Exhibit 10.3

VOID AFTER 5:00 P.M., NEW YORK CITY

TIME, ON MAY 14, 2011

(UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
LAWS.

 

Right to Purchase Shares of

Common Stock, par value $0.001 per share

Date: May 15, 2006

ACCENTIA BIOPHARMACEUTICALS, INC.

STOCK PURCHASE WARRANT

THIS CERTIFIES THAT, for value received, [                    ], or its
registered assigns, is entitled to purchase from Accentia Biopharmaceuticals,
Inc., a corporation organized under the laws of the State of Florida (the
“Company”), at any time or from time to time during the period specified in
Section 2 hereof, [                     (            )] fully paid and
nonassessable shares (the “Warrant Shares”) of the Company’s common stock, par
value $0.001 per share (the “Common Stock”), at an exercise price per share (the
“Exercise Price”) equal to $6.59. The number of Warrant Shares and the Exercise
Price are subject to adjustment as provided in Section 4 hereof. The term
“Warrant” and all references thereto, as used throughout this instrument, shall
mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, including all Warrants issued
upon transfer or exchange of this Warrant as provided herein, and the term
“Warrants” means this Warrant and the other warrants of the Company issued
pursuant to that certain Securities Purchase Agreement, dated as of May 15,
2006, by and among the Company and the other signatories thereto (the
“Securities Purchase Agreement”).

This Warrant is subject to the following terms, provisions and conditions:

1. Exercise of Warrant.

(a) Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 10 hereof, this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, by the surrender of
this Warrant, together with a completed

 

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exercise agreement in the form attached hereto (the “Exercise Agreement”), to
the Company during normal business hours on any business day at the Company’s
principal executive offices (or such other office or agency of the Company as it
may designate by written notice to the holder hereof), and upon (i) payment to
the Company in cash, by certified or official bank check or by wire transfer for
the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) if the holder is effectuating a
Cashless Exercise (as defined in Section 9 hereof) pursuant to Section 9 hereof,
delivery to the Company of a written notice of an election to effect a Cashless
Exercise for the Warrant Shares specified in the Exercise Agreement.

(b) The Warrant Shares purchased upon exercise of this Warrant in accordance
with this Section 1 shall be deemed to be issued to the holder hereof or the
holder’s designee, as the record owner of such shares, and shall be deemed to be
outstanding, in each case, as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Exercise Agreement shall have
been delivered, and payment shall have been made for such shares as set forth
above or, if such date is not a business day, on the next succeeding business
day. The Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the holder
hereof or the holder’s designee within a reasonable time, not exceeding two
business days, after this Warrant shall have been so exercised (the “Delivery
Period”). If the Company’s transfer agent is participating in the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer program, and so long as
the certificates therefor do not bear a legend pursuant to the terms of the
Securities Purchase Agreement and are not required to bear legend pursuant to
the Securities Purchase Agreement, the Company shall cause its transfer agent to
electronically transmit the Warrant Shares so purchased to the holder or the
holder’s designee by crediting the account of the holder or the holder’s
designee or its respective nominee with DTC through its Deposit Withdrawal Agent
Commission system (“DTC Transfer”). If the aforementioned conditions to a DTC
Transfer are not satisfied, the Company shall deliver to the holder or the
holder’s designee physical certificates representing the Warrant Shares so
purchased. Notwithstanding the foregoing, the holder or the holder’s designee
may instruct the Company to deliver to the holder or such designee physical
certificates representing the Warrant Shares so purchased in lieu of delivering
such shares by way of DTC Transfer. Any certificates so delivered shall be in
such denominations as may be reasonably requested by the holder hereof or the
holder’s designee, shall be registered in the name of the holder or such other
name as shall be designated by the holder and, following the date on which the
Warrant Shares have been registered under the Securities Act pursuant to that
certain Registration Rights Agreement, dated as of May 15, 2006, by and among
the Company and the other signatories thereto (the “Registration Rights
Agreement”) or otherwise may be sold by the holder without limitation as to
volume pursuant to Rule 144 promulgated under the Securities Act (or a successor
rule), shall not bear any restrictive legend. If this Warrant shall have been
exercised only in part, then the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.

(c) If, at any time, a holder of this Warrant submits this Warrant, an Exercise
Agreement and payment to the Company of the Exercise Price for each of the
Warrant Shares specified in the Exercise Agreement (including pursuant to a
Cashless Exercise), and the Company fails for any reason (other than the reasons
contemplated by Section 10 hereof) to

 

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deliver, on or prior to the fourth business day following the expiration of the
Delivery Period for such exercise, the number of shares of Common Stock to which
the holder is entitled upon such exercise (an “Exercise Default”), then the
Company shall pay to the holder payments (“Exercise Default Payments”) for an
Exercise Default in the amount of (i) (N/365), multiplied by (ii) the amount by
which the Market Price (as defined in Section 11 hereof) of the Common Stock on
the date the Exercise Agreement giving rise to the Exercise Default is
transmitted in accordance with this Section 1 (the “Exercise Default Date”)
exceeds the Exercise Price in respect of such Warrant Shares, multiplied by
(iii) the number of shares of Common Stock the Company failed to so deliver in
such Exercise Default, multiplied by (iv) .18, where N equals the number of days
from the Exercise Default Date to the date that the Company effects the full
exercise of this Warrant which gave rise to the Exercise Default. The accrued
Exercise Default Payment for each calendar month shall be paid in cash and shall
be made to the holder by the fifth day of the month following the month in which
it has accrued. Nothing herein shall limit the holder’s right to pursue actual
damages for the Company’s failure to maintain a sufficient number of authorized
shares of Common Stock as required pursuant to the terms of Section 3(b) hereof
or to otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).

2. Period of Exercise. This Warrant shall be exercisable at any time or from
time to time during the period (the “Exercise Period”) commencing on the date of
initial issuance of this Warrant (the “Issue Date”) and ending at 5:00 p.m., New
York City time, on the fifth anniversary of the Issue Date. The Exercise Period
shall automatically be extended by one day for each day on which (a) the Company
does not have a number of shares of Common Stock reserved for issuance upon
exercise hereof at least equal to the number of shares of Common Stock issuable
upon exercise hereof or otherwise fails to deliver shares of Common Stock in the
names set forth in Section 1 hereof upon exercise hereof, or (b) there is no
effective registration statement covering the resale of all the Warrant Shares
to the extent such effective registration is required by the Registration Rights
Agreement or a registration statement is available but the Company cannot use it
as required pursuant to the terms of the Registration Rights Agreement. Not less
than thirty days prior to the expiration of the Expiration Period, the Company
shall notify the Holder in writing of the upcoming expiration of the Expiration
Period.

3. Certain Agreements of the Company. The Company hereby covenants and agrees as
follows:

(a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid and
non-assessable and free from all taxes, liens, claims, charges and other
encumbrances or restrictions.

(b) Reservation of Shares. During the Exercise Period, the Company shall at all
times have authorized, and reserved for the purpose of issuance upon exercise of
this Warrant, a sufficient number of shares of Common Stock to provide for the
exercise in full of this Warrant (without giving effect to the limitations on
exercise set forth in Section 10 hereof).

(c) Listing. The Company shall promptly secure the listing or quotation of the
shares of Common Stock issuable upon exercise of this Warrant upon each national
securities exchange

 

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or automated or electronic quotation system, if any, upon which shares of Common
Stock are then listed or quoted or become listed or quoted (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as
any other shares of Common Stock shall be so listed or quoted, such listing or
quotation of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall so list or apply for quotation
on each national securities exchange or automated or electronic quotation
system, as the case may be, and shall maintain such listing or quotation of, any
other shares of capital stock of the Company issuable upon the exercise of this
Warrant if and so long as any shares of the same class shall be listed or quoted
on such national securities exchange or automated or electronic quotation
system.

(d) Certain Actions Prohibited. The Company shall not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, 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 to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the economic benefit inuring to the holder hereof
and the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. 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, and (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 free and clear of all taxes, liens and encumbrances.

(e) Successors and Assigns. This Warrant shall be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company’s assets.

(f) Blue Sky Laws. The Company shall, on or before the date of issuance of any
Warrant Shares, take such actions as the Company shall reasonably determine are
necessary to qualify the Warrant Shares for, or obtain exemption for the Warrant
Shares for, sale to the holder of this Warrant upon the exercise hereof under
applicable securities or “blue sky” laws of the states of the United States, and
shall provide evidence of any such action so taken to the holder of this Warrant
prior to such date; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(f), (ii) subject itself to general taxation in any such
jurisdiction, or (iii) file a general consent to service of process in any such
jurisdiction.

(g) Payment of Taxes and Expenses. The Company shall pay any recording, filing,
stamp or similar tax which may be payable in respect of any transfer involved in
the issuance of, and the preparation and delivery of the certificates (if
applicable) representing (i) any Warrant Shares purchased upon exercise of this
Warrant and/or (ii) new or replacements warrants in the holder’s name or the
name of any transferee of all or any portion of this Warrant.

 

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(h) No Impairment. The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, 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.

4. Antidilution Provisions. During the Exercise Period, the Exercise Price and
the number of Warrant Shares issuable hereunder shall be subject to adjustment
from time to time as provided in this Section 4.

(a) Stock Splits, Stock Dividends, Etc. If, at any time during the Exercise
Period, the number of outstanding shares of Common Stock is increased by a stock
split, stock dividend, combination, reclassification or other similar event, the
Exercise Price in effect immediately prior to such increase shall be
proportionately reduced, or if the number of outstanding shares of Common Stock
is decreased by a reverse stock split, combination, reclassification or other
similar event, the Exercise Price in effect immediately prior to such decrease
shall be proportionately increased. In such event, the Company shall notify its
transfer agent of such change on or before the effective date thereof. The
Exercise Price and the number of Warrant Shares as so adjusted shall be
readjusted in the same manner upon the occurrence of successive event or events
described in this Section 4(a).

(b) Merger, Consolidation, Etc. If, at any time during the Exercise Period,
there shall be (i) any reorganization, reclassification or change of the
outstanding shares of Common Stock (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
a subdivision or combination), (ii) any consolidation or merger of the Company
with any other entity (other than a merger in which the Company is the surviving
or continuing entity and its capital stock is unchanged), (iii) any sale or
transfer of all or substantially all of the assets of the Company or more than
50% of the voting capital stock of the Company (whether issued and outstanding,
newly issued, from treasury or any combination thereof) to any other person
under any plan or arrangement contemplating the consolidation or merger or sale
or transfer, or dissolution of the Company, or (iv) any share exchange or other
transaction pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property (each of (i) - (iv) above being a
“Corporate Change”), then, in each case, the holder hereof shall thereafter have
the right to receive upon exercise of this Warrant, in lieu of the Warrant
Shares otherwise issuable, such shares of stock, securities and/or other
property to which the holder would have been entitled upon the consummation of
such Corporate Change if such holder had so exercised this Warrant immediately
prior to such Corporate Change (without giving effect to the limitations
contained in Section 10), and in any such case, appropriate provisions (in form
and substance reasonably satisfactory to the holder hereof) shall be made with
respect to the rights and interests of the holder to the end that the economic
value of this Warrant is in no way diminished by such Corporate Change and that
the provisions hereof (including, without limitation, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is not the Company, an immediate adjustment of the Exercise Price and Warrant
Shares so that the Exercise Price and Warrant Shares immediately after the
Corporate Change reflects the same relative value as compared to the value of
the surviving entity’s common stock that existed between the Exercise Price and
the Warrant Shares and the value of the Company’s Common Stock immediately prior
to such Corporate Change) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or

 

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securities thereafter deliverable upon the exercise thereof. Notwithstanding
anything to the contrary set forth in this Section 4(b), in the event of a
Corporate Change and in lieu of the foregoing, the holder of this Warrant may,
at its sole option, surrender this Warrant to the Company and require the
Company to pay such holder in cash an amount equal to the value of the
unexercised portion of this Warrant determined using the Black-Scholes Option
Pricing Model reflecting (i) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of this Warrant as of the
date on which the holder notifies the Company of such election and (ii) an
expected volatility equal to the greater of 60% and the 100 day volatility
obtained from the HVT function on Bloomberg (as defined in Section 11(b)
hereof). The Company shall not effect any Corporate Change unless (A) the holder
hereof has received written notice of such transaction at least 45 days prior
thereto, but in no event later than 15 days prior to the record date for the
determination of shareholders entitled to vote with respect thereto, (B) if
required by the Securities Purchase Agreement, the consent of the Buyers (as
such term is defined in the Securities Purchase Agreement) shall have been
obtained in accordance with the Securities Purchase Agreement, and (C) the
resulting successor or acquiring entity (if not the Company) and, if an entity
other than the successor or acquiring entity is the entity whose capital stock
or assets the holders of the Common Stock are entitled to receive as a result of
such Corporate Change, such other entity, assumes by written instrument (in form
and substance reasonable satisfactory to the holder hereof) the obligations of
the Company under this Warrant. The above provisions shall apply regardless of
whether or not there would have been a sufficient number of shares of Common
Stock authorized and available for issuance upon exercise hereof as of the date
of such transaction, and shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges. Upon any Corporate
Change, this Warrant shall continue in full force and effect.

(c) Distributions. Other than in respect of adjustments to the Exercise Price
that have otherwise been effected pursuant to Section 4(a) hereof, if, at any
time during the Exercise Period, the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company’s shareholders
in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then the holder hereof shall be
entitled, upon any exercise of this Warrant after the date of record for
determining shareholders entitled to such Distribution (or if no such record is
taken, the date on which such Distribution is declared or made), to receive the
amount of such assets which would have been payable to the holder with respect
to the Warrant Shares issuable upon such exercise (without giving effect to the
limitations contained in Section 10) had the holder hereof been the holder of
such Warrant Shares on the record date for the determination of shareholders
entitled to such Distribution (or if no such record is taken, the date on which
such Distribution is declared or made

(d) Convertible Securities and Purchase Rights. Other than in respect of
adjustments to the Exercise Price that have otherwise been effected pursuant to
Section 4(a) hereof, if, at any time during the Exercise Period, the Company
issues any securities or other instruments which are convertible into or
exercisable or exchangeable for Common Stock (“Convertible Securities”) or
options, warrants or other rights to purchase or subscribe for Common Stock or
Convertible Securities (“Purchase Rights”) pro rata to the record holders of any
class of Common Stock, whether or not such Convertible Securities or Purchase
Rights are immediately

 

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convertible, exercisable or exchangeable, then the holder hereof shall be
entitled, upon any exercise of this Warrant after the date of record for
determining shareholders entitled to receive such Convertible Securities or
Purchase Rights (or if no such record is taken, the date on which such
Convertible Securities or Purchase Rights are issued), to receive the aggregate
number of Convertible Securities or Purchase Rights which the holder would have
received with respect to the Warrant Shares issuable upon such exercise (without
giving effect to the limitations contained in Section 10) had the holder hereof
been the holder of such Warrant Shares on the record date for the determination
of shareholders entitled to receive such Convertible Securities or Purchase
Rights (or if no such record is taken, the date on which such Convertible
Securities or Purchase Rights were issued). If the right to exercise or convert
any such Convertible Securities or Purchase Rights would expire in accordance
with their terms prior to the exercise of this Warrant, then the terms of such
Convertible Securities or Purchase Rights shall provide that such exercise or
convertibility right shall remain in effect until 30 days after the date the
holder receives such Convertible Securities or Purchase Rights pursuant to the
exercise hereof.

(e) Other Action Affecting Exercise Price. If, at any time during the Exercise
Period, the Company takes any action affecting the Common Stock that would be
covered by Section 4(a) through (d), but for the manner in which such action is
taken or structured, which would in any way diminish the value of this Warrant,
then the Exercise Price shall be adjusted in such manner as the Board of
Directors of the Company shall in good faith determine to be equitable under the
circumstances.

(f) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 4, the number of shares of Common
Stock issuable upon exercise of this Warrant at each such Exercise Price shall
be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant at such Exercise Price immediately prior
to such adjustment and dividing the product so obtained by the adjusted Exercise
Price.

(g) Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment or readjustment of the Exercise Price or change in number or type of
stock, securities and/or other property issuable upon exercise of this Warrant,
then, and in each such case, the Company shall promptly make a public
announcement of such adjustment or readjustment and shall give notice thereof to
the holder hereof, which notice shall state the Exercise Price resulting from
such adjustment or readjustment and any change in the number or type of stock,
securities and/or other property issuable upon exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.

(h) No Fractional Shares. No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but the Company shall pay a cash adjustment
in respect of any fractional share which would otherwise be issuable in an
amount equal to the same fraction of the Market Price of a share of Common Stock
on the date of such exercise.

 

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(i) Other Notices. In case at any time:

(i) the Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (other than
dividends or distributions payable in cash out of retained earnings consistent
with the Company’s past practices with respect to declaring dividends and making
distributions) to the holders of the Common Stock;

(ii) the Company shall offer for subscription pro rata to the holders of the
Common Stock any additional shares of stock of any class or other rights;

(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity; or

(iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

then, in each such case, the Company shall give to the holder of this Warrant
(A) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (B) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least thirty (30) days prior to the record date or the date on which the
Company’s books are closed in respect thereto. Failure to give any such notice
or any defect therein shall not affect the validity of the proceedings referred
to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing,
the Company shall publicly disclose the substance of any notice delivered
hereunder prior to delivery of such notice to the holder hereof.

5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise
of this Warrant shall be made without charge to the holder of this Warrant 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 of this Warrant.

6. No Rights or Liabilities as a Shareholder. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the holder hereof to purchase Warrant Shares, and no mere enumeration herein of
the rights or privileges of the holder hereof, shall give rise to any liability
of such holder for the Exercise Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.

 

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7. Transfer, Exchange, Redemption and Replacement of Warrant.

(a) Restriction on Transfer. This Warrant and the rights granted to the holder
hereof are transferable, in whole or in part, upon surrender of this Warrant,
together with a properly executed assignment in the form attached hereto, at the
office or agency of the Company referred to in Section 7(e) below, provided,
however, that any transfer or assignment shall be subject to the conditions set
forth in Sections 7(f) and 10 hereof and to the provisions of the Securities
Purchase Agreement. Until due presentment for registration of transfer on the
books of the Company, the Company may treat the registered holder hereof as the
owner and holder hereof for all purposes, and the Company shall not be affected
by any notice to the contrary. Notwithstanding anything to the contrary
contained herein, the registration rights described in Section 8 hereof are
assignable only in accordance with the provisions of the Registration Rights
Agreement.

(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares (at the Exercise Price therefor) as shall be designated by the holder
hereof at the time of such surrender.

(c) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of any such loss, theft, or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver, in lieu thereof,
a new Warrant of like tenor.

(d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the holder of this
Warrant or transferees) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 7. The Company
shall indemnify and reimburse the holder of this Warrant for all losses and
damages arising as a result of or related to any breach of the terms of this
Warrant, including costs and expenses (including legal fees) incurred by such
holder in connection with the enforcement of its rights hereunder.

(e) Warrant Register. The Company shall maintain, at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
been issued, as well as the name and address of each transferee and each prior
owner of this Warrant.

 

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(f) Transfer or Exchange Without Registration. If, at the time of the surrender
of this Warrant in connection with any transfer or exchange of this Warrant,
this Warrant (or, in the case of any exercise, the Warrant Shares issuable
hereunder) shall not be registered under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a condition of
allowing such transfer or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer or exchange
may be made without registration under the Securities Act and under applicable
state securities or blue sky laws (the cost of which shall be borne by the
Company if the Company’s counsel renders such an opinion, and up to $1,000 of
such cost shall be borne by the Company if the holder’s counsel is required to
render such opinion), (ii) that the holder or transferee execute and deliver to
the Company an investment letter in form and substance acceptable to the
Company, and (iii) that the transferee be an “accredited investor” as defined in
Rule 501(a) promulgated under the Securities Act; provided, however, that no
such opinion, letter, or status as an “accredited investor” shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.

8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.

9. Cashless Exercise. This Warrant may be exercised at any time during the
Exercise Period by delivering a completed Exercise Agreement in the form
attached hereto to the Company at its principal executive offices with a written
notice of the holder’s intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a “Cashless Exercise”). In the
event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price of a share of the Common Stock
on the date of exercise and the Exercise Price, and the denominator of which
shall be the then current Market Price per share of Common Stock.

10. Additional Restrictions on Exercise and Transfer. The exercise and transfer
of this Warrant shall be subject to the following limitations (each of which
limitations shall be applied independently):

(a) Cap Amount. If the Company is prohibited by Rule 4350(i) of the National
Association of Securities Dealers, Inc. (“NASD”), or any successor or similar
rule, or the rules or regulations of any other securities exchange on which the
Common Stock is then listed or traded, from issuing a number of shares of Common
Stock upon exercise of this Warrant (together with any shares of Common Stock
issued pursuant to the Securities Purchase Agreement or other agreements entered
in connection therewith) in excess of a prescribed amount (the “Cap Amount”)
(without shareholder approval or otherwise), then the Company shall not issue
shares upon any such exercise in excess of the Cap Amount. Assuming solely for
purposes of this Section 10(a) that such Rule 4350(i) or similar rule is
applicable, the Cap Amount shall be

 

10

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5,828,434 shares. The Cap Amount shall be allocated pro rata to the holders of
Warrants as provided in Section 12(h). In the event that the Company is
prohibited from issuing shares of Common Stock upon any exercise of this Warrant
as a result of the operation of this Section 10(a), the Company shall
immediately notify the holder hereof of such occurrence and the holder shall
thereafter have the option, exercisable in whole or in part at any time and from
time to time, by delivery of written notice to such effect (a “Redemption
Notice”) to the Company, to require the Company to redeem for cash, at an amount
per share equal to the Redemption Amount (as defined below), a portion of this
Warrant such that, after giving effect to such redemption, the then unissued
portion of the holder’s Cap Amount is at least equal to one hundred percent
(100%) of the total number of shares of Common Stock issuable upon exercise of
this Warrant in full. If the Company fails to redeem such portion of this
Warrant within five business days after its receipt of such Redemption Notice,
then the holder hereof shall be entitled to interest on the Redemption Amount at
a per annum rate equal to the lower of 18% and the highest interest rate
permitted by applicable law from the date on which such Redemption Amount is
required to be paid hereunder until the actual date of payment of the Redemption
Amount hereunder. For purposes of this Section 10(a), the “Redemption Amount”
equals the value of the unexercised portion of this Warrant determined using the
Black-Scholes Option Pricing Model reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of this Warrant as of the date on which the holder notifies the Company of such
election and (ii) an expected volatility equal to the greater of 60% and the 100
day volatility obtained from the HVT function on Bloomberg (as defined in
Section 11(b) hereof).

(b) Additional Restrictions on Exercise and Transfer. In no event shall the
holder hereof have the right to exercise any portion of this Warrant for shares
of Common Stock or to dispose of any portion of this Warrant to the extent that
such right to effect such exercise or disposition would result in the holder and
its affiliates together beneficially owning more than 4.99% of the outstanding
shares of Common Stock. For purposes of this Section 10(b), beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13D-G thereunder. The restriction
contained in this Section 10(b) may not be altered, amended, deleted or changed
in any manner whatsoever unless the holders of a majority of the outstanding
shares of Common Stock and the holder hereof shall approve, in writing, such
alteration, amendment, deletion or change.

11. Certain Definitions. For purposes of this Warrant, the following capitalized
terms shall have the respective meanings assigned to them:

(a) “business day” means any day, other than a Saturday or Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law, regulation or executive order to close.

(b) “Market Price” means, for any security as of any date, the last sales price
of such security on the principal trading market where such security is listed
or traded as reported by Bloomberg Financial Markets (or a comparable reporting
service of national reputation selected by the Company and reasonably acceptable
to the holder hereof if Bloomberg Financial Markets is not then reporting
closing sales prices of such security) (in any case, “Bloomberg”), or if the
foregoing does not apply, the last reported sales price of such security on a
national exchange or in the over-the-counter market on the electronic bulletin
board for such security as reported by

 

11

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Bloomberg, or, if no such price is reported for such security by Bloomberg, the
average of the bid prices of all market makers for such security as reported in
the “pink sheets” by the National Quotation Bureau, Inc., in each case for such
date or, if such date was not a trading day for such security, on the next
preceding date which was a trading day. If the Market Price cannot be calculated
for such security as of either of such dates on any of the foregoing bases, the
Market Price of such security on such date shall be the fair market value as
reasonably determined by an investment banking firm selected by the Company and
reasonably acceptable to the holder hereof, with the costs of such appraisal to
be borne by the Company.

(c) “trading day” means any day on which principal United States securities
exchange or trading market where the Common Stock is then listed or traded, is
open for trading.

12. Miscellaneous.

(a) Governing Law; Jurisdiction. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York. The Company irrevocably
consents to the jurisdiction of the United States federal courts and the state
courts located in the City of New York, Borough of Manhattan, in any suit or
proceeding based on or arising under this Warrant and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding in such forum. The Company further
agrees that service of process upon the Company mailed by first class mail shall
be deemed in every respect effective service of process upon the Company in any
such suit or proceeding. Nothing herein shall affect the right of the holder to
serve process in any other manner permitted by law. The Company agrees that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.

(b) Construction. Whenever the context requires, the gender of any word used in
this Warrant includes the masculine, feminine or neuter, and the number of any
word includes the singular or plural. Unless the context otherwise requires, all
references to articles and sections refer to articles and sections of this
Warrant, and all references to schedules are to schedules attached hereto, each
of which is made a part hereof for all purposes. The descriptive headings of the
several articles and sections of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any of the
provisions hereof.

(c) Severability. If any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Warrant or the
validity or enforceability of this Warrant in any other jurisdiction.

(d) Entire Agreement; Amendments. This Warrant contains the entire understanding
of the Company and the holder hereof with respect to the matters covered herein.
Subject to any additional express provisions of this Warrant, no provision of
this Warrant may be waived other than by an instrument in writing signed by the
party to be charged with enforcement, and no provision of this Warrant may be
amended other than by an instrument in writing signed by the Company and the
holder.

 

12

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(e) Notices. Any notices required or permitted to be given under the terms of
this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by nationally recognized overnight carrier
or by confirmed facsimile transmission, and shall be effective five days after
being placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by nationally recognized overnight carrier or confirmed
facsimile transmission, in each case addressed to a party. The initial addresses
for such communications shall be as follows, and each party shall provide notice
to the other parties of any change in such party’s address:

(i) If to the Company:

 

Accentia Biopharmaceuticals, Inc.. 2324 South Hyde Park Avenue Suite 350 Tampa,
Florida, 33606 Telephone:  

(813) 864-2554

Facsimile:  

(813) 258-6912

Attention: James A. McNulty, CPA with a copy simultaneously transmitted by like
means (which transmittal shall not constitute notice hereunder) to:

Name: Foley & Lardner LLP

100 North Tampa Street

Suite 2700

Tampa, Florida 33602

Telephone:

 

(813) 225-4122

Facsimile:

 

(813) 221-4210

Attention: Curt P. Creely, Esq.

(ii) If to the holder, at such address as shall be set forth in the Warrant
Register from time to time.

(f) Successors and Assigns. This Warrant shall be binding upon and inure to the
benefit of the parties and their successors and assigns. Except as provided
herein, the Company shall not assign this Warrant or its obligations hereunder.
The holder hereof may assign or transfer this Warrant and such holders rights
hereunder in accordance with Section 7 hereof.

(g) Equitable Relief. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holder by vitiating the
intent and purpose of this Warrant. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations hereunder will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Warrant, that the holder 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.

 

13

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(h) Allocation of Cap Amount. The initial Cap Amount shall be allocated pro rata
among the holders of the Warrants based on the number of Warrant Shares issuable
upon exercise of the Warrants issued to each such holder. Each increase to the
Cap Amount shall be allocated pro rata among the holders of the Warrants based
on the number of Warrant Shares issuable upon exercise of the Warrants held by
each holder at the time of the increase in the Cap Amount. In the event the
holder shall sell or otherwise transfer any of the holder’s Warrants, each
transferee shall be allocated a pro rata portion of such transferor’s Cap
Amount. Any portion of the Cap Amount which remains allocated to any person or
entity which does not hold any Warrants shall be allocated to the remaining
holders of the Warrants pro rata based on the number of Warrant Shares issuable
upon exercise of the Warrants then held by such holders.

(i) Remedies Cumulative. The remedies provided in this Warrant shall be
cumulative and in addition to all other remedies available under this Warrant,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit a holder’s right to pursue
actual damages for any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders hereof and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees, in
the event of any such breach or threatened breach, that the holders hereof 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.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer.

 

ACCENTIA BIOPHARMACEUTICALS, INC.

By:

 

 

Name:

 

Title:

 

 

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FORM OF EXERCISE AGREEMENT

(To be Executed by the Holder in order to Exercise the Warrant)

 

To:   Accentia Biopharmaceuticals, Inc.

  324 South Hyde Park Avenue

  Suite 350

  Tampa, FL 33606

  Facsimile: (813) 258-6912

  Attention: Chief Executive Officer

The undersigned hereby irrevocably exercises the right to purchase
                     shares of the Common Stock of Accentia Biopharmaceuticals,
Inc., a corporation organized under the laws of the State of Florida (the
“Company”), evidenced by the attached Warrant, and herewith [makes payment of
the Exercise Price with respect to such shares in full][elects to effect a
Cashless Exercise (as defined in Section 9 of such Warrant)], all in accordance
with the conditions and provisions of said Warrant.

The undersigned agrees not to offer, sell, transfer or otherwise dispose of any
Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.

¨ The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this Exercise
Agreement to the account of the undersigned or its nominee (which is
                    ) with DTC through its Deposit Withdrawal Agent Commission
System (“DTC Transfer”), provided that such transfer agent participates in the
DTC Fast Automated Securities Transfer program.

¨ In lieu of receiving the shares of Common Stock issuable pursuant to this
Exercise Agreement by way of DTC Transfer, the undersigned hereby requests that
the Company cause its transfer agent to issue and deliver to the undersigned
physical certificates representing such shares of Common Stock.

The undersigned requests that a Warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:

 

Dated:                             

  

 

   Signature of Holder   

 

   Name of Holder (Print)   

Address:

  

 

  

 

  

 

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FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock covered thereby set forth herein below, to:

 

Name of Assignee

       

Address

       

No. of Shares

, and hereby irrevocably constitutes and appoints
                                         as agent and attorney-in-fact to
transfer said Warrant on the books of the within-named corporation, with full
power of substitution in the premises.

Dated:                     ,         

In the presence of

 

 

 

 

Name:  

 

Signature:  

 

Title of Signing Officer or Agent (if any):

 

Address:  

 

 

 

 

 

Note:   The above signature should correspond exactly with the name on the face
of the within Warrant.