Placement Agent Agreement

March 15, 2006

Griffin Securities, Inc.
17 State Street
New York, NY 10004

Paramount BioCapital, Inc.
787 Seventh Avenue, 48th Floor
New York, NY 10019

Gentlemen:

The undersigned, NovaDel Pharma Inc., a Delaware corporation (the “Company”),
hereby agrees, pursuant to the terms and conditions of this letter agreement
(the “Agreement”), with Griffin Securities, Inc., a New York corporation
(“Griffin”), and Paramount BioCapital, Inc., a New York corporation (“Paramount”
together with Griffin, the “Placement Agents” and each a “Placement Agent”), to
engage the Placement Agents in a transaction to raise equity capital through the
issuance of up to 8,092,796 shares of common stock, par value $.001 per share,
of the Company (the “Common Stock”) (or such lesser amount as may be limited by
listing standards) in a “Private Investment in Public Equity” transaction to be
sold by the Company to “accredited investors” (as defined in Rule 501
promulgated under the Securities Act of 1933, as amended (together with the
rules promulgated thereunder, the “Securities Act”)) who are also sophisticated
investors. This letter sets forth the terms and conditions of the Agreement.

                    1. Best Efforts Offering. The Company hereby engages Griffin
and Paramount to act as its Placement Agents during the term of the offering as
outlined herein (the “Offering”) to sell shares of Common Stock and warrants
(the “Warrants”) to purchase Common Stock (collectively, the “Securities”), on a
“best efforts” basis. The Warrants shall have a provision for cashless exercise.
The Placement Agents shall market the Offering on terms substantially similar to
those set forth in the Term Sheet attached hereto as Exhibit A, to the extent
permitted by applicable law, regulations and listing standards. The Securities
shall be offered without registration in reliance on one or more applicable
registration exemptions under the Securities Act, and in compliance with Rule
506 of Regulation D thereof. It is understood that the Placement Agents’
services hereunder shall be subject to, among other things, satisfactory
completion of due diligence by the Placement Agents, market conditions, the
absence of material adverse changes to the Company’s business or financial
condition since the date hereof, and approval of the Placement Agents’ internal
committees. It is expressly understood and agreed that the Placement Agents are
not undertaking to provide any advice relating to legal, regulatory, accounting
or tax matters. In furtherance thereof, the Company acknowledges and agrees that
(a) it and its affiliates have relied and will continue to rely on

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the advice of its own legal, tax and accounting advisors for all matters
relating to the Offering, and (b) neither it, nor any of its affiliates, has
received, or has relied upon, the advice of either of the Placement Agents or
any of their affiliates regarding matters of law, taxation or accounting.

It is understood that the Company’s obligations hereunder shall be subject to,
among other things, the receipt of a certificate of each of the Placement Agents
at Closing in substantially the form of the certificate delivered by Paramount
in connection with the private offering of common stock and warrants conducted
by the Company on May 26, 2005 (the “Prior Offering”) with such changes as are
agreed upon by the parties.

                    2. Offering Materials. The Company shall, as soon as
practicable after the date hereof, prepare offering materials (the “Offering
Materials”), which shall meet the anti-fraud and other requirements of the
applicable federal and state securities laws, be in form and substance
reasonably satisfactory to the parties and will include, by reference, the
Company’s public documents filed pursuant to the Securities Exchange Act of
1934, as amended (together with the rules promulgated thereunder, the “Exchange
Act”). The Placement Agents each agree that (i) they will not disclose any
non-public information with respect to the Company or the Common Stock to any
investor, potential investor or any other person, other than as may be included
in the Offering Materials; (ii) they will use any non-public information about
the Company or the Common Stock only for the purposes of rendering their
services hereunder; and (iii) they will not make any assertion, representation
or commitment inconsistent with or supplement to those in the Offering Material
or the Securities Purchase Agreement. The Placement Agents further agree that,
prior to or simultaneously with the delivery of the Offering Materials to any
potential investor, the Placement Agents will obtain an express agreement from
such potential investor that such person will maintain in confidence and not
disclose to any other person or entity the existence or terms of this Offering
and that such potential investor will not use the information regarding the
Offering and the terms thereof for any purpose other than to evaluate a
potential investment in the Offering and will not trade in the Common Stock or
any derivatives thereof until the Offering and the terms thereof have been made
public by the Company or the Offering has been terminated.

                    3. Compensation. The Placement Agents will be paid at
closing of the Offering (the “Closing”) by wire transfer of immediately
available funds an aggregate cash commission of 7% of the aggregate amount of
the Offering proceeds (the “Cash Compensation”), excluding any proceeds received
from any sales to officers or directors of the Company for their personal
investment accounts, including for accounts beneficially owned by or for the
benefit of their family members, or to SIAR Capital (the “Excluded Offerees”),
for the Securities sold to all other investors in the Offering. In addition, the
Placement Agents shall collectively receive at Closing Warrants to purchase such
number of shares of the Company’s Common Stock equal to 6% of the number of
shares of Common Stock sold in the Offering, excluding any Shares of Common
Stock sold to Excluded Offerees (the “Warrant Compensation”). Such Warrants
shall be substantially the same in form and substance as the Warrants issued to
the investors in the Offering, and shall be afforded equivalent registration
rights as the Securities sold in the Offering. The Placement Agents agree that
they shall be

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deemed purchasers under the Securities Purchase Agreement and the Registration
Rights Agreement and, accordingly, they shall comply with all of the terms,
conditions and limitations set forth in such agreements. Griffin, acting as lead
Placement Agent in the Offering, will receive 60.0% of the total Cash
Compensation and Warrant Compensation, and Paramount, acting as co-placement
agent in the Offering will receive 40.0% of the Cash Compensation and Warrant
Compensation. The Company shall pay to Griffin 60.0% of the total Cash
Compensation and pay to Paramount 40.0% of the total Cash Compensation, and
shall deliver to Griffin and Paramount (or their designees) certificates for the
Warrant Compensation as directed in writing to the Company by Griffin and
Paramount, respectively, within 24 hours after the receipt by the Company of
such written directions.

Paramount consents to the Offering and acknowledges, agrees and confirms that
the Company has no obligation to pay and Paramount has no right to receive any
compensation pursuant to Section 3 of the Introduction Agreement, dated May 10,
2005 (the “Paramount Agreement”), between the Company and Paramount.
Notwithstanding any provision of the Paramount Agreement to the contrary, this
Agreement shall provide the exclusive terms and conditions relating to
Paramount’s rights and compensation with respect to this Offering and any sales
of Securities pursuant to this Agreement to any purchaser in the Offering, any
Excluded Offeree, ProQuest Investments or Caisse de Dépôt et Placement du
Québec. Paramount hereby waives its rights pursuant to Section 10 of the
Paramount Agreement solely with respect to the Offering.

Notwithstanding anything to the contrary herein, if, during the period from the
date hereof through the earlier of the date of Closing or the termination of
this Agreement (the “Offering Period”), a qualified investor is informed in good
faith of the Offering by the Placement Agents and a Placement Agent in good
faith has offered to furnish to such potential investor the Offering Materials
(as more fully defined below, an “Introduced Party”) and (i) the Offering does
not close and such Introduced Party purchases from the Company any securities of
the Company that are issued in an offering not involving a public offering
(whether or not subject to a registration statement) (excluding any securities
issued as compensation to employees, directors or consultants, securities issued
pursuant to existing employee benefit plans, and any securities issued to
Excluded Offerees) within 12 months after the termination of the Offering or
(ii) the Offering hereunder closes and such Introduced Party subsequently
purchases from the Company within 12 months after the Closing any securities of
the Company that are not registered under the Securities Act (excluding any
securities issued as compensation to employees, directors or consultants,
securities issued pursuant to existing employee benefit plans, and any
securities issued to Excluded Offerees), the Placement Agents shall be entitled
to Cash Compensation and Warrant Compensation as set forth in this Paragraph 3.
The Placement Agents will provide the Company with a list of the Introduced
Parties that did not participate in the Offering. Such list shall not include
the Excluded Offerees and the persons and entities set forth on Exhibit B
hereto. The Placement Agents, each of their employees and their affiliates shall
have the right to invest in the Offering provided they are accredited and
sophisticated investors, subject to the requirements or limitations of
applicable listing standards and provided that the Company is permitted, under
applicable law, rules of any governmental or self-regulatory body and listing
standards, to

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register the Securities purchased by such persons pursuant to a registration
statement on Form S-3. The provisions of this paragraph shall survive the
Closing and any termination of the Offering or this Agreement.

                    4. Expenses. Whether or not the Offering is completed, it
shall be the Company’s obligation to bear all of its expenses in connection with
the proposed Offering, including without limitation, with respect to filings,
applications or registrations with any governmental or regulatory body,
including, without limitation, those associated with any sales pursuant to
Regulation D under the Securities Act, state securities laws, and the laws of
the foreign countries in which the Securities will be offered or sold; provided,
however, that the Placement Agents shall not offer for sale the Securities in
any country other than the United States without the prior written consent of
the Company. In addition, upon the later of (i) the Closing or the earlier
termination of this Agreement and (ii) the date that is three business days
after receipt by the Company of reasonably satisfactory documentation of such
out-of-pocket expenses, the Company shall reimburse the Placement Agents for
their reasonable actual out of pocket expenses, including reasonable legal fees
and disbursements up to a maximum aggregate amount of $55,000, by wire transfer
of immediately available funds. Notwithstanding the foregoing, except for the
legal fees referenced above, neither Placement Agent shall incur any
out-of-pocket expenses in excess of $1,000 without the prior approval of the
Company. The Placement Agents acknowledge and agree that the Company shall have
no obligation to reimburse any investor for any expenses incurred by such
investor in connection with the Offering. The provisions of this paragraph shall
survive the Closing and any termination of the Offering or this Agreement.

                    5. Further Representations and Agreements of the Company.
The Company further represents and agrees that (i) it is authorized to enter
into this Agreement and to carry out the Offering contemplated hereunder and
this Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except in all cases as rights of
indemnity or contribution hereunder may be limited under applicable law and
except as the enforceability hereof may be limited by bankruptcy, receivership,
moratorium, conservatorship, reorganization or other laws of general application
affecting the rights of creditors generally or general equitable principles,
(ii) the Company shall not during the Offering Period, without notifying the
Placement Agents in advance, issue any equity securities or securities
convertible into, exchangeable for, or giving the holder thereof the right to
acquire the Common Stock (other than shares issued pursuant to the exercise of
outstanding warrants or pursuant to options issued under any of the Company’s
existing equity compensation or incentive plans), (iii) subject to the Placement
Agents’ obligation to maintain the confidentiality of any information not yet
disclosed by the Company to the public, the Company will, during the course of
the Offering, provide the Placement Agents with all information and copies of
documentation with respect to the Company’s business, financial condition and
other matters as the Placement Agents may reasonably deem relevant, including
copies of all documents sent to stockholders or filed with any federal
authorities; provided, however, the Company is not obligated to deliver
documents filed with the Food and Drug Administration that contain trade
secrets, manufacturing processes or CMC information or documents available on
the SEC’s EDGAR system, and will make reasonably available to the

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Placement Agents, its auditors, counsel, and officers and directors to discuss
with the Placement Agents any aspect of the Company or its business which the
Placement Agents may reasonably deem relevant, (iv) the executive officers,
directors and affiliates of the Company included in Exhibit F shall enter into a
lock-up agreement with the Placement Agents, in a form reasonably acceptable to
all parties, in which they will agree not to sell any equity securities or
securities convertible into, exchangeable for, or giving the holder thereof the
right to acquire equity securities of the Company held by them under Rule 144 or
otherwise for a period from the date hereof until the later of six (6) months
from the Closing hereunder and 90 days following the effective date of a
Registration Statement (as defined below) in which the Securities are included;
provided, however, that such lock-up shall terminate if this Agreement is
terminated prior to a Closing hereunder, (v) the Company agrees that for the
earlier to occur of a period of 45 days after the effectiveness of the
Registration Statement or until all Securities may be sold without volume
limitations under Rule 144, it shall not issue or sell any shares of its Common
Stock or other securities convertible into, exchangeable for or giving the
holder thereof the right to acquire the Common Stock of the Company (other than
shares issued in connection with a strategic transaction, pursuant to the
exercise of outstanding warrants or pursuant to options issued under any of the
Company’s existing equity compensation or incentive plans), and (vi) the Company
shall use best efforts to file with the SEC a registration statement on Form S-3
or such other appropriate form (the “Registration Statement”) for the resale of
the Securities (including the Warrants and underlying shares issued to the
Placement Agents as Warrant Compensation) within 30 days of the date of the
Closing and shall use best efforts to have such Registration Statement declared
effective within 90 days after the date of the Closing; if the Company does not
have the Registration Statement filed within 30 days after the date of the
Closing or declared effective within 120 days of the date of the Closing, the
Company shall pay the investors a cash penalty on a monthly basis of 1.0% of the
purchase price of the Securities purchased in the Offering for so long as the
Registration Statement is not filed after 30 days from the date of the Closing
or is not effective after 120 days from the date of the Closing.

Notwithstanding anything to the contrary herein, (i) the Company shall have no
obligation to qualify as a dealer in securities in any jurisdiction, (ii) the
Company shall have no obligation to register or qualify the Securities for sale
pursuant to any state securities laws except that the Company shall use best
efforts to qualify for an exemption from the qualification or registration
requirements in such states as the Placement Agents may reasonably request, and
(iii) the Company shall not be required to consummate any sale of Securities in
any manner or any jurisdiction in which such sale may not lawfully be made.

                    6. Representations, Warranties and Covenants of the
Placements Agents. Each of the Placement Agents hereby represents, warrants and
covenants to the Company, as of the date hereof, and as of the date of the
Closing, as follows: (i) it is a member of the National Association of
Securities Dealers and it has, and at all times while taking any actions
constituting an offer or sale of the Securities had, all governmental and
self-regulatory body licenses (including both federal and state broker/dealer
licenses) required to perform its duties as placement agent for the Securities,
(ii) it has not taken and will not take, directly or indirectly, any action
designed to cause or result in any manipulation of the price of the

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Securities or of the Common Stock, and neither of the Placement Agents has taken
or will take any action in contravention of Regulation M promulgated under the
Exchange Act, (iii) it has not delivered, and it will not deliver any written
disclosure or soliciting materials to any prospective investor in the Securities
other than the Offering Materials, and (iv) it is authorized to enter into this
Agreement and to carry out the Offering contemplated hereunder and this
Agreement constitutes a legal, valid and binding obligation of such Placement
Agent, enforceable in accordance with its terms, except in all cases as rights
of indemnity or contribution hereunder may be limited under applicable law and
except as the enforceability hereof may be limited by bankruptcy, receivership,
moratorium, conservatorship, reorganization or other laws of general application
affecting the rights of creditors generally or general equitable principles.

                    7. Closing Matters. The Company will cause to be furnished
to the Placement Agents and the purchasers of the Securities, on the date of the
Closing, a copy of the closing documents with respect to the Offering, and
copies of one or more opinions of Company general and/or Company outside counsel
substantially in the form attached hereto as Exhibit C. To the extent the
Company’s counsel shall deliver a legal opinion or opinions as described in the
preceding sentence or the Company’s auditors shall deliver a comfort letter in
connection with the Offering to the purchasers of the Securities, such opinions
and comfort letter shall also be addressed to the Placement Agents. Prior to the
Closing, all subscription amounts will be deposited in a segregated escrow
account with an independent escrow agent reasonably acceptable to Company and
the Placement Agents.

                    8. Indemnification. The Company agrees to indemnify Griffin
and Paramount, respectively, in accordance with the provisions set forth on
Exhibits C and D attached hereto, respectively. Griffin and Paramount,
respectively, agree to indemnify and hold harmless the Company and each of its
affiliates, stockholders, directors, officers, employees, agents and controlling
persons within the meaning of the Securities Act in accordance with the
provisions set forth on Exhibit E attached hereto. Such indemnification
obligations will survive the Closing and any termination of the Offering or this
Agreement.

                    9. No-Shop. The Company agrees that, during the Offering
Period, it will not negotiate with any other person relating to a possible
public or private offering or placement of the Company’s securities; provided,
however, that the Company may engage in discussions with any officer or director
to the extent necessary to enable the Company to comply with its obligations
under applicable law, regulations and listing standards and with its internal
policies. The provisions of this section shall survive the Closing and any
termination of the Offering or this Agreement.

                    10. Termination. This Agreement and the Offering shall
automatically terminate on March 31, 2006, if the Offering has not been
consummated prior to such date; provided, however, that the Company, in its sole
discretion, may extend the term of the Offering and this Agreement for up to an
additional 30 days upon notice to the Placement Agents. This Agreement and the
indemnification agreements referred to in Section 8 hereof and the Offering may
be terminated by the Company, in its sole discretion, at any time prior

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to the date of the Closing. In addition, each or both of the Placement Agents
shall have the right to withdraw as a party to this Agreement at any time prior
to the date of the Closing, and upon such withdrawal, this Agreement shall
remain in full force and effect as to the Company and the non-withdrawing
Placement Agent, if any. Such withdrawal by a Placement Agent shall, without any
further action or acknowledgement by any of the parties, constitute the
termination of this Agreement as to the withdrawing Placement Agent.

                    11. Competing Claims. Other than as set forth in this
Agreement and the Paramount Agreement, the Company acknowledges and agrees that,
subject to Paramount’s acknowledgement set forth in the second paragraph of
Section 3 hereof, it is not a party to any agreements that provide for, and, to
the knowledge of the Company, no entity has any claims or entitlement to, any
payments for services in the nature of a finder’s fee or any other arrangements,
agreements, payments or understandings pursuant to this Offering.

                    12. Selected Dealers. Paramount may engage other persons,
selected by it in its discretion and reasonably acceptable to Griffin, who are
members of the National Association of Securities Dealers, Inc., or who are
located outside the United States and that have executed a Selected Dealers
Agreement with Paramount (each, a “Selected Dealer” and collectively, the
“Selected Dealers”), and Paramount may allow such persons such part of the
compensation and payment of expenses payable to Paramount hereunder as Paramount
shall determine; provided, however, that the Company shall have no obligations,
including, without limitation, with respect to the payment of compensation or
the reimbursement of expenses, to any Selected Dealer. Paramount shall obtain
from any Selected Dealers an express written agreement with Paramount to be
bound by the same terms, conditions and limitations as the Placement Agents
hereunder, including without limitation the confidentiality and non-use
provisions hereof, and Paramount shall deliver a closing certificate to the
Company certifying that Paramount has entered into such agreements and
certifying that the Selected Dealers have complied with the terms hereof and
containing other certifications with respect to the actions of the Selected
Dealers substantially identical to the certifications required to be delivered
by the Placement Agents.

                    13. Miscellaneous.

          (a) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (without giving effect to the conflicts of
law principles) of the State of New York. Each of the parties hereto submits to
the exclusive jurisdiction of any state or federal court sitting in the Borough
of Manhattan, County of New York, in any action or proceeding arising out of or
relating to this Agreement, agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court and agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of any other party with respect
thereto. Any party may make service on any other party hereto by sending or
delivering a copy of the process to the party to be served at the address

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for each respective party in Section 12(c) below. Nothing in this Section,
however, shall affect the right of any party to serve legal process in any other
manner permitted by law.

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

          (c) Notices. All notices, consents, waivers and other communications
required or permitted by this Agreement shall be in writing and shall be deemed
given to a party when (i) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid), (ii) sent by
facsimile with confirmation of transmission by the transmitting equipment, or
(iii) received or rejected by the addressee, if sent by certified mail, return
receipt requested, in each case to the following addresses or facsimile numbers
and marked to the attention of the person (by name or title) or department
designated below (or to such other address or facsimile number or person as a
party may designate by notice to the other parties):

Griffin:

Griffin Securities, Inc.
17 State Street
New York, NY 10004
Attention: Adrian Stecyk, President
Facsimile number: (212) 509-9501

Paramount:

Paramount BioCapital, Inc.
787 Seventh Avenue, 48th Floor
New York, NY 10019
Attention: Legal Department
Facsimile number: (212) 554-4355

The Company:

NovaDel Pharma Inc.
25 Minneakoning Road
Flemington, New Jersey 08822
Attention: Michael Spicer, CFO
Facsimile number: (908) 782-2445

          (d) Dispute. In the event of any action at law, suit in equity or
arbitration proceeding in relation to this Agreement or the transactions
contemplated by this Agreement, the prevailing party, or parties, shall be paid
its reasonable attorney’s fees and expenses arising from such action, suit or
proceeding by the other party.

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          (e) Entire Agreement. Except for any non-disclosure or confidentiality
agreement entered into by and between the parties hereto, this Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and supersedes and cancels any prior communications, understanding, and
agreements between the parties; provided, however, that, other than as expressly
set forth in the second paragraph of Section 3 above, nothing contained in this
Agreement shall supersede the surviving provisions of the Paramount Agreement,
which surviving provisions shall continue in full force and effect.

          (f) No Third Party Beneficiaries. The Company acknowledges and agrees
that Griffin and Paramount have been retained to act as co-Placement Agents to
the Company, and not as advisors to or agents of any other person, and that the
Company’s engagement of the Placement Agents is not intended to confer rights
upon any person not a party to this Agreement (other than indemnified persons
pursuant to Section 7 hereof) as against the Placement Agents or their
affiliates, or their respective directors, officers, employees or agents.

          (g) Independent Contractor. Each Placement Agent shall act as an
independent contractor under this Agreement, and any duties arising out of their
engagement shall be owed solely to the Company. It is understood that the
Placement Agents’ responsibilities to the Company are solely contractual in
nature and the Placement Agents do not owe the Company, or any other party, any
fiduciary duty as a result of this Agreement.

          (h) Amendment; Waiver. This Agreement may not be waived, amended,
modified or assigned, in any way, in whole or in part, including by operation of
law, without the prior written consent of the Company and the Placement Agents.
The provisions of this Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the Placement
Agents.

          (i) Acts and Omissions. Neither Griffin nor Paramount shall be liable
for the acts and/or omissions of the other.

          (j) Publicity. Except as otherwise required by applicable law or the
rules of a regulatory or self-regulatory body, the Company shall not, during the
period commencing on the date hereof and ending 30 days after the Closing, issue
any press release or other communication, make any written or oral statement to
any media organization or publication or hold any press conference, presentation
or seminar, or engage in any other publicity with respect to the Company not in
the ordinary course of business and as consistent with past practice for the
Company, its financial condition, results of operations, business, properties,
assets, or liabilities, without the prior consent of each Placement Agent, which
consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, that, to the extent permitted by applicable law, the Company may issue
a press release and make filings after the Closing disclosing the existence and
terms of the Offering, including but not limited to, the identities of the
parties to this Agreement. Notwithstanding the preceding sentence, the Placement
Agents acknowledge that this Agreement may be a “material agreement” and that,

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if so determined by the Company, the Company will be required to describe it in
a Current Report on Form 8-K filed with the SEC no later than four business days
after the date of execution of this Agreement, and that the Company will be
required to file this Agreement with the Securities and Exchange Commission (the
“SEC”) as an exhibit to its next periodic report filed with the SEC, if not
filed with the Form 8-K. The Placement Agents agree that the Company may file a
copy of this Agreement with its next periodic report or, with the consent of the
Placement Agents, with such Form 8-K.

If the foregoing correctly sets forth the understanding between the Placement
Agents and the Company, please so indicate in the space provided below for that
purpose whereupon this letter shall constitute a binding agreement between us.

 

 

 

 

 

Very truly yours,

 

 

 

 

NovaDel Pharma Inc.

 

 

 

 

By:

 /s/ Michael E. Spicer

 

 

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Michael E. Spicer

 

 

Chief Financial Officer

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Confirmed and agreed to:

Griffin Securities, Inc.

 

 

 

By:

 /s/ Adrian Stecyk

 

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Adrian Stecyk

 

President

 

 

Date:

 March 15, 2006

 

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Paramount BioCapital, Inc.

 

 

By:

 /s/ Lindsay A. Rosenwald

 

 

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Lindsay A. Rosenwald, M.D.

 

 

Date:

 March 15, 2006

 

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Confidential

EXHIBIT A

NovaDel Pharma Inc.
Best Efforts Private Placement of Common Stock with Warrants
Preliminary Term Sheet

The terms set forth in this Exhibit A are subject to modification to the extent
necessary to obtain the approval of the terms and structure of the Offering by
the American Stock Exchange (“AMEX”) to the sole satisfaction of the Company.

 

 

 

Issuer:

 

NovaDel Pharma Inc. (the “Company”), a Delaware corporation.

 

 

 

Offering Amount:

 

Up to 8,092,796 shares of the Company’s common stock (the “Common Stock”) (or
such lesser amount as may be limited by applicable listing standards).

 

 

 

Securities:

 

Up to 8,092,796 shares (or such lesser amount as may be limited by applicable
listing standards) of Common Stock and Warrants to purchase 2,427,839 shares of
Common Stock (the “Securities”).

 

 

 

Investors:

 

Accredited investors, as defined in Rule 501 under the Securities Act of 1933,
as amended, and sophisticated investors only.

 

 

 

Unit Price:

 

Equal to the lower of (i) the volume weighted average price for the twenty (20)
trading days immediately prior to the pricing of the Offering and (ii) the then
current market price (the “Unit Price”); but in no case greater than $1.45 per
share of Common Stock. The Pricing Date is defined as the date in which the
Securities Purchase Agreement (“SPA”) entered into by the investors is accepted
by the Company. All sales to the officers and directors of the Company shall be
made at a price equal to the greater of book and market value, within the
meaning of the AMEX listing standards.

 

 

 

Warrants:

 

Five-year Warrants with an exercise price equal to the greater of (i) 110% of
the Unit Price per share of Common Stock and (ii) the closing price of the
Common Stock on the trading day immediately prior to the date on which binding
obligations to purchase the warrants are executed (the “Exercise Price”). The
Warrants will have a provision for cashless/net exercise. The Warrants will not
be callable and will not be exercisable for at least six months.

 

 

 

Use of Proceeds:

 

R&D spending and general corporate purposes.

A-1

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Purchase Agreement:

 

The Common Stock and Warrants shall be purchased pursuant to the SPA which shall
contain representations, warranties and covenants of the Company and the
purchasers and conditions to closing customary for a transaction of this kind.

 

 

 

Closing Date:

 

The financial closing shall occur within three business days following the
Pricing Date (the “Closing Date”). Closing mechanics for those required to
purchase at the higher of book or fair market value will need to be structured
so as to satisfy AMEX listing standards.

 

 

 

Registration Rights:

 

The Company shall use its best efforts to file with the SEC a registration
statement on Form S-3 or such other appropriate form (the “Registration
Statement”) for the resale of the Securities (including the Warrants and
underlying shares issued to the Placement Agents as Warrant Compensation) within
30 days of the date of the Closing and shall use its best efforts to have such
Registration Statement declared effective within 90 days after the date of the
Closing; if the Company does not have the Registration Statement filed within 30
days after the date of the Closing or declared effective within 120 days of the
date of the Closing, the Company shall pay the investors a cash penalty on a
monthly basis of 1.0% of the purchase price of the Securities purchased in the
Offering for so long as the Registration Statement is not filed after 30 days
from the date of the Closing or is not effective after 120 days from the date of
the Closing.

 

 

 

Escrow:

 

Funds will be collected and disbursed via an escrow account established in
conformity with NASD and SEC regulations, with an independent escrow agent
reasonably acceptable to the Placement Agents and the Company.

A-2

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EXHIBIT B

Exclusions From List of
Introduced Parties

ProQuest Investments
Caisse de Depot et Placement due Quebec
John Levin & Company
Manchester Management
GRT Capital Partners
Heritage House
Presidio Capital

B-1

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Exhibit C

Form of Opinion of Company Counsel

 

 

1.

          The Company is a corporation validly existing and in good standing
under the laws of the State of Delaware, with the corporate power and authority
to carry on its business as described in the Company’s annual report on Form
10-KSB for the fiscal year ended July 31, 2005, and any amendments thereto (the
“Form 10-KSB”), the Company’s quarterly reports on Form 10-Q for each of the
periods ending subsequent to July 31, 2005, and any amendments thereto, and the
Company’s Definitive Proxy Statement dated December 27, 2005.

 

 

2.

          The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Transaction Documents,
including issuing, selling and delivering the Shares, the Warrants and the
Warrant Shares, upon the due exercise of the Warrants.

 

 

3.

          As of the date of the Company’s quarterly report on Form 10-Q for the
quarterly period ended January 31, 2006, the authorized capital stock of the
Company consists of [101,000,000] shares of capital stock of all classes;
[100,000,000] shares of Common Stock, par value $0.001 per share, [40,597,318]
shares of which are [issued and outstanding] prior to the Closing, and
[1,000,000] shares of undesignated preferred stock, par value [$0.001] per
share, none of which are issued and outstanding prior to the Closing.

 

 

4.

          Each of the Transaction Documents has been duly authorized, executed
and delivered by the Company.

 

 

5.

          Each of the Transaction Documents constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.

 

 

6.

          The Shares and the Warrants have been duly authorized by the Company
and, when issued and sold by the Company, and delivered by the Company and paid
for by you in accordance with the terms of the Securities Purchase Agreement,
will be validly issued, fully paid and non-assessable and free of statutory
preemptive rights under the Delaware General Corporation Law, the Restated
Certificate, the Restated Bylaws or pursuant to any agreement listed as an
exhibit to the Company’s Form 10-KSB. The Common Stock issuable upon exercise of
the Warrants have been duly and validly reserved for issuance and, when and if
issued upon exercise in accordance with the Warrants, will be validly issued,
fully paid and non-assessable and free of statutory preemptive rights under the
Delaware General Corporation Law, the Restated Certificate, the Restated Bylaws
or pursuant to any agreement listed as an exhibit to the Company’s Form 10-KSB.

C-1

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

 

 

7.

          To our knowledge, the Company meets the eligibility requirements for
the use of Form S-3 for the registration of the Shares and Warrant Shares.

 

 

8.

          Based in part upon the representations made by you in the Securities
Purchase Agreement, the offer, sale and issuance of the Shares and Warrants to
be issued in conformity with the terms of the Securities Purchase Agreement and
the issuance of the Common Stock, if any, to be issued upon exercise of the
Warrants, constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended.

 

 

9.

          The execution and delivery by the Company of the Transaction Documents
do not, and the performance by the Company of its obligations thereunder will
not, (i) result in a violation of the Restated Certificate, Restated Bylaws or
any agreement filed as an exhibit to the Company’s Form 10-KSB (the “Material
Contracts”), (ii) result in a violation of any court order or decree known to
us, or (iii) violate any law of the United States or the General Corporation Law
of the Sate of Delaware applicable to the Company.

 

 

10.

          To our knowledge, the Company’s Form 10-KSB and subsequent filings
pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as of their respective effective or issue dates,
or as of the dates they were filed with the Securities Exchange Commission, as
the case may be (except as to the financial statements, schedules, notes, other
financial and accounting data and statistical data derived therefrom, and
information about internal controls over financial reporting, as to which we
express no opinion) appear on their face to comply as to form and are
appropriately responsive in all material respects with the requires of the
Exchange Act and the rules and regulations of the Securities and Exchange
Commission.

 

 

11.

          To our knowledge, there are no pending lawsuits or other proceedings
against the Company before any court, arbitrator or governmental agency or
authority that challenge the legality, validity or enforceability of the
Transaction Documents or as may otherwise be required to be described in the
Company’s Form 10-KSB, the Company’s quarterly reports on Form 10-Q for each of
the periods ending subsequent to July 31, 2005, and any amendments thereto,
which is not otherwise disclosed therein.

 

 

12.

          No consent, approval or authorization of or designation, declaration
or filing with, any federal or state governmental authority, stock exchange or
under the Delaware General Corporation Law, on the part of the Company is
required in connection with the valid execution and delivery of the Transaction
Documents, or the offer, sale or issuance of the Shares (and the Common Stock
issuable upon conversion or exercise thereof), except the filing of Form D
pursuant to Rule 503 under the Securities Act of 1933, as amended, and the
Company’s Additional Listing Application with the American Stock Exchange.

 

 

13.

          The Company is not and, after giving effect to the offering and sale
of the Shares and the Warrants, will not be, an “investment company,” as such
term is defined in the Investment Company Act of 1940, as amended.

C-2

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14.

          To my knowledge, the Company has all material governmental licenses,
authorizations, consents and approvals which are required under Applicable Laws
(as defined below).

 

 

15.

          Except as described in the Purchase Agreement, there are no other
options, warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire from the Company any capital stock or other
securities of the Company, or any other agreements to issue any such securities
or rights. The rights, privileges and preferences of the Common Stock and
preferred stock of the Company are as stated in the “Description of Securities –
Common Stock” set forth in the Company’s Registration Statement on Form SB-2/A,
No. 333-112852, filed with the Securities and Exchange Commission (“SEC”) on
March 25, 2004.

 

 

16.

          Commencing upon the Company’s 2005 fiscal year, the Company has filed
all reports (the “SEC Reports”) required to be filed by it under Sections 13(a)
and 15(d) of the Exchange Act of 1934, as amended (the “Exchange Act”). As of
their respective filing dates, the SEC Reports complied in all material respects
as to form with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder.

 

 

17.

          Except as otherwise disclosed in the Form 10-Q for the quarterly
period ended January 31, 2006 there is no threatened litigation and there is no
claim, action, suit, proceeding, arbitration, investigation or inquiry, pending
before any court or governmental or administrative body or agency, or any
private arbitration tribunal, against the Company or any of its officers,
directors or employees (in connection with the discharge of their duties as
officers, directors and employees), or affecting any of its properties or assets
which would have a material adverse effect on the business and prospects of the
Company.

 

 

18.

          No shareholder approval is necessary in connection with the execution
of the transaction documents.

C-3

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

EXHIBIT D

____________2006

Griffin Securities, Inc.
17 State Street
New York, New York 10004
Attention: Adrian Stecyk, President

Gentlemen:

In connection with the engagement by NovaDel Pharma Inc. (the “Company”) of
Griffin Securities, Inc. (“Griffin”) and Paramount BioCapital, Inc. as our
co-placement agents (collectively, the “Placement Agents”) pursuant to a
Placement Agent Agreement (the “Placement Agreement”) dated as of March 15,
2006, by and among the Company and the Placement Agents in connection with a
transaction to raise capital through the issuance of up to 8,092,796 shares of
common stock of the Company (the “Offering”), the Company hereby agrees to
indemnify and hold harmless Griffin and its affiliates, and the respective
controlling persons, directors, officers, shareholders, agents and employees of
any of the foregoing (collectively the “Indemnified Persons”), from and against
any and all claims, actions, suits, proceedings (including those of
stockholders), damages, liabilities and expenses incurred by any of them
(including the reasonable fees and expenses of counsel) (collectively, a
“Claim”), insofar as such Claims arise out of or are based upon (i) any actions
taken or omitted to be taken by the Company or its directors, officers,
partners, shareholders, agents and employees in connection with the Offering;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Offering Materials or any amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that if the Offering Materials contained any alleged untrue
statement or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
such statement or omission shall have been corrected in a supplement or
amendment thereto, the Company shall not be liable to any Indemnified Person
with respect to such alleged untrue statement or alleged omission to the extent
that any Claim results from the fact that Securities were sold to a person to
whom the Placement Agents or any Selected Dealer failed to send or give, at or
prior to the consummation of such sale, a copy of the Offering Materials as then
amended or supplemented containing a correction of such alleged misstatements or
omission; or (iii) any breach of any representation, warranty, covenant or
agreement by the Company of its obligations to any person or entity in
connection with the Offering or pursuant to the Placement Agreement or any other
Offering Materials, and we shall reimburse any Indemnified Person for all
expenses (including the reasonable fees and expenses of counsel) incurred by
such Indemnified Person in connection with investigating, preparing or defending
any such claim, action, suit or proceeding, whether or not in

D-1

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

connection with pending or threatened litigation in which any Indemnified Person
is a party. Notwithstanding the foregoing, we will not be responsible for any
Claim which (i) is finally judicially determined to have resulted from the gross
negligence or willful misconduct of any Indemnified Person or either of the
Placement Agents or any Selected Dealer or the affiliates of any of the
foregoing, and the respective controlling persons, directors, officers,
shareholders, agents and employees of any of the foregoing; (ii) relates to or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Offering Materials or any such amendment or
supplement in reliance upon and in conformity with information furnished to the
Company by either of the Placement Agents or their affiliates or any person at
the direction or for the benefit of either thereof, including without limitation
any Selected Dealers, for inclusion in the Offering Materials or for the purpose
of determining whether any information should be included in the Offering
Materials; or (iii) is related to any breach of a covenant, representation or
warranty of either of the Placement Agents or any Selected Dealer, as
applicable.

To the extent that this indemnification agreement conflicts with any other
agreements entered into between the Company and the Placement Agents in
connection with the Offering, including Griffin, the terms hereof shall prevail.
All capitalized, undefined terms contained herein and not otherwise defined
shall have the meanings given to such terms in the Placement Agreement.

We further agree that we will not, without the prior written consent of Griffin,
settle, compromise or consent to the entry of any judgment in any pending or
threatened Claim in respect of which indemnification may be sought hereunder
(whether or not any Indemnified Person is an actual or potential party to such
Claim), unless such settlement, compromise or consent includes an unconditional,
irrevocable release of each Indemnified Person hereunder from any and all
liability arising out of such Claim.

Promptly upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification is
being sought hereunder, such Indemnified Person shall notify us in writing of
such complaint or of such assertion or institution but failure to so notify us
shall not relieve us from any obligation we may have hereunder, unless and only
to the extent such failure results in the forfeiture by us of substantial rights
and defenses. If we so elect, we will assume the defense of such Claim,
including the employment of counsel reasonably satisfactory to such Indemnified
Person and the payment of the fees and expenses of such counsel. In the event,
however, that legal counsel to such Indemnified Person reasonably determines and
provides written correspondence to us that having common counsel would present
such counsel with a conflict of interest or if the defendant in, or target of,
any such Claim, includes an Indemnified Person and us, and legal counsel to such
Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to
those available to us, then such Indemnified Person may employ its own separate
counsel to represent or defend it in any such Claim and we shall pay the
reasonable fees and expenses of such counsel. Notwithstanding anything herein to
the contrary, if we fail timely or diligently

D-2

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

to defend, contest, or otherwise protect against any Claim, the relevant
Indemnified Party shall have the right, but not the obligation, to defend,
contest, assert cross claims, or counterclaims or otherwise protect against the
same, and shall be fully indemnified by us therefor, including without
limitation, for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement thereof. In no
event, however, shall any Indemnified Party, without our prior written consent
(which will not be unreasonably withheld), settle, compromise or consent to the
entry of any judgment in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person
is an actual or potential party to such Claim). In any Claim in which we assume
the defense, the Indemnified Person shall have the right to participate in such
Claim and to retain its own counsel therefor at its own expense.

We agree that if any indemnity sought by an Indemnified Person hereunder is
unavailable for any reason then (whether or not the Placement Agents are the
Indemnified Person), we and each of the Placement Agents shall contribute to the
Claim for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to us, on the one hand, and the
Placement Agents on the other, in connection with the Placement Agents’
engagement referred to above, subject to the limitation that in no event shall
the amount of either Placement Agent’s contribution to such Claim exceed the
amount of fees actually received by such Placement Agent from us pursuant to the
Placement Agreement. We hereby agree that the relative benefits to us, on the
one hand, and the Placement Agents on the other, with respect to the Placement
Agents’ engagement shall be deemed to be in the same proportion as (a) the total
value paid or proposed to be paid or received by us or our stockholders, as the
case may be, pursuant to the Offering (whether or not consummated) bears to (b)
the fee paid or proposed to be paid to the Placement Agents in connection with
such engagement.

Our indemnity, reimbursement and contribution obligations under this
indemnification agreement shall be in addition to, and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party may have at law
or in equity.

The validity and interpretation of this indemnification agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to agreements made and to be fully performed therein
(excluding the conflicts of laws rules). Griffin and the Company each hereby
irrevocably submit to the jurisdiction of any court of the State of New York for
the purpose of any suit, action or other proceeding arising out of this
indemnification agreement which is brought by or against Griffin or the Company
and in connection therewith, Griffin and the Company (i) each hereby agree that
all claims in respect of any such suit, action or proceeding may be heard and
determined in any such court, (ii) to the extent that either of them has
acquired, or hereafter may acquire, any immunity from jurisdiction of any such
court or from any legal process therein, such party hereby waives, to the
fullest extent permitted by law, such immunity and (iii) each hereby agree not
to commence any action, suit or proceeding relating to this indemnification
agreement other than in any such court. Griffin and the Company each hereby
waive and agree not to assert in any

D-3

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

such action, suit or proceeding, to the fullest extent permitted by applicable
law, any claim that (a) it is not personally subject to the jurisdiction of any
such court, (b) it is immune from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to its property or (c) any suit, action or proceeding
is brought in an inconvenient forum.

The provisions of this indemnification agreement shall remain in full force and
effect following the completion or termination of the Placement Agreement.

 

 

 

 

Very truly yours,

 

 

 

NovaDel Pharma Inc.

 

 

By: 

 

 

 

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

 

 

Michael E. Spicer

 

 

Chief Financial Officer

D-4

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Confirmed and agreed to:

 

Griffin Securities, Inc.

 

By: 

 

 

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

 

Adrian Stecyk

D-5

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EXHIBIT E

___________2006

Paramount BioCapital, Inc.
787 Seventh Avenue, 48th Floor
New York, NY 10019
Attention: Lindsay A. Rosenwald, M.D.

Gentlemen:

In connection with the engagement by NovaDel Pharma Inc. (the “Company”) of
Griffin Securities, Inc. and Paramount BioCapital, Inc. (“Paramount”) as our
co-placement agents (collectively, the “Placement Agents”) pursuant to a
Placement Agent Agreement (the “Placement Agreement”) dated as of March 15,
2006, by and among the Company and the Placement Agents in connection with a
transaction to raise capital through the issuance of up to 8,092,796 shares of
common stock of the Company (the “Offering”), the Company hereby agrees to
indemnify and hold harmless Paramount and its affiliates, and the respective
controlling persons, directors, officers, shareholders, agents and employees of
any of the foregoing (collectively the “Indemnified Persons”), from and against
any and all claims, actions, suits, proceedings (including those of
stockholders), damages, liabilities and expenses incurred by any of them
(including the reasonable fees and expenses of counsel) (collectively, a
“Claim”), insofar as such Claims arise out of or are based upon (i) any actions
taken or omitted to be taken by the Company or its directors, officers,
partners, shareholders, agents and employees in connection with the Offering;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Offering Materials or any amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that if the Offering Materials contained any alleged untrue
statement or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
such statement or omission shall have been corrected in a supplement or
amendment thereto, the Company shall not be liable to any Indemnified Person
with respect to such alleged untrue statement or alleged omission to the extent
that any Claim results from the fact that Securities were sold to a person to
whom the Placement Agents or any Selected Dealer failed to send or give, at or
prior to the consummation of such sale, a copy of the Offering Materials as then
amended or supplemented containing a correction of such alleged misstatements or
omission; or (iii) any breach of any representation, warranty, covenant or
agreement by the Company of its obligations to any person or entity in
connection with the Offering or pursuant to the Placement Agreement or any other
Offering Materials, and we shall reimburse any Indemnified Person for all
expenses (including the reasonable fees and expenses of counsel) incurred by
such Indemnified Person in connection with investigating, preparing or defending
any such claim, action, suit or proceeding, whether or not in connection with
pending or threatened litigation in which any

E-1

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Indemnified Person is a party. Notwithstanding the foregoing, we will not be
responsible for any Claim which (i) is finally judicially determined to have
resulted from the gross negligence or willful misconduct of any Indemnified
Person or either of the Placement Agents or any Selected Dealer or the
affiliates of any of the foregoing, and the respective controlling persons,
directors, officers, shareholders, agents and employees of any of the foregoing;
(ii) relates to or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Offering Materials or any such
amendment or supplement in reliance upon and in conformity with information
furnished to the Company by either of the Placement Agents or their affiliates
or any person at the direction or for the benefit of either thereof, including
without limitation any Selected Dealers, for inclusion in the Offering Materials
or for the purpose of determining whether any information should be included in
the Offering Materials; or (iii) is related to any breach of a covenant,
representation or warranty of either of the Placement Agents or any Selected
Dealer, as applicable.

To the extent that this indemnification agreement conflicts with any other
agreements entered into between the Company and the Placement Agents in
connection with the Offering, including Paramount, the terms hereof shall
prevail. All capitalized, undefined terms contained herein and not otherwise
defined shall have the meanings given to such terms in the Placement Agreement.

We further agree that we will not, without the prior written consent of
Paramount, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any
and all liability arising out of such Claim.

Promptly upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification is
being sought hereunder, such Indemnified Person shall notify us in writing of
such complaint or of such assertion or institution but failure to so notify us
shall not relieve us from any obligation we may have hereunder, unless and only
to the extent such failure results in the forfeiture by us of substantial rights
and defenses. If we so elect, we will assume the defense of such Claim,
including the employment of counsel reasonably satisfactory to such Indemnified
Person and the payment of the fees and expenses of such counsel. In the event,
however, that legal counsel to such Indemnified Person reasonably determines and
provides written correspondence to us that having common counsel would present
such counsel with a conflict of interest or if the defendant in, or target of,
any such Claim, includes an Indemnified Person and us, and legal counsel to such
Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to
those available to us, then such Indemnified Person may employ its own separate
counsel to represent or defend it in any such Claim and we shall pay the
reasonable fees and expenses of such counsel. Notwithstanding anything herein to
the contrary, if we fail timely or diligently to defend, contest, or otherwise
protect against any Claim, the relevant Indemnified Party shall

E-2

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have the right, but not the obligation, to defend, contest, assert cross claims,
or counterclaims or otherwise protect against the same, and shall be fully
indemnified by us therefor, including without limitation, for the reasonable
fees and expenses of its counsel and all amounts paid as a result of such Claim
or the compromise or settlement thereof. In no event, however, shall any
Indemnified Party, without our prior written consent (which will not be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim). In any Claim in which we assume the defense, the
Indemnified Person shall have the right to participate in such Claim and to
retain its own counsel therefor at its own expense.

We agree that if any indemnity sought by an Indemnified Person hereunder is
unavailable for any reason then (whether or not the Placement Agents are the
Indemnified Person), we and each of the Placement Agents shall contribute to the
Claim for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to us, on the one hand, and the
Placement Agents on the other, in connection with the Placement Agents’
engagement referred to above, subject to the limitation that in no event shall
the amount of either Placement Agent’s contribution to such Claim exceed the
amount of fees actually received by such Placement Agent from us pursuant to the
Placement Agreement. We hereby agree that the relative benefits to us, on the
one hand, and the Placement Agents on the other, with respect to the Placement
Agents’ engagement shall be deemed to be in the same proportion as (a) the total
value paid or proposed to be paid or received by us or our stockholders, as the
case may be, pursuant to the Offering (whether or not consummated) bears to (b)
the fee paid or proposed to be paid to the Placement Agents in connection with
such engagement.

Our indemnity, reimbursement and contribution obligations under this
indemnification agreement shall be in addition to, and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party may have at law
or in equity.

The validity and interpretation of this indemnification agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to agreements made and to be fully performed therein
(excluding the conflicts of laws rules). Paramount and the Company each hereby
irrevocably submit to the jurisdiction of any court of the State of New York for
the purpose of any suit, action or other proceeding arising out of this
indemnification agreement which is brought by or against Paramount or the
Company and in connection therewith, Paramount and the Company (i) each hereby
agree that all claims in respect of any such suit, action or proceeding may be
heard and determined in any such court, (ii) to the extent that either of them
has acquired, or hereafter may acquire, any immunity from jurisdiction of any
such court or from any legal process therein, such party hereby waives, to the
fullest extent permitted by law, such immunity and (iii) each hereby agree not
to commence any action, suit or proceeding relating to this indemnification
agreement other than in any such court. Paramount and the Company each hereby
waive and agree not to assert in any such action, suit or proceeding, to the
fullest extent permitted by applicable law, any claim

E-3

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

that (a) it is not personally subject to the jurisdiction of any such court, (b)
it is immune from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to its property or (c) any suit, action or proceeding is
brought in an inconvenient forum.

The provisions of this indemnification agreement shall remain in full force and
effect following the completion or termination of the Placement Agreement.

 

 

 

 

Very truly yours,

 

 

 

NovaDel Pharma Inc.

 

 

 

By:

 

 

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

 

 

  Michael E. Spicer

 

 

  Chief Financial Officer

E-4

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

 

 

 

Confirmed and agreed to:

 

 

 

Paramount BioCapital, Inc.

 

 

 

By:

 

 

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

 

 

Lindsay A. Rosenwald, M.D.

 

 

 

 

Date: 

 

 

 

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

 

E-5

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EXHIBIT F

[Separate indemnification agreements in the form set forth
below will be executed by each Placement Agent.]

___________, 2006

NovaDel Pharma Inc.
25 Minneakoning Road
Flemington, New Jersey, 08822
Attn: Jan H. Egberts, M.D., Chairman of the Board of Directors,
President and Chief Executive Officer

Dear Dr. Egberts:

In connection with the engagement by NovaDel Pharma Inc. (the “Company”) of
Griffin Securities, Inc. (“Griffin”) and Paramount BioCapital, Inc.
(“Paramount”) as our co-placement agents (collectively, the “Placement Agents”)
pursuant to a Placement Agent Agreement (the “Placement Agreement”) dated as of
March 15, 2006, by and among the Company and the Placement Agents in connection
with a transaction to raise capital through the issuance of up to 8,092,796
shares of common stock of the Company (the “Offering”), Griffin/Paramount hereby
agrees to indemnify and hold harmless the Company and its affiliates, and the
respective controlling persons, directors, officers, shareholders, agents and
employees of any of the foregoing (collectively, the “Indemnified Persons”),
from and against any and all claims, actions, suits, proceedings (including
those of stockholders), damages, liabilities and expenses incurred by any of
them (including the reasonable fees and expenses of counsel) (collectively, a
“Claim”), insofar as such Claims arise out of or are based upon (i) any actions
taken or omitted to be taken by either of the Placement Agents or any Selected
Dealer or any of their directors, officers, partners, shareholders, agents and
employees in connection with the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Offering Materials or any
amendment or supplement thereto, or omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Offering Materials or any amendment or supplement thereto in reliance
upon information furnished to the Company by either of the Placement Agents or
any Selected Dealer or by any affiliate of either of the Placement Agents or any
Selected Dealer or any person acting act at the direction or for the benefit of
either of the Placement Agents or any Selected Dealer for inclusion in for the
purpose of determining whether any information should be included in the
Offering Materials; (iii) any and all losses, claims, expenses, damages and
liabilities arising out of the gross negligence or willful misconduct of either
of the Placement Agents or any Selected Dealer or any of their directors,
officers, partners, shareholders, agents and

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employees, and (iv) any breach of any representation, warranty, covenant or
agreement by either of the Placement Agents of their obligations to any person
or entity in connection with the Offering or pursuant to the Placement Agreement
or any Offering Materials, and the Placement Agents shall reimburse any
Indemnified Person for all expenses (including the reasonable fees and expenses
of counsel) incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action, suit or
proceeding, whether or not in connection with pending or threatened litigation
in which any Indemnified Person is a party. Notwithstanding the foregoing, we
will not be responsible for any Claim which (i) is finally judicially determined
to have resulted from the gross negligence or willful misconduct of any
Indemnified Person; or (ii) is related to any breach of a covenant,
representation or warranty of the Company.

To the extent that this indemnification agreement conflicts with any other
agreements entered into between the Company and Placement Agents in connection
with the Offering the terms hereof shall prevail. All capitalized, undefined
terms contained herein and not otherwise defined shall have the meanings given
to such terms in the Placement Agreement.

We further agree that we will not, without the prior written consent of the
Company, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any
and all liability arising out of such Claim.

Promptly upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification is
being sought hereunder, such Indemnified Person shall notify us in writing of
such complaint or of such assertion or institution but failure to so notify us
shall not relieve us from any obligation we may have hereunder, unless and only
to the extent such failure results in the forfeiture by us of substantial rights
and defenses. If we so elect, we will assume the defense of such Claim,
including the employment of counsel reasonably satisfactory to such Indemnified
Person and the payment of the fees and expenses of such counsel. In the event,
however, that legal counsel to such Indemnified Person reasonably determines and
provides written correspondence to us, that having common counsel would present
such counsel with a conflict of interest or if the defendant in, or target of,
any such Claim, includes an Indemnified Person and us, and legal counsel to such
Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to
those available to us, then such Indemnified Person may employ its own separate
counsel to represent or defend it in any such Claim and we shall pay the
reasonable fees and expenses of such counsel. Notwithstanding anything herein to
the contrary, if we fail timely or diligently to defend, contest, or otherwise
protect against any Claim, the relevant Indemnified Party shall have the right,
but not the obligation, to defend, contest, assert cross claims, or
counterclaims or otherwise protect against the same, and shall be fully
indemnified by us therefor, including without limitation, for the reasonable
fees and expenses of its counsel and all amounts paid as

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a result of such Claim or the compromise or settlement thereof. In no event,
however, will any Indemnified Party, without our prior written consent (which
will not be unreasonably withheld), settle, compromise or consent to the entry
of any judgment in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person
is an actual or potential party to such Claim). In any Claim in which we assume
the defense, the Indemnified Person shall have the right to participate in such
Claim and to retain its own counsel therefor at its own expense.

We agree that if any indemnity sought by an Indemnified Person hereunder is
unavailable for any reason then (whether or not the Company is the Indemnified
Person) we shall contribute to the Claim for which such indemnity is held
unavailable in such proportion as is appropriate to reflect the relative
benefits to the Placement Agents, on the one hand, and the Company on the other,
in connection with the Placement Agents’ engagement referred to above, subject
to the limitation that in no event shall the amount of either Placement Agent’s
contribution to such Claim exceed the amount of fees actually received by such
Placement Agent from the Company pursuant to the Placement Agreement. We hereby
agree that the relative benefits to us, on the one hand, and the Company on the
other, with respect to the Placement Agents’ engagement shall be deemed to be in
the same proportion as (a) the total value paid or proposed to be paid or
received by the Company or its stockholders, as the case may be, pursuant to the
Offering (whether or not consummated) bears to (b) the fee paid or proposed to
be paid to the Placement Agents in connection with such engagement.

Our indemnity, reimbursement and contribution obligations under this
indemnification agreement shall be in addition to, and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party may have at law
or in equity. Each of the Placement Agents hereby agrees that neither the
Company’s rights or remedies nor either of the Placement Agents’ obligations
under the terms of this indemnification agreement shall be released, diminished,
impaired, reduced or affected by the existence of indemnification obligations
owed to any Indemnified Party by the other Placement Agent or any neglect, lack
of diligence, delay, omission, failure or refusal of the Company to take or
prosecute (or in taking or prosecuting) any action for the enforcement of any
obligations of either Placement Agent pursuant to the indemnification agreement
between the Company and either Placement Agent.

The validity and interpretation of this indemnification agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to agreements made and to be fully performed therein
(excluding the conflicts of laws rules). Each of the Placement Agents and the
Company hereby irrevocably submits to the jurisdiction of any court of the State
of New York for the purpose of any suit, action or other proceeding arising out
of this indemnification agreement or the transactions contemplated hereby, which
is brought by or against either of the Placement Agents or the Company and in
connection therewith, each of the Placement Agents and the Company (i) hereby
irrevocably agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court, (ii) to the extent
that it has acquired, or hereafter may acquire, any immunity from jurisdiction
of any such court or from any legal process therein, it hereby waives, to the

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fullest extent permitted by law, such immunity and (iii) agrees not to commence
any action, suit or proceeding relating to this agreement other than in any such
court. Each of the Placement Agents and the Company hereby waives and agrees not
to assert in any such action, suit or proceeding, to the fullest extent
permitted by applicable law, any claim that (a) it is not personally subject to
the jurisdiction of any such court, (b) it is immune from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to its property or (c)
any suit, action or proceeding is brought in an inconvenient forum.

The provisions of this indemnification agreement shall remain in full force and
effect following the completion or termination of the Placement Agents’
engagement.

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Very truly yours,

 

 

 

Griffin Securities, Inc.

 

 

 

By:

 

 

 

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     Adrian Stecyk

 

 

 

 

Paramount BioCapital, Inc.

 

 

 

By:

 

 

 

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     Lindsay A Rosenwald, M.D.

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Confirmed and agreed to:

NovaDel Pharma Inc.

 

 

By:

 

 

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Michael E. Spicer

 

Chief Financial Officer

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EXHIBIT G

Persons Subject to Lock-Up Agreements

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