WARRANT
 
NO. TPIX - ___
TRANSDEL PHARMACEUTICALS, INC.
________ Shares
     

WARRANT TO PURCHASE COMMON STOCK
 
VOID AFTER 5:30 P.M., EASTERN
TIME, ON THE EXPIRATION DATE
 
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
 
FOR VALUE RECEIVED, TRANSDEL PHARMACEUTICALS, INC., a Delaware corporation (the
“Company”), hereby agrees to sell upon the terms and on the conditions
hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on the
Expiration Date (as hereinafter defined) to ________________ or registered
assigns (the “Holder”), under the terms as hereinafter set forth,
__________________ (_____________) fully paid and non-assessable shares of the
Company’s Common Stock, par value $0.001 per share (the “Warrant Stock”), at a
cash purchase price of FOUR DOLLARS AND FORTY CENTS ($4.40) per share (the “Cash
Warrant Price”) or a cashless purchase price of FIVE DOLLARS AND FIFTY CENTS
($5.50) per share (the “Cashless Warrant Price”), pursuant to this warrant (this
“Warrant”). The number of shares of Warrant Stock to be so issued and each
Warrant Price are subject to adjustment in certain events as hereinafter set
forth. The term “Common Stock” shall mean, when used herein, unless the context
otherwise requires, the stock and other securities and property at the time
receivable upon the exercise of this Warrant.
 

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

 
1. Exercise of Warrant.
 
a. The Holder may exercise this Warrant according to its terms by (i)
surrendering this Warrant, properly endorsed, to the Company at the address set
forth in Section 10, (ii) delivering the subscription form attached hereto to
the Company, duly executed by the Holder, and (iii) payment of the purchase
price being made to the Company for the number of shares of the Warrant Stock
specified in the subscription form, or as otherwise provided in this Warrant,
prior to 5:30 p.m., Eastern Time, on __________________, 2013 (the “Expiration
Date”). Such exercise shall be effected by the surrender of the Warrant,
together with a duly executed copy of the Form of Exercise attached hereto, to
Company at its principal office and (i) the payment to the Company of an amount
equal to the aggregate Cash Warrant Price for the number of shares of Warrant
Stock being purchased in cash, certified check or bank draft or (ii) by
surrendering such number of shares of Warrant Stock received upon exercise of
this Warrant with a Fair Market Value (as defined below) equal to the aggregate
Cashless Warrant Price for the Warrant Stock being purchased (a “Cashless
Exercise”).
 
b. If the Holder elects the Cashless Exercise method of payment, the Company
shall issue to the Holder a number of shares of Warrant Stock determined in
accordance with the following formula:
 

X  = Y(A - B)
A

with: X =  the number of shares of Warrant Stock to be issued to the Holder;

Y = the number of shares of Warrant Stock with respect to which the Warrant is
being exercised;

A = the fair value per share of Common Stock on the date of exercise of this
Warrant; and

B = the then-current Cashless Warrant Price of the Warrant

For the purposes of this Section 1, “Fair Market Value” per share of Common
Stock shall mean (A) the average of the closing sales prices, as quoted on the
primary national or regional stock exchange on which the Common Stock is listed,
or, if not listed, the OTC Bulletin Board if quoted thereon, on the ten (10)
trading days immediately preceding the date on which the notice of exercise is
deemed to have been sent to the Company, or (B) if the Common Stock is not
publicly traded as set forth above, as reasonably and in good faith determined
by the Board of Directors of the Company as of the date which the notice of
exercise is deemed to have been sent to the Company.

c. This Warrant may be exercised in whole or in part so long as any exercise in
part hereof would not involve the issuance of fractional shares of Warrant
Stock. If exercised in part, the Company shall deliver to the Holder a new
Warrant, identical in form, in the name of the Holder, evidencing the right to
purchase the number of shares of Warrant Stock as to which this Warrant has not
been exercised, which new Warrant shall be signed by the Chairman, Chief
Executive Officer or President of the Company. The term Warrant as used herein
shall include any subsequent Warrant issued as provided herein.
 
d. No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. The Company shall pay cash in lieu of
fractions with respect to the Warrants based upon the fair market value of such
fractional shares of Common Stock (which shall be the closing price of such
shares on the exchange or market on which the Common Stock is then traded) at
the time of exercise of this Warrant.
 

2

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

 
e. In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the Warrant Stock so purchased, registered in
the name of the Holder, shall be delivered to the Holder within a reasonable
time after such rights shall have been so exercised. The person or entity in
whose name any certificate for the Warrant Stock is issued upon exercise of the
rights represented by this Warrant shall for all purposes be deemed to have
become the holder of record of such shares immediately prior to the close of
business on the date on which the Warrant was surrendered and payment of the
Cash Warrant Price or the Cashless Warrant Price, as the case may be, and any
applicable taxes was made, irrespective of the date of delivery of such
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are closed, such person shall be
deemed to have become the holder of such shares at the opening of business on
the next succeeding date on which the stock transfer books are open. The Company
shall pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on
exercise of this Warrant.
 
2. Disposition of Warrant Stock and Warrant.
 
a. The Holder hereby acknowledges that this Warrant and any Warrant Stock
purchased pursuant hereto are, as of the date hereof, not registered: (i) under
the Securities Act of 1933, as amended (the “Act”), on the ground that the
issuance of this Warrant is exempt from registration under Section 4(2) of the
Act as not involving any public offering or (ii) under any applicable state
securities law because the issuance of this Warrant does not involve any public
offering; and that the Company’s reliance on the Section 4(2) exemption of the
Act and under applicable state securities laws is predicated in part on the
representations hereby made to the Company by the Holder that it is acquiring
this Warrant and will acquire the Warrant Stock for investment for its own
account, with no present intention of dividing its participation with others or
reselling or otherwise distributing the same, subject, nevertheless, to any
requirement of law that the disposition of its property shall at all times be
within its control.
 
The Holder hereby agrees that it will not sell or transfer all or any part of
this Warrant and/or Warrant Stock unless and until it shall first have given
notice to the Company describing such sale or transfer and furnished to the
Company either (i) an opinion, reasonably satisfactory to counsel for the
Company, of counsel (skilled in securities matters, selected by the Holder and
reasonably satisfactory to the Company) to the effect that the proposed sale or
transfer may be made without registration under the Act and without registration
or qualification under any state law, or (ii) an interpretative letter from the
Securities and Exchange Commission to the effect that no enforcement action will
be recommended if the proposed sale or transfer is made without registration
under the Act.
 
b. If, at the time of issuance of the shares issuable upon exercise of this
Warrant, no registration statement is in effect with respect to such shares
under applicable provisions of the Act, the Company may at its election require
that the Holder provide the Company with written reconfirmation of the Holder’s
investment intent and that any stock certificate delivered to the Holder of a
surrendered Warrant shall bear legends reading substantially as follows:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
 

3

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

 
In addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions.
 
3. Reservation of Shares. The Company hereby agrees that at all times there
shall be reserved for issuance upon the exercise of this Warrant such number of
shares of its Common Stock as shall be required for issuance upon exercise of
this Warrant. The Company further agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will be duly
authorized and will, upon issuance and against payment of the exercise price, be
validly issued, fully paid and non-assessable, free from all taxes, liens,
charges and preemptive rights with respect to the issuance thereof, other than
taxes, if any, in respect of any transfer occurring contemporaneously with such
issuance and other than transfer restrictions imposed by federal and state
securities laws.
 
4. Exchange, Transfer or Assignment of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations, entitling the Holder or Holders
thereof to purchase in the aggregate the same number of shares of Common Stock
purchasable hereunder. Upon surrender of this Warrant to the Company or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof.
 

4

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

 
5. Capital Adjustments. This Warrant is subject to the following further
provisions:
 
a. If any recapitalization of the Company or reclassification of its Common
Stock or any merger or consolidation of the Company into or with a corporation
or other business entity, or the sale or transfer of all or substantially all of
the Company’s assets or of any successor corporation’s assets to any other
corporation or business entity (any such corporation or other business entity
being included within the meaning of the term “successor corporation”) shall be
effected, at any time while this Warrant remains outstanding and unexpired,
then, as a condition of such recapitalization, reclassification, merger,
consolidation, sale or transfer, lawful and adequate provision shall be made
whereby the Holder of this Warrant thereafter shall have the right to receive
upon the exercise hereof as provided in Section 1 and in lieu of the shares of
Common Stock immediately theretofore issuable upon the exercise of this Warrant,
such shares of capital stock, securities or other property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore issuable upon the exercise of this Warrant had such
recapitalization, reclassification, merger, consolidation, sale or transfer not
taken place, and in each such case, the terms of this Warrant shall be
applicable to the shares of stock or other securities or property receivable
upon the exercise of this Warrant after such consummation.
 
b. If the Company at any time while this Warrant remains outstanding and
unexpired shall subdivide or combine its Common Stock, the number of shares of
Warrant Stock purchasable upon exercise of this Warrant and each Warrant Price
shall be proportionately adjusted.
 
c. If the Company at any time while this Warrant is outstanding and unexpired
shall issue or pay the holders of its Common Stock, or take a record of the
holders of its Common Stock for the purpose of entitling them to receive, a
dividend payable in, or other distribution of, Common Stock, then (i) each
Warrant Price shall be adjusted in accordance with Section 5(e) and (ii) the
number of shares of Warrant Stock purchasable upon exercise of this Warrant
shall be adjusted to the number of shares of Common Stock that the Holder would
have owned immediately following such action had this Warrant been exercised
immediately prior thereto.
 
d. If the Company shall at any time after the date of issuance of this Warrant
distribute to all holders of its Common Stock any shares of capital stock of the
Company (other than Common Stock) or evidences of its indebtedness or assets
(excluding cash dividends or distributions paid from retained earnings or
current year’s or prior year’s earnings of the Company) or rights or warrants to
subscribe for or purchase any of its securities (excluding those referred to in
the immediately preceding paragraph) (any of the foregoing being hereinafter in
this paragraph called the “Securities”), then in each such case, the Company
shall reserve shares or other units of such securities for distribution to the
Holder upon exercise of this Warrant so that, in addition to the shares of the
Common Stock to which such Holder is entitled, such Holder will receive upon
such exercise the amount and kind of such Securities which such Holder would
have received if the Holder had, immediately prior to the record date for the
distribution of the Securities, exercised this Warrant.
 
e. Except as otherwise provided herein, whenever the number of shares of Warrant
Stock purchasable upon exercise of this Warrant is adjusted, as herein provided,
each Warrant Price payable upon the exercise of this Warrant shall be adjusted
to that price determined by multiplying such Warrant Price immediately prior to
such adjustment by a fraction (i) the numerator of which shall be the number of
shares of Warrant Stock purchasable upon exercise of this Warrant immediately
prior to such adjustment, and (ii) the denominator of which shall be the number
of shares of Warrant Stock purchasable upon exercise of this Warrant immediately
thereafter.
 
f. The number of shares of Common Stock outstanding at any given time for
purposes of the adjustments set forth in this Section 5 shall exclude any shares
then directly or indirectly held in the treasury of the Company.
 

5

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

 
g. The Company shall not be required to make any adjustment pursuant to this
Section 5 if the amount of such adjustment would be less than one percent (1%)
of both Warrant Prices in effect immediately before the event that would
otherwise have given rise to such adjustment. In such case, however, any
adjustment that would otherwise have been required to be made shall be made at
the time of and together with the next subsequent adjustment which, together
with any adjustment or adjustments so carried forward, shall amount to not less
than one percent (1%) of both Warrant Prices in effect immediately before the
event giving rise to such next subsequent adjustment.
 
h. Following each computation or readjustment as provided in this Section 5,
each new adjusted Warrant Price and number of shares of Warrant Stock
purchasable upon exercise of this Warrant shall remain in effect until a further
computation or readjustment thereof is required.
 
6. Redemption. This Warrant may be redeemed prior to the Expiration Date, at the
option of the Company, at a price of $0.001 per share of Warrant Stock
(“Redemption Price”), upon not less than 10 days prior written notice
(“Redemption Period”) to Holder notifying Holder of the Company’s intent to
exercise such right and setting forth a time and date for such redemption;
provided, however, that no redemption under this Section 6 may occur unless (i)
the Company’s Common Stock has had a closing sales price greater than $7.50 per
share for twenty (20) consecutive trading days and (ii) at the date of
redemption notice and during the entire Redemption Period there is an effective
registration statement covering the resale of the Warrant Stock. This Warrant
may be exercised by Holder, for cash, at any time after notice of redemption has
been given by the Company and prior to the time and date fixed for redemption.
On and after the redemption date, the Holder shall have no further rights except
to receive, upon surrender of this Warrant, the Redemption Price.
 
7. Notice to Holders.
 
a. In case:
 
(i) the Company shall take a record of the holders of its Common Stock (or other
stock or securities at the time receivable upon the exercise of this Warrant)
for the purpose of entitling them to receive any dividend (other than a cash
dividend payable out of earned surplus of the Company) or other distribution, or
any right to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right;
 
(ii) of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation with or merger of the Company
into another corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
 

6

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

 
(iii) of any voluntary dissolution, liquidation or winding-up of the Company;
 
then, and in each such case, the Company will mail or cause to be mailed to the
Holder hereof at the time outstanding a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any, is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the time
receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution or winding-up. Such notice shall
be mailed at least thirty (30) days prior to the record date therein specified,
or if no record date shall have been specified therein, at least thirty (30)
days prior to such specified date, provided, however, failure to provide any
such notice shall not affect the validity of such transaction.
 
b. Whenever any adjustment shall be made pursuant to Section 5 hereof, the
Company shall promptly make a certificate signed by its Chairman, Chief
Executive Officer, President, Vice President, Chief Financial Officer or
Treasurer, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and each Warrant Price and number of shares of Warrant Stock
purchasable upon exercise of this Warrant after giving effect to such
adjustment, and shall promptly cause copies of such certificates to be mailed
(by first class mail, postage prepaid) to the Holder of this Warrant.
 
8. Loss, Theft, Destruction or Mutilation. Upon receipt by the Company of
evidence satisfactory to it, in the exercise of its reasonable discretion, of
the ownership and the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company and, in the case of mutilation, upon surrender and
cancellation thereof, the Company will execute and deliver in lieu thereof,
without expense to the Holder, a new Warrant of like tenor dated the date
hereof.
 
9. Warrant Holder Not a Stockholder. The Holder of this Warrant, as such, shall
not be entitled by reason of this Warrant to any rights whatsoever as a
stockholder of the Company.
 
10. Notices. Any notice required or contemplated by this Warrant shall be deemed
to have been duly given if transmitted by registered or certified mail, return
receipt requested, or nationally recognized overnight delivery service, to the
Company at its principal executive offices located at 4225 Executive Square,
Suite 460, La Jolla, California 92037, Attention: Chief Financial Officer, or to
the Holder at the name and address set forth in the Warrant Register maintained
by the Company.
 
11. Choice of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
 

7

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

 
12. Jurisdiction and Venue. The Company and Holder hereby agree that any dispute
which may arise between them arising out of or in connection with this Warrant
shall be adjudicated before a court located in Kent County, Delaware and they
hereby submit to the exclusive jurisdiction of the federal and state courts of
the State of Delaware located in Kent County with respect to any action or legal
proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Warrant or any acts or
omissions relating to the sale of the securities hereunder, and consent to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth
herein or such other address as either party shall furnish in writing to the
other.
 

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 

8

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

IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officers, as of this __
day of May, 2008.
 

        TRANSDEL PHARMACEUTICALS, INC.  
   
   
    By:      

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

Name: Juliet Singh, Ph.D.   Title: Chief Executive Officer 

 
 
 
 
 

9

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

FORM OF EXERCISE
 
(to be executed by the registered holder hereof)
 
 
 
The undersigned hereby exercises the right to purchase _________ shares of
common stock, par value $0.001 per share (“Common Stock”), of Transdel
Pharmaceuticals, Inc. evidenced by the within Warrant Certificate for a Cash
Warrant Price of $4.40 per share or a Cashless Warrant Price of $5.50 per share
and herewith makes payment of the purchase price in full of (i) $__________ in
cash or (ii) shares of Common Stock (pursuant to a Cashless Exercise in
accordance with Section 1b.). Kindly issue certificates for shares of Common
Stock (and for the unexercised balance of the Warrants evidenced by the within
Warrant Certificate, if any) in accordance with the instructions given below.
 
 
 
Dated:____________________ , 20___ .
 

______________________________

Instructions for registration of stock

_____________________________
  Name (Please Print)

Social Security or other identifying Number:

Address:__________________________________
   City/State and Zip Code
 

Instructions for registration of certificate representing
the unexercised balance of Warrants (if any)
 

_____________________________
Name (Please Print)
 
Social Security or other identifying Number: ___________

Address:____________________________________
   City, State and Zip Code

10

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

FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto
_____________________ the right represented by the within Warrant to purchase
_________ shares of Common Stock of Transdel Pharmaceuticals, Inc. to which the
within Warrant relates, and appoints _____________________ to transfer such
right on the books of Transdel Pharmaceuticals, Inc. with full power of
substitution in the premises.

Dated: ____________________  ______________________________
(Signature must conform to name
of holder as specified on the
face of the Warrant)

_______________________________
(Address)
Signed in the presence of:

__________________________

 

 

 

 

 

11

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