**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549 

 

**FORM 10-K/A**

**Amendment No. 1**

 

**[ X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

OR 

 

**o****TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**EXCHANGE ACT OF 1934**

 

For the year ended December 31, 2008

 

*COMMISSION FILE NO. 001-32177*

 

**NOVADEL PHARMA INC.**

 

(Exact name of registrant as specified in its charter) 

 

 

|                                                            |   |   |   |                                  |
|-----------------------------------------------------------------|--------|--------|--------|---------------------------------------|
| Delaware                                                        |   |   |   | 22-2407152                            |
| (State or other jurisdiction

of incorporation or organization) |   |   |   | (I.R.S. Employer

Identification No.) |

 

 

25 MINNEAKONING ROAD, FLEMINGTON, NEW JERSEY 08822 

(Address of principal executive offices) (Zip Code) 

 

(908) 782-3431 

Registrant’s telephone number, including area code 

 

**Securities registered pursuant to Section 12(b) of the Exchange Act:**

 

 

| **Title of each class**                     |   | **Name of each exchange on which registered** |
|---------------------------------------------|--------|-----------------------------------------------|
| **Common Stock, par value $.001 per share** |   | **NYSE Amex LLC**                             |

 

**Securities registered pursuant to Section 12(g) of**

**the Exchange Act:**

 

**None**

 

Indicate by check mark if the registrant is a well-know seasoned issuer, as defined in Rule 405 of the Securities Act. Yes oNo x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes oNo x

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo        o

 

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o         No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o | Accelerated filer o |
|---------------------------|---------------------|

| Non-accelerated filer o | Smaller reporting company x |
|-------------------------|-----------------------------|

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YesoNo x

 

As of June 30, 2008, the aggregate market value of the voting and non-voting common equity of the issuer held by non-affiliates of the registrant was approximately $12 million based upon the closing sale price of $0.23 for the Registrant’s Common Stock, $0.001 par value, as reported by the NYSE Amex LLC, formerly known as the American Stock Exchange, on that date. This determination of affiliate status        is not necessarily a conclusive determination for other purposes.

 

As of April 24, 2009, the issuer had 60,911,374 shares of Common Stock, $0.001 par value, outstanding. 

 

 

 

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**NOVADEL PHARMA INC.**

 

**ANNUAL REPORT ON FORM 10-K/A**

**FOR THE YEAR ENDED DECEMBER 31, 2008**

 

**TABLE OF CONTENTS**

 

|     |                                                                                            |   |
|----------|-------------------------------------------------------------------------------------------------|--------|
|     |                                                                                            | PAGE   |
|     | PART III                                                                                        |   |
| Item 10. | Directors, Executive Officers and Corporate Governance.                                         | 2      |
|     |                                                                                            |   |
| Item 11. | Executive Compensation.                                                                         | 5      |
|     |                                                                                            |   |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | 25     |
|     |                                                                                            |   |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence.                      | 26     |
|     |                                                                                            |   |
| Item 14. | Principal Accountant Fees and Services.                                                         | 28     |
|     |                                                                                            |   |
|     | PART IV                                                                                         |   |
| Item 15. | Exhibits                                                                                        | 30     |
|     |                                                                                            |   |
|     | Signatures                                                                                      | 31     |

 

**EXPLANATORY NOTE**

NovaDel Pharma Inc. is filing this Amendment No. 1 on Form 10-K/A to its Annual Report on Form 10-K for the year ended December 31, 2008 filed on March 30, 2009 to furnish the information required in Part III (Items 10, 11, 12, 13 and 14). This report is limited in scope to the items identified above and should be read in conjunction with the Form 10-K. This report does not reflect events occurring after        the filing of the Form 10-K and, other than the furnishing of the information identified above, does not modify or update the disclosure in the Form 10-K in any way.

 

 

 

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Unless the context otherwise requires, all references to “we,” “us,” “our,” and the “Company” include NovaDel Pharma Inc. (NovaDel).

 

**SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995**

 

This Annual Report on Form 10-K/A includes “forward-looking statements”, including statements regarding NovaDel Pharma Inc.’s (the “Company,” “we,” “us” or “NovaDel”) expectations, beliefs, intentions or strategies for the future and the Company’s internal controls and procedures and outstanding financial reporting obligations and        other accounting issues. The Company intends that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and reflect the Company’s views as of the date they are made with respect to future events and financial performance. The Company uses words such as “expect,” “anticipate,” “believe,” “intend” and similar        expressions to identify forward-looking statements. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. A number of important risks and uncertainties could, individually or in the aggregate, cause actual results to differ materially from those expressed or implied in any forward-looking statements.

Examples of the risks and uncertainties include, but are not limited to: the inherent risks and uncertainties in developing products of the type the Company is developing (independently and through collaborative arrangements); the inherent risks and uncertainties in completing the pilot pharmacokinetic feasibility studies being conducted by the Company; possible changes in the Company’s financial        condition; the progress of the Company’s research and development; inadequate supply of drug substances and drug products, inability to obtain timely, sufficient patient enrollment in the Company’s clinical trials; the impact of development of competing therapies and/or technologies by other companies; the Company’s ability to obtain additional required financing to fund its research programs; the Company’s ability to enter into agreements with collaborators and        the failure of collaborators to perform under their agreements with the Company; the progress of the U.S. Food and Drug Administration, or FDA, approvals in connection with the conduct of the Company’s clinical trials and the marketing of the Company’s products; the additional costs and delays which may result from requirements imposed by the FDA in connection with obtaining the required approvals; acceptance for filing by the FDA does not mean that the New Drug Application,        or NDA, has been or will be approved, nor does it represent an evaluation of the adequacy of the data submitted; the risks related to the Company’s internal controls and procedures; and the risks identified under the section entitled “Risk Factors” included as Item 1A in Part I of the Annual Report on Form 10-K filed on March 30, 2009 and other reports, including this report and other filings filed with the Securities and Exchange Commission from time to        time.

 

We make available free of charge on our internet website (www.novadel.com) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable        after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. The content on our website is available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K/A.

 

1

 

 

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**PART III**

 

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.**

 

***Section 16(a) Beneficial Ownership Reporting Compliance***

 

Directors, named executive officers and beneficial owners of more than 10% of our Common Stock are required by Section 16(a) of the Securities Exchange Act of 1934 and related regulations to file ownership reports on Forms 3, 4 and 5 with the Securities and Exchange Commission and the principal exchange upon which such securities are traded or quoted and to furnish us with copies of the reports. Based        solely on a review of the copies of such forms furnished to us, we believe that from January 1, 2008 to December 31, 2008, that all of our named executive officers, Directors and greater than 10% holders of our Common Stock were in compliance with all applicable Section 16(a) filing requirements.

 

***Information Regarding the Board of Directors***

 

The Board of Directors, or the Board, is comprised of the following members:

 

| **NAME**                      | **AGE** | **POSITION WITH NOVADEL**                                                         |
|-------------------------------|---------|-----------------------------------------------------------------------------------|
| Mark J. Baric                 | 50      | Director                                                                          |
| Thomas E. Bonney, CPA         | 44      | Director                                                                          |
| William F. Hamilton, Ph.D.    | 70      | Lead Independent Director                                                         |
| J. Jay Lobell                 | 46      | Director                                                                          |
| Charles Nemeroff, M.D., Ph.D. | 59      | Director                                                                          |
| Steven B. Ratoff              | 66      | Director and Chairman of the Board, Interim President and Chief Executive Officer |

 

The ages, principal occupations and directorships held, and certain other information with respect to the nominees, are shown below as of April 24, 2009.

 

***Mark J. Baric***, Director, 50. Mr. Baric was elected to the Board in February 2007. Since 2005, Mr. Baric has been the President and co-founder of CeNeRx BioPharma, Inc., a privately-held development company with a therapeutic focus on diseases of the central nervous system. In 2001 he co-founded and served, until 2005, as Chief Executive Officer and Chairman of 2ThumbZ        Entertainment Inc., a privately-held company which develops and markets entertainment applications for users of handheld wireless devices and networks. From 1996 to 2001, Mr. Baric was Chairman and Chief Executive Officer of Virtus Entertainment Corporation, an emerging company in the fast-growing interactive entertainment industry. From 1990 to 1996, Mr. Baric held various leadership positions, including Chief Operating Officer and Chief Financial and Administrative Officer of Seer        Technologies Inc. (now known as Cicero, Inc.), a provider of business integration software. Prior to 1990, Mr. Baric held various leadership positions at several firms, including CS First Boston and Coopers and Lybrand. Mr. Baric serves on the boards of CeNeRx BioPharma, Inc. and 2ThumbZ Entertainment Inc. Mr. Baric received an M.B.A. from the Wharton School of the University of Pennsylvania and a B.S. from Clarion University. He is a member of our Audit Committee and a member of our        Compensation Committee.

 

***Thomas E. Bonney***, CPA, Director, 44. Mr. Bonney was elected to the Board in March 2005. Since 2002, Mr. Bonney has served as Managing Director of CMF Associates, LLC, a financial and management consulting firm. Since December 2006, Mr. Bonney has been a General Partner in West Place LLC, and West Place Restaurant Group, LLC, privately-held companies that invest in and        manage hotels and real estate. Since June 2005, Mr. Bonney has been a Director of Leblon Holdings LLC, a privately-held beverage supplier and from June 2005 through July 2007 was the Chief Financial Officer of Leblon Holdings, LLC. From 2001 to 2002, he was Chief Financial Officer of Akcelerant Holdings, Inc., a technology holding company. From 1995 to 2001, Mr. Bonney was President and a Director of Polaris Consulting & Information Technologies, a technology solutions provider. Mr.        Bonney was at Deloitte & Touche from 1987 to 1995 in various positions including Senior Manager. Mr. Bonney received his B.S. in Accounting at the Pennsylvania State University and is a member of the Pennsylvania Institute of Certified Public Accountants. He is a member and chair of our Audit Committee and a member of our Corporate Governance and Nominating Committee.

 

2

 

 

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***William F. Hamilton***, Ph.D., Director, 70. Dr. Hamilton was elected to the Board in March 2003. In January 2006, Dr. Hamilton was appointed Lead Independent Director. Dr. Hamilton has served on the University of Pennsylvania faculty since 1967, and is the Landau Professor of Management and Technology, and Director of the Jerome Fisher Program in Management and Technology        at The Wharton School and the School of Engineering and Applied Science. He serves as a director of Neose Technologies, Inc., a publicly-traded company developing proprietary drugs; Arno Therapeutics, Inc., a publicly-traded biopharmaceutical company focused on the development of innovative products for the treatment of cancer patients; Yaupon Therapeutics, Inc., a privately-held specialty pharmaceutical company that develops small molecule pharmaceuticals licensed from under-served        academic laboratories; Avid Radiopharmaceuticals, Inc., a privately-held clinical-stage product-focused molecular imaging company and Neuro Diagnostic Devices, a privately-held development-stage medical device company. Dr. Hamilton received his B.S. and M.S. in chemical engineering and his M.B.A. from the University of Pennsylvania, and his Ph.D. in applied economics from the London School of Economics. Dr. Hamilton is a member of our Audit Committee and a member and chair of our        Corporate Governance and Nominating Committee.

 

***J. Jay Lobell***, Director, 46. Mr. Lobell was elected to the Board in December 2005. Mr. Lobell has served as President and Chief Operating Officer of Paramount BioCapital Asset Management, Inc. and Paramount Biosciences, LLC since January 2005, and is a registered representative of Paramount BioCapital, Inc. From 1996 until January 2005, Mr. Lobell was a partner at        Covington & Burling, a law firm. Mr. Lobell received his B.A. from Queens College and his J.D. from Yale Law School. Mr. Lobell is a director of Chem Rx Corporation, a publicly-traded long-term care pharmacy, as well as several private biotechnology companies. Mr. Lobell is a member and chair of our Compensation Committee.

 

***Charles Nemeroff***, M.D., Ph.D., Director, 59. Dr. Nemeroff was elected to the Board in September 2003. Dr. Nemeroff has been the Reunette W. Harris Professor of the Department of Psychiatry and Behavioral Sciences at Emory University School of Medicine in Atlanta, Georgia, since 1991. Dr. Nemeroff has served on the Scientific Advisory Board of numerous publicly-traded        pharmaceutical companies, including Astra-Zeneca Pharmaceuticals, Forest Laboratories, Janssen and Quintiles. In 2002, he was elected to the Institute of Medicine of the National Academy of Sciences. Dr. Nemeroff received his B.S. from the City College of New York, his M.S. from Northeastern University, his Ph.D. and post doctorate training from the University of North Carolina and his M.D. from the University of North Carolina. Dr. Nemeroff is chair of our Scientific Advisory Board. He        is also a member of our Compensation Committee and is a member of our Corporate Governance and Nominating Committee.

 

***Steven B. Ratoff***, Chairman of the Board, Interim President and Chief Executive Officer, 66. Mr. Ratoff was elected to the Board in January 2006 and was elected Chairman of the Board on September 15, 2006. He was appointed as Interim President and Chief Executive Officer of NovaDel on July 23, 2007. Mr. Ratoff is a private investor and since December 2004 has served as a        venture partner with ProQuest Investments, a health care venture capital firm. Mr. Ratoff has been a director, since May 2005, and was Chairman of the Board, from September 2005 to October 2006, of Torrey Pines Therapeutics Inc. (formerly Axonyx Inc.), a NASDAQ development stage pharmaceutical company. Mr. Ratoff served as a director of Inkine Pharmaceuticals, Inc. from February 1998 to its sale to Salix, Inc. in September 2005. He also served as a board member since March 1995 and as        Chairman of the Board and Interim Chief Executive Officer of CIMA Labs, Inc. from May 2003 to its sale to Cephalon, Inc. in August 2004. Mr. Ratoff also served as a director, since 1998 and as President and Chief Executive Officer of MacroMed, Inc. from February to December, 2001. From December 1994 to February 2001, Mr. Ratoff served as Executive Vice President and Chief Financial Officer of Brown-Forman Corporation, a publicly-traded diversified manufacturer of consumer products. Mr.        Ratoff received his B.S. in Business Administration from Boston University and an M.B.A. with Distinction from the University of Michigan.

 

3

 

 

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***Audit Committee***

 

The Audit Committee currently consists of Mr. Bonney (Chair), Dr. Hamilton and Mr. Baric. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. In the opinion of the Board, and as the term “independent” is defined in Section 121(A) of the listing standards of NYSE Amex LLC, Mr. Bonney, Mr. Baric and Dr. Hamilton are independent of management and free        of any relationship that would interfere with the exercise of independent judgment as members of the Audit Committee. Members of the Audit Committee also all meet the independence requirements set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934. Our Board has determined that Mr. Bonney qualifies as an “audit committee financial expert” and “independent director” as those terms are defined by the regulations of the Securities and Exchange        Commission and the listing standards of NYSE Amex LLC.

 

The Charter of the Audit Committee can be found on the Company’s website at www.novadel.com.

 

***Code of Ethics***

 

Our Board adopted a Business Conduct Policy that is applicable to all of our employees, officers and Directors. The Business Conduct Policy is intended to be designed to deter wrong-doing and promote honest and ethical behavior, full, fair, timely, accurate and understandable disclosure, and compliance with applicable laws. The Business Conduct Policy satisfies the definition of “code of        ethics” under the rules and regulations of the Securities and Exchange Commission and listing standards of NYSE Amex LLC. The Board adopted the Business Conduct Policy in 2003 and a subsequent revised Business Conduct Policy was adopted by the Board in 2004. A copy of the Business Conduct Policy can be obtained and will be provided to any person without charge upon written request to our Corporate Secretary at our executive offices, 25 Minneakoning Road, Flemington, New Jersey        08822.

 

The Business Conduct Policy can also be obtained on our website, www.novadel.com. We intend to disclose on our website any amendments to, or waivers from, our Business Conduct Policy that are required to be disclosed pursuant to the rules of the Securities and Exchange Commission and NYSE Amex LLC. Our website and the        information contained therein or connected thereto are not incorporated into this Form 10-K/A.

 

***Information Regarding Executive Officers***

 

The names and ages of our current named executive officers are set out below. The named executive officers are elected annually by the Board and serve at the pleasure of the Board. The Board has determined that the following individuals are our executive officers for the 2009 fiscal year: Mr. Ratoff, Dr. Bergstrom, Mr. Spicer and Dr. Zodda.

 

| NAME                      | AGE | POSITION WITH NOVADEL                                   |
|---------------------------|-----|---------------------------------------------------------|
| Steven B. Ratoff          | 66  | Interim President, Chief Executive Officer and Director |
| David H. Bergstrom, Ph.D. | 54  | Senior Vice President and Chief Operating Officer       |
| Michael E. Spicer, CPA(1) | 55  | Chief Financial Officer and Corporate Secretary         |
| Deni M. Zodda, Ph.D.(1)   | 55  | Senior Vice President and Chief Business Officer        |

 

(1) On March 19, 2009, Michael E. Spicer notified our Board of his intention to resign as Chief Financial Officer and Corporate Secretary, effective April 1, 2009. There is no disagreement between us and Mr. Spicer concerning our policies, procedures and operations. Effective April 1, 2009, Deni Zodda began serving as our Interim Chief Financial Officer and Corporate Secretary and Joseph W. Warusz, a        consultant, began serving as our principal accounting officer.

 

***Steven B. Ratoff***, Chairman of the Board, Interim President and Chief Executive Officer, 66. For information regarding Mr. Ratoff’s prior experience please see “Information Regarding the Board of Directors” above.

 

4

 

 

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***David H. Bergstrom***, Ph.D., Senior Vice President and Chief Operating Officer, 54.Dr. Bergstrom joined NovaDel in December 2006 as Senior Vice President and Chief Operating Officer.From 1999 to November 2006, Dr. Bergstrom served in several capacities at Cardinal Health, Inc., including Vice President, Research & Development and Senior Vice President and General        Manager. From 1998 to 1999, Dr. Bergstrom was Vice President of Pharmaceutical & Chemical Development at Guilford Pharmaceuticals Inc. Dr. Bergstrom was employed by Hoechst Marion Roussel, Inc. as the Director of Pharmaceutical and Analytical Sciences from 1996 to 1998. Dr. Bergstrom served as Director of Pharmaceutical and Analytical Development for the predecessor company, Hoechst-Roussel Pharmaceuticals Inc., from 1991 to 1996, and Group Manager, Formulations, Pharmaceutical        Research from 1990 to 1991. Prior thereto, Dr. Bergstrom held various positions at Ciba-Geigy Corporation. Dr. Bergstrom received his Ph.D. in Pharmaceutics at the University of Utah in 1985. In addition, he received his M.S. in Pharmaceutical Chemistry at the University of Michigan in 1982 and his B.S. degree in Pharmacy in 1978 at Ferris State University.

 

***Michael E. Spicer***, CPA, Chief Financial Officer and Corporate Secretary, 55. Mr. Spicer joined NovaDel as Chief Financial Officer in December 2004 and was named Corporate Secretary in April 2006. From December 2001 to December 2004, Mr. Spicer was Chief Financial Officer of Orchid Biosciences, Inc. (now known as Orchid Cellmark Inc.). From September 1998 to December        2001, Mr. Spicer served as Vice President, Chief Financial Officer of Lifecodes Corporation until it was acquired by Orchid. Mr. Spicer is a Certified Public Accountant and holds an undergraduate degree in Accounting from the University of Virginia and an M.B.A. from Harvard Business School. On March 25, 2009, Mr. Spicer announced his intention to resign as Chief Financial Officer and Corporate Secretary effective April 1, 2009.

 

***Deni M. Zodda***, Ph.D., Senior Vice President and Chief Business Officer, 55. Dr. Zodda joined NovaDel in February 2007 as Senior Vice President and Chief Business Officer. From May 2006 to February 2007, Dr. Zodda was Principal of Medignostica, LLC, a consulting firm he owns which provided business development services to various clients and was acting Chief Executive        Officer of StemCapture, Inc., a privately-held stem cell research company. From 2000 to May 2006, Dr. Zodda served in varying capacities, including Senior Vice President, Business Development and Principal Financial Officer of Discovery Laboratories, Inc. From 1998 to 2000, Dr. Zodda served as Managing Director of the Life Sciences Practice at KPMG. During the course of his career, Dr. Zodda also held senior management positions in business development, marketing and commercial        operations at Cephalon, Inc., Wyeth, Baxter International Inc. and SmithKline Beckman, Inc. Dr. Zodda received his M.B.A. in Marketing and Finance from the University of Santa Clara in 1986, his Ph.D. in Biology from the University of Notre Dame in 1980 and his B.S. in Biology from Villanova University in 1975. On March 25, 2009, our Board of Directors appointed Dr. Zodda to serve as Interim Chief Financial Officer, Principal Financial Officer and Corporate Secretary, effective April 1,        2009.

 

There are no family relationships between any director, executive officer or person nominated or chosen by the Company to become a director or executive officer.

 

**ITEM 11. EXECUTIVE COMPENSATION.**

 

***Compensation of Directors***

 

The general policy of the Board is that compensation for independent Directors should be a mix of cash and equity-based compensation. NovaDel does not pay employee Directors for Board service in addition to their regular employee compensation. The Compensation Committee, which consists solely of independent Directors, has the primary responsibility for reviewing and considering any revisions to Director        compensation. The Board reviews the Compensation Committee’s recommendations and determines the amount of Director compensation.

 

Pursuant to its charter, the Compensation Committee may engage the services of outside advisers, experts, and others to assist them. During 2006, the Compensation Committee hired Compensation Resources, Inc., or CRI, to aid in setting Director compensation. During 2007 and 2008, CRI acted as an advisor to the Compensation Committee on certain compensation-related matters. There were no changes to Director        compensation in 2007 or 2008 .

 

To assist the Compensation Committee in its annual review of Director compensation in 2006, CRI provided Director compensation data compiled from the annual reports and proxy statements of companies that the Board uses as its “peer group” for determining Director compensation. The Director peer group used in the 2006 review by CRI consisted of companies within the pharmaceutical and drug        delivery industry that are generally considered comparable to NovaDel. The Director peer group used in 2006 consisted of the following companies:

 

5

 

 

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| **Director Compensation Peer Group**

                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Advanced Life Sciences Holdings, Inc.

Advanced Viral Research Corp.

Anadys Pharmaceuticals, Inc.

Antigenics Inc.

Avalon Pharmaceuticals, Inc.

Biopure Corporation

BioSante Pharmaceuticals, Inc.

Curis, Inc.

Delcath Systems, Inc.

Elite Pharmaceuticals, Inc.

EpiCept Corporation | Generex Biotechnology Corporation

Idera Pharmaceuticals, Inc.

Inhibitex, Inc.

Lev Pharmaceuticals Inc.

Lipid Sciences, Inc.

Manhattan Pharmaceuticals, Inc.

Point Therapeutics, Inc.

RegeneRx Biopharmaceuticals, Inc.

Repros Therapeutics Inc.

SIGA Technologies, Inc.

Valentis, Inc. |

 

 

The following table shows amounts earned by each Director in the fiscal year ended December 31, 2008.

 

|  

 

 

 

 

**Director** |  

**Fees Earned or Paid in Cash**

**($)** |  

 

 

**Stock Awards**

**($)** |  

 

 

**Option Awards**

**($)(1)** |  

 

**Non-Equity Incentive Plan Compensation**

**($)** | **Change in Pension Value and Nonqualified Deferred Compensation Earnings** |  

 

 

**All Other Compensation**

**($)** |  

 

 

 

**Total**

**($)** |
|------------------------------------------------------|--------------------------------------------------|---------------------------------------------------|-------------------------------------------------------|---------------------------------------------------------------------|-----------------------------------------------------------------------------|-------------------------------------------------------------|----------------------------------------------------|
| Mark J. Baric

                                 | $41,000                                          | —                                           | $6,899                                                | —                                                             | —                                                                     | —                                                     | $47,899                                            |
| Thomas E. Bonney, CPA

                         | $47,500                                          | —                                           | $6,899                                                | —                                                             | —                                                                     | —                                                     | $54,399                                            |
| William F. Hamilton, Ph.D.

                    | $48,000                                          | —                                           | $6,899                                                | —                                                             | —                                                                     | —                                                     | $54,899                                            |
| J. Jay Lobell

                                 | $39,500                                          | —                                           | $6,899                                                | —                                                             | —                                                                     | —                                                     | $46,399                                            |
| Charles Nemeroff, M.D., Ph.D.(1)

              | $43,500                                          | —                                           | $8,697                                                | —                                                             | —                                                                     | —                                                     | $52,197                                            |
| Steven B. Ratoff

                              | $20,000                                          | —                                           | $6,899                                                | —                                                             | —                                                                     | —                                                     | $26,899(2)                                         |

 

|   | (1) | For all directors, $6,899 option award in September 2008 represents estimated fair value of the option award on the grant date using a Black-Scholes option pricing model that assumes the following: expected volatility of 83%; dividend yield of 0%; expected term until exercise of 3.4 years; and a risk-free interest rate of 2.3%. In addition, Dr. Nemeroff                        received an option award of $1,798, based on his membership on the Company’s Scientific Advisory Board, of which Dr. Nemeroff is the Chairman. The estimated fair value of Dr. Nemeroff’s options was determined using a Black-Scholes option pricing model with the following assumptions: expected volatility of 85%; dividend yield of 0%; expected term until exercise of 5.5 years; and a risk-free interest rate of 1.8%. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Does not include fees earned by Mr. Ratoff pursuant to his consulting arrangement with us, or stock awards received by Mr. Ratoff pursuant to his role as the Company’s Interim President and Chief Executive Officer. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

6

 

 

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The following table shows the options granted to each Director in the fiscal year ended December 31, 2008.

 

 

| **Director**                  |   | **Number of Shares****Underlying****Options Granted** |   | **Grant**

**Date** |   | **Exercise Price****Per Share** |   |
|-------------------------------|--------|-------------------------------------------------------|--------|---------------------|--------|---------------------------------|--------|
| Mark J. Baric                 |   | 50,000                                                |   | 9/8/2008            |   | $                               | 0.24   |   |
| Thomas E. Bonney, CPA         |   | 50,000                                                |   | 9/8/2008            |   | $                               | 0.24   |   |
| William F. Hamilton, Ph.D.    |   | 50,000                                                |   | 9/8/2008            |   | $                               | 0.24   |   |
| J. Jay Lobell                 |   | 50,000                                                |   | 9/8/2008            |   | $                               | 0.24   |   |
| Charles Nemeroff, M.D., Ph.D. |   | 50,000                                                |   | 9/8/2008            |   | $                               | 0.24   |   |
| Steven B. Ratoff (1)          |   | 50,000                                                |   | 9/8/2008            |   | $                               | 0.24   |   |

 

|   | (1) | Does not include restricted stock awards to Mr. Ratoff in his capacity as the Company’s Interim President and Chief Executive Officer. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

 

The Board followed the recommendation of the Compensation Committee and determined non-employee Director compensation as follows:

 

***Fiscal 2008 Policy***--Directors who were not employees and were independent received fees in the following amounts:

 

***Equity Compensation***-- Each new non-employee Director will, upon initially joining the Board, receive options to purchase 100,000 shares of our Common Stock pursuant to our 2006 Equity Incentive Plan, or the Plan, and thereafter, each non-employee Director will receive an annual grant of options to purchase 50,000 shares of our Common Stock upon re-election to the        Board.

 

***Cash Compensation***-- Each non-employee Director will be paid an annual retainer fee of $20,000 and $2,000 for in-person and $1,000 for telephonic meetings of the Board. The Lead Independent Director will be paid a $2,500 retainer for such role. In addition, each non-employee Director will receive certain additional annual retainers and meeting fees for chairing or        serving as a member of the committees of the Board, with annual retainers as follows:

 

| Chairman of the Audit Committee                               | $      | 7,500  |
|---------------------------------------------------------------|--------|--------|
| Member of the Audit Committee                                 | $      | 2,500  |
|                                                          |   |   |
| Chairman of the Compensation Committee                        | $      | 5,000  |
| Member of the Compensation Committee                          | $      | 2,500  |
|                                                          |   |   |
| Chairman of the Corporate Governance and Nominating Committee | $      | 5,000  |
| Member of the Corporate Governance and Nominating Committee   | $      | 2,500  |

 

In addition, each non-employee Director will be paid $1,000 for in-person and $500 for telephonic committee meetings. The Board has agreed to permit each non-employee Director to elect to receive cash compensation in connection with their Board and committee retainers in the form of equity under the Plan. Such election will be made on an annual basis and valued at the time of grant. Equity grants will be        received by such non-employee Directors when cash compensation payments are due.

 

7

 

 

----

In September 2006, Mr. Ratoff was elected Chairman of the Board. In connection with Mr. Ratoff’s appointment as Chairman of the Board, the Board entered into a consulting arrangement to compensate Mr. Ratoff for his efforts in such position. Such arrangement is on a month-to-month basis. From September 15, 2006 until March 16, 2007, Mr. Ratoff was compensated at a rate of $17,500 per month and        reimbursement of reasonable expenses. From March 16, 2007 until June 6, 2007, his monthly rate was reduced to $10,000 and reimbursement of reasonable expenses. Effective June 6, 2007, his monthly rate was increased to $17,500. Mr. Ratoff will also receive compensation as a member of the Board. On July 25, 2007, Mr. Ratoff was appointed as Interim President and Chief Executive Officer of the Company, concurrent with the resignation with Dr. Jan Egberts.

 

***EXECUTIVE COMPENSATION***

 

***Compensation Discussion and Analysis***

 

This Compensation Discussion and Analysis discusses the principles underlying our compensation policies and decisions and the principal elements of compensation paid to our named executive officers during the 2008 fiscal year. Our Chief Executive Officer, Chief Financial Officer and the other named executive officers included in the Summary Compensation Table on page 16 will be referred to as the        “named executive officers” for purposes of this discussion.

 

This year’s overview of our executive compensation policy has been significantly expanded to provide a more comprehensive picture to you, the stockholder, of both the rationale behind executive compensation decisions and the manner in which those decisions are made. In developing our enhanced disclosure, the Compensation Committee of the Board, or Committee, relied upon the principles contained in        the newly adopted regulations governing public company executive compensation disclosure that were recently approved by the Securities and Exchange Commission.

 

***Compensation Objectives and Philosophy***

 

The Committee is responsible for reviewing and approving the compensation payable to our named executive officers and other key employees. As part of such process, the Committee seeks to accomplish the following objectives with respect to our executive compensation programs:

 

|   | **•** | motivate, recruit and retain executives capable of meeting our strategic objectives; |
|--------|------------|--------------------------------------------------------------------------------------|

|   | **•** | provide incentives to ensure superior executive performance and successful financial results for NovaDel; and |
|--------|------------|---------------------------------------------------------------------------------------------------------------|

|   | **•** | align the interests of the named executive officers with the long-term interests of our stockholders. |
|--------|------------|-------------------------------------------------------------------------------------------------------|

 

The Committee seeks to achieve these objectives by:

 

|   | **•** | establishing a compensation structure that is both market competitive and internally fair; |
|--------|------------|--------------------------------------------------------------------------------------------|

|   | **•** | linking a substantial portion of compensation to our achievement of financial objectives and the individual’s contribution to the attainment of those objectives; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | providing upward leverage for overachievement of goals; and |
|--------|------------|-------------------------------------------------------------|

|   | **•** | providing long-term equity-based incentives. |
|--------|------------|----------------------------------------------|

 

In order to achieve the above goals, our total compensation package includes base salary and annual bonus, all paid in cash, as well as long-term compensation in the form of stock options and restricted stock. We believe that appropriately balancing the total compensation package is necessary in order to provide market-competitive compensation.

 

8

 

 

----

***Setting Executive Compensation***

 

***Role of Compensation Committee and Chief Executive Officer***. The Committee oversees the design, development and implementation of the compensation program for the Chief Executive Officer and the other named executive officers. The Committee evaluates the performance of the Chief Executive Officer and determines the Chief Executive Officer’s compensation in light of        the goals and objectives of the compensation program. The Chief Executive Officer and the Committee together assess the performance of the other named executive officers employed by us as of December 31 and determine their compensation, based on initial recommendations from the Chief Executive Officer. Our Interim Chief Executive Officer provided the Committee with a detailed review of the performance of the other named executive officers and made recommendations to the Committee with        respect to the compensation packages for those officers for the 2008 fiscal year.

 

Mr. Steven B. Ratoff, the Company’s Chairman of the Board, also serves as the Company’s Interim President and Chief Executive Officer. He was appointed as Interim President and Chief Executive Officer on July 25, 2007, concurrent with the resignation of Dr. Jan Egberts. Mr. Ratoff does not have an employment agreement with the Company in connection with his service as Interim President and        Chief Executive Officer. In connection with Mr. Ratoff’s services as Chairman of the Board, the Board entered into a consulting arrangement to compensate Mr. Ratoff for his efforts in such position. Such arrangement is on a month-to-month basis. From September 15, 2006 until March 16, 2007, Mr. Ratoff was compensated at a rate of $17,500 per month and reimbursement of reasonable expenses. From March 16, 2007 until June 6, 2007, his monthly rate was reduced to $10,000 and        reimbursement of reasonable expenses. Effective June 6, 2007, his monthly rate was increased to $17,500. During the year ended December 31, 2008, Mr. Ratoff received $210,000 in consulting fees. As Mr. Ratoff is still a non-employee, he will continue to receive his annual retainer and option awards as a member of the Board.

 

The other named executive officers do not play a role in their own compensation determination, other than discussing individual performance objectives and results with the Chief Executive Officer.

 

***Role of Compensation Consultant***.In 2006, the Committee utilized Compensation Resources, Inc., or CRI, a nationally recognized compensation consulting firm to provide competitive compensation data and general advice in the design of programs that affect the named executive officers compensation, including the Chief Executive Officer. Our named executive officers did not        participate in the selection of the consultant. We have not used the services of any other compensation consultant in matters affecting the named executive officers or Director compensation. In the future, we, or the Committee, may engage or seek the advice of other compensation consultants. During 2006, CRI performed a market analysis of the compensation paid by comparable pharmaceutical and drug delivery companies and provided the Committee with recommended compensation ranges for        each named executive officer positionbased on the competitive data. During 2007 and 2008, CRI acted as an advisor to the Committee on certain compensation-related matters.

 

***Competitive Position***

 

The Committee has structured our annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by the Board and reward the executives for achieving such goals. At the end of the year, the Committee reviews the performance of each named executive officer in achieving the established objectives. These results are included with the        overall performance review provided by the Chief Executive Officer, after which the Committee votes upon any recommendations for salary adjustments, stock option grants and cash incentives. The Chief Executive Officer then executes the actions recommended by the Committee with respect to such matters.

 

9

 

 

----

In CRI’s market analysis of compensation performed in 2006, the relevant peer group for compensation and benefit programs consists primarily of companies of comparative size, similar businesses and geographic scope. These are the firms with which NovaDel competes for talent. The comparator group was chosen to include companies with similar market capitalization, similar revenue size, and some direct        competitors. The comparator group is different from the companies used in the “Performance Graph” on page 59 of our Annual Report on Form 10-K for the period ended December 31, 2008. The reason for this is that NovaDel has business competitors with whom we benchmark against for financial performance, but also have business and talent competitors against whom we benchmark for pay purposes. Additionally, the positions were compared to published survey data from nationally        recognized sources to ensure the accuracy and validity of the proxy peer group. The companies from the peer analysis are listed below:

 

| **Company Name**                      | **Total Revenues Most Recent Fiscal Year ($Millions)** | **Current Stock Price ($)** | **Market Cap (Millions)** | **Total Shares Outstanding (Millions)** |
|---------------------------------------|--------------------------------------------------------|-----------------------------|---------------------------|-----------------------------------------|
| Advanced Life Sciences Holdings, Inc. | 0.1                                                    | 3.53                        | 84.8                      | 24                                      |
| Advanced Viral Research Corp.         | 0.8                                                    | 0.056                       | 41.8                      | 746.4                                   |
| Anadys Pharmaceuticals, Inc.          | 4.9                                                    | 3                           | 88.5                      | 29.5                                    |
| Antigenics Inc.                       | 0.6                                                    | 1.9                         | 74.7                      | 39.3                                    |
| Avalon Pharmaceuticals, Inc.          | 1.5                                                    | 2.95                        | 30.4                      | 10.3                                    |
| Biopure Corporation                   | 2.1                                                    | 0.92                        | 38.9                      | 42.3                                    |
| BioSante Pharmaceuticals, Inc.        | 0.3                                                    | 1.95                        | 33.3                      | 17.1                                    |
| Curis, Inc.                           | 6                                                      | 1.56                        | 76.6                      | 47.1                                    |
| Delcath Systems, Inc.                 | 0.4                                                    | 3.68                        | 62.6                      | 17                                      |
| Elite Pharmaceuticals, Inc.           | 2.5                                                    | 2.18                        | 43.6                      | 20                                      |
| EpiCept Corporation                   | 0.4                                                    | 1.77                        | 42.7                      | 24.1                                    |
| Generex Biotechnology Corporation     | 0.4                                                    | 2.17                        | 229.9                     | 105.9                                   |
| Idera Pharmaceuticals, Inc.           | 2.5                                                    | 3.9                         | 61.9                      | 15.9                                    |
| Inhibitex, Inc.                       | 0.9                                                    | 1.57                        | 46.6                      | 29.7                                    |
| Lev Pharmaceuticals Inc.              | 0.5                                                    | 0.75                        | 77.6                      | 103.5                                   |
| Lipid Sciences, Inc.                  | 0                                                      | 1.68                        | 46.5                      | 27.7                                    |
| Manhattan Pharmaceuticals, Inc.       | 1                                                      | 0.67                        | 39.7                      | 59.3                                    |
| Point Therapeutics, Inc.              | 0.2                                                    | 1.17                        | 46.5                      | 39.7                                    |
| RegeneRx Biopharmaceuticals, Inc.     | 0.6                                                    | 2.3                         | 85.9                      | 37.3                                    |
| Repros Therapeutics Inc.              | 0.6                                                    | 8.28                        | 75.4                      | 9.1                                     |
| SIGA Technologies, Inc.               | 8.5                                                    | 1.97                        | 50.2                      | 25.5                                    |
| Valentis, Inc.                        | 0.7                                                    | 0.84                        | 11.4                      | 8.9                                     |
| MEAN                                  |                                                   |                        | 63.2                      |                                    |

 

***Components of Compensation***

 

The key components of NovaDel’sexecutive compensation package are cash compensation (salary & annual incentives), long term incentives and company-sponsored benefit plans. These components are administered with the goal of providing total compensation that recognizes meaningful differences in individual performance, is competitive, varies the opportunity based on individual and corporate        performance, and is valued by our named executive officers. We seek to achieve our compensation objectives through five key compensation elements:

 

|   | **•** | base salary; |
|--------|------------|--------------|

|   | **•** | annual short-term cash incentives; |
|--------|------------|------------------------------------|

|   | **•** | long-term equity incentive awards; |
|--------|------------|------------------------------------|

|   | **•** | special benefits; and |
|--------|------------|-----------------------|

|   | **•** | change in control and other severance agreements. |
|--------|------------|---------------------------------------------------|

 

10

 

 

----

***Base Salary***. **In General –**It is the Committee’s objective to set a competitive rate of annual base salary for each named executive officer. The Committee believes competitive base salaries are necessary to attract and retain top quality executives, since it is common practice for public companies to        provide their named executive officers with a guaranteed annual component of compensation that is not subject to performance risk. The Committee works with outside consultants as necessary to establish salary ranges for the named executive officers, with minimum to maximum opportunities that cover the normal range of market variability. The actual base salary for each named executive officer is then derived from those salary ranges based on his responsibility, tenure and past        performance and market comparability.

 

Annual base salaries for the named executive officers are reviewed and approved by the Committee in the first fiscal quarter following the end of the previous performance year. Changes in base salary are based on the scope of an individual’s current job responsibilities, individual performance in the previous performance year, target pay position relative to the peer group, and our salary budget        guidelines. The Committee reviews established goals and objectives and determines an individual’s achievement of those goals and objectives and considers the recommendations provided by the Chief Executive Officer to assist it in determining appropriate salaries for the named executive officers other than the Chief Executive Officer. For any given performance year, actual salary increases may range from 0% to 10% of the salary guidelines based on individual performance. This broad        range allows for meaningful differentiation on a pay for performance basis.

 

Changes for Fiscal Year 2009**–**The Committee met in December 2008 to evaluate the performance and compensation for each named executive officer. The Committee reviewed compensation of comparable companies and recognized the need to retain current management given individual and collective performance. As a result of the Company’s cash position        and requirement for additional funding, the Committee recommended to the Board that no merit increases be granted to our named executive officers for 2009. 

 

***Annual Bonuses***. **In General –**As part of their compensation package, our named executive officers have the opportunity to earn annual bonuses. Annual bonuses are designed to reward superior executive performance while reinforcing our short-term strategic operating goals. Pursuant to the individual employment        agreements, the Committee establishes each year a target award for each named executive officer based on a percentage of base salary. Annual bonus targets as a percentage of salary increase with executive rank so that for the more senior executives, a greater proportion of their total cash compensation is contingent upon annual performance.

 

At the beginning of the performance year, each named executive officer, in conjunction with the Chief Executive Officer, establishes annual goals and objectives. Actual bonus awards are based on an assessment against the pre-established goals for each named executive officer’s individual performance, the performance of the business function for which he is responsible, and/or our overall performance        for the year. For any given performance year, proposed annual bonuses may range from 0% to 100% of target, or higher under certain circumstances, based on corporate and individual performance. Corporate and individual performance has a significant impact on the annual bonus amounts because the Committee believes it is a precise measure of how the named executive officer contributed to business results.

 

**Fiscal 2008 Performance Measures and Payouts –**In 2008, annual bonus targetswere 30% of base salary for the named executive officers and were payable based on the Committee’s subjective review of both the performance of NovaDel as well as individual performance. The Committee utilizes annual bonuses to compensate officers for achieving financial and operational        goals and for achieving individual annual performance objectives. These objectives will vary depending on the individual executive, but will relate generally to (i) operational goals such as the development of our product candidates and the identification and advancement of additional product candidates, (ii) strategic goals such as the establishment of operating plans and budgets, review of organization and staff, and (iii) the enhancement of stockholder value.

 

11

 

 

----

At the end of each fiscal year, the Committee determines the level of achievement with respect to each corporate goal, and decides the overall percent of corporate goal achievement for purposes of annual bonuses. For this assessment, the Committee evaluates the status of NovaDel’s development programs and clinical progress, corporate development and regulatory compliance activities. These        qualitative factors are also typically used by comparable companies to evaluate performance and involve a subjective assessment of corporate performance by the Committee. Moreover, the Committee does not base its considerations on a single performance factor, but rather considers a mix of factors and evaluates company and individual performance against that mix. The Chief Executive Officer provides written evaluations for the named executive officers, other than himself, to the        Committee along with his recommendations for each individual performance factor. The Committee reviews the performance and assessment of each named executive officer and then evaluates the Chief Executive Officer and assigns a weight to each individual achievement factor. The table below details fiscal 2008 annual bonus targets and actual payouts for our previous Chief Executive Officer, our Chief Operating Officer, our Chief Business Officer, and our Chief Financial Officer.

 

| **Name**                  | **Title**                                       | **2008 Target Bonus ($)** | **2008 Target Bonus**

**(% Salary)** | **2008 Actual Bonus ($)** | **2008 Actual Bonus**

**(% Salary)** |
|---------------------------|-------------------------------------------------|---------------------------|---------------------------------------|---------------------------|---------------------------------------|
| Steven B. Ratoff(1)       | Interim President and Chief Executive Officer   | —                   | —                               | —                   | —                               |
| David H. Bergstrom, Ph.D. | Chief Operating Officer                         | $90,000                   | 30%                                   | —(2)                | —(2)                            |
| Deni M. Zodda, Ph.D.(3)   | Chief Business Officer                          | $83,500                   | 30%                                   | —                   | —                               |
| Michael E. Spicer, CPA(3) | Chief Financial Officer and Corporate Secretary | $76,900                   | 30%                                   | —                   | —                               |

 

|   | 1. | Mr. Ratoff entered into a consulting arrangement with the Company in 2006, and is compensated under that arrangement at a rate of $17,500 per month, plus reimbursement of reasonable expenses. Mr. Ratoff is not entitled to a bonus. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Dr. Bergstrom did not receive a fiscal 2008 annual bonus, however, Dr. Bergstrom did receive a one-time special cash bonus of $50,000 in recognition of his individual efforts in 2008 in connection with the Company’s research and development efforts and clinical activities including, but not limited to, the U.S. Food and Drug Administration’s                        approval of the New Drug Application for ZolpimistTM (zolpidem tartrate) Oral Spray for the short-term treatment of insomnia. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | On March 19, 2009, Michael E. Spicer notified our Board of his intention to resign as Chief Financial Officer and Corporate Secretary, effective April 1, 2009. There is no disagreement between us and Mr. Spicer concerning our policies, procedures and operations. Effective April 1, 2009, Deni Zodda began serving as our Interim Chief Financial Officer and                        Corporate Secretary and Joseph W. Warusz, a consultant, began serving as our principal accounting officer. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Change for Fiscal Year 2008 –**As in 2008,annual bonuses for 2009, if any, will be based on achievement of pre-established company objectives and individual goals for each named executive officer and, for each named executive officer other than the Chief Executive Officer, a subjective review of that individual’s performance. Corporate performance targets may        include such measures as strategic plan metrics while individual performance targets may include operational and financial metrics, regulatory compliance metrics, and delivery of specific programs, plans, and budgetary objectives identified and documented at the beginning of each fiscal year. It is the Committee’s intention to base a greater percentage of the annual award payout on corporate as opposed to individual performance for higher level executives, with 100% of the Chief        Executive Officer’s annual bonus tied to the attainment of corporate performance objectives.

 

For the 2009 fiscal year awards, the potential payout may range from 0 –100% of target, or higher under certain circumstances. The Committee has also retained the discretion to reduce the dollar amount of the awards otherwise payable to the named executive officers. Our objectives relating to development and clinical goals for 2009 include the following:

 

|   | **•** | pursuit of strategic partners for our NitroMistTM oral spray; |
|--------|------------|--------------------------------------------------------------------|

|   | **•** | pursuit of strategic partners for our ZolpimistTM oral spray; and |
|--------|------------|------------------------------------------------------------------------|

|   | **•** | continued development of the Company’s technology and operating platform, and |
|--------|------------|-------------------------------------------------------------------------------------|

|   | **•** | other strategic transactions that benefit the Company and its stockholders |
|--------|------------|----------------------------------------------------------------------------|

 

12

 

 

----

The table below shows the dollar amount of the 2008 and 2009 annual target bonus for each named executive officer, together with percentage of base salary represented by that target:

 

 

| **Name**                  | **Title**                                         | **2008 Target Bonus ($)** | **2008 Target Bonus**

**(% Salary)** | **2009 Target Bonus ($)** | **2009 Target Bonus**

**(% Salary)** |
|---------------------------|---------------------------------------------------|---------------------------|---------------------------------------|---------------------------|---------------------------------------|
| Steven B. Ratoff(1)       | Interim President and Chief Executive Officer     | $0                        | 0%                                    | $0                        | 0%                                    |
| David H. Bergstrom, Ph.D. | Senior Vice President and Chief Operating Officer | $90,000                   | 30%                                   | $90,000                   | 30%                                   |
| Michael E. Spicer, CPA(2) | Chief Financial Officer and Corporate Secretary   | $76,900                   | 30%                                   | $76,900                   | 30%                                   |
| Deni M. Zodda, Ph.D.      | Senior Vice President and Chief Business Officer  | $82,500                   | 30%                                   | $82,500                   | 30%                                   |

 

|   | (1) | Mr. Ratoff entered into a consulting arrangement with the Company in 2006, and is compensated under that arrangement at a rate of $17,500 per month, plus reimbursement of reasonable expenses. Mr. Ratoff is not entitled to a bonus. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Mr. Spicer resigned from the Company effective April 1, 2009. |
|--------|-----|---------------------------------------------------------------|

 

Mr. Steven B. Ratoff, the Company’s Chairman of the Board, also serves as the Company’s Interim President and Chief Executive Officer. Mr. Ratoff does not have an employment agreement with the Company in connection with his service as Interim President and Chief Executive Officer, and therefore does not receive a base salary or annual bonus. In connection with Mr. Ratoff’s services as        Chairman of the Board, the Board entered into a consulting arrangement to compensate Mr. Ratoff for his efforts in such position. Such arrangement is on a month-to-month basis. From September 15, 2006 until March 16, 2007, Mr. Ratoff was compensated at a rate of $17,500 per month and reimbursement of reasonable expenses. From March 16, 2007 until June 6, 2007, his monthly rate was reduced to $10,000 and reimbursement of reasonable expenses. Effective June 6, 2007, his monthly rate was        increased to $17,500. Mr. Ratoff will also receive compensation as a member of the Board. On July 25, 2007, Mr. Ratoff was appointed as Interim President and Chief Executive Officer of the Company, concurrent with the resignation with Dr. Jan Egberts.

 

***Long-Term Incentive Equity Awards***. **In General -**We believe that long-term performance is achieved through an ownership culture that encourages high performance by our named executive officers through the use of stock-based awards. Our equity plans have been established to provide our employees, including our        named executive officers, with incentives to help align employees’ interests with the interests of our stockholders. The Committee believes that the use of stock-based awards offers the best approach to achieving our compensation goals. We have historically elected to use stock options as the primary long-term equity incentive vehicle; however, the Committee has used restricted stock and may in the future utilize restricted stock as part of our long-term incentive program. We have        expensed stock option grants under Statement of Financial Accounting Standards 123R, Share-Based Payment (SFAS 123R), since August 1, 2005. Due to the early stage of our business and our desire to preserve cash, we expect to provide a greater portion of total compensation to our named executive officers through stock options and restricted stock grants than through cash-based compensation.

 

***Stock Options.***Our stock plans authorize us to grant options to purchase shares of Common Stock to our employees, Directors and consultants. The Committee generally oversees the administration of our stock option plans. In 2008, the Committee delegated the authority to our Chief Executive Officer to make initial option grants to certain new employees        within an approved range. All new employee grants in excess of the Chief Executive Officer’s limit and any grant to a named executive officer are approved by the Committee. Stock options may be granted at the commencement of employment, annually, occasionally following a significant change in job responsibilities or to meet other objectives.

 

The Committee reviews and approves stock option awards to named executive officers based upon a review of competitive compensation data, its assessment of individual performance, a review of each named executive officer’s existing long-term incentives, and retention considerations. Periodic stock option grants are made at the discretion of the Committee to eligible employees and, in appropriate        circumstances, the Committee considers the recommendations of members of management, such as Steven B. Ratoff, our Interim President and Chief Executive Officer.

 

13

 

 

----

In 2008, certain named executive officers were awarded stock options in the amounts included in the Grants of Plan-Based Awards table on page 18. Stock options granted by us have an exercise price equal to the fair market value of our Common Stock on the day of grant, typically vest annually over a three-year period or upon the achievement of certain performance-based milestones and are based upon        continued employment, and generally expire ten (10) years after the date of grant. The fair value of the options granted to the named executive officers in the Summary Compensation Table on page 16, is determined in accordance with SFAS 123R. The Committee has also granted performance based options to certain of our named executive officers. Incentive stock options also include certain other terms necessary to ensure compliance with the Internal Revenue Code of 1986, as        amended.

 

We expect to continue to use stock options as a long-term incentive vehicle because:

 

|   | **•** | Stock options align the interests of our named executive officers with those of our stockholders, supporting a pay-for performance culture, foster employee stock ownership, and focus the management team on increasing value for our stockholders. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Stock options are performance-based. All of the value received by the recipient of a stock option is based on the growth of the stock price. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Stock options help to provide a balance to the overall executive compensation program as base salary and annual bonuses focus on the short–term compensation, while the vesting of stock options increases stockholder value over the longer term. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The vesting period of stock options encourages executive retention and the preservation of stockholder value. In determining the number of stock options to be granted to our named executive officers, we take into account the individual’s position, scope of responsibility, ability to affect profits and stockholder value and the individual’s                        historic and recent performance and the value of stock options in relation to other elements of the individual named executive officer’s total compensation. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

***Restricted Stock.***Our 2006 Equity Incentive Plan authorizes us to grant restricted stock. As of December 31, 2008, we had granted 1.2 million shares of restricted stock to our Interim President and Chief Executive Officer, our three executive officers, and other non-executive employees of the Company. Of this amount, we granted 1.1 million shares of        restricted stock on February 6, 2008 to our Interim President and Chief Executive Officer, our three executive officers, and other non-executive employees of the Company. In order to implement our long-term incentive goals, we anticipate that we may grant additional shares of restricted stock in the future.

 

***Executive Benefits and Perquisites***

 

Our named executive officers, who are parties to employment agreements, will continue to be parties to such employment agreements in their current form until the expiration of the employment agreement or until such time as the Committee determines in its discretion that revisions to such employment agreements are advisable. In addition, consistent with our compensation philosophy, we intend to continue to        maintain our current benefits for our named executive officers, including medical, dental and life insurance and the ability to contribute and receive a company match to a 401(k) plan; however, the Committee in its discretion may revise, amend or add to the officer’s executive benefits if it deems it advisable. We believe these benefits are currently comparable to benefit levels for comparable companies. We have no current plans to change either the employment agreements (except        as required by law or as required to clarify the benefits to which our named executive officers are entitled as set forth herein) or level of benefits.

 

***Severance and Change in Control Arrangements***

 

The specific terms of our severance and change in control arrangements are discussed in detail below under the headings Potential Payments Upon Termination or Change in Control on page 21 and Employment Agreements beginning on page 22. As a general matter, however, we believe that reasonable severance and change in control protection for our named executive officers is necessary in order for us to recruit        and retain qualified executives.

 

***Equity Grant Policy***

 

All grants to our named executive officers are at the discretion of the Board, following review and input by the Committee.

 

14

 

 

----

***IRC Section 162(m) compliance***

 

Section 162(m) of the Internal Revenue Code of 1986, as amended, the Code, generally disallows a tax deduction to public companies for certain compensation in excess of $1 million paid to our named executive officers. Certain compensation, including qualified performance-based compensation, will not be subject to the deduction limit if certain requirements are met. In general, our compensation program is        designed to reward executives for the achievement of our performance objectives. The stock plan is designed in a manner intended to comply with the performance-based exception to Section 162(m). Nevertheless, compensation attributable to awards granted under the plans may not be treated as qualified performance-based compensation under Section 162(m). In addition, the Committee considers it important to retain flexibility to design compensation programs that are in the best interests of        NovaDel and its stockholders and, to this end, the Committee reserves the right to use its judgment to authorize compensation payments that may be subject to the limitations under Section 162(m) when the Committee believes that compensation is appropriate and in the best interests of NovaDel and our stockholders, after taking into consideration changing business conditions and performance of our employees.

 

***Compensation Committee Interlocks and Insider Participation***

 

For fiscal year end December 31, 2008, the members of the Compensation Committee were Mr. J. Jay Lobell, Mr. Mark J. Baric and Dr. Charles Nemeroff. None of these individuals was at any time during or at any other time an officer or employee of ours. Dr. Jan H. Egberts, our President and Chief Executive Officer through July 25, 2008, and Mr. Steven B. Ratoff, our Chairman of the Board, and our Interim        President and Chief Executive Officer from July 25, 2008 through the current date, participated in discussions and decisions regarding salaries and incentive compensation for all of our named executive officers, except they were excluded from discussions regarding their own salary and incentive stock compensation.

 

***Compensation Committee Report***

 

The Compensation Committee evaluates and establishes compensation for the named executive officers, NovaDel’s stock plans, and other management incentive, benefit and perquisite programs. Management has the primary responsibility for our financial statements, including the disclosure of executive compensation. With this in mind, the Compensation Committee has reviewed and discussed with management        the Compensation Discussion and Analysis section beginning on page 8 of this Form 10-K/A. The Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly and completely represents the philosophy, intent, and actions of the Compensation Committee with regard to executive compensation. The Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Form 10-K/A for filing with the Securities and Exchange        Commission.

 

 

|   |   | J. Jay Lobell, Chair          |
|--------|--------|-------------------------------|
|   |   | Mr. Mark J. Baric             |
|   |   | Charles Nemeroff, M.D., Ph.D. |
|   |   |                          |

 

 

 

15

 

 

----

**Summary Compensation Table**

 

The following table sets forth a summary for the fiscal year ended December 31, 2008 of the cash and non-cash compensation awarded, paid or accrued by us to our Chief Executive Officer, our Chief Financial Officer and our three most highly compensated officers other than the Chief Executive Officer and Chief Financial Officer who served in such capacities in 2008, collectively, the named executive        officers.

 

| **Name and Principal Position**                                                        | **Year**         | **Salary**

**($)**               | **Bonus**

**($)(1)**     |  

 

 

 

 

**Stock Awards**

**($)** | **Option Awards ($)**                | **Non-Equity Incentive Plan Compensation ($)** | **Change in Pension Value and Nonqualified Deferred Compensation Earnings**

**($)** | **All Other Compensation**

**($)(9)** |  

 

 

 

 

 

**Total**

**($)** |
|----------------------------------------------------------------------------------------|------------------|-----------------------------------|---------------------------|-------------------------------------------------------------------|--------------------------------------|------------------------------------------------|--------------------------------------------------------------------------------------|----------------------------------------|--------------------------------------------------------------------|
| Steven B. Ratoff 

*Interim President and Chief Executive Officer*

              | 2008

2007

2006 | 210,000(2)

206,500(2)

61,000(2) | —

—

— | 141,000(10)

6,899(11)

—                                   | —

57,335(3)

71,000(3)        | —

—

—

               | —

—

—

                                                     | 20,000(3)

6,000(3)

29,449(3)         | 377,899

269,835

161,449                                          |
| David H. Bergstrom, Ph.D.

*Senior Vice President and Chief Operating Officer*

  | 2008

2007

2006 | 311,538

300,000

23,076          | 50,000

100,000

—  | 70,500(10)

—

171,000(4)                                   | —

—

563,000(5)         | —

—

—                      | —

—

—                                                            | 25,157

19,799

—                | 457,195

419,799

757,076                                          |
| Michael E. Spicer, CPA 

*Chief Financial Officer and Corporate Secretary*

      | 2008

2007

2006 | 266,054

255,731

244,000         | —

—

73,200  | 70,500(10)

—

—                                      | —

256,124(6)

491,000(7)      | —

—

—

               | —

—

—                                                            | 40,114

62,443

52,545                 | 376,618

574,298

860,745                                          |
| Deni M. Zodda, Ph.D

*Chief Business Officer*                                          | 2008

2007

2006 | 288,577

232,692

—         | —

—

— | 70,500(10)

—

—                                      | —

364,576(8)

—

  | —

—

—                      | —

—

—                                                            | 35,783

25,541

—                | 394,860

622,809

—                                          |

 

|   | (1) | Bonus for Mr. Spicer was earned in fiscal year 2006 and paid in 2007. Dr. Bergstrom’s $100,000 bonus was earned in fiscal year 2007 and paid in January 2008. In addition, Dr. Bergstrom received a one-time special cash bonus of $50,000 paid in 2009 in recognition of his individual efforts in 2008 in connection with the Company’s research and                        development efforts and clinical activities including, but not limited to, the U.S. Food and Drug Administration’s approval of the New Drug Application for ZolpimistTM (zolpidem tartrate) Oral Spray for the short-term treatment of insomnia. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Amount represents fees paid to Mr. Ratoff as part of his consulting agreement with NovaDel. |
|--------|-----|---------------------------------------------------------------------------------------------|

|   | (3) | Amount represents Board fees paid to Mr. Ratoff during 2007 and 2006, as previously discussed under director compensation. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------|

|   | (4) | The grant date fair value, as determined by us for financial reporting purposes in accordance with Statement of Financial Accounting Standards No. 123R, or FAS 123R, of the restricted stock award was $1.71 per share of Dr. Bergstrom. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | The grant date fair value, as determined by us for financial reporting purposes in accordance with Statement of Financial Accounting Standards No. 123R, or FAS 123R, of the stock option awards was $0.63 per share for Dr. Bergstrom. The actual amount ultimately realized by Dr. Bergstrom from the equity award will likely vary based on a number of factors,                        including, but not limited to, NovaDel’s actual performance, stock price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | The grant date fair value, as determined by us for financial reporting purposes in accordance with FAS 123R, of the stock option awards was $1.14 per share for Mr. Spicer. The actual amount realized by Mr. Spicer from the equity award will likely vary based on a number of factors, including, but not limited to, NovaDel’s actual performance, stock                        price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting . |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | The grant date fair value, as determined by us for financial reporting purposes in accordance with FAS 123R, of the stock option awards was $1.09 per share for Mr. Spicer. The actual amount ultimately realized by Mr. Spicer from the equity award will likely vary based on a number of factors, including, but not limited to, NovaDel’s actual                        performance, stock price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | The grant date fair value, as determined by us for financial reporting purposes in accordance with FAS 123R, of the stock option awards was $0.55 per share for Dr. Zodda. The actual amount ultimately realized by Dr. Zodda from the equity award will likely vary based on a number of |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

16

 

 

----

factors, including, but not limited to, NovaDel’s actual performance, stock price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting.

|   | (9) | See All Other Compensation - 2008 Chart below for amounts. |
|--------|-----|------------------------------------------------------------|

|   | (10) | In addition, the named executives each received restricted stock awards in February 2008: Mr. Ratoff received 300,000 restricted shares, and each of Dr. Bergstrom, Mr. Spicer and Dr. Zodda received 150,000 restricted shares. The restrictions on the restricted stock awarded in February 2008 shall lapse over a three-year period, subject to reduction as                        follows: (1) in the event of a $5 million non-dilutive financing by the Company on or before December 31, 2008, the three-year restriction shall be accelerated such that the restrictions on the restricted stock shall lapse over a two-and-one-half year period; (2) in the event of an additional $5 million (or $10 million in the aggregate) non-dilutive financing by the Company on or before December 31, 2008, the three-year restriction shall be accelerated such that the                        restrictions on the restricted stock shall lapse over a two-year period; and (3) in the event of a $20 million (or $20 million in the aggregate) non-dilutive financing by the Company, the restrictions shall immediately lapse. Additionally, the Board, upon the recommendation of the Compensation Committee, agreed that, in the case of the Company’s Chief Executive Officer, an additional 200,000 shares of restricted stock shall be granted as follows: (1) upon achieving                        a $5 million non-dilutive financing by the Company on or before December 31, 2008, an additional 100,000 shares of restricted stock shall be granted; and (2) upon achieving an additional $5 million (or $10 million in the aggregate) in non-dilutive financing by the Company on or before December 31, 2008, an additional 100,000 shares of restricted stock shall be granted. The restrictions on such additional shares shall lapse over a three-year period. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (11) | For all directors, $6,899 option award in September 2008 represents estimated fair value of the option award on the grant date using a Black-Scholes option pricing model that assumes the following: expected volatility of 83%; dividend yield of 0%; expected term until exercise of 3.4 years; and a risk-free interest rate of 2.3%. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**All Other Compensation — 2008**

 

|  

 

**Name**  |  

**401(K)**

**($)** | **Health Care Coverage**

**($)** |  

**Relocation**

**($)** | **Severance Payment**

**($)** | **Vacation Payout**

**($)** | **Auto**

**Allowance**

**($)** |  

**Total**

**($)** |
|---------------------------|-----------------------------|-----------------------------------|---------------------------------|--------------------------------|------------------------------|----------------------------------|----------------------------|
| Steven B. Ratoff          | —                     | —                           | —                         | —                        | —                      | —                          | —                    |
| David H. Bergstrom, Ph.D. | 12,261                      | 12,896                            | —                         | —                        | —                      | —                          | 25,157                     |
| Michael E. Spicer, CPA    | 10,248                      | 28,184                            | 1,682                           | —                        | —                      | —                          | 40,114                     |
| Deni M. Zodda, Ph.D.      | 10,346                      | 25,437                            | —                         | —                        | —                      | —                          | 35,783                     |

 

 

17

 

 

----

**Grants Of Plan-Based Awards**

 

The following table sets forth information with respect to the named executive officers concerning grants of restricted stock during the fiscal year ended December 31, 2008. There were no stock options granted to the named executive officers during the fiscal year ended December 31, 2008.

 

| **Name**

                | **Grant Date**

       | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards**

  | **Estimated Future Payouts Under Equity Incentive Plan Awards**

  | **All Other Stock Awards: Number of Shares of Stock or Units**

**(#)(1)** | **All Other Option Awards: Number of Securities Underlying Options**

**(#)** | **Exercise or Base Price of Option Awards**

**($/Sh)**

  | **Grant Date Fair Value of Stock and Option Awards**

**($)** |
|--------------------------------|-----------------------------|-----------------------------------------------------------------------------|-------------------------------------------------------------------------|----------------------------------------------------------------------------|-------------------------------------------------------------------------------|-----------------------------------------------------------------|---------------------------------------------------------------|
| **Threshold**

**($)**

  | **Target**

**($)**

  | **Maximum**

**($)**

                                                 | **Threshold**

**(#)**

                                           | **Target (#)**

                                                      | **Maximum**

**(#)**

                                                   |
|                           |                        |                                                                        |                                                                    |                                                                       |                                                                          |                                                            |                                                          |   |   |   |
| Steven B. Ratoff               | 2/6/08                      | —                                                                     | —                                                                 | —                                                                    | —                                                                       | —                                                         | —                                                       | 300,000 | — | — | — |
| David H. Bergstrom, Ph.D.      | 2/6/08                      | —                                                                     | —                                                                 | —                                                                    | —                                                                       | —                                                         | —                                                       | 150,000 | — | — | — |
| Michael E. Spicer, CPA(2)      | 2/6/08                      | —                                                                     | —                                                                 | —                                                                    | —                                                                       | —                                                         | —                                                       | 150,000 | — | — | — |
| Deni M. Zodda, Ph.D.           | 2/6/08                      | —                                                                     | —                                                                 | —                                                                    | —                                                                       | —                                                         | —                                                       | 150,000 | — | — | — |

 

|   | (1) | Amounts in this column represent restricted stock awards granted pursuant to 1998 Stock Option Plan to the named executive officer during 2008. The restrictions on the restricted stock shall lapse over a three-year period, subject to reduction as follows: (1) in the event of a $5 million non-dilutive financing by the Company on or before December 31,                        2008, the three-year restriction shall be accelerated such that the restrictions on the restricted stock shall lapse over a two-and-one-half year period; (2) in the event of an additional $5 million (or $10 million in the aggregate) non-dilutive financing by the Company on or before December 31, 2008, the three-year restriction shall be accelerated such that the restrictions on the restricted stock shall lapse over a two-year period; and (3) in the event of a $20 million                        (or $20 million in the aggregate) non-dilutive financing by the Company, the restrictions shall immediately lapse. Additionally, the Board, upon the recommendation of the Compensation Committee, agreed that, in the case of the Company’s Chief Executive Officer, an additional 200,000 shares of restricted stock shall be granted as follows: (1) upon achieving a $5 million non-dilutive financing by the Company on or before December 31, 2008, an additional 100,000                        shares of restricted stock shall be granted; and (2) upon achieving an additional $5 million (or $10 million in the aggregate) in non-dilutive financing by the Company on or before December 31, 2008, an additional 100,000 shares of restricted stock shall be granted. The restrictions on such additional shares shall lapse over a three-year period. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Mr. Spicer resigned from the Company effective April 1, 2009, and as a result, his 150,000 restricted shares were forfeited on said date. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

 

18

 

 

----

**Outstanding Equity Awards at Fiscal Year-End**

 

The following table provides a summary of equity awards outstanding at December 31, 2008 for each of our named executive officers.

 

|                      | **Option Awards**                                                       | **Stock Awards**                                                          |
|---------------------------|-------------------------------------------------------------------------|---------------------------------------------------------------------------|
| **Name**                  | **Number of Securities Underlying Unexercised Options (#) Exercisable** | **Number of Securities Underlying Unexercised Options (#) Unexercisable** | **Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)** | **Option Exercise Price ($)** | **Option Expiration Date** | **Number of Shares or Units of Stock That Have Not Vested (#)** | **Market Value of Shares or Units of Stock That Have Not Vested ($)** | **Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)** | **Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)** |
| Steven B. Ratoff          | 66,677(1)

29.945(2)

16,667(1)

                                  | 33,333

—

 

33,333                                           | —

—

—

  | $1.36

$1.52

$1.52 | 1/16/2011

1/15/2012

1/15/2012 | 300,000(6)

—

—

  | $96,000

—

—

  | —

—

—

  | —

—

—

  |
| David H. Bergstrom, Ph.D. | 21,930(3)

315,570(3)                                                   | 36,549

525,951                                                           | —

—

  | $1.71

$1.71 | 12/3/2016

12/3/2016 | 183,334(6)

—

  | $58,667

—

  | —

—

  | —

—

  |
| Deni M. Zodda, Ph.D.      | —

—                                                        | 68,027(4)

598,973(4)                                                     | —

— | $1.47

$1.47

  | 2/21/2017

2/21/2017 | 150,000(6)

—

  | $48,000

—

  | —

—

  | —

—

  |
| Michael E. Spicer, CPA(7) | 100,000(2)

40,404(5)

259,596(5)

18,416(1)

56,584(1)                 | —

20,202

129,798

36,832

113,168                                 | —

—

—

—

  | $1.57

$1.65

$1.65

$1.81

$1.81 | 12/19/2014

4/18/2016

4/18/2016

1/25/2017

1/25/2017 | 150,000(6)

—

—

—

 

  | $48,000

—

—

—

 

  | —

—

—

—

 

  | —

—

—

—

 

  |

 

 

|   | (1) | The options vest in one-third installments per year in years 1, 2 and 3. An additional 1/3 of these options vested in January 2009. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | These options are fully vested. |
|--------|-----|---------------------------------|

|   | (3) | Dr. Bergstrom’s options are performance based and vest 12.5% upon acceptance by the Food & Drug Administration (FDA) of our New Drug Application (NDA) submission for our product candidate zolpidem; 12.5% upon FDA acceptance of a NDA submission for our product candidate sumatriptan; 12.5% upon Board approval and successful implementation of                        portfolio plan for next generation compounds; 12.5% upon Chief Executive Officer approval and successful implementation of organization plan to address issues in analytical, clinical and regulatory; 15% upon completion of a Board approved licensing deal for our product candidate zolpidem; 15% upon completion of a Board approved licensing deal for our product candidate sumatriptan; and 20% at Board discretion upon completion of approved licensing deal for our product                        candidates zolpidem or sumatriptan. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Dr. Zodda’s options are performance based and vest upon achievement of performance milestones; so that 22,676 incentive stock options and 200,324 non-qualified stock options will vest on the signing of a Board approved third party agreement for U.S. or worldwide rights of sumatriptan; 22,676 incentive stock options and 199,324 non-qualified stock                        options will vest on the signing of a Board approved third party agreement for U.S. or worldwide rights of zolpidem; and 22,675 incentive stock options and 199,325 non-qualified stock options will vest upon approval by the Board of any third party agreement whereby the Company obtains the right to develop a product incorporating an active pharmaceutical ingredient that is the subject of a then valid U.S. Patent (or in-process U.S. Patent Application) and already approved                        for sale by the U.S. Food and Drug Administration with sales in the U.S. of at least $100 million. Such options will expire on February 21, 2017. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | An additional 1/3 of these options vested on April 19, 2009. |
|--------|-----|--------------------------------------------------------------|

|   | (6) | Dr. Bergstrom was awarded 100,000 shares of restricted stock in December 2006, which restricted stock vests in one-third installments in years 1, 2 and 3. In addition, the named executives each received restricted stock awards in February 2008: Mr. Ratoff received 300,000 restricted shares, and each of Dr. Bergstrom, Mr. Spicer and Dr. Zodda received                        150,000 restricted shares. The restrictions on the restricted stock awarded in February 2008 shall lapse over a three-year period, subject to reduction as follows: (1) in the event of a $5 million non-dilutive financing by the Company on or before December 31, 2008, the three-year restriction shall be accelerated such that the restrictions on the restricted stock shall lapse over a two-and-one-half year period; (2) in the event of an additional $5 million (or $10 |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

19

 

 

----

million in the aggregate) non-dilutive financing by the Company on or before December 31, 2008, the three-year restriction shall be accelerated such that the restrictions on the restricted stock shall lapse over a two-year period; and (3) in the event of a $20 million (or $20 million in the aggregate) non-dilutive financing by the Company, the restrictions shall immediately lapse.        Additionally, the Board, upon the recommendation of the Compensation Committee, agreed that, in the case of the Company’s Chief Executive Officer, an additional 200,000 shares of restricted stock shall be granted as follows: (1) upon achieving a $5 million non-dilutive financing by the Company on or before December 31, 2008, an additional 100,000 shares of restricted stock shall be granted; and (2) upon achieving an additional $5 million (or $10 million in the aggregate) in        non-dilutive financing by the Company on or before December 31, 2008, an additional 100,000 shares of restricted stock shall be granted. The restrictions on such additional shares shall lapse over a three-year period.

|   | (7) | Mr. Spicer resigned from the Company effective April 1, 2009. |
|--------|-----|---------------------------------------------------------------|

 

 

**Option Exercises and Stock Vested During 2008**

 

There were no options or other derivative securities exercised in 2008 by our named executive officers. In addition, there were no shares acquired by our named executive officers upon the vesting of restricted stock.

 

20

 

 

----

**Potential Payments Upon Termination or Change in Control**

 

The following table shows the potential payments upon death or disability, termination, resignation or a change of control of NovaDel for each of the named executive officers. For purposes of disclosure, the table assumes that the death or disability, termination, resignation or a change of control occurred as of December 31, 2008.

 

 

|  

 

**Name**  | **Executive Benefits and Payments Upon Termination** |  

**Death or Disability($)** |  

**Termination for Cause($)** |  

 

**Resignation($)** | **Termination Without Cause Or For Good Reason($)** | **Termination in Connection With Change in Control($)** |
|---------------------------|------------------------------------------------------|------------------------------------|--------------------------------------|------------------------------------|-----------------------------------------------------|---------------------------------------------------------|
|                      |                                                 |                               |                                 |                               |                                                |                                                    |
| Steven B. Ratoff(1)       |                                                 |                               |                                 |                               |                                                |                                                    |
|                      |                                                 |                               |                                 |                               |                                                |                                                    |
| David H. Bergstrom, Ph.D. | Base Salary                                          | 72,000                             | —                              | —                            | 300,000                                             | 300,000                                                 |
|                      | Bonus(2)                                             | 90,000                             | —                              | —                            | 90,000                                              | 90,000                                                  |
|                      | Stock Options/Restricted Stock Accelerated(3)        | 58,667                             | —                              | —                            | —                                             | 58,667                                                  |
|                      | Health Care Continuation                             | 1,200                              | —                              | —                            | 1,200                                               | 1,200                                                   |
|                      | Accrued Vacation Pay(5)                              | 28,846                             | 28,846                               | 28,846                             | 28,846                                              | 28,846                                                  |
|                      | Life Insurance Benefits(4)                           | 100,000                            | —                              | —                            | —                                             | —                                                 |
| TOTAL ($)                 |                                                 | 350,713                            | 28,846                               | 28,846                             | 420,046                                             | 478,713                                                 |
|                      |                                                 |                               |                                 |                               |                                                |                                                    |
| Michael E. Spicer, CPA(6) | Base Salary                                          | 72,000                             | —                              | —                            | 256,200                                             | 256,200                                                 |
|                      | Bonus(2)                                             | 76,900                             | —                              | —                            | 76,900                                              | 76,900                                                  |
|                      | Stock Options/Restricted Stock Accelerated(3)        | 48,000                             | —                              | —                            | —                                             | 48,000                                                  |
|                      | Health Care Continuation                             | 28,200                             | —                              | —                            | 28,200                                              | 28,200                                                  |
|                      | Accrued Vacation Pay(5)                              | 19,708                             | 19,708                               | 19,708                             | 19,708                                              | 19,708                                                  |
|                      | Life Insurance Benefits(4)                           | 100,000                            | —                              | —                            | —                                             | —                                                 |
| TOTAL ($)                 |                                                 | 344,808                            | 19,708                               | 19,708                             | 381,008                                             | 429,008                                                 |
|                      |                                                 |                               |                                 |                               |                                                |                                                    |
| Deni M. Zodda, Ph.D.      | Base Salary                                          | 72,000                             | —                              | —                            | 275,000                                             | 275,000                                                 |
|                      | Bonus(2)                                             | 82,500                             | —                              | —                            | 82,500                                              | 82,500                                                  |
|                      | Stock Options/Restricted Stock Accelerated(3)        | 48,000                             | —                              | —                            | —                                             | 48,000                                                  |
|                      | Health Care Continuation                             | 25,400                             | —                              | —                            | 25,400                                              | 25,400                                                  |
|                           | Accrued Vacation Pay(5)                              | 21,154                             | 21,154                               | 21,154                             | 21,154                                              | 21,154                                                  |
|                      | Life Insurance Benefits(4)                           | 100,000                            | —                              | —                            | —                                             | —                                                 |
| TOTAL ($)                 |                                                 | 349,054                            | 21,154                               | 21,154                             | 404,054                                             | 452,054                                                 |

 

 

21

 

 

----

 

|   | (1) | Mr. Ratoff was appointed as the Interim President and Chief Executive Officer of the Company on July 25, 2007, but has no employment agreement. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Assumes the named executive officer has earned 100% of the potential bonus payable per the individual employment agreement. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Represents the intrinsic value of the options or restricted stock as of December 31, 2008 (the difference between the market value of $0.32 as of December 31, 2008 and the exercise price). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Pursuant to our current benefit plans, each named executive officer would receive a $50,000 death benefit plus an additional $50,000 for an accidental death or a maximum benefit of $100,000. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Represents maximum amount vacation payable to executive. Vacation time accrued ratably throughout the calendar year, and lapses as of December 31 of each year if not otherwise utilized. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Mr. Spicer resigned from the Company effective April 1, 2009. |
|--------|-----|---------------------------------------------------------------|

 

***Employment Agreements***

 

We have entered into agreements with Dr. Bergstrom, Mr. Spicer, and Dr. Zodda. In exchange for the benefits offered under the agreements, these executives have agreed not to engage in competitive activities or to interfere with our business relations for a specified period of time following the termination of their employment. The individual agreements of the named executive officers are summarized        below.

 

***David H. Bergstrom, Ph.D***. Dr. Bergstrom’s agreement expires on December 4, 2009. His agreement currently provides for:

 

|   | **•** | annual base salary of $300,000, subject to periodic and customary review for increase by the Board or Compensation Committee; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | an annual bonus of $100,000 for the period commencing on January 1, 2007 and ending on December 31, 2007 and thereafter eligible to receive an annual bonus equal to 30% of base salary; and |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | options to purchase 900,000 shares of Common Stock and 100,000 shares of restricted stock pursuant to our 2006 Equity Incentive Plan. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------|

 

If Dr. Bergstrom’s employment is terminated as a result of his death or disability, we shall (i) pay to Dr. Bergstrom or to Dr. Bergstrom’s estate, as applicable, (x) his base salary and any accrued and unpaid bonus and expense reimbursement amounts through the date of his death or disability and (y) the pro rata portion of the guaranteed bonus and stock options earned by Dr. Bergstrom during        the year of his death or disability (which, for this purpose, shall be prorated in accordance with the number of full months in such year during which Dr. Bergstrom was employed hereunder), and (ii) for the longer of twelve (12) months following his death or disability or the balance of the agreement (as if such termination had not occurred) provide continuation coverage to the members of Dr. Bergstrom’s family and, in the case of termination for disability, Dr. Bergstrom under        all major medical and other health, accident, life or other disability plans and programs in which such family members and, in the case of termination for disability, Dr. Bergstrom participated immediately prior to his death or disability. All stock options that are scheduled to vest by the end of the calendar year in which such termination occurs shall be accelerated and deemed to have vested as of the termination date. All stock options that have not vested (or been deemed pursuant to        the immediately preceding sentence to have vested) as of the date of termination shall be deemed to have expired as of such date. Any stock options that have vested as of the date of Dr. Bergstrom’s death (including the options described in the immediately preceding sentence) shall remain exercisable for a period of one hundred and eighty (180) days after the date of his death; in the event of a disability, any unexercised option may be exercised in whole or in part, within the        first ninety (90) days after such termination of employment or service. If Dr. Bergstrom’s employment is terminated by us for “Cause” or by Dr. Bergstrom other than for “Good Reason,” we shall pay: (i) base salary through the date of termination; (ii) all options that have not vested as of the date of any such termination shall be deemed to have expired; (iii) Dr. Bergstrom’s right to exercise any vested options shall terminate as of such date; and        (iv) any restricted shares that are then forfeitable shall be forfeited immediately. If Dr. Bergstrom is terminated by us (or our successor) upon a “Change of Control,” we (or our successor, as applicable) shall pay: (i) base salary for a period of one year following termination; (ii) any bonus that would otherwise be due to Dr. Bergstrom by the end of the calendar end of the year in which such termination occurs; (iii) any expense reimbursement amounts owed through the date        of termination; and (iv) all options not vested shall be accelerated and deemed to have vested. If Dr. Bergstrom is terminated prior to end of term by us other than as a result of death or disability or Dr. Bergstrom’s employment is terminated by Dr. Bergstrom for “Good Reason” or we provide notice to Dr. Bergstrom that the agreement will not be renewed, we shall pay: (i) twelve (12) month severance from date of public announcement of same; (ii) the bonus that would        have otherwise been due, unless there is documentation on file for a period of at least three (3) months regarding performance issues which have not been 

 

22

 

 

----

cured, to Dr. Bergstrom in the calendar year in which such termination or non-renewal occurs; (iii) any expense reimbursement amounts owed through the date of termination; and (iv) all options that are granted shall be accelerated and deemed to have vested and all vested options at date of termination shall expire ninety (90) days post termination of employment. However, our obligation will be reduced if        compensation is received from other employment for these amounts otherwise actually earned by Dr. Bergstrom during the one year period following the termination of his employment.

***Michael E. Spicer***. Mr. Spicer’s agreement was renewed on January 22, 2008, to be effective from December 20, 2007. The agreement was renewed on December 20, 2008, and the agreement as renewed expires on December 20, 2009, and would be subject to automatic extension for successive one-year periods on the anniversary of the effective date unless        either party gives written notice, no later than 90 days preceding the date of any such extension, of an intention not to further extend the term. On April 1, 2009, the Board accepted the resignation of Mr. Spicer from his position as Chief Financial Officer and Corporate Secretary. There was no disagreement between Mr. Spicer and the Company on any matter relating to the Company’s operations, policies or practices. Options and restricted shares previously granted to Mr. Spicer        that had not yet vested were canceled, and remaining vested options are exercisable through June 30, 2009. Mr. Spicer’s original agreement with the Company, which was further amended on September 2, 2005 and March 12, 2007, expired on December 20, 2007.His current agreement provides for: 

|   | **•** | an annual base salary of $256,200, subject to periodic and customary review for increase by the Board or Compensation Committee; |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | eligible to receive an annual bonus equal to 30% of base salary; and |
|--------|------------|----------------------------------------------------------------------|

 

|   | **•** | eligible to receive additional grants of stock options and other equity awards, in addition to equity awards which Mr. Spicer has already received. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

 If Mr. Spicer’s employment is terminated as a result of his death or disability, we shall (i) pay to Mr. Spicer or to Mr. Spicer’s estate, as applicable, (x) his base salary through the date of his death or disability and (y) the bonus, if any, that would otherwise have been due at the end of the calendar year in which such death or disability occurs; and the pro rata        portion of the stock options earned by Mr. Spicer during the year of his death or disability, prorated in accordance with the number of full months in such year during which Mr. Spicer was employed by us; (ii) for the longer of twelve (12) months following his death or disability or the balance of the agreement (as if such termination had not occurred) provide continuation coverage to the members of Mr. Spicer’s family and, in the case of termination for disability, to Mr. Spicer        under all major medical and other health, accident, life or other disability plans and programs in which such family members and, in the case of termination for disability, Mr. Spicer participated immediately prior to his death or disability; and (iii) pay any expense reimbursement amounts owed through the date of death or disability. All stock options that are scheduled to vest by the end of the calendar year in which such termination occurs shall be accelerated and deemed to have        vested as of the termination date. All stock options that have not vested (or been deemed pursuant to the immediately preceding sentence to have vested) as of the date of termination shall be deemed to have expired as of such date. Any stock options that have vested as of the date of Mr. Spicer’s death (including the options described in the immediately preceding sentence) shall remain exercisable for a period of one hundred and eighty (180) days after the date of his death; in        the event of a disability, any unexercised option may be exercised in whole or in part, within the first ninety (90) days after such termination of employment or service. If Mr. Spicer’s employment is terminated by us for “Cause” or by Mr. Spicer other than for “Good Reason,” we shall pay (i) base salary through the date of termination; (ii) all options that have not vested shall be deemed to have expired as of such date and; (iii) all rights to exercise        any vested options shall terminate. If Mr. Spicer is terminated by us (or our successor) upon a “Change of Control,” we (or our successor, as applicable), upon receiving a copy of a release and separation agreement signed by Mr. Spicer, shall pay within ten (10) business days: (i) a lump sum equivalent to twelve (12) months of base salary, and (ii) a lump sum equivalent to the bonus, if any, that would otherwise have been due at the end of the calendar year in which such        termination occurs; and (iii) any expense reimbursement amounts owed through the date of termination; and (iv) all stock options that have not vested as of the date of such termination shall be accelerated and deemed to have vested. If Mr. Spicer is terminated by us other than as a result of death or disability or Mr. Spicer terminates for “Good Reason,” we shall pay: (i) base salary for a period of twelve (12) months following termination; and (ii) any accrued and unpaid        bonus and expense reimbursement amounts through the date of termination.

 

23

 

 

----

 

***Deni M. Zodda, Ph.D.***Dr. Zodda’s agreement expires on February 22, 2010. His agreement currently provides for: 

|   | **•** | annual base salary of $275,000, subject to periodic and customary review for increase by the Board or Compensation Committee; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | eligible to receive an annual bonus equal to 30% of base salary; and |
|--------|------------|----------------------------------------------------------------------|

 

|   | **•** | an incentive stock option to purchase 68,027 shares of Common Stock and a non-qualified stock option to purchase 598,973 shares of Common Stock pursuant to our 2006 Equity Incentive Plan. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 If Dr. Zodda’s employment is terminated as a result of his death or disability, we shall (i) pay to Dr. Zodda or to Dr. Zodda’s estate, as applicable, (x) his base salary through the date of his death or disability and (y) the bonus, if any, that would otherwise have been due at the end of the calendar year in which such death or disability occurs; and the pro rata        portion of the stock options earned by Dr. Zodda during the year of his death or disability, prorated in accordance with the number of full months in such year during which Dr. Zodda was employed by us; (ii) for the longer of twelve (12) months following his death or disability or the balance of the agreement (as if such termination had not occurred) provide continuation coverage to the members of Dr. Zodda’s family and, in the case of termination for disability, to Dr. Zodda        under all major medical and other health, accident, life or other disability plans and programs in which such family members and, in the case of termination for disability, Dr. Zodda participated immediately prior to his death or disability; and (iii) pay any expense reimbursement amounts owed through the date of death or disability. All stock options that are scheduled to vest by the end of the calendar year in which such termination occurs shall be accelerated and deemed to have        vested as of the termination date. All stock options that have not vested (or been deemed pursuant to the immediately preceding sentence to have vested) as of the date of termination shall be deemed to have expired as of such date. Any stock options that have vested as of the date of Dr. Zodda’s death (including the options described in the immediately preceding sentence) shall remain exercisable for a period of one hundred and eighty (180) days after the date of his death; in the        event of a disability, any unexercised option may be exercised in whole or in part, within the first ninety (90) days after such termination of employment or service. If Dr. Zodda’s employment is terminated by us for “Cause” or by Dr. Zodda other than for “Good Reason,” we shall pay (i) base salary through the date of termination; (ii) all options that have not vested shall be deemed to have expired as of such date and; (iii) all rights to exercise any        vested options shall terminate.

If Dr. Zodda is terminated by us (or our successor) upon a “Change of Control,” we (or our successor, as applicable), upon receiving a copy of a release and separation agreement signed by Dr. Zodda, shall pay within ten (10) business days: (i) a lump sum equivalent to twelve (12) months of base salary, and (ii) a lump sum equivalent to the bonus, if any, that would        otherwise have been due at the end of the calendar year in which such termination occurs; and (iii) any expense reimbursement amounts owed through the date of termination; and (iv) all stock options that have not vested as of the date of such termination shall be accelerated and deemed to have vested. During the first year of Dr. Zodda’s agreement, if he is terminated by us other than as a result of death or disability or Dr. Zodda terminates for “Good Reason,” we        shall pay: (i) base salary for a period of six (6) months following termination; and (ii) any accrued and unpaid bonus and expense reimbursement amounts through the date of termination. However, our obligation shall be reduced, by amounts otherwise actually earned by Dr. Zodda during the six (6) month period following termination. If Dr. Zodda is terminated during the second and third year of the agreement by us other than as a result of death or disability or Dr. Zodda terminates for        “Good Reason,” we shall pay: (i) base salary for a period of twelve (12) months following termination; and (ii) any accrued and unpaid bonus and expense reimbursement amounts through the date of termination. However, our obligation shall be reduced, by amounts otherwise actually earned by Dr. Zodda during the twelve (12) month period following termination.

The foregoing agreements also provide for certain non-competition and non-disclosure covenants on the part of such executive. However, with respect to the non-competition covenants, a court may determine not to enforce such provisions or only partially enforce such provisions. Additionally, each of the foregoing agreements provides for certain fringe benefits, such as inclusion in        pension, profit sharing, stock option, savings, hospitalization and other benefit plans at such times as we may adopt them.

 

24

 

 

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**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.**

 

***Stock Ownership of Certain Beneficial Owners***

 

The following table sets forth information, as of April 24, 2009, regarding beneficial ownership of the Common Stock to the extent known to us by each person known to be the beneficial owner of 5% or more of the Common Stock. Except as otherwise noted, each person has sole voting and investment power as to his or her shares.

 

|  

**Title of Class** | **Name and Address or****Number in Group** | **Amount and Nature of Beneficial Ownership** | **Percentage of Class** |
|----------------------------|--------------------------------------------|-----------------------------------------------|-------------------------|
| Common Stock               | ProQuest Investments, II, L.P.(1)          | 33,666,262(2)                                 | 38.1%                   |
| Common Stock               | Wachovia Corporation(3)                    | 5,800,000(4)                                  | 9.5%                    |

 

|   | (1) | The address for ProQuest Investments II, L.P., ProQuest Investments III, L.P. and ProQuest Investments II Advisors Fund, LP is 90 Nassau Street, 5th Floor, Princeton, NJ 08542. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes (i) 1,262,747 shares of Common Stock, $297,172.77 in convertible secured promissory notes from the Initial Closing convertible into 1,007,365 shares of Common Stock, $508,719.54 in convertible secured promissory notes from the Subsequent Closing convertible into 2,164,704 shares of Common Stock, and warrants to purchase 2,347,981 shares of                        Common Stock held in the name of ProQuest Investments II, L.P., (ii) 4,974,426 shares of Common Stock, $1,170,673.16 in convertible secured promissory notes from the Initial Closing convertible into 3,968,384 shares of Common Stock, $2,004,033.71 in convertible secured promissory notes from the Initial Closing convertible into 8,527,803 shares of Common Stock and warrants to purchase 9,249,567 shares of Common Stock held in the name of ProQuest Investments III, L.P., and                        (iii) 30,397 shares of Common Stock, $7,154.07 in convertible secured promissory notes from the Initial Closing convertible into 24,251 shares of Common Stock, $12,246.75 in convertible secured promissory notes convertible into 52,114 shares of Common Stock, and warrants to purchase 10,704 shares of Common Stock. ProQuest Associates III LLC, or Associates III, is the General Partner of ProQuest Investments III, L.P. ProQuest Associates II LLC, or Associates II, is the                        general partner of ProQuest Investments II, L.P. and of ProQuest Investments II Advisors Fund, L.P. Jay Moorin and Alain Schreiber, Managing Members of Associates III and Associates II, have voting, dispositive and investment power with respect to the securities. Each of Mr. Moorin and Mr. Schreiber disclaim beneficial ownership of such securities except to the extent of each such person’s respective pecuniary interest in such securities. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | The address for Wachovia Corporation is: One Wachovia Center, Charlotte, NC 28288-0137. |
|--------|-----|-----------------------------------------------------------------------------------------|

|   | (4) | As reported on Schedule 13G filed with the Securities and Exchange Commission on January 11, 2007, Wachovia Corporation has (i) sole power to vote 5,800,000 shares of Common Stock and (ii) no power to dispose or direct the disposition of 5,800,000 shares of Common Stock. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

***Stock Ownership of Directors and Management***

 

The following table sets forth information, as of April 24, 2009, regarding beneficial ownership of the Common Stock to the extent known to us, by (i) each person who is a nominee for Director; (ii) each named executive officer in the Summary Compensation Table on page 16; and (iii) all Directors and named executive officers as a group. Except as otherwise noted, each person has sole voting and investment        power as to his or her shares. 

 

|  

**Title of Class** | **Name and Address or**

**Number in Group(1)**                    | **Amount and Nature of**

**Beneficial Ownership(2)** | **Percentage of**

**Class** |
|----------------------------|--------------------------------------------------------------------|-------------------------------------------------------|------------------------------|
| Common Stock               | Mark J. Baric                                                      | 71,667                                                | *                            |
| Common Stock               | David H. Bergstrom, Ph.D.                                          | 477,500(3)                                            | *                            |
| Common Stock               | Thomas E. Bonney, CPA                                              | 236,433                                               | *                            |
| Common Stock               | William F. Hamilton, Ph.D.                                         | 190,506                                               | *                            |
| Common Stock               | J. Jay Lobell                                                      | 320,291(4)                                            | *                            |
| Common Stock               | Charles Nemeroff, M.D., Ph.D.                                      | 148,333                                               | *                            |
| Common Stock               | Steven B. Ratoff                                                   | 911,705(5)                                            | 1.48%                        |
| Common Stock               | Michael E. Spicer, CPA                                             | 599,416                                               | *                            |
| Common Stock               | Deni M. Zodda, Ph.D.                                               | 10,416                                                | *                            |
| Common Stock               | All Directors and Named Executive Officers as a group (11 persons) | 2,966,267                                             | 4.67%                        |

 

*less than 1%.

 

25

 

 

----

 

|   | 1. | The address of all holders listed herein is c/o NovaDel Pharma Inc., 25 Minneakoning Road, Flemington, New Jersey |
|--------|----|-------------------------------------------------------------------------------------------------------------------|

|   | 08822. |
|--------|--------|

|   | 2. | For each of the following persons, the numbers set forth in this column includes the number of shares of Common Stock immediately succeeding such person’s name, which such person has the right to acquire within 60 days through the exercise of stock options: Mr. Baric, 66,667; Dr. Bergstrom, 370,834; Mr. Bonney, 211,133; Dr. Hamilton, 181,506; Mr.                        Lobell, 133,333; Dr. Nemeroff, 133,333; Mr. Ratoff, 612,978; Mr. Spicer, 560,416; Dr. Zodda, 10,416; and all Directors and named executive officers as a group 2,280,616. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | For Dr. Bergstrom, the numbers set forth in this column include 66,666 shares of stock which have vested, pursuant to the 100,000 share restricted stock award that Dr. Bergstrom received in December 2006. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | Includes warrants to purchase 9,494 shares of Common Stock. |
|--------|----|-------------------------------------------------------------|

|   | 5. | Includes warrants to purchase 38,727 shares of Common Stock. |
|--------|----|--------------------------------------------------------------|

 

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.**

 

***Certain Relationships and Related Transactions***

 

To the best of management’s knowledge, other than (i) compensation for services as named executive officers and Directors or (ii) as set forth below, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or were to be a party, in which the amount involved exceeds $120,000 during fiscal 2008,        and in which any Director or named executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of the Common Stock, or any member of the immediate family of any of the foregoing persons, has an interest.

 

In May 2008, we completed the Initial Closing of the 2008 Financing with ProQuest Investments of $1,475,000 convertible notes with a conversion price of $.295 and warrants to purchase 3,000,000 shares of our Common Stock at an exercise price of $.369. We received proceeds, net of offering costs, of approximately $1,275,000 from the Initial Closing. In October 2008, we completed the Subsequent Closing of        the 2008 Financing with ProQuest Investments of $2,525,000 convertible notes with a conversion price of $.235. We received proceeds, net of offering costs, of approximately $2.5 million from the Subsequent Closing. As a result of the 2008 Financing and as of April 24, 2009, ProQuest Investments beneficially owns 38.1% of our total outstanding Common Stock. As such, ProQuest Investments may be deemed to be our affiliate. Mr. Steven B. Ratoff, our Interim President and Chief        Executive Officer, has served as a venture partner with ProQuest Investments since December 2004, although he has no authority for investment decisions by ProQuest Investments. 

 

With respect to the Subsequent Closing of the 2008 Financing, we agreed to file a registration statement with the SEC to register the resale of 17,978,724 shares of Common Stock issuable pursuant to the 2008 Financing, referred to herein as the Subsequent Registrable Shares, within 30 days of the related closing. Also, we agreed to respond to all SEC comment letters as promptly as reasonably possible and        to use our best efforts to have the registration statement declared effective within 90 days of the related closing. However, we were unable to register 9,044,649 of the Subsequent Registrable Shares in accordance with the rules and regulations of the SEC. Therefore, we filed a registration statement with the SEC to register the resale of 8,934,075 of the Subsequent Registrable Shares issuable pursuant to the 2008 Financing. There is no guarantee that the SEC will declare the        registration statement effective. In connection with our reduction of Subsequent Registrable Shares being registered on the registration statement, we have agreed with ProQuest Investments to pay, as partial liquidated damages, an amount equal to 1.0% of the aggregate purchase price paid by ProQuest Investments for the shares that we are not able to register for resale under the registration statement. Such liquidated damages equal $12,703 for each 30-day period during which the shares        remain unregistered, beginning on February 15, 2009 and ending on the date on which such subsequent registrable shares are registered. However, these payments may not exceed 10% of the aggregate purchase price paid by the purchasers, or $127,030. The liquidated damages will be paid in the form of a non-convertible promissory note, which accrues interest at a rate of 10% per annum and all interest and principal will become due and payable upon the earlier to occur of (i) the maturity        date, which is twelve months following the date of issuance or (ii) a change against certain liabilities, including liabilities under the Securities Act of 1933, incurred in connection with the offering.

 

26

 

 

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***Independence of Directors***

 

The Board annually determines the independence of each Director based on a review by the Board and our Corporate Governance and Nominating Committee. The NYSE Amex LLC Corporate Governance Standards require that a majority of the Board be independent and that for a Director to qualify as independent, the Board must affirmatively determine that the Director has no material relationship with NovaDel, either        directly or as a partner, shareholder or officer of an organization that has a relationship with us. In determining whether a material relationship exists, the Board and our Corporate Governance and Nominating Committee broadly consider all relevant facts and circumstances brought to their attention through the processes described below.

 

The NovaDel Corporate Governance Guidelines, adopted by the Board in September 2005 and amended in June 2006, are available on the Corporate Governance section of our website at www.novadel.com. The listing standards of NYSE Amex LLC generally provide that a Director will not be considered independent if:

 

|   | **•** | the Director is, or within the last three years, has been an employee of NovaDel, or an immediate family member of the Director is, or within the last three years has been, an executive officer of NovaDel; |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | the Director, or an immediate family member of the Director, has received more than $120,000 in any 12-month period in the last three years in direct compensation from NovaDel, other than Director fees, compensation paid to an immediate family member who is an employee (other than an executive officer) of the company, compensation received for former                        service as an interim executive officer (provided the interim employment did not last longer than one year) or benefits under a tax-qualified retirement plan, or non-discretionary compensation; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | a Director who is, or has an immediate family member who is, a current partner or employee of our independent public registered accounting firm, or was a partner or employee of our independent registered public accounting firm who worked on our audit at any time during any of the past three years; |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | the Director, or an immediate family member of the Director is, or in the last three years has been, employed as an executive officer of another company where any of NovaDel’s present executives serve on that company’s compensation committee; or |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | a Director who is, or has an immediate family member who is, an employee of any organization to which the company made or from which the company received, payments that exceed the greater of 2% or $1 million of such organization’s consolidated gross revenues in any of the most recent three fiscal years. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Pursuant to the Corporate Governance Guidelines and the NYSE Amex LLC rules, the Board reviewed the independence of each of our Directors in March 2008, taking into account potential conflicts of interest, transactions or other relationships that would reasonably be expected to compromise any of our Directors’ independence. In performing this review, the Board, together with our Corporate Governance        and Nominating Committee, reviewed the responses received from each Director to a questionnaire inquiring about, among other things, their relationships with us.

 

As a result of this review, the Board, based on the recommendation of the Corporate Governance and Nominating Committee, affirmatively determined that all of our Directors are independent of NovaDel and management under the standards set forth in the listing standards of the NYSE Amex LLC, with the exception of our Chairman, Mr. Steven B. Ratoff, who is not independent because of his consulting        arrangement with NovaDel and his current role as our Interim President and Chief Executive Officer.

 

27

 

 

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**ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.**

 

***Independent Registered Public Accounting Firm’s Fee Summary***

 

The following table sets forth fees billed to us by our independent registered public accounting firm during the year ended December 31, 2008 and 2007 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services by our independent registered public accounting firm that are reasonably related to the performance of the audit        or review of our financial statements and that are not reported as Audit Fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other fees for services rendered.

 

 

 

|               | JH COHN |
|--------------------|---------|
|               |    | Fiscal year ended 12/31/08 |   |   | Fiscal year ended 12/31/07 |
|               |    |   |   |   |   |
| Audit Fees         | $       | 114,000 |   | $ | 125,000 |
| Audit Related Fees | $       | 15,000 |   | $ | 19,000 |
| Tax Fees           |    | — |   |   | — |
| All Other Fees     |    | — |   |   | — |

 

 

12% of services in 2008 were for audit-related fees and none were necessary for Audit Committee approval per above policy. 88% of fees were for audit, which were approved by audit committee.

 

***Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm***

 

The Audit Committee has adopted a policy for the pre-approval of all audit and permitted non-audit services that may be performed by our independent registered public accounting firm. Under this policy, unless a type of service to be provided by our independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed        services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee periodically will revise the list of pre-approved services, based on subsequent determinations. The Audit Committee delegates pre-approval authority to its chairperson and may delegate such authority to one or more of its        members, whose activities are reported to the Audit Committee at each regularly scheduled meeting.

 

28

 

 

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The Audit Committee has approved for fiscal year 2009 the following services with the following fee limits:

 

**Audit Services**

 

| **Service** |                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Range of Fees**     |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|
| 1.          | Statutory audits or financial audits for affiliates of the Company for annual financial statements and review of financial statements included in quarterly reports in Form 10-Q                                                                                                                                                                                                                                                                 | Not to exceed $20,000 |
| 2.          | Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g. comfort letters, consents) and assistance in responding to SEC comment letters                                                                                                                                                                             | Not to exceed $5,000  |
| 3.          | Consultations by the Company’s management as to the accounting or disclosure treatment of transactions or events and/or other actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard setting bodies (Note: Under SEC rules, some consultations may be “audit-related”                        services rather than “audit” services) | Not to exceed $10,000 |

 

**Audit Related Services**

 

| **Service** |                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Range of Fees**     |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|
| 1.          | Due diligence services pertaining to potential business acquisitions/dispositions                                                                                                                                                                                                                                                                                                                                                              | Not to exceed $5,000  |
| 2.          | Agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond or comply with financial, accounting or regulatory reporting matters                                                                                                                                                                                                                                                                 | Not to exceed $10,000 |
| 3.          | Consultations by the Company’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be “audit” services                        rather than “audit-related” services) | Not to exceed $10,000 |
| 4.          | Attest services not required by statute or regulation                                                                                                                                                                                                                                                                                                                                                                                          | Not to exceed $5,000  |

 

**Tax Services**

 

| **Service** |                                                  | **Range of Fees**     |
|-------------|-------------------------------------------------------|-----------------------|
| 1.          | U.S. federal, state and local tax planning and advice | Not to exceed $5,000  |
| 2.          | U.S. federal, state and local tax compliance          | Not to exceed $20,000 |
| 3.          | International tax planning and advice                 | Not to exceed $5,000  |
| 4.          | International tax compliance                          | Not to exceed $5,000  |

 

**All Other Services**

 

| **Service**                       |   | **Range of Fees** |
|-----------------------------------|--------|-------------------|
| No such services are pre-approved |   | —           |

 

 

29

 

 

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**PART IV**

 

**ITEM 15. EXHIBITS**

 

 

| (a) | Schedules |
|-----|-----------|

 

 

 

|   | 3. | List of Exhibits |
|--------|----|------------------|

 

 

**INDEX TO EXHIBITS**

 

The following exhibits are included with this Amendment to our Annual Report on Form 10-K/A:

 

| EXHIBIT NO. |   | DESCRIPTION                                                       |   | METHOD OF FILING   |
|-------------|--------|-------------------------------------------------------------------|--------|--------------------|
| 31.1        |   | Certification of Chief Executive Officer under Rule 13a-14(a)     |   | Furnished herewith |
|        |   |                                                              |   |               |
| 31.2        |   | Certification of Principal Financial Officer under Rule 13a-14(a) |   | Furnished herewith |
|        |   |                                                              |   |               |

 

 

30

 

 

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**SIGNATURES**

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

 

|                 | **NovaDel Pharma Inc.**

  |
|----------------------|---------------------------------|
| Date: April 29, 2009 | By:                             | /s/ STEVEN B. RATOFF |
|                 |                            | Steven B. Ratoff |
|                 |                            | Chairman, Interim President and Chief Executive Officer |

 

 

31

 

 

----

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

 

 

| SIGNATURES

                    | TITLE                                                                                           | DATE                           |
|--------------------------------------|-------------------------------------------------------------------------------------------------|--------------------------------|
|  

 

/s/ STEVEN B. RATOFF |  

Chairman, Interim President and Chief Executive Officer 

(Principal Executive Officer) |  

April 29, 2009         |
| Steven B. Ratoff                     |                                                                                            |                           |
|                                 |                                                                                            |                           |
|  

 

/s/ DENI M. ZODDA    |  

Interim Chief Financial Officer

(Principal Financial and Accounting Officer)           |  

April 29, 2009         |
| Deni M. Zodda                        |                                                                                            |                           |
| /s/ JOSEPH WARUSZ                    | (Principal Accounting Officer)                                                                  | April 29, 2009                 |
| Joseph Warusz                        |                                                                                            |                           |
| /s/ MARK J. BARIC                    | Director                                                                                        | April 29, 2009                 |
| Mark J. Baric                        |                                                                                            |                           |
|  

/s/ THOMAS E. BONNEY         |  

Director                                                                                |  

 

April 29, 2009 |
| Thomas E. Bonney                     |                                                                                            |                           |
|                                 |                                                                                            |                           |
|  

/S/ WILLIAM F. HAMILTON      |  

Director                                                                                |  

April 29, 2009         |
| William F. Hamilton, Ph.D.           |                                                                                            |                           |
|                                 |                                                                                            |                           |
|  

/s/ J. JAY LOBELL            |  

Director                                                                                |  

April 29, 2009         |
| J. Jay Lobell                        |                                                                                            |                           |
|                                 |                                                                                            |                           |
|  

/s/ CHARLES NEMEROFF         |  

Director                                                                                |  

April 29, 2009         |
| Charles Nemeroff                     |                                                                                            |                           |
|                                 |                                                                                            |                           |

 

 

 

 

32