EXHIBIT 4.8


FOR
NEGOTIATION AND 

DISCUSSION PURPOSES ONLY

NOT AN OFFER OR SALE OF SECURITIES


 [FORM OF SERIES C WARRANT]


NOVADEL PHARMA INC.


WARRANT TO PURCHASE COMMON STOCK


Series C
Warrant No.: ____________

Date of Issuance: February [___], 2011 (“Issuance
Date”)


          NovaDel Pharma Inc., a Delaware
corporation (the “Company”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, [IROQUOIS MASTER FUND LTD.],
[OTHER BUYERS], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, upon exercise of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in exchange,
transfer or replacement hereof, the “Warrant”),
at any time or times on or after the one (1) year and one (1) day anniversary
of the Issuance Date (the “Initial Exercise Date”), but not after
11:59 p.m., New York time, on the Expiration Date (as defined below),
[______________]1
(subject to adjustment as provided herein) fully paid and non-assessable shares
of Common Stock (as defined below) (the
“Warrant Shares”). Except as
otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 16. This Warrant is one of the Series C Warrants
to Purchase Common Stock (the “SPA Warrants”)
issued pursuant to Section 1 of that certain Securities Purchase Agreement,
dated as of February [___], 2011, by and among the Company and the investors
(the “Buyers”) referred to therein
(the “Securities Purchase Agreement”).


1. EXERCISE
OF WARRANT.


          (a) Mechanics
of Exercise. Subject to the terms and conditions hereof (including, without
limitation, the limitations set forth in Section 1(f)), this Warrant may be
exercised by the Holder on any day on or after the Initial Exercise Date, in
whole or in part, by delivery (whether via facsimile or otherwise) of a written
notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”),
of the Holder’s election to exercise this Warrant. Within one (1) Trading Day
following an exercise of this Warrant as aforesaid, the Holder shall deliver
payment to the Company of an amount equal to the Exercise Price in effect on
the date of such exercise multiplied by the number of Warrant Shares as to
which this Warrant was so exercised (the “Aggregate
Exercise Price”) in cash or via wire transfer of immediately
available funds if the Holder did not notify the Company in such Exercise
Notice that such exercise was made pursuant to a Cashless Exercise (as defined
in Section 1(d)). The Holder shall not be required to deliver the original of
this Warrant in order to effect an exercise hereunder. Execution and delivery
of an Exercise Notice with respect to less than all of the Warrant Shares shall
have the


	
  

 
	

 


 
	
 1
 100% warrant coverage.

 









same effect as cancellation of the original of this Warrant and
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. Execution and delivery of an Exercise Notice for all of the
then-remaining Warrant Shares shall have the same effect as cancellation of the
original of this Warrant after delivery of the Warrant Shares in accordance
with the terms hereof. On or before the first (1st) Trading Day
following the date on which the Company has received an Exercise Notice, the
Company shall transmit by facsimile an acknowledgment of confirmation of
receipt of such Exercise Notice, in the form attached hereto as Exhibit B,
to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd)
Trading Day following the date on which the Company has received such Exercise
Notice (provided that the Aggregate Exercise Price with respect thereto has
been delivered to the Company by the Holder on or prior to such third (3rd)
Trading Day if the Holder did not notify the Company in such Exercise Notice
that such exercise was made pursuant to a Cashless Exercise), the Company shall
(X) provided that the Transfer Agent is participating in The Depository Trust
Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such
aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account
with DTC through its Deposit/ Withdrawal at Custodian system, or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and deliver to the Holder or, at the Holder’s
instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in
each case, sent by reputable overnight courier to the address as specified in
the applicable Exercise Notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee (as indicated in the
applicable Exercise Notice), for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of an Exercise
Notice, the Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date such Warrant Shares are credited
to the Holder’s DTC account or the date of delivery of the certificates
evidencing such Warrant Shares (as the case may be). If this Warrant is
submitted in connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise,
then, at the request of the Holder, the Company shall as soon as practicable
and in no event later than three (3) Business Days after any exercise and at
its own expense, issue and deliver to the Holder (or its designee) a new
Warrant (in accordance with Section 7(d)) representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised. No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but rather the number of shares of
Common Stock to be issued shall be rounded up to the nearest whole number. The
Company shall pay any and all taxes and fees which may be payable with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant.


          (b) Exercise
Price. For purposes of this Warrant, “Exercise
Price” means $0.15, subject to adjustment as provided herein.


          (c) Company’s
Failure to Timely Deliver Securities. If the Company shall fail, for any
reason or for no reason, to issue to the Holder within three (3) Trading Days
after receipt of the applicable Exercise Notice (provided that the Aggregate
Exercise Price with respect thereto has been delivered to the Company by the
Holder on or prior to such third (3rd) Trading Day if


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the Holder did not notify the Company in such Exercise Notice that such
exercise was made pursuant to a Cashless Exercise), a certificate for the
number of shares of Common Stock to which the Holder is entitled and register
such shares of Common Stock on the Company’s share register or to credit the
Holder’s balance account with DTC for such number of shares of Common Stock to
which the Holder is entitled upon the Holder’s exercise of this Warrant (as the
case may be), then, in addition to all other remedies available to the Holder,
the Company shall pay in cash to the Holder on each day after such third (3rd)
Trading Day that the issuance of such shares of Common Stock is not timely
effected an amount equal to 2% of the product of (A) the aggregate number of
shares of Common Stock not issued to the Holder on a timely basis and to which
the Holder is entitled and (B) the Closing Sale Price of the Common Stock on
the Trading Day immediately preceding the last possible date on which the
Company could have issued such shares of Common Stock to the Holder without
violating Section 1(a). In addition to the foregoing, if within three (3)
Trading Days after the Company’s receipt of the applicable Exercise Notice
(provided that the Aggregate Exercise Price with respect thereto has been
delivered to the Company by the Holder on or prior to such third (3rd)
Trading Day if the Holder did not notify the Company in such Exercise Notice
that such exercise was made pursuant to a Cashless Exercise), the Company shall
fail to issue and deliver a certificate to the Holder and register such shares
of Common Stock on the Company’s share register or credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder
is entitled upon the Holder’s exercise hereunder (as the case may be), and if
on or after such third (3rd) Trading Day the Holder (or any other
Person in respect, or on behalf, of the Holder) purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Holder of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all or any
portion of the number of shares of Common Stock, issuable upon such exercise
that the Holder so anticipated receiving from the Company, then, in addition to
all other remedies available to the Holder, the Company shall, within three (3)
Business Days after the Holder’s request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if
any) for the shares of Common Stock so purchased (including, without
limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the
Company’s obligation to so issue and deliver such certificate or credit the
Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case
may be) (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to so issue and deliver to the Holder a
certificate or certificates representing such shares of Common Stock or credit
the Holder’s balance account with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s exercise hereunder (as the
case may be) and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of
Common Stock multiplied by (B) the lowest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date of the
applicable Exercise Notice and ending on the date of such issuance and payment
under this clause (ii).


          (d) Cashless
Exercise. Notwithstanding anything contained herein to the contrary (other
than Section 1(f) below), if at the time of exercise hereof a registration
statement is not effective (or the prospectus contained therein is not
available for use) for the issuance by the Company to the Holder of all of the
Warrant Shares, then the Holder may, in its sole discretion,


3





exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):


	
  

 	
  

 	
  

 
	
  

 	
 Net Number =
 (A x B) - (A x C)

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                                      B

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 For purposes
 of the foregoing formula:

 






	
  

 	
  

 
	
  

 	
 A= the total number of shares with respect to which this Warrant is
 then being exercised.

 
	
  

 	
  

 
	
  

 	
 B= as applicable: (i) the Closing Sale Price of the Common Stock on
 the Trading Day immediately preceding the date of the applicable Exercise
 Notice if such Exercise Notice is (1) both executed and delivered pursuant to
 Section 1(a) hereof on a day that is not a Trading Day or (2) both executed
 and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the
 opening of “regular trading hours” (as defined in Rule 600(b)(64) of
 Regulation NMS promulgated under the federal securities laws) on such Trading
 Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s
 execution of the applicable Exercise Notice if such Exercise Notice is
 executed during “regular trading hours” on a Trading Day and is delivered
 within two (2) hours thereafter pursuant to Section 1(a) hereof or (iii) the
 Closing Sale Price of the Common Stock on the date of the applicable Exercise
 Notice if the date of such Exercise Notice is a Trading Day and such Exercise
 Notice is both executed and delivered pursuant to Section 1(a) hereof after
 the close of “regular trading hours” on such Trading Day.

 
	
  

 	
  

 
	
  

 	
 C= the Exercise Price then in effect for the applicable Warrant
 Shares at the time of such exercise.

 


          (e) Disputes.
In the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the number of Warrant Shares to be issued pursuant to
the terms hereof (including, without limitation, under Section 1(h)), the
Company shall promptly issue to the Holder the number of Warrant Shares that
are not disputed and resolve such dispute in accordance with Section 13.


          (f) Limitations
on Exercises. Notwithstanding anything to the contrary contained in this
Warrant, this Warrant shall not be exercisable by the Holder hereof to the
extent (but only to the extent) that the Holder or any of its affiliates would
beneficially own in excess of 4.9% (the “Maximum
Percentage”) of the Common Stock. To the extent the above
limitation applies, the determination of whether this Warrant shall be
exercisable (vis-à-vis other convertible, exercisable or exchangeable
securities owned by the Holder or any of its affiliates) and of which such
securities shall be exercisable (as among all such securities owned by the
Holder) shall, subject to such Maximum Percentage limitation, be determined on
the basis of the first submission to the Company for conversion, exercise or
exchange (as the case may be). No prior inability to exercise this Warrant
pursuant to this paragraph shall have any effect on the 


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applicability of the provisions of this paragraph with respect to
any subsequent determination of exercisability. For the purposes of this
paragraph, beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of percentage
ownership) shall be determined in accordance with Section 13(d) of the 1934 Act
(as defined in the Securities Purchase Agreement) and the rules and regulations
promulgated thereunder. The provisions of this paragraph shall be implemented
in a manner otherwise than in strict conformity with the terms of this
paragraph to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Maximum Percentage beneficial
ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Maximum Percentage
limitation. The limitations contained in this paragraph shall apply to a
successor Holder of this Warrant. The holders of Common Stock shall be third
party beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its Common Stock. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation, pursuant to this
Warrant or securities issued pursuant to the Securities Purchase Agreement. 


          (g) Insufficient
Authorized Shares. From and after the Stockholder Meeting Deadline (as
defined in the Securities Purchase Agreement), the Company shall at all times
keep reserved for issuance under this Warrant a number of shares of Common Stock
as shall be necessary to satisfy the Company’s obligation to issue shares of
Common Stock hereunder (without regard to any limitation otherwise contained
herein with respect to the number of shares of Common Stock that may be
acquirable upon exercise of this Warrant). If, notwithstanding the foregoing,
and not in limitation thereof, at any time after the Stockholder Meeting
Deadline while any of the SPA Warrants remain outstanding the Company does not
have a sufficient number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon exercise of the SPA
Warrants at least a number of shares of Common Stock equal to the number of
shares of Common Stock as shall from time to time be necessary to effect the exercise
of all of the SPA Warrants then outstanding (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company shall promptly
take all action necessary to increase the Company’s authorized shares of Common
Stock to an amount sufficient to allow the Company to reserve the Required
Reserve Amount for all the SPA Warrants then outstanding. Without limiting the
generality of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event later than
eighty (80) days after the occurrence of such Authorized Share Failure, the
Company shall hold a meeting of its stockholders for the approval of an
increase in the number of authorized shares of Common Stock. In connection with
such meeting, the Company shall provide each stockholder with a proxy statement
and shall use its reasonable best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such proposal.


          (h) Issuance
Limit. Notwithstanding anything to the contrary contained in this Warrant
(but subject to Section 1(f)), the maximum number of Warrant Shares for which
this Warrant may be exercised at any specific time by the Holder shall be equal
to the quotient of (i) the Current Available Amount as of such time over (ii)
the Exercise Price then in effect as of


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such time. The foregoing determination shall be made upon each receipt
of an Exercise Notice hereunder and no inability to exercise as of any specific
time as a result of this Section 1(h) shall affect any future determination of
exercisability as of any other time. In the event that the Holder shall sell or
otherwise transfer all or any portion of this Warrant, the Company’s board of
directors shall in good faith make equitable adjustments with respect to the
Current Available Amount (and the components thereof) to properly give effect
to such sale of transfer, provided further that if the Holder does not accept
such adjustments, then the Company’s board of directors and the Holder shall
agree, in good faith, upon an independent investment bank of nationally
recognized standing to make such appropriate adjustments, whose determination shall
be final and binding and whose fees and expenses shall be borne by the Company.


2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section 2.


          (a) Stock
Dividends and Splits. Without limiting any provision of Section 2(b) or Section 4, if
the Company, at any time on or after the date of the Securities Purchase
Agreement, (i) pays a stock dividend on one or more classes of its then
outstanding shares of Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii)
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its then outstanding shares of Common Stock into a
larger number of shares or (iii) combines (by combination, reverse stock split
or otherwise) one or more classes of its then outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding immediately before such event and
of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clause (ii) or (iii)
of this paragraph shall become effective immediately after the effective date
of such subdivision or combination. If any event requiring an adjustment under
this paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted
appropriately to reflect such event.


          (b) Adjustment
Upon Issuance of Shares of Common Stock. If and whenever on or after the
date of the Securities Purchase Agreement, the Company issues or sells, or in
accordance with this Section 2 is
deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding any Excluded Securities (as defined in the
Securities Purchase Agreement) issued or sold or deemed to have been issued or
sold) for a consideration per share (the “New
Issuance Price”) less than a price equal to the Exercise Price in
effect immediately prior to such issue or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then immediately after such Dilutive Issuance, the Exercise Price then in
effect shall be reduced to an amount equal to the New Issuance Price. For all
purposes of the foregoing (including, without limitation, determining the
adjusted Exercise Price and consideration per share under this Section 2(b)),
the following shall be applicable:


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           (i) Issuance
 of Options. If the Company in any manner grants or sells any Options and
 the lowest price per share for which one share of Common Stock is issuable
 upon the exercise of any such Option or upon conversion, exercise or exchange
 of any Convertible Securities issuable upon exercise of any such Option is
 less than the Applicable Price, then such share of Common Stock shall be
 deemed to be outstanding and to have been issued and sold by the Company at
 the time of the granting or sale of such Option for such price per share. For
 purposes of this Section 2(b)(i), the “lowest price per share for which one
 share of Common Stock is issuable upon the exercise of any such Options or
 upon conversion, exercise or exchange of any Convertible Securities issuable
 upon exercise of any such Option” shall be equal to (1) the lower of (x) the
 sum of the lowest amounts of consideration (if any) received or receivable by
 the Company with respect to any one share of Common Stock upon the granting
 or sale of such Option, upon exercise of such Option and upon conversion,
 exercise or exchange of any Convertible Security issuable upon exercise of
 such Option and (y) the lowest exercise price set forth in such Option for
 which one share of Common Stock is issuable upon the exercise of any such
 Options or upon conversion, exercise or exchange of any Convertible
 Securities issuable upon exercise of any such Option minus (2) the sum of all
 amounts paid or payable to the holder of such Option (or any other Person)
 upon the granting or sale of such Option, upon exercise of such Option and
 upon conversion, exercise or exchange of any Convertible Security issuable
 upon exercise of such Option plus the value of any other consideration
 received or receivable by, or benefit conferred on, the holder of such Option
 (or any other Person). Except as contemplated below, no further adjustment of
 the Exercise Price shall be made upon the actual issuance of such shares of
 Common Stock or of such Convertible Securities upon the exercise of such
 Options or upon the actual issuance of such shares of Common Stock upon
 conversion, exercise or exchange of such Convertible Securities.

 
	
  

 	
  

 
	
  

 	
           (ii) Issuance
 of Convertible Securities. If the Company in any manner issues or sells
 any Convertible Securities and the lowest price per share for which one share
 of Common Stock is issuable upon the conversion, exercise or exchange thereof
 is less than the Applicable Price, then such share of Common Stock shall be
 deemed to be outstanding and to have been issued and sold by the Company at
 the time of the issuance or sale of such Convertible Securities for such
 price per share. For purposes of this Section 2(b)(ii), the “lowest price per
 share for which one share of Common Stock is issuable upon the conversion,
 exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum
 of the lowest amounts of consideration (if any) received or receivable by the
 Company with respect to one share of Common Stock upon the issuance or sale
 of the Convertible Security and upon conversion, exercise or exchange of such
 Convertible Security and (y) the lowest conversion price set forth in such
 Convertible Security for which one share of Common Stock is issuable upon
 conversion, exercise or exchange thereof minus (2) the sum of all amounts
 paid or payable to the holder of such Convertible Security (or any other
 Person) upon the issuance or sale of such Convertible Security plus the value
 of any other consideration received or receivable by, or benefit conferred
 on, the holder of such Convertible Security (or any other Person). Except as
 contemplated below, no further adjustment of the Exercise Price shall be made
 upon the actual issuance of such shares of Common Stock upon conversion,
 exercise or exchange of such Convertible Securities, and if any such issue or
 sale of such Convertible Securities is made upon exercise of any 

 


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 Options for which adjustment of this Warrant has been or is to be
 made pursuant to other provisions of this Section 2(b), except as
 contemplated below, no further adjustment of the Exercise Price shall be made
 by reason of such issue or sale.

 
	
  

 	
  

 
	
  

 	
           (iii) Change
 in Option Price or Rate of Conversion. If the purchase or exercise price
 provided for in any Options, the additional consideration, if any, payable
 upon the issue, conversion, exercise or exchange of any Convertible
 Securities, or the rate at which any Convertible Securities are convertible
 into or exercisable or exchangeable for shares of Common Stock increases or
 decreases at any time, the Exercise Price in effect at the time of such
 increase or decrease shall be adjusted to the Exercise Price which would have
 been in effect at such time had such Options or Convertible Securities
 provided for such increased or decreased purchase price, additional
 consideration or increased or decreased conversion rate, as the case may be,
 at the time initially granted, issued or sold. For purposes of this Section
 2(b)(iii), if the terms of any Option or Convertible Security that was
 outstanding as of the date of issuance of this Warrant are increased or
 decreased in the manner described in the immediately preceding sentence, then
 such Option or Convertible Security and the shares of Common Stock deemed
 issuable upon exercise, conversion or exchange thereof shall be deemed to
 have been issued as of the date of such increase or decrease. No adjustment
 pursuant to this Section 2(b) shall be made if such adjustment would result
 in an increase of the Exercise Price then in effect.

 
	
  

 	
  

 
	
  

 	
           (iv) Calculation
 of Consideration Received. If any Option or Convertible Security is
 issued in connection with the issuance or sale or deemed issuance or sale of
 any other securities of the Company, together comprising one integrated
 transaction, (x) such Option or Convertible Security (as applicable) will be
 deemed to have been issued for consideration equal to the Black Scholes
 Consideration Value thereof and (y) the other securities issued or sold or
 deemed to have been issued or sold in such integrated transaction shall be
 deemed to have been issued for consideration equal to the difference of (I)
 the aggregate consideration received by the Company minus (II) the Black
 Scholes Consideration Value of each such Option or Convertible Security (as
 applicable). If any shares of Common Stock, Options or Convertible Securities
 are issued or sold or deemed to have been issued or sold for cash, the
 consideration received therefor will be deemed to be the gross amount of
 consideration received by the Company therefor. If any shares of Common
 Stock, Options or Convertible Securities are issued or sold for a
 consideration other than cash, the amount of such consideration received by
 the Company will be the fair value of such consideration, except where such
 consideration consists of publicly traded securities, in which case the
 amount of consideration received by the Company for such securities will be
 the arithmetic average of the VWAPs of such security for each of the five (5)
 Trading Days immediately preceding the date of receipt. If any shares of
 Common Stock, Options or Convertible Securities are issued to the owners of
 the non-surviving entity in connection with any merger in which the Company
 is the surviving entity, the amount of consideration therefor will be deemed
 to be the fair value of such portion of the net assets and business of the
 non-surviving entity as is attributable to such shares of Common Stock,
 Options or Convertible Securities, as the case may be. The fair value of any
 consideration other than cash or publicly traded securities will be
 determined jointly by the Company and the Holder. If such parties are unable
 to reach agreement within ten (10) days after the occurrence of an event
 requiring valuation (the “Valuation 

 


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 Event”), the fair value of such
 consideration will be determined within five (5) Trading Days after the tenth
 (10th) day following such Valuation Event by an independent,
 reputable appraiser jointly selected by the Company and the Holder. The
 determination of such appraiser shall be final and binding upon all parties
 absent manifest error and the fees and expenses of such appraiser shall be
 borne by the Company.

 
	
  

 	
  

 
	
  

 	
           (v) Record
 Date. If the Company takes a record of the holders of shares of Common
 Stock for the purpose of entitling them (A) to receive a dividend or
 other distribution payable in shares of Common Stock, Options or in
 Convertible Securities or (B) to subscribe for or purchase shares of
 Common Stock, Options or Convertible Securities, then such record date will
 be deemed to be the date of the issue or sale of the shares of Common Stock
 deemed to have been issued or sold upon the declaration of such dividend or
 the making of such other distribution or the date of the granting of such
 right of subscription or purchase (as the case may be).

 


          (c) Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraphs (a) or (b) of this Section 2, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the adjusted number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such
adjustment (without regard to any limitations on exercise contained herein).


          (d) Other
Events. In the event that the Company (or any Subsidiary (as defined in the
Securities Purchase Agreement)) shall take any action to which the provisions
hereof are not strictly applicable, or, if applicable, would not operate to
protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Exercise Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(d) will increase
the Exercise Price or decrease the number of Warrant Shares as otherwise
determined pursuant to this Section 2, provided further that if the Holder does
not accept such adjustments as appropriately protecting its interests hereunder
against such dilution, then the Company’s board of directors and the Holder
shall agree, in good faith, upon an independent investment bank of nationally
recognized standing to make such appropriate adjustments, whose determination
shall be final and binding and whose fees and expenses shall be borne by the Company.


          (e) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest
cent or the nearest 1/100th of a share, as applicable. The number of
shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.


3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any
adjustments pursuant to Section 2 above, if the Company shall declare or make
any dividend or other distribution of its


9





assets (or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way
of a dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Maximum Percentage) immediately before the date on
which a record is taken for such Distribution, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, to
the extent that the Holder’s right to participate in any such Distributions
would result in the Holder exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to such extent (or
the beneficial ownership of any such shares of Common Stock as a result of such
Distribution to such extent) and such Distribution to such extent shall be held
in abeyance for the benefit of the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Maximum Percentage,
provided further that such Distribution shall be held in abeyance for the
benefit of the Holder until such time as the Holder exercises this Warrant
(whether in whole or in part), and subject to the foregoing proviso, upon each
exercise of this Warrant the Company shall make such Distribution to the Holder
with respect to each Warrant Share for which this Warrant is so exercised until
such time as this Warrant has been exercised in full).


4. PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.


          (a) Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at
any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Maximum Percentage) immediately before the
date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights (provided, however, to the extent that
the Holder’s right to participate in any such Purchase Right would result in
the Holder exceeding the Maximum Percentage, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (or beneficial
ownership of such shares of Common Stock as a result of such Purchase Right to
such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Maximum Percentage, provided further, such Purchase
Right shall be held in abeyance for the benefit of the Holder until such time
as the Holder exercises this Warrant (whether in whole or in part), and subject
to the foregoing proviso, upon each exercise of this Warrant the Company shall
distribute such Purchase Right to the Holder with respect to each Warrant Share
for which this Warrant is so exercised until such time as this Warrant has been
exercised in full).


10





          (b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental
Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents (as defined in the Securities Purchase Agreement) in accordance with
the provisions of this Section 4(b) pursuant to written agreements in
form and substance satisfactory to the Holder and approved by the Holder prior
to such Fundamental Transaction, including agreements to deliver to the Holder
in exchange for this Warrant a
security of the Successor
Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant,
including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value of the
shares of Common Stock pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such adjustments to the number of shares of
capital stock and such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the consummation of such
Fundamental Transaction) and
(ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market. Upon
the consummation of each Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of the
applicable Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents referring to the “Company” shall refer instead to
the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant and
the other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of each
Fundamental Transaction, the Successor Entity shall deliver to the Holder
confirmation that there shall be issued upon exercise of this Warrant at any time after
the consummation of the applicable Fundamental Transaction, in lieu of the
shares of Common Stock (or other securities, cash, assets or other property
(except such items still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the
applicable Fundamental Transaction, such shares of publicly traded common stock
(or its equivalent) of the Successor Entity (including its Parent Entity) which
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without
regard to any limitations on the exercise of this Warrant), as adjusted
in accordance with the provisions of this Warrant. In addition to and not in substitution for any
other rights hereunder, prior to the consummation of each Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the applicable Fundamental Transaction but prior
to the Expiration Date, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive


11





upon the happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without
regard to any limitations on the exercise of this Warrant). Provision
made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder.


          (c) Black
Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request
of the Holder delivered at any time commencing on the earliest to occur of (x)
the public disclosure of any Fundamental Transaction, (y) the consummation of
any Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental
Transaction (including, without limitation, a Fundamental Transaction that is
publicly disclosed, consummated or of which the Holder first becomes aware (as
the case may be) prior to the Initial Exercise Date) through the date that is
ninety (90) days after the public disclosure of the consummation of such
Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K
filed with the SEC, the Company or the Successor Entity (as the case may be)
shall purchase this Warrant from the Holder on the date of such request by
paying to the Holder cash in an amount equal to the Black Scholes Value.


          (d) Application.
The provisions of this Section 4 shall apply similarly and equally to
successive Fundamental Transactions and Corporate Events and shall be applied
as if this Warrant (and any such subsequent warrants) were fully exercisable
and without regard to any limitations on the exercise of this Warrant (provided that the Holder
shall continue to be entitled to the benefit of the Maximum Percentage, applied
however with respect to shares of capital stock registered under the 1934 Act
and thereafter receivable upon exercise of this Warrant (or any such other
warrant)).


5. NONCIRCUMVENTION. The Company hereby covenants and agrees
that the Company will not, by amendment of its Certificate of Incorporation (as
defined in the Securities Purchase Agreement), Bylaws (as defined in the
Securities Purchase Agreement) or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the Holder. Without limiting
the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, (ii) shall take all such actions
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall from and after the Stockholder
Meeting Deadline, so long as any of the SPA Warrants are outstanding, take all
action necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the SPA Warrants, the maximum number of shares of Common Stock as
shall from time to time be necessary to effect the exercise of the SPA Warrants
then outstanding (without regard to any limitations on exercise).


6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, the Holder, solely in its capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer


12





upon the Holder, solely in its capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which it is then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this Warrant
or otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. Notwithstanding this
Section 6, the Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.


7. REISSUANCE
OF WARRANTS.


          (a) Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance
with Section 7(d)), registered as the Holder may request, representing the
right to purchase the number of Warrant Shares being transferred by the Holder
and, if less than the total number of Warrant Shares then underlying this
Warrant is being transferred, a new Warrant (in accordance with Section 7(d))
to the Holder representing the right to purchase the number of Warrant Shares
not being transferred.


          (b) Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with Section
7(d)) representing the right to purchase the Warrant Shares then underlying
this Warrant.


          (c) Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a new Warrant
or Warrants (in accordance with Section 7(d)) representing in the aggregate the
right to purchase the number of Warrant Shares then underlying this Warrant,
and each such new Warrant will represent the right to purchase such portion of
such Warrant Shares as is designated by the Holder at the time of such
surrender; provided, however, no warrants for fractional shares of Common Stock
shall be given.


          (d) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the face of such
new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant


13





Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.


8. NOTICES. Whenever notice is required to be given under this
Warrant, unless otherwise provided herein, such notice shall be given in
accordance with Section 8(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s) and (ii) at least fifteen (15) days prior to the date on which
the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect to any
grants, issuances or sales of any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property to holders of shares of
Common Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder and (iii) at least ten (10) Trading
Days prior to the consummation of any Fundamental Transaction. To the extent
that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of its Subsidiaries, the
Company shall simultaneously file such notice with the SEC (as defined in the
Securities Purchase Agreement) pursuant to a Current Report on Form 8-K. It is
expressly understood and agreed that the time of execution specified by the
Holder in each Exercise Notice shall be definitive and may not be disputed or
challenged by the Company.


9. AMENDMENT AND WAIVER. Except as otherwise provided herein,
the provisions of this Warrant (other than Section 1(f)) may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the Holder. The Holder shall be entitled, at its option, to
the benefit of any amendment of any other similar warrant issued under the
Securities Purchase Agreement. No waiver shall be effective unless it is in
writing and signed by an authorized representative of the waiving party.


10. SEVERABILITY. If any provision of this Warrant is prohibited
by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).


14





11. GOVERNING LAW. This Warrant shall be governed by and
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Warrant shall be
governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.


12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be
jointly drafted by the Company and the Holder and shall not be construed
against any Person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant. Terms used in this Warrant but defined in the
other Transaction Documents shall have the meanings ascribed to such terms on
the Closing Date (as defined in the Securities Purchase Agreement) in such
other Transaction Documents unless otherwise consented to in writing by the
Holder.


13. DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price, the Closing Sale Price, the Bid Price or
fair market value or the arithmetic calculation of the Warrant Shares (as the
case may be), the Company or the Holder (as the case may be) shall submit the
disputed determinations or arithmetic calculations (as the case may be) via
facsimile (i) within two (2) Business Days after receipt of the applicable
notice giving rise to such dispute to the Company or the Holder (as the case
may be) or (ii) if no notice gave rise to such dispute, at any time after the
Holder learned of the circumstances giving rise to such dispute (including,
without limitation, as to whether any issuance or sale or deemed issuance or
sale was an issuance or sale or deemed issuance or sale of Excluded
Securities). If the Holder and the Company are unable to agree upon such
determination or calculation (as the case may be) of the Exercise Price, the
Closing Sale Price, the Bid Price or fair market value or the number of Warrant
Shares (as the case may be) within three (3) Business Days of such disputed
determination or arithmetic calculation being submitted to the Company or the
Holder (as the case may be), then the Company shall, within two (2) Business
Days submit via facsimile (a) the disputed determination of the Exercise Price,
the Closing Sale Price, the Bid Price or fair market value (as the case may be)
to an independent, reputable investment bank selected by the Holder or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause at its expense the
investment bank or the accountant (as the case may be) to perform the
determinations or calculations (as the case may be) and notify the Company and
the Holder of the results no later than ten (10) Business Days from the time it
receives such disputed determinations or calculations (as the case may be).
Such investment bank’s or


15





accountant’s determination or calculation (as the case may be) shall be
binding upon all parties absent demonstrable error.


14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and the
other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the right of the Holder to pursue actual damages for any failure by the
Company to comply with the terms of this Warrant. The Company covenants to the
Holder that there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided for herein
with respect to payments, exercises and the like (and the computation thereof)
shall be the amounts to be received by the Holder and shall not, except as
expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that
the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required. The
Company shall provide all information and documentation to the Holder that is
requested by the Holder to enable the Holder to confirm the Company’s
compliance with the terms and conditions of this Warrant (including, without limitation,
compliance with Section 2 hereof). The issuance of shares and certificates for
shares as contemplated hereby upon the exercise of this Warrant shall be made
without charge to the Holder or such shares for any issuance tax or other costs
in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance
and delivery of any certificate in a name other than the Holder or its agent on
its behalf.


15. TRANSFER. This Warrant may be offered for sale, sold,
transferred or assigned without the consent of the Company.


16. CERTAIN DEFINITIONS. For purposes of this Warrant, the
following terms shall have the following meanings:


          (a) “Aggregate
Face Exercise Amount” is equal to $[_____________].


          (b) “Aggregate
Series B Face Exercise Amount” is equal to $[_____________].


          (c) “Bid Price” means, for any security as of
the particular time of determination, the bid price for such security on the
Principal Market as reported by Bloomberg as of such time of determination, or,
if the Principal Market is not the principal securities exchange or trading
market for such security, the bid price of such security on the principal
securities exchange or trading market where such security is listed or traded
as reported by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg as
of such time of determination, or, if no bid price is reported for such
security by Bloomberg as of such time of determination, the average of the bid
prices of any market makers for such security


16





as reported in the “pink sheets” by OTC Markets Inc. (formerly Pink
Sheets LLC) as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of determination on any of
the foregoing bases, the Bid Price of such security as of such time of
determination shall be the fair market value as mutually determined by the
Company and the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.


          (d) “Black Scholes Consideration Value” means
the value of the applicable Option or Convertible Security (as the case may be)
as of the date of issuance thereof calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the Closing Sale Price of the Common Stock
on the Trading Day immediately preceding the public announcement of the
execution of definitive documents with respect to the issuance of such Option
or Convertible Security (as the case may be), (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining
term of such Option or Convertible Security (as the case may be) as of the date
of issuance of such Option or Convertible Security (as the case may be) and (iii)
an expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following the date
of issuance of such Option or Convertible Security (as the case may be).


          (e) “Black Scholes Value” means the value of the
unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c), which value is calculated using the Black
Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
utilizing (i) an underlying price per share equal to the greater of (1) the
highest Closing Sale Price of the Common Stock during the period beginning on
the Trading Day immediately preceding the earliest to occur of (x) the public
disclosure of the applicable Fundamental Transaction, (y) the consummation of
the applicable Fundamental Transaction and (z) the date on which the Holder
first became aware of the applicable Fundamental Transaction and ending on the
Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the sum of
the price per share being offered in cash in the applicable Fundamental
Transaction (if any) plus the value of the non-cash consideration being offered
in the applicable Fundamental Transaction (if any), (ii) a strike price equal
to the Exercise Price in effect on the date of the Holder’s request pursuant to
Section 4(c), (iii) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the greater of (1) the remaining term of
this Warrant as of the date of the Holder’s request pursuant to Section 4(c)
and (2) the remaining term of this Warrant as of the date of consummation of
the applicable Fundamental Transaction or as of the date of the Holder’s
request pursuant to Section 4(c) if such request is prior to the date of the
consummation of the applicable Fundamental Transaction and (iv) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from
the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the earliest to occur of
(x) the public disclosure of the applicable Fundamental Transaction, (y) the
consummation of the applicable Fundamental Transaction and (z) the date on
which the Holder first became aware of the applicable Fundamental Transaction.


17





          (f) “Bloomberg” means Bloomberg, L.P.


          (g) “Business Day” means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.


          (h) “Closing Sale Price” means, for any security
as of any date, the last closing trade price for such security on the Principal
Market, as reported by Bloomberg, or, if the Principal Market begins to operate
on an extended hours basis and does not designate the closing trade price, then
the last trade price of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last trade price
of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, or if the foregoing
does not apply, the last trade price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no last trade price is reported for such security by Bloomberg,
the average of the ask prices of any market makers for such security as
reported in the “pink sheets” by OTC Markets Inc. (formerly Pink Sheets LLC).
If the Closing Sale Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Closing Sale Price of such security on
such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.


          (i) “Common Stock” means (i) the Company’s
shares of common stock, $0.001 par value per share, and (ii) any capital stock
into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock.


          (j) “Convertible Securities” means any stock or
other security (other than Options) that is at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire,
any shares of Common Stock.


          (k) “Current
Available Amount” is, as of the applicable time of determination,
equal to (i) the product of (1) the Aggregate Face Exercise Amount times (2)
the Series B Multiplier minus (ii) the Prior Aggregate Exercise Amount.


          (l) “Eligible Market” means The New York Stock
Exchange, the NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market or the Principal Market.


          (m) “Expiration Date” means the date that is the
fifth (5th) anniversary of the Initial Exercise Date or, if such
date falls on a day other than a Business Day or on which trading does not take
place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.


          (n) “Fundamental Transaction” means that (i) the
Company or any of its Subsidiaries shall, directly or indirectly, in one or
more related transactions, (1) consolidate or


18





merge with or into
(whether or not the Company or any of its Subsidiaries is the surviving corporation) any
other Person, or (2) sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or
assets to any other Person, or (3) allow any other Person to make a
purchase, tender or exchange offer that is accepted by the holders of more than
50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the Person or Persons making or party to, or
associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (4) consummate a stock or share purchase
agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other
Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any
shares of Voting Stock of the Company held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business
combination), or (5) (I)
reorganize, recapitalize or reclassify the Common Stock, (II) effect or
consummate a stock combination, reverse stock split or other similar
transaction involving the Common Stock or (III) make any public announcement or
disclosure with respect to any stock combination, reverse stock split or other
similar transaction involving the Common Stock (including, without limitation,
any public announcement or disclosure of (x) any potential, possible or actual
stock combination, reverse stock split or other similar transaction involving
the Common Stock or (y) board or stockholder approval thereof, or the intention
of the Company to seek board or stockholder approval of any stock combination,
reverse stock split or other similar transaction involving the Common Stock),
or (ii) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the “beneficial owner” (as defined
in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the
aggregate ordinary voting power represented by issued and outstanding Voting
Stock of the Company.


          (o) “Options” means any rights, warrants or
options to subscribe for or purchase shares of Common Stock or Convertible
Securities.


          (p) “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or
equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public
market capitalization as of the date of consummation of the Fundamental
Transaction.


          (q) “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity or a government or any department
or agency thereof.


          (r) “Principal Market” means the OTC Bulletin
Board. 


          (s) “Prior
Aggregate Exercise Amount” is, as of the applicable time of
determination, equal to the total aggregate Exercise Price theretofore actually
paid (whether in cash or by delivery of notice of Cashless Exercise) with
respect to the Series C Warrants initially issued to [Iroquois Master Fund
Ltd.] [OTHER BUYERS] (and not including the exercise in question).


19





          (t) “Series B
Multiplier” is equal to the quotient of (i) the Series B Prior
Aggregate Exercise Amount divided by (ii) the Aggregate Series B Face Exercise
Amount.


          (u) “Series B
Prior Aggregate Exercise Amount” is, as of the applicable time of
determination, equal to the total aggregate Exercise Price (as defined in the
Series B Warrants (as defined in the Securities Purchase Agreement))
theretofore actually paid (whether in cash or by delivery of notice of Cashless
Exercise) for prior or concurrent exercises with respect to the Series B
Warrants initially issued to [Iroquois Master Fund Ltd.] [OTHER BUYERS].


          (v) “Successor Entity” means the Person (or, if so elected by
the Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.


          (w) “Trading Day” means any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder.


          (x) “Voting Stock”
of a Person means capital stock of such Person of the class or classes pursuant
to which the holders thereof have the general voting power to elect, or the
general power to appoint, at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not at the time
capital stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).


          (y) “VWAP” means, for any security as of any
date, the dollar volume-weighted average price for such security on the
Principal Market (or, if the Principal Market is not the principal trading
market for such security, then on the principal securities exchange or
securities market on which such security is then traded) during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York
time, as reported by Bloomberg through its “Volume at Price” function or, if
the foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in
the “pink sheets” by OTC Markets Inc. (formerly Pink Sheets LLC). If VWAP
cannot be calculated for such security on such date on any of the foregoing
bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the
Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section


20





13. All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction
during such period.


[signature
page follows]


21





          IN WITNESS WHEREOF, the Company has caused
this Warrant to Purchase Common Stock to be duly executed as of the Issuance
Date set out above.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 NOVADEL PHARMA INC.

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title:

 	
  

 









EXHIBIT A


EXERCISE NOTICE


TO BE EXECUTED BY THE REGISTERED HOLDER TO
EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK


NOVADEL PHARMA INC.


          The
undersigned holder hereby exercises the right to purchase _________________ of
the shares of Common Stock (“Warrant Shares”)
of NovaDel Pharma Inc., a Delaware corporation (the “Company”), evidenced by Series C Warrant No. _______ (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.


          1. Form
of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:


	
  

 	
  

 	
  

 
	
  

 	
 ____________

 	
 a “Cash
 Exercise” with respect to _________________ Warrant Shares; and/or

 
	
  

 	
  

 	
  

 
	
  

 	
 ____________

 	
 a “Cashless
 Exercise” with respect to _______________ Warrant Shares.

 


          In the
event that the Holder has elected a Cashless Exercise with respect to some or
all of the Warrant Shares to be issued pursuant hereto, the Holder hereby
represents and warrants that (i) this Exercise Notice was executed by the
Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if
applicable, the Bid Price as of such time of execution of this Exercise Notice
was $________.


          2. Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise
with respect to some or all of the Warrant Shares to be issued pursuant hereto,
the Holder shall pay the Aggregate Exercise Price in the sum of $___________________
to the Company in accordance with the terms of the Warrant.


          3. Delivery
of Warrant Shares. The Company shall deliver to Holder, or its designee or
agent as specified below, __________ Warrant Shares in accordance with the
terms of the Warrant. Delivery shall be made to Holder, or for its benefit, to
the following address:













Date:
_______________ __, ______


	
  

 	
  

 
	

 


 	
  

 
	
 Name of Registered Holder

 	
  

 













	
  

 	
  

 	
  

 
	
 By: 

 	
  

 	
  

 
	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title:

 	
  

 









EXHIBIT B


ACKNOWLEDGMENT


          The Company
hereby acknowledges this Exercise Notice and hereby directs ______________ to
issue the above indicated number of shares of Common Stock in accordance with
the Transfer Agent Instructions dated _________, 20__, from the Company and
acknowledged and agreed to by _______________.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 NOVADEL PHARMA INC.

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title: