Document:

EXHIBIT 4.5

See Legends
on Reverse 

Incorporated Under the Laws of the
State of Delaware

 

 

	*******	*******

 

 

 

 

NOVADEL PHARMA INC.

SERIES A CONVERTIBLE
PREFERRED STOCK $0.001PAR VALUE

 

THIS
IS TO CERTIFY THAT _______________ is the owner of __________(_______)
Shares of the SERIES A CONVERTIBLE PREFERRED STOCK OF 

NOVADEL PHARMA INC.

  transferable only on the books
of the Corporation by the holder hereof, in person or by attorney, upon surrender of this Certificate properly endorsed.

This certificate and the shares
represented hereby are issued and shall have the rights specified in and be held subject to all the provisions of the Certificate
of Incorporation and the Bylaws of said corporation and any amendments thereof, to all of which the holder of this certificate,
by acceptance hereof, assents.

The shares represented by this
Certificate are convertible into shares of Common Stock at the election of the holder thereof and shall be so converted upon the
occurrence of certain events as set forth in the Charter.

The Corporation is authorized to
issue more than one class or series of stock. Upon written request, the Corporation will furnish without charge to each stockholder
a copy of powers, designations, preferences and relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

IN
WITNESS WHEREOF, the said Corporation has caused this certificate to be signed by its duly authorized officers this _____ day
of _________, 20 ____.

 

	 	 	 	 
	Secretary
	 	President
	 

 

 

 

ANY TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY
REVIEW THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES A PREFERRED STOCK REPRESENTED
BY THIS CERTIFICATE, INCLUDING SECTION 4(c)(vi) THEREOF. THE NUMBER OF SHARES OF SERIES A PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES A PREFERRED STOCK STATED ON THE FACE HEREOF PURSUANT TO SECTION 4(c)(vi) OF THE
CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES A PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.EXHIBIT 4.6

FOR NEGOTIATION AND 

DISCUSSION PURPOSES ONLY 

NOT AN OFFER OR SALE OF SECURITIES 

 [FORM OF SERIES A WARRANT]

NOVADEL PHARMA INC.

WARRANT TO PURCHASE COMMON STOCK

Series A
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 A
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, 

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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, 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 

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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. 

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. 

5

          (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: 

	
  

 	
  

 
	
  

 	
           (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 

 

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 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 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 

 

7

	
  

 	
  

 
	
  

 	
 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 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).

 
	
  

 	
  

 

8

          (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 

9

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 

10

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 

11

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. 

12

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 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 

13

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). 

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 

14

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
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 

15

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 

16

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 

17

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 

18

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 

19

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]

20

          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 A 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:

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