THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT MADE UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT.
Warrant Certificate No.:_____
Date of Issue:____________
Void after 5:00 p.m, Columbia, Maryland Time on_________
Warrant to Purchase
__________Common Shares
WARRANT TO PURCHASE COMMON SHARES
CHEUNG LABORATORIES, INC.
This is to certify that, for value received,
DunnHughes Holdings, Inc.
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or registered assigns ("Holder"), is entitled to purchase subject to the
provisions of this Warrant, from Cheung Laboratories, Inc., a Maryland
corporation ("Company"), at any time after_________ and not later than 5:00
p.m., Columbia, Maryland Time, on__________, shares, $0.01 par value, of the
Company Common Stock ("Common Stock"), at the purchase price per share of $____.
The number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for a share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock" and the exercise price of a
share of Common Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price."
(a) Exercise of Warrant. This Warrant may be exercised in whole or
in part at any time or from time to time on or after the date hereof, but not
later than 5:00 p.m., Columbia, Maryland Time, on the date set forth above. If
such date is a day on which banking institutions are authorized by law to close,
then the expiration date shall be on the next succeeding day which shall not be
such a day. This Warrant may be exercised by presentation and surrender hereof
to the Company or at the office of its stock transfer agent, if any, with
written notice duly executed and accompanied by payment in cash or cash
equivalent of the Exercise Price for the number of shares specified in such
notice, together with all federal and state taxes applicable upon such exercise.
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the right of the holder to purchase the balance of the shares
purchasable hereunder. Upon receipt by the Company of this Warrant at the office
or agency of the Company, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. The Form of
Subscription Agreement, attached hereto, shall be submitted at the time of
exercise and all other documents reasonably requested.
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(b) Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance or delivery upon exercise of this Warrant.
(c) Restrictions on Transfer. The securities represented hereby
and the shares to be issued on exercise have not been registered under federal
or state securities laws. They may not be sold or offered for sale in the
absence of effective registration under such securities laws, or an opinion of
counsel satisfactory to the Company that such registration is not required.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Subject to compliance with paragraph (d), this
Warrant is assignable. Any such assignment shall be made by surrender of this
Warrant to the Company or at the office of its stock transfer agent, if any,
with written notice of assignment duly executed and funds sufficient to pay any
transfer tax; whereupon the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be canceled. This Warrant may be divided or
combined with other Warrants which carry the same rights upon presentation
hereof at the office of the Company or at the office of its stock transfer
agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrant issued in
substitution for or replacement of this Warrant, or into which this Warrant may
be divided or exchanged and the term "original issue date hereof" shall refer to
the date that the Company first issued a Warrant which was subsequently
transferred or exchanged for another. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
(e) Rights of the Holder. The Holder shall not, by virtue hereof,
be entitled to any rights of a shareholder in the Company either at law or
equity, and the rights of the Holder are limited to those expressed in the
Warrant and are not enforceable against the Company except to the extent set
forth herein.
(f) Split or Combination of Stock and Stock Dividend: In case the
Company shall at any time subdivide its outstanding shares of Stock into a
greater number of shares or declare a dividend upon its Stock payable solely in
shares of Stock, the Stock Purchase Price in effect immediately prior to such
subdivision or declaration shall be proportionally reduced, and the number of
shares issuable upon exercise of the Option shall be proportionately increased.
Conversely, in case the outstanding shares of Stock of the Company shall be
combined into a smaller number of shares, the Stock Purchase Price in effect
immediately prior to such combination shall be proportionately increased, and
the number of shares issuable upon exercise of the Option shall be
proportionately reduced.
(g) Officer's Certificate. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section (f) hereof, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office, and with its stock transfer agent, if any, an officer's
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certificate showing the adjusted Exercise Price determined as herein provided
and setting forth in reasonable detail the facts requiring such adjustment. Each
such officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
(h) Notice to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten (10) days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(i) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value or from no par value to par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger in which the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in case
of any sale or conveyance to another corporation of the property of the Company
as an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance. Any such provision shall include provisions for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant.
(j) Piggy-back/Incidental Registration If at any time the Company
subsequent to the next public offering of registered Common Shares of the
Company, shall propose the filing of a Registration Statement on an appropriate
form under the Securities Act for the registration of any securities of the
Company, other than a registration statement on Form S-4 or S-8 or any
equivalent form of registration statement then in effect, then the Company shall
give the Holder(s) notice of such proposed registration and shall include in any
Registration Statement relating to such securities all or a portion of the
Warrant Stock then owned or to be owned by such Holder(s), which such Holder(s)
shall request (such Holder(s) to be considered "Selling Shareholder(s)"), by
notice given by such Selling Shareholder(s) to the Company within 15 business
days after the giving of such notice by the Company, within 15 business days
after the giving of such notice by the Company, to be so included. In the event
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of the inclusion of Warrant Stock pursuant to this paragraph k, the Company
shall bear the Costs and Expenses of such registration; provided, however that
the Selling Shareholder(s) shall pay the fees and disbursements of their own
counsel and, pro-rata based upon the number of shares of Warrant Stock included
therein as these relate to the total number of Common Shares to be offered or
sold, the Securities Act registration fees and underwriters discounts and
compensation attributable to the inclusion of such Warrant Stock. Nothing in
this paragraph k shall require the registration of Warrant Stock in a
Registration Statement relating solely to (a) securities to be issued by the
Company in connection with the acquisition of the stock or the assets of another
corporation, or the merger or consolidation of any other corporation by or with
the Company or any of its subsidiaries, or an exchange offer with any
corporation, (b) securities to be offered to the then existing security holders
of the Company, or (c) securities to be offered to employees of the Company. In
the event the distribution of securities of the Company covered by a
Registration Statement referred to in this paragraph k is to be underwritten,
then the Company's obligation to include Warrant Stock in such a Registration
Statement shall be subject, at the option of the Company, to the following
further conditions:
(1) The distribution for the account of the Selling
Shareholders shall be underwritten by the same underwriters who are
underwriting the distribution of the securities for the account of the
Company and/or any other persons whose securities are covered by such
Registration Statement and the Selling Shareholder(s) shall enter into
an agreement with such underwriters containing customary provisions.
(2) If the Selling Shareholders are included in the
Registration Statement and if the underwriting agreement entered into
with the aforesaid underwriters contains restrictions upon the sale of
securities of the Company, other than the securities which are to be
included in the proposed distribution, for a period not exceeding 90
days from the effective date of the Registration Statement, then such
restrictions shall be binding upon the Selling Shareholder(s) with
respect to any Warrant Stock not covered by the Registration Statement
and, if requested by the underwriter, the Selling Shareholder(s) shall
enter into a written agreement to that effect.
(3) If the underwriters shall state in writing that they
are unwilling to include any or all of the Selling Shareholder(s)
Warrant Stock in the proposed underwriting because such inclusion would
materially interfere with the orderly sale and distribution of the
securities being offered by the Company, then the number of the Selling
Shareholder(s)' shares of Warrant Stock to be included shall be reduced
pro rata on the basis of the number of shares of Warrant Stock
originally requested to be included by such Selling Shareholder(s), or
there shall be no inclusion of the shares of the Selling Shareholder(s)
in the Registration Statement not proposed distribution, in accordance
with such statement by the underwriters.
(k) Applicable Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Maryland.
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(l) Optional Waiver. Holder may waive by signed writing any rights
of Holder contained herein.
(m) IN ADDITION TO THE RESTRICTIONS ON TRANSFERABILITY DESCRIBED
HEREIN, THE SECURITIES ISSUABLE ON EXERCISE OF THIS WARRANT SHALL NOT BE SOLD,
PLEDGED, TRANSFERRED, HYPOTHECATED OR ASSIGNED WITHIN 7 DAYS BEFORE OR 180 DAYS
AFTER THE DATE OF EFFECTIVENESS OF A REGISTRATION STATEMENT FILED BY THE COMPANY
WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH A PUBLIC OFFERING
OF THE COMPANY'S SECURITIES. THIS RESTRICTION IS IN ADDITION TO AND NOT IN LIEU
OF THE RESTRICTIONS CONTAINED HEREIN AND AS SUCH, THIS 180 DAY PERIOD MAY EXPIRE
PRIOR TO OR BEYOND THE RESTRICTIONS IMPOSED HEREIN. THIS RESTRICTION SHALL
OBLIGATE ALL SUCCESSORS IN INTEREST TO THE SHARES ISSUED ON EXERCISE.
CERTIFICATES REPRESENTING THE WARRANT STOCK SHALL BEAR A LEGEND EVIDENCING THIS
RESTRICTION.
Executed as of the date first above written.
CHEUNG LABORATORIES, INC.
By:__________________________
Augustine Cheung, Chairman
Attest:
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Secretary
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EXERCISE FORM
To be executed by the Holder
in Order to Exercise Warrants
The undersigned Holder hereby irrevocably elects to exercise __________ Warrants
represented by this Warrant Agreement, and to purchase the securities issuable
upon the exercise of such Warrants, and requests that certificates for such
securities shall be issued in the Holder's name and be delivered to
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[please print or type address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Agreement, that a new Warrant Agreement for the balance of such Warrants
be registered in the name of, and delivered to, the Holder at the address stated
above.
The undersigned acknowledges that the Warrant Shares issued on exercise will
be "restricted securities" and will bear appropriate restrictive legends.
Dated: _______________________________________________________
Signature of Holder
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Taxpayer ID Number
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Signature Guaranteed
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