Exhibit 4.5


PLACEMENT AGENT WARRANT


NOVADEL PHARMA INC.


WARRANT TO PURCHASE COMMON STOCK


Warrant No.:
PA-4 

Date of Issuance: February 14, 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, Roth Capital Partners, LLC, 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), 333,400 (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 the Warrant to Purchase Common Stock (the
“Placement Agent Warrant”) issued
pursuant to Section 1 of that certain Placement Agency Agreement, dated as of
February 14, 2011, by and among the Company and Roth Capital Partners, LLC (the
“Buyers”) (the “Placement Agency Agreement”). In connection
with the Placement Agency Agreement, the Company has entered into a Securities
Purchase Agreement, dated of even date herewith, with certain investors (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 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 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 


2





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, 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 


3





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, 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 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 


4





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 Placement Agency 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) FINRA
Restrictions. Holder agrees that, pursuant to the Lock-Up Period (as
defined below) contained in Rule 5110(g)(1) of the Financial Industry
Regulatory Authority, Inc. (“FINRA”),
it will not (a) sell, transfer, assign, pledge, hypothecate or otherwise
transfer this Warrant (including any Warrant Shares issued or issuable
hereunder) other than to a bona fide officer or partner of the Holder or any
selected dealer in connection with the offering contemplated by the Placement
Agency Agreement, in each case in accordance with FINRA Conduct Rule
5110(g)(1), or (b) cause this Warrant or any Warrant Shares issued or issuable 


5





hereunder to be the subject of any hedging, short sale, derivative, put
or call transaction that would result in the effective economic disposition of
this Warrant or any Warrant Shares issued or issuable hereunder, except as
provided for in FINRA Rule 5110(g)(2). As used herein, the term “Lock-Up Period” means the period beginning
on the date that the registration statement registering this Warrant is
declared effective by the SEC (as defined in the Securities Purchase Agreement
(the “Effective Date”) and ending
on the one hundred eighty day anniversary of the Effective Date. In addition,
notwithstanding the other terms of this Warrant or any agreement between the
Company and the Holder, the Holder agrees that, as required by FINRA Rule
5110(f)(2)(H): (i) this Warrant may not be exercised more than five years from
the Effective Date; (ii) the Holder shall not have more than one demand
registration right at the Company’s expense; (iii) the Holder shall not have
the right to demand registration of this Warrant or the Warrant Shares more
than five years from the earlier of the Effective Date or the commencement of
sales of the public offering contemplated by the Placement Agency Agreement;
(iv) the Holder shall not have the right to piggyback registration with respect
to this Warrant or the Warrant Shares more than seven years from the earlier of
the Effective Date or the commencement of sales of the public offering
contemplated by the Placement Agency Agreement; (v) this Warrant may not have
anti-dilution terms that allow the Holder and related persons to receive more
shares or to exercise at a lower price than originally agreed upon at the time
of the public offering, when the public shareholders have not been
proportionally affected by a stock split, stock dividend, or other similar
event; and (vi) this Warrant may not have anti-dilution terms that allow the
Holder and related persons to receive or accrue cash dividends prior to the
exercise or conversion of the security. 


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 Placement
Agency 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) Intentionally
Omitted. 


6





          (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 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 


7





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). 


          (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 


8





 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 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 


9





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 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. 


10





          (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
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 11 of the Placement Agency 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 


11





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
Placement Agency 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). 


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 


12





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 Placement Agency 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 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 


13





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) “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 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.



          (b) “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 


14





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). 


          (c) “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. 


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


          (e) “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. 


          (f) “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 


15





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. 


          (g) “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. 


          (h) “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. 


          (i) “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. 


          (j) “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. 


          (k) “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 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 


16





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. 


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


          (m) “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. 


          (n) “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. 


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


          (p) “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. 


          (q) “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. 


          (r) “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). 


          (s) “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 


17





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 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]


18





          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:

 	
     /s/
 Steven B. Ratoff

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:
    Steven B. Ratoff

 
	
  

 	
 Title:
      Chairman, Chief Executive Officer and
 President

 









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 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: