executive under Section 10 shall continue
notwithstanding  termination  of the  Executive's  employment  pursuant  to this
Section 9.3.

                  9.4  TERMINATION  BY EXECUTIVE.  The Executive  shall have the
right to terminate this Agreement for Good Reason, as hereinafter defined.  Good
Reason shall mean any of the following:  (i) any reduction by the Corporation of
the Executive's  compensation or benefits payable hereunder (it being understood
that a reduction of benefits  applicable  to all  employees of the  Corporation,
including  the  Executive,  shall not be deemed a reduction  of the  Executive's

<PAGE>

compensation  package for purposes of this  definition);  or (ii)  requiring the
Executive to be based  without his consent at a location  not within  reasonable
commuting distance of Flemington, New Jersey.

         10.      INTELLECTUAL PROPERTY; NON-COMPETITION.

                  10.1 INVENTIONS RETAINED AND LICENSED.  Executive has attached
hereto,  as Exhibit  A, a list  describing  all  inventions,  original  works of
authorship,  developments,  improvements,  and trade  secrets which were made by
Executive prior to his employment with the Company (collectively  referred to as
"Prior Inventions"), which belong to him, which relate to the Company's proposed
business,  products or research and  development,  and which are not assigned to
the Company  hereunder;  or, if no such list is attached,  Executive  represents
that  there are no such  Prior  Inventions.  Executive  agrees  that he will not
incorporate,  or permit to be incorporated,  any Prior Invention owned by him or
in which he has an interest into a Company  product,  process or machine without
the Company's prior written consent. Notwithstanding the foregoing sentence, if,
in the course of Executive's employment with the Company, he incorporates into a
Company  product,  process or machine a Prior Invention owned by him or in which
he has an interest, the Company is hereby granted and shall have a nonexclusive,
royalty-free,  irrevocable,  perpetual,  worldwide  license to make,  have made,
modify,  use and sell such Prior Invention as part of or in connection with such
product, process or machine.

                  10.2 ASSIGNMENT OF INVENTIONS.  Executive  agrees that he will
promptly make full written disclosure to the Company, will hold in trust for the
sole right and benefit of the Company,  and hereby assign to the Company, or its
designee,  all his right,  title, and interest in and to any and all inventions,
original works of authorship,  developments,  concepts,  improvements,  designs,
discoveries,  ideas,  trademarks or trade secrets,  whether or not patentable or
registrable  under  copyright  or similar  laws,  which he may solely or jointly
conceive or develop or reduce to practice, or cause to be conceived or developed
or  reduced  to  practice,  during the period of time he is in the employ of the
Company  (collectively  referred  to as  "Inventions"),  except as  provided  in
Section 10.6 below.  Executive  further  acknowledges that all original works of
authorship  which are made by him  (solely or jointly  with  others)  within the
scope of and during the period of  Executive's  employment  with the Company and
which are  protectible  by copyright  are "works made for hire," as that term is
defined in the United States  Copyright Act.  Executive  understands  and agrees
that the  decision  whether  or not to  commercialize  or market  any  invention
developed  by him solely or jointly  with  others is within the  Company's  sole
discretion and for the Company's sole benefit and that no royalty will be due to
Executive as a result of the Company's  efforts to  commercialize  or market any
such Invention.

                  10.3  INVENTIONS  ASSIGNED  TO THE  UNITED  STATES.  Executive
agrees to assign to the  United  States  government  all his right,  title,  and
interest in and to any and all  Inventions  whenever such full title is required
to be in the United  States by a contract  between  the  Company  and the United
States or any of its agencies.

                  10.4  MAINTENANCE  OF  RECORDS.  Executive  agrees to keep and
maintain  adequate and current  written  records of all  Inventions  made by him
(solely or jointly  with  others)  during  the term of his  employment  with the
Company. The records will be in the form of notes,  sketches,  drawings, and any
other format that may be specified by the Company. The records will be available
to and remain the sole property of the Company at all times.

                  10.5 PATENT AND COPYRIGHT  REGISTRATIONS.  Executive agrees to
assist the Company,  or its designee,  at the Company's expense, in every proper
way to  secure  the  Company's  rights  in the  Inventions  and any  copyrights,
patents, mask work rights or other intellectual property rights relating thereto
in any and all countries,  including,  but not limited to, the disclosure to the
Company  of all  pertinent  information  and  data  with  respect  thereto,  the
execution of all applications,  specifications, oaths, assignments and all other
instruments  which the Company  shall deem  necessary  in order to apply for and
obtain  such  rights  and in order to  assign  and  convey to the  Company,  its
successors,  assigns,  and nominees  the sole and  exclusive  rights,  title and
interest  in and to such  Inventions,  and any  copyrights,  patents,  mask work
rights or other intellectual property rights relating thereto. Executive further

<PAGE>

agrees that his obligation to execute or cause to be executed, when it is in his
power  to do so,  any  such  instrument  or  papers  shall  continue  after  the
termination of this  Agreement.  If the Company is unable because of Executive's
mental or physical incapacity or for any other reason to secure his signature to
apply for or to pursue any  application for any United States or foreign patents
or copyright  registrations  covering Inventions or original works of authorship
assigned to the Company as above, then Executive hereby  irrevocably  designates
and  appoints  the Company and its duly  authorized  officers  and agents as his
agent and  attorney  in fact,  to act for and in his behalf and stead to execute
and file any such  applications  and to do all other lawfully  permitted acts to
further  the   prosecution   and   issuance  of  letters   patent  or  copyright
registrations  thereon  with the same legal  force and effect as if  executed by
Executive.

                  10.6 EXCEPTION TO ASSIGNMENTS.  Executive understands that the
provisions of this Agreement  requiring  assignment of Inventions to the Company
shall not apply to any invention that he has developed  entirely on his own time
without  using the  Company's  equipment,  supplies,  facilities,  trade  secret
information or Confidential  Information except for those inventions that either
(i) relate at the time of  conception  or reduction to practice of the invention
to the Company's  business,  or actual or demonstrably  anticipated  research or
development of the Company or (ii) result from any work that Executive performed
for the Company.  Executive  will advise the Company  promptly in writing of any
inventions  that he  believes  meet the  foregoing  criteria  and not  otherwise
disclosed on Exhibit A.

                  10.7  NON-COMPETITION.  Executive  agrees  that,  for a period
beginning  with the  Effective  Date of this  Agreement and ending twelve months
after the date of termination of employment by the Company,  Executive will not,
either  individually  or in  conjunction  with any  person,  firm,  association,
syndicate, company or corporation,  directly or indirectly (as principal, agent,
employee,  director,  officer,  shareholder,  partner,  independent  contractor,
individual  proprietor,  or as an  investor  who has  made  advances,  loans  or
contributions  to  capital,  or in any other  manner  whatsoever)  compete  with
company in the business then  conducted by Company.  Executive also agrees that,
during such period,  Executive  will not solicit or  encourage  any persons who,
during such period,  were  employees of Company to (i)  terminate  such persons'
employment  with  Company;  or (ii) become  affiliated  with any  person,  firm,
association, syndicate, company or corporation which is in a business similar to
that of the Company and in which Executive,  either directly or indirectly,  has
an  interest.  If  Company  directs  Executive  to cease and  desist a  proposed
post-termination  course of conduct,  on the  grounds  that he is  proposing  to
compete  with the  Company's  business,  during this  one-year  post-termination
period,  Company shall compensate Executive by paying him his base Salary during
the period he is prevented from pursuing such activity.

                  10.8  ANTI-RAIDING.  Executive  agrees that during the term of
his  employment  hereunder,  and,  thereafter  for a  period  of one  (1)  year,
Executive  will  not,  as  principal,  agent,  employee,  employer,  consultant,
director or partner of any person,  firm,  corporation or business  entity other
that  the  Corporation,   or  in  any  individual  or  representative   capacity
whatsoever, directly or indirectly, without the prior express written consent of
the Corporation approach, counsel or attempt to induce any person who is then in
the employ of the  Corporation to leave the employ of the  Corporation or employ
or  attempt  to employ any such  person or  persons  who at any time  during the
preceding six months was in the employ of the Corporation.

                  10.9  INJUNCTION.  Executive  acknowledges  and  agrees  that,
because of the unique and  extraordinary  nature of his services,  any breach or
threatened  breach of any of the above provisions of this Section 10 hereof will
cause the Corporation  irreparable injury and incalculable harm and,  therefore,
the Corporation will have "no adequate remedies at law".  Executive,  therefore,
agrees in advance that  Corporation  shall be entitled to  injunctive  and other
equitable  relief for such  breach or  threatened  breach and that resort by the
Corporation to such injunctive or other equitable  relief shall not be deemed to
waive or to limit in any respect any right or remedy which the  Corporation  may
have with respect to such breach or threatened breach. The Executive agrees that
in such action,  if the  Corporation  makes a prima facie showing that Executive

<PAGE>

has  violated or  apparently  intends to violate any of the  provisions  of this
Section 10, the Corporation  need not prove either damage or irreparable  injury
in order to obtain injunctive  relief.  The Corporation and Executive agree that
any such action for injunctive or equitable  relief shall be heard in a state or
federal  court  situated in New Jersey and each of the parties  hereto agrees to
accept  service of process by  registered  mail and to otherwise  consent to the
jurisdiction of such courts.

                  10.10 NO INDEMNIFICATION.  The provisions of Section 8, above,
do not apply to any expenses  incurred by  Executive  in  defending  against any
claim made pursuant to this Section 10.

                  10.11  SEVERABILITY.  If any provision  contained  within this
Section 10 is found to be  unenforceable  by reason of the  extent,  duration or
scope  thereof,  or otherwise,  then such  restriction  shall be enforced to the
maximum extent permitted by law, and Executive agrees that such extent, duration
or scope may be modified in any proceeding brought to enforce such restriction.

         11.      ARBITRATION.

         Except with respect to any proceeding  brought under Section 10 hereof,
any controversy,  claim, or dispute between the parties, directly or indirectly,
concerning this Employment Agreement or the breach hereof, or the subject matter
hereof,  including  questions  concerning  the scope and  applicability  of this
arbitration clause,  shall be finally settled by arbitration in the State of New
Jersey  pursuant  to  the  rules  then  applying  of  the  American  Arbitration
Association. The arbitrators shall consist of one representative selected by the
Corporation, one representative selected by the Executive and one representative
selected  by the  first two  arbitrators.  The  parties  agree to  expedite  the
arbitration proceeding in every way, so that the arbitration proceeding shall be
commenced  within  thirty (30) days after request  therefore is made,  and shall
continue  thereafter,  without  interruption,  and  that  the  decision  of  the
arbitrators  shall be handed down within  thirty (30) days after the hearings in
the arbitration proceedings are closed. The arbitrators shall have the right and
authority to assess the cost of the arbitration proceedings and to determine how
their  decision  or  determination  as to each issue or matter in dispute may be
implemented or enforced.  The decision in writing of any two of the  arbitrators
shall be binding and conclusive on all of the parties to this Agreement.  Should
either  the  Corporation  or the  Executive  fail to appoint  an  arbitrator  as
required  by this  Section 11 within  thirty (30) days after  receiving  written
notice  from the other  party to do so, the  arbitrator  appointed  by the other
party  shall act for all of the parties  and his  decision  in writing  shall be
binding and conclusive on all of the parties to this Employment  Agreement.  Any
decision  or award of the  arbitrators  shall be  final  and  conclusive  on the
parties to this  Agreement;  judgment upon such decision or award may be entered
in any competent Federal or state court located in the United States of America;
and the application may be made to such court for  confirmation of such decision
or award for any order of enforcement  and for any other legal remedies that may
be necessary to effectuate such decision or award.

         12.      NOTICES.

         All notices,  requests,  consents and other communications  required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been  duly  given  if  delivered  personally  or sent  by  facsimile  or  mailed
first-class,  postage prepaid,  by registered or certified mail (notices sent by
mail shall be deemed to have been  given on the date  sent),  to the  parties at
their  respective  addresses  hereinabove  set forth or to such other address as
either  party shall  designate  by notice in writing to the other in  accordance
herewith.  Copies of all notices shall be sent to Robert F. Schaul, Esq. Esq. at
57 Dutch Lane, Ringoes, New Jersey 08551.

         13.      GENERAL.

                  13.1 GOVERNING  LAW. This  Agreement  shall be governed by and
construed  and  enforced in  accordance  with the local laws of the State of New
Jersey applicable to agreements made and to be performed entirely in New Jersey.

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

<PAGE>

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

                  13.4 SEVERABILITY.  If any of the provisions of this Agreement
shall be unlawful, void, or for any reason, unenforceable,  such provision shall
be  deemed  severable  from,  and  shall  in  no  way  affect  the  validity  or
enforceability of, the remaining portions of this Agreement.

                  13.5 WAIVER. The waiver by any party hereto of a breach of any
provision of this Agreement by any other party shall not operate or be construed
as a  waiver  of any  subsequent  breach  of the  same  provision  or any  other
provision hereof.

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

                  13.7 ASSIGNABILITY. This Agreement, and Executive's rights and
obligations  hereunder,  may not be assigned by Executive.  The  Corporation may
assign its rights,  together with its obligations,  hereunder in connection with
any sale,  transfer  or other  disposition  of all or  substantially  all of its
business or assets;  in any event the rights and  obligations of the Corporation
hereunder  shall be binding on its  successors  or  assigns,  whether by merger,
consolidation  or  acquisition  of all or  substantially  all of its business or
assets.

                  13.8  AMENDMENT.  This  Agreement  may be  amended,  modified,
superseded,  canceled, renewed or extended and the terms or covenants hereof may
be waived,  only by a written instrument executed by both of the parties hereto,
or in the case of a waiver,  by the party  waiving  compliance.  No  superseding
instrument, amendment,  modification,  cancellation, renewal or extension hereof
shall  require  the  consent or  approval  of any person  other than the parties
hereto. The failure of either party at any time or times to require  performance
of any  provision  hereof shall in no matter affect the right at a later time to
enforce  the  same.  No  waiver  by  either  party of the  breach of any term or
covenant  contained in this Agreement,  whether by conduct or otherwise,  in any
one or more  instances,  shall be deemed to be, or  construed  as, a further  or
continuing  waiver of any such  breach,  or a waiver of the  breach of any other
term or covenant contained in this Agreement.

<PAGE>

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

ATTEST:                                      NOVADEL PHARMA INC

By: /s/ Robert F. Schaul                     By: /s/ Gary A. Shangold
    --------------------------------            -------------------------------
        Robert F. Schaul, Secretary                  Gary A. Shangold, M.D.

WITNESS:

 /s/ Lynne Pyzik                                /s/ Mohammed Abd El-Shafy
------------------------------------            -------------------------------
                                                    Mohammed Abd El-Shafy

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