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Exhibit 10.1
 
NOTE AND WARRANT AMENDMENT AGREEMENT
 
This NOTE AND WARRANT AMENDMENT AGREEMENT (this “Amendment”), dated as of
December 31, 2009, by and among NovaDel Pharma Inc., a Delaware corporation (the
“Company”), and ProQuest Investment II, L.P., ProQuest Investment Advisors Fund
II, L.P. and ProQuest Investments III, L.P. (the “Holders”).
 
WHEREAS, the Holders own certain promissory notes (the “Notes”) issued by the
Company, which may or may not be convertible into shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), and certain warrants to
purchase shares of Common Stock (the “Warrants”), in each case, as set forth on
Schedule A hereto; and
 
WHEREAS, to induce the conversion by the Holders of the Notes, the Company and
the Holders now desire to amend the Notes and Warrants to reduce the conversion
price of each Note and the exercise price of each Warrant as set forth herein,
and in consideration therefor, the Holders have agreed to convert all of the
Notes held by the Holders;
 
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 
1.           Note Amendment.  Effective upon the Effective Date (as defined
below) and immediately prior to the conversion of the Notes contemplated hereby,
Section 8(a) of each Note is hereby amended and restated in its entirety to read
as follows:
 
(a)           Conversion into Common Shares.  The Holder shall have the option
to convert, as a whole or in part, up to the entire amount outstanding under
this Note (including the accrued but unpaid interest) into Common Shares at any
time or from time to time at a conversion price equal to $0.1574 per share (the
“Conversion Price”), subject to adjustments in the event of any stock splits,
reverse stock splits, stock dividends or other similar recapitalization or
reorganization transactions that affect all shareholders equally as set forth in
Section 9.
 
2.           Warrant Amendment.  Effective upon the Effective Date, the exercise
price of each Warrant as set forth on Schedule A (referred to herein as the “Old
Warrant”) is hereby amended such that the new exercise price of each Warrant
shall be $0.1888 per share (referred to herein as the “New Warrant”).  In
addition to the foregoing, effective upon the Effective Date, the number of
shares of Common Stock underlying certain Warrants (referred to as the PIPE
Warrants) shall be reduced by 10% as reflected on Schedule A hereto.  The
Company agrees that, as soon as reasonably practicable after the Effective Date,
the Company will issue New Warrants to the Holders in exchange for the Old
Warrants.
 

 
 

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3.           Effective Date.  This Amendment shall only become effective upon
receipt by the Company of an irrevocable notice of conversion of all Notes held
by the Holders (referred to herein as the “Effective Date”).  At the Effective
Date, any accrued but unpaid interest as set forth on Schedule A hereto shall be
paid in kind with Notes on the same terms as Section 1 above;
 
provided, that, such Notes shall be immediately converted to Common Stock
pursuant to this Section 3, and thereafter, there shall be no interest (in cash
or in kind) due under the Notes; provided, however, that such interest shall
continue to accrue if the Company shall fail to issue the shares of Common Stock
upon conversion as per the conversion terms of the Notes.  For purposes of
clarity, the parties hereto acknowledge that, immediately after the Effective
Date and immediately upon the conversion of the Notes pursuant to their terms,
the security interest underlying the Notes shall be terminated pursuant to the
terms of the Notes.
 
4.           Except as amended hereby, the terms and provisions of each Note and
Warrant remain in full force and effect.
 
5.           This Amendment shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York and shall be
binding upon the Holders, the Holders’ heirs, estate, legal representatives,
successors and assigns and shall inure to the benefit of the Company, its
successors and assigns
 
6.           This Amendment may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument, and may be executed by facsimile
signatures.
 

 
 

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IN WITNESS WHEREOF, this Amendment has been duly executed by the parties hereto
as of the date first written above.
 
NOVADEL PHARMA INC.
 
By:
/s/ Steven B. Ratoff
Name:  Steven B. Ratoff
Title:  Interim President and Chief Executive Officer
 
PROQUEST INVESTMENTS II, L.P.
 
By:
ProQuest Associates II, LLC,
its general partner
 
By:
/s/ Pasquale DeAngelis
Name:  Pasquale DeAngelis
Title: Managing Member
 
PROQUEST INVESTMENTS II ADVISORS FUND, L.P.
 
By:
ProQuest Associates II, LLC,
its general partner
 
By:
/s/ Pasquale DeAngelis
Name:  Pasquale DeAngelis
Title:  Managing Member
 
PROQUEST INVESTMENTS III, L.P.
 
By:
ProQuest Associates III, LLC,
its general partner
 
By:
/s/ Pasquale DeAngelis
Name:  Pasquale DeAngelis
Title:  Managing Member

 

 

 
 

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SCHEDULE A

Description
 
Shares
   
Price/Share
   
Total Value
 
Pre-Conversion:
                 
Convertible Notes
                 
May 2008
    1,610,169     $ 0.295     $ 475,000  
October 2008
    10,744,621     $ 0.235     $ 2,525,000  
Total:
    12,354,790             $ 3,000,000                            
Registration Penalty Notes
                  $ 171,778  
Accrued Interest
                  $ 485,739  
Total:
                  $ 657,517                            
Warrants
                       
May 2008
    3,000,000     $ 0.369          
October 2008
    6,446,809     $ 0.294          
PIPE (May 2005)
    1,615,597     $ 1.300          
PIPE (April 2006)
    206,899     $ 1.600          
PIPE (December 2006)
    384,766     $ 1.700          
Total Warrants
    11,654,071                                                                  
   
Post-Conversion:
                       
Convertible Notes
                       
May 2008
    1,610,169     $ 0.1574     $ 253,441  
October 2008
    10,744,621     $ 0.1574     $ 1,691,203  
Additional
    6,704,930     $ 0.1574     $ 1,055,356  
Total
    19,059,720             $ 3,000,000                            
Registration Penalty
    4,177,363     $ 0.1574     $ 657,571  
Notes & Accrued Interest
                                                 
Total Shares Issued
    23,237,083                                            
Warrants
                       
May 2008
    3,000,000     $ 0.1888          
October 2008
    6,446,809     $ 0.1888          
PIPE (May 2005)
    1,615,597     $ 0.1888          
PIPE (April 2006)
    206,899     $ 0.1888          
PIPE (December 2006)
    384,766     $ 0.1888                                    
Warrant Reduction
    (220,726 )*                
(10% PIPE Only)
                                                 
Total Warrants
    11,433,345                  

*Upon the Effective Date, the number of shares underlying the May 2005 PIPE
Warrants shall be reduced by 220,726 shares to an amount equal to 1,394,871
shares. The number of shares underlying the April 2006 PIPE Warrants and the
December 2006 PIPE Warrants shall remain unchanged.

 
 

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