DISCLOSURE AND RELEASE
RELATED TO THE EXCHANGE OF
NON-PLAN OPTIONS FOR
STOCK OPTIONS UNDER THE
NOVADEL PHARMA INC. 1998 STOCK OPTION PLAN
You entered into an Employment
Agreement with NovaDel Pharma Inc. (the Company) on April 19, 2004
(Employment Agreement). Under the terms of the Employment Agreement you were
to be granted a nonqualified stock option to purchase ONE HUNDRED THOUSAND (100,000)
SHARES of the Companys common stock. The Employment Agreement did not specify under
which of the Companys stock option plans you were to receive the stock option.
You subsequently entered into a
Non-Plan Nonqualified Stock Option Agreement with the Company on May 17, 2004 (2004
Agreement). Under the terms of the 2004 Agreement you were issued an option under a
nonqualified non-plan in ONE HUNDRED THOUSAND (100,000) SHARES of the
Companys common stock, par value $.001 per share.
The Company has since determined that
the Companys issuance of such options could give rise to compliance issues regarding
the continued listing standards of the American Stock Exchange and the Company therefore
desires to cancel the non-plan options issued since May 11, 2004, under the nonqualified
non-plan. The Company proposes to issue you new options under the existing NovaDel Pharma
Inc. 1998 Stock Option Plan (1998 Plan).
The terms of the 1998 Plan and the
form agreement thereto are not identical to the terms of your 2004 Agreement or your
Employment Agreement. The below summary outlines the differences between your 2004
Agreement, your Employment Agreement and the 1998 Plan Stock Option Agreement that the
Company proposes to enter into with you (Agreement). Unless otherwise defined
herein, all capitalized terms are defined in either the Agreement or the 1998 Plan. You
should carefully read your proposed Agreement and the 1998 Plan attached to your Agreement
and consider all of the information provided in this Disclosure. You are encouraged to
consult your own legal counsel before entering into the Agreement offered to you along
with this Disclosure and Release.
SUMMARY OF YOUR 1998
PLAN STOCK OPTION AGREEMENT
You are granted an option for one hundred thousand shares of the Companys
common stock. The Option is for the same number of shares and is the same class
of the Companys stock as your existing option under the 2004 Agreement
(Non-Plan Option) and as provided in your Employment Agreement.
The exercise price is $1.98 for each share of common stock you purchase under
the Agreement. The exercise price is the same exercise price as under your 2004
Your Option under the 1998 Plan will have the same vesting schedule as provided
for in your Employment Agreement and in your 2004 Agreement. Your vesting
33,333 Option shares vest on or after May 17, 2005;
33,333 Option shares vest on or after May 17, 2006;
33,334 Option shares vest on or after May 17, 2007.
The Option under your Agreement will expire on May 16, 2014. The term of your
Option is the same as the term of your existing Non-Plan Option. Your Employment
Agreement provides similarly.
Similar to the terms of your Non-Plan Option, if your employment terminates
other than For Cause (as defined in your Agreement) or other than
due to your death or Disability (as defined in your Agreement), your vested
Options as of the date of such Termination shall continue to be exercisable by
you under the terms of the 1998 Plan and your Agreement.
Similar to the terms of your Non-Plan Option, your Option will vest upon a
Change in Control, as that term is defined in Section 9 of your Employment
If your employment is terminated For Cause, as defined in your Agreement and in
your Employment Agreement, then you forfeit your Option under your Agreement.
Your 2004 Agreement and your Employment Agreement provided for forfeiture as
SUMMARY OF MATERIAL
(1) YOUR 2004 AGREEMENT AND YOUR EMPLOYMENT AGREEMENT
AND (2) YOUR 1998 PLAN STOCK OPTION AGREEMENT
Your Agreement provides that upon your death or Disability, your Options may
continue to be exercised for the term of your Option as set forth in your
Agreement. Your Option expires on May 16, 2014. The 2004 Agreement did not
define Disability. The Agreement defines Disability in Section 8.
The 1998 Plan provides that upon an Optionees Termination without cause
and not due to death or Disability, that the vested Options as of that date
shall be exercised by the Optionee within three months of the termination event
(or shorter if the Options term expires earlier). Your Employment
Agreement does not contain a three-month exercise period limitation, however
your 2004 Agreement contained a conflicting provision. Therefore, your Agreement
specifically excludes the three-month exercise period limitation.
For Cause is defined in your Agreement in Section 10. For Cause was
not defined in your 2004 Agreement.
RELEASE AND DISCHARGE
The undersigned, her successors and
assigns do hereby give up any and all of her rights in the 2004 Agreement entered into
between the undersigned and the Company on February 28, 2004 and does hereby release,
acquit and forever discharge the Company from any and all actions, causes of actions,
claims, damages, liabilities, costs and all claims of any nature or kind whatsoever for
economic loss or otherwise, known or unknown, due to the exchange of the
undersigneds Non-Plan Options for an Option under the 1998 Plan. The undersigned
states, pursuant to her signature hereunder, that she has read and fully understands this
release and that she has the opportunity to consult her own legal counsel before entering
into this release.
|/s/ JEAN W. FRYDMAN
||/s/ GARY A. SHANGOLD
|Jean W. Frydman, Optionee|| ||
||Gary A. Shangold, M.D.,|| || |
||President and CEO|| || |