<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 8 , 1999
REGISTRATION NO. - 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-1176514
(STATE OF INCORPORATION) I.R.S. EMPLOYER IDENTIFICATION NO.)
1111 SOUTH PACA ST.
BALTIMORE, MD 21230-2591
(410) 843-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THOMAS P. RICE
PRESIDENT, CHIEF EXECUTIVE OFFICER
1111 SOUTH PACA ST.
BALTIMORE, MD 21230-2591
(410) 843-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO
THE AGENT FOR SERVICE, SHOULD BE SENT TO:
RICHARD C. TILGHMAN, JR., ESQUIRE
PIPER & MARBURY L.L.P.
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 539-2530
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX: / /
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: / X /
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST
THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING: / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING: / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX: / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
TITLE OF SHARES TO BE REGISTERED PROPOSED MAXIMUM AGGREGATE OFFERING PRICE AMOUNT OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK, $.01 PAR VALUE $3,464,377.59 $963.10
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) CALCULATED IN ACCORDANCE WITH RULE 457(O) OF THE SECURITIES ACT OF 1933, AS
AMENDED.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION
SEPTEMBER 8, 1999
1,385,751 SHARES
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
COMMON STOCK
-----------
The 1,385,751 shares of Common Stock of Chesapeake Biological
Laboratories, Inc. ("CBL" or "the Company") covered by this Prospectus are
outstanding shares that may be offered and sold by the stockholders named
herein. They included 1,034,051 shares of Common Stock issuable upon conversion
of outstanding shares of preferred stock, 225,000 shares of now outstanding
Common Stock and 126,700 shares of Common Stock issuable upon exercise of
outstanding warrants. Except for the exercise price payable on exercise of the
outstanding warrants, CBL will not receive any proceeds from the sale of shares
by the Selling Stockholders.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "CBLI." On September 1, 1999, the last sale price for the Common Stock as
reported on the Nasdaq Stock Market was $2.50 per share.
The Selling Stockholders may sell shares of the Common Stock offered
hereby in transactions on the Nasdaq Stock Market, in privately-negotiated
transactions or otherwise, in each case at negotiated prices. The brokers or
dealers through or to whom the shares of Common Stock covered hereby may be sold
may be deemed "underwriters" within the meaning of the Securities Act of 1933,
in which event all brokerage commissions or discounts and other compensation
received by such brokers or dealers may be deemed underwriting compensation.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is _____________ , 1999.
<PAGE>
To be inserted vertically on previous page in margin: [The information in this
prospectus is not complete and may be changed. We may not sell these securities
until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is prohibited.]
-2-
<PAGE>
AVAILABLE INFORMATION
CBL is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by CBL with the Commission, including the reports and other
information incorporated by reference into this Prospectus, can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices located
at 7 World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at rates
prescribed by the Commission or from the Commission's Internet web site at
http:\\www.sec.gov. The Common Stock of CBL is quoted on the Nasdaq National
Market. Reports, proxy statements and other information concerning CBL can be
inspected at the offices of the Nasdaq Stock Market, 1735 K Street, Washington,
D.C. 20006. This Prospectus does not contain all the information set forth in
the Registration Statement of which this Prospectus is a part and exhibits
relating thereto which CBL has filed with the Commission. Copies of the
information and exhibits are on file at the offices of the Commission and may be
obtained, upon payment of the fees prescribed by the Commission, may be examined
without charge at the offices of the Commission or through the Commission's
Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by CBL with the Commission (File No.
001-12748) pursuant to the 1934 Act are incorporated herein by reference:
(i) Annual Report on Form 10-K for the year ended March 31, 1999;
(ii) Report on Form 8-K filed with the SEC on May 25, 1999.
(iii) Quarterly Report on Form 10-Q for the quarter ended June 30,
1999.
(iv) the description of Common Stock contained in Item 9 of CBL's
Registration Statement S-2, filed April 27, 1997 with the Commission under the
1933 Act.
(v) all other documents filed by CBL pursuant to Sections 13(a), 13(c),
14 or 15(d) of the 1934 Act subsequent to the date of filing of the Registration
Statement of which this Prospectus is a part and prior to the termination of the
offering made hereby.
CBL will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of any such person, a copy of any or
all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Chesapeake Biological Laboratories, Inc., 1111 South Paca
Street, Baltimore, Maryland 21230, Attention: Chief Financial Officer,
telephone: (410) 843-5000.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
-3-
<PAGE>
THE COMPANY
Chesapeake Biological Laboratories, Inc. ("CBL" or the "Company") is an
established provider of pharmaceutical and biopharmaceutical product development
and production services for parenteral and other sterile products. The Company
serves a broad range of customers, from major international pharmaceutical firms
to emerging biotechnology companies. Since 1990, the Company has provided
services on a contract basis to more than 100 pharmaceutical and biotechnology
companies and has contributed to the development and production of more than 100
therapeutic products. Customers contract with the Company to produce development
stage products for use in U.S. Food and Drug Administration ("FDA") required
toxicology studies, clinical trials and to produce and manufacture FDA approved
products for commercial sale.
The Company has particular experience and expertise in providing
product development services and producing sterile, process-sensitive
biopharmaceutical parenteral products. Biopharmaceutical products are derived
from biological materials and typically involve larger, more complex molecules
than traditional pharmaceutical products, which generally are based upon
smaller, more stable, synthetic organic molecules. The complexity, inherent
instability and process-sensitivity of biopharmaceutical products require the
application of specialized technology and expertise in their development,
production and analysis.
The specialized development services provided by the Company include
research and development on sterile product formulations; test method
development and validation; process design and manufacturing validations;
regulatory and compliance consulting; preparation of clinical trail and
toxicology materials; container-closure system design; and, accelerated and
ongoing stability studies.
In June 1996, the Company received ISO (International Organization for
Standardization) 9001 certification, demonstrating CBL's conformance with the
established international quality management standards for product design,
development, production, inspection and testing. CBL believes that ISO 9001
certification has been a positive factor in attracting domestic and
international customers.
The Company's objective is to accelerate its growth and profitability
by expanding its share of the market for parenteral product development and
production services for the pharmaceutical and biotechnology industries. CBL's
strategy to achieve this objective is to capitalize on outsourcing trends in
those industries by increasing its development and production capabilities. The
Company renovated a 70,000 square foot building purchased in November 1996 into
a sterile pharmaceutical production facility. The pharmaceutical production
operation was mechanically completed in December 1997. The FDA initial general
facility inspection was completed in July 1998.
CBL believes its established experience and expertise, ISO 9001
certification, plus the increase in capacity provided by the new facility and
ability to offer a broad range of drug development and production services, will
enable it to provide competitive, cost-effective contract services to the
pharmaceutical and biopharmaceutical industries.
The Company also refers you to its Annual Report on Form 10-K for the
year ended March 31, 1999 filed June 29, 1999, specifically to Item 1
("Business"), which describes various risks related to the Company's business
and growth plans under the headings: "Expand Production and Development Services
Capabilities; Outsourcing Trend/Sales Marketing; Focus on Development of
Customers' Products; and Contracts and Customers."
We have made statements in our Annual Report on Form 10-K, this
Prospectus and in documents that are incorporated by reference into this
Prospectus that constitute forward-looking statements, as that term is defined
in the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties. These forward-looking statements generally
are accompanied by words such as "intend," "anticipate," "believe," "estimate,"
"expect," "should," or similar expressions. You should understand that these
forward-looking statements are subject to a number of assumptions, risks and
uncertainties that could cause our actual results to differ materially from
those expressed or implied in the forward-looking statements. Important factors
that could cause actual results to differ materially from the estimates or
projections we make in forward-looking statements include those described in
"Risk Factors."
CBL's principal executive offices are located at 1111 South Paca
Street, Baltimore, Maryland 21230, and its telephone number is: (410) 843-5000.
-4-
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of the shares of CBL's Common Stock
offered hereby will be received by the Selling Stockholders. While CBL will
receive none of the proceeds from the sale of the shares of Common Stock offered
hereby, the Company will receive cash upon any exercise of the outstanding
warrants referred to herein.
SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of CBL's Common Stock by the Selling Stockholders, the maximum number
of shares of Common Stock to be sold by each Selling Stockholder hereby, and the
beneficial ownership of CBL's Common Stock by each of the Selling Stockholders
after this offering, assuming that all shares of Preferred Stock are converted
to Common Stock, all warrants are exercised and all shares of Common Stock
offered hereby are sold.
Several of the selling stock holders are affiliated with CBL. Their
names and relationships with CBL are as follows: Thomas P. Rice - President and
Chief Executive Officer of CBL and a member of the Board of Directors; Harvey L.
Miller, Regis F. Burke - members of the Board of Directors; and Narlin B. Beaty
- - Chief Technical Officer and a member of the Board of Directors.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Shares Owned After
Offering Offered Offering
- ------------------------------------------------------------------------------------------------------------------------
Name of Holder Number Percent
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate Opportunities Fund, L.P.(1) 945,885 147,427 - *
c/o James C. Gale, Investment Manager...............
Corporate Opportunities Fund (Institutional), L.P.(1) 945,885 798,458 - *
c/o James C. Gale, Investment Manager...............
Howard & Phyllis J. Silverman, JTWROS(1)............. 69,933 69,933 - *
LAB Partners(1)
c/o Lillian Hahn, Managing Partner ................. 69,933 69,933 - *
Thomas P. Rice, President and CEO(2)
Chesapeake Biological Laboratories, Inc............. 162,500 42,500 120,000 1.8%
Harvey L. Miller, Director(2)....................... 102,500 42,500 60,000 *
Regis F. Burke, Director(2)......................... 73,200 42,500 30,700 *
Michael A. Besche(2)................................ 42,500 12,500 - *
A.C. Besche Foundation(2)........................... 10,000 10,000 - *
Virginia B. Besche Trust(2)......................... 20,000 20,000 - *
G. Grayson Boyce(2)................................. 42,500 42,500 - *
Narlin B. Beaty,(2)
Chief Technical Officer and Director ............... 167,791 12,500 155,291 2.4%
First Union National Bank(3)
c/o J. David Linthicum.............................. 75,000 75,000 - *
</TABLE>
- -------------
*Less than 1%.
-5-
<PAGE>
1. Pursuant to the Preferred Stock Purchase Agreement, dated as of May 20, 1999,
by and among CBL, on the one hand, and Corporate Opportunities Fund, L.P.,
Corporate Opportunities Fund (institutional), L.P , Howard & Phyllis J.
Silverman and LAB Partners, on the other hand, CBL sold shares of its
Convertible Preferred Stock to those four entities. CBL granted warrants to
Corporate Opportunities Fund, L.P., Corporate Opportunities Fund
(institutional), L.P , Howard & Phyllis J. Silverman and LAB Partners to
purchase an aggregate of 51,700 shares of Common Stock.
2. Pursuant to the Common Stock Purchase Agreement, dated as of April 8, 1999,
by and among CBL, on the one hand, and Thomas P. Rice, Harvey L. Miller, Regis
F. Burke, Michael A. Besche, G. Grayson Boyce, A.C. Besche Foundation, Virginia
B. Besche Trust and Narlin B. Beaty, on the other, CBL sold an aggregate of
225,000 shares of Common Stock.
3. CBL granted a warrant to First Union National Bank to purchase 75,000 shares
of Common Stock in connection with the modification of the loan agreements
between First Union National Bank and CBL.
-6-
<PAGE>
PLAN OF DISTRIBUTION
CBL's Common Stock is quoted on the Nasdaq National Market under the
symbol "CBLI." The shares covered by this Prospectus (the "Shares") may be sold
from time to time by one or more of the Selling Stockholders (or their pledgees,
donees, transferees or other successors in interest) directly or through
broker-dealers or underwriters who may act solely as agents or who may acquire
the Shares as principals. In connection with any sales of the Shares hereunder,
the Selling Stockholders and any broker-dealers participating such sales may be
deemed to be "underwriters" within the meaning of the Securities Act. The
distribution of the Shares hereunder by the Selling Stockholders may be effected
in one or more transactions that may take place on the Nasdaq National Market or
otherwise, including block trades or ordinary brokers' transactions, or through
privately negotiated transactions, through an underwritten public offering, or
through a combination of any such methods of sale, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specially negotiated brokerage fees or
commissions may be paid by the Selling Stockholders in connection with such
sales. From time to time, one or more of the Selling Stockholders may engage in
short sales, short sales against the box, puts and calls and other transactions
in securities of CBL or derivatives thereof, and they may sell and deliver the
Shares in connection therewith or in settlement of securities loans. From time
to time, one or more of the Selling Stockholders may pledge their Shares
pursuant to the margin provisions of their customer agreements with their
respective brokers. Upon any default by a Selling Stockholder, the broker may
offer and sell the pledged shares from time to time. CBL will not bear any
commissions or discounts paid or allowed by any of the Selling Stockholders to
underwriters, dealers, brokers or agents.
To the extent required, the specific Shares to be sold, purchase price,
public offering price, the names of any such agent, dealer or underwriter and
any applicable commission or discount with respect to a particular offering may
be set forth in an accompanying Prospectus Supplement. CBL has agreed to bear
the cost of preparing the Registration Statement of which Prospectus is a part
and all filing fees and legal and accounting expenses in connection with
registration of the Shares offered by the Selling Stockholders hereby under
federal and state securities laws.
Pursuant to the Registration Rights Agreements entered into by and
among CBL and all Selling Stockholders except First Union National Bank, CBL has
agreed to indemnify those Selling Stockholders against various liabilities,
including any liability under the Securities Act.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for CBL
by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements of Chesapeake Biological Laboratories,
Inc. at March 31, 1999 and 1998 and for each of the three years in the period
ended March 31, 1999, incorporated by reference in this Prospectus and
Registration Statement, have been audited by Arthur Andersen, LLP, independent
public accountants, as indicated in their reports thereon incorporated herein by
reference. Such consolidated financial statements have been incorporated herein
by reference in reliance upon the authority of said firm as experts in giving
said reports.
-7-
<PAGE>
<TABLE>
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- ----------------------------------------------------------- --------------------------------------------------------
<S> <C>
No person has been authorized by CBL to give any 1,385,751 SHARES
information or to make any representations other than
those contained in this Prospectus in connection with the
offer contained in this Prospectus, and if given or made,
such information or representations may not be relied CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
upon as having been authorized by CBL. This Prospectus
does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities in any jurisdiction COMMON STOCK
in which such offer or solicitation is not authorized, or
in which the person making such offer or solicitation is
not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder
shall create an implication that there has been no change
in the affairs of CBL since the date hereof.
PROSPECTUS
- -----------------------------
TABLE OF CONTENTS
PAGE
----
Available Information.........................3
Incorporation of Certain
Documents by Reference........................3
The Company...................................4
Use of Proceeds...............................5 SEPTEMBER 8 1999
Selling Stockholders..........................5
Plan of Distribution..........................7
Legal Matters.................................7
Experts.......................................7
- ----------------------------------------------------------- --------------------------------------------------------
- ----------------------------------------------------------- --------------------------------------------------------
</TABLE>
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this
Registration Statement. CBL will pay all expenses of the offering. All of such
expenses are estimates, other than the filing fees payable to the Securities and
Exchange Commission.
<TABLE>
<S> <C>
Filing Fee-Securities and Exchange Commission.......................... $963.10
Nasdaq National Market Listing Fees.................................... 17,500.00
Fees and Expenses of Counsel........................................... 2,500.00
Miscellaneous Expenses................................................. 3,036.90
---------
TOTAL.................................................................. $24,000.00
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
CBL's Charter provides that, to the fullest extent that limitations on
the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of CBL shall have any liability to CBL
or its stockholders for monetary damages. The Maryland General Corporation Law
provides that a corporation's charter may include a provision which restricts or
limits the liability of its directors or officers to the corporation or its
stockholders for money damages except: (1) to the extent that it is provided
that the person actually received an improper benefit or profit in money,
property or services, for the amount of the benefit or profit in money, property
or services actually received, or (2) to the extent that a judgment or other
final adjudication adverse to the person is entered in a proceeding based on a
finding in the proceeding that the person's action, or failure to act, was the
result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. CBL's Charter and By-laws provide that CBL
shall indemnify and advance expenses to its currently acting and its former
directors to the fullest extent permitted by the Maryland General Corporation
Law and that CBL shall indemnify and advance expenses to its officers to the
same extent as its directors and to such further extent as is consistent with
law.
The Charter and By-laws provide that CBL will indemnify its directors
and officers and may indemnify employees or agents of CBL to the fullest extent
permitted by law against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with CBL. In
addition, CBL's Charter provides that its directors and officers will not be
liable to stockholders for money damages, except in limited instances. However,
nothing in the Charter or By-laws of CBL protects or indemnifies a director,
officer, employee or agent against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. To the
extent that a director has been successful in defense of any proceeding, the
Maryland General Corporation Law provides that he shall be indemnified against
reasonable expenses incurred in connection therewith.
-1-
<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
3.1 Articles of Amendment and Restatement of the Charter*
3.2 Articles Supplementary to the Articles of Amendment and
Restatement of the Charter
3.3 Amended and Restated By-Laws dated December 31, 1994**
4.2 Preferred Stock Purchase Agreement dated as of May 20, 1999, by
and among CBL and Corporate Opportunities Fund, L.P., Corporate
Opportunities Fund (Institutional), L.P. Howard & Phyllis J
Silverman, JTWROS, and LAB Partners.***
4.3 Common Stock Warrant dated as of May 20, 1999 issued by CBL to
Corporate Opportunities Fund, L.P.***
4.4 Common Stock Warrant dated as of May 20, 1999 issued by CBL to
Corporate Opportunities Fund (Institutional), L.P.***
4.5 Common Stock Warrant dated as of May 20, 1999 issued by CBL to
Howard & Phyllis Silverman, JTWROS.***
4.6 Common Stock Warrant dated as of May 20, 1999 issued by CBL to
LAB Partners.***
4.7 Common Stock Purchase Agreement dated as of April 8, 1999 by and
among CBL and Thomas P. Rice, Harvey L. Miller, Regis F. Burke,
Michael A. Besche, A.C. Besche Foundation, Virginia B. Besche
Trust, G. Grayson Boyce, and Narlin B. Beaty.***
4.8 Common Stock Warrant, dated as of June 11, 1999, between CBL and
First Union National Bank.
4.9 Registration Rights Agreement dated as of May 20, 1999 by and
among CBL and Corporate Opportunities Fund, L.P., Corporate
Opportunities Fund (Institutional), L.P. Howard & Phyllis J
Silverman, JTWROS, and LAB Partners.***
4.10 Registration Rights Agreement dated as of April 8, 1999 by and
among CBL and Thomas P. Rice, Harvey L. Miller, Regis F. Burke,
Michael A. Besche, A.C. Besche Foundation, Virginia B. Besche
Trust, G. Grayson Boyce, and Narlin B. Beaty.***
5.1 Opinion of Piper & Marbury L.L.P.
23.1 Consent of Arthur Andersen, LLP
23.5 Consent of Piper & Marbury L.L.P. (contained in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
* Incorporated by reference from the Registrant's Registration Statement
on Form S-2 (No. 333-25903).
** Incorporated by reference from CBL's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1994.
*** Incorporated by reference from CBL's Current Report on Form 8-K filed
May 25, 1999.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
-2-
<PAGE>
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suite or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by
reference in the registration statement.
(2) That for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in Baltimore, Maryland, on this 8th day of September, 1999.
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
By /s/ THOMAS P. RICE
--------------------
/s/ JOHN T. JANSSEN
--------------------
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Thomas P. Rice and John T. Janssen (with
full power to each of them to act alone) as his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead in any and all capacities to sign any or all amendments or post-effective
amendments to this Registration Statement, including post-effective amendments
filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, to sign any and all
applications, registration statements, notices or other document necessary or
advisable to comply with the applicable state securities laws, and to file the
same, together with all other documents in connection therewith, with the
appropriate state securities authorities, granting unto said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, thereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ THOMAS P. RICE President and Chief Executive Officer and Director September 8, 1999
- -------------------
Thomas P. Rice
/s/ JOHN T. JANSSEN Chief Financial Officer and Treasurer September 8, 1999
- --------------------
John T. Janssen
/s/ NARLIN B. BEATY, PH.D Chief Technical Officer and Director September 8, 1999
- --------------------------
Narlin B. Beaty, Ph.D
/s/ ROBERT J. MELLO, PH.D Secretary September 8, 1999
- --------------------------
Robert J. Mello
/s/ HARVEY L. MILLER Director September 8, 1999
- ---------------------
Harvey L. Miller
</TABLE>
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<PAGE>
<PAGE>
EXHIBIT 3.2
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
ARTICLES SUPPLEMENTARY
Chesapeake Biological Laboratories, Inc., a Maryland corporation,
having its principal office in Baltimore, Maryland (hereinafter called the
"CORPORATION"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "SDAT") that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation (the "Board") by Article SEVENTH of the Articles of
Incorporation of the Corporation, as amended (the "CHARTER"), the Board has duly
reclassified and designated 15,510 authorized but unissued shares of the Class A
Common Stock, par value $0.01 per share, of the Corporation into a series
designated as Series A-1 Convertible Preferred Stock and has provided for the
issuance of such series.
SECOND: The terms of the Series A-1 Convertible Preferred Stock
(including the preferences, conversions or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board are as
follows:
1. ISSUANCE; RANK. The issuance price of the Series A-1 Convertible
Preferred Stock (the "SERIES A-1 PREFERRED STOCK") shall be $100 per share (the
"ORIGINAL PURCHASE PRICE"). The Series A-1 Preferred Stock shall rank senior to
the Common Stock and any other class or series of capital stock of the
Corporation ranking junior to the Series A-1 Preferred Stock as to dividends and
upon liquidation, dissolution or winding up. The date on which any share of
Series A-1 Preferred Stock was issued shall hereinafter be referred to as the
"ORIGINAL ISSUE DATE" with respect to such share.
2. DIVIDENDS.
(a) Beginning on May 31, 2001, annually on May 31st, the holders of
record of shares of Series A-1 Preferred Stock as of May 10th of such year (the
"DIVIDEND RECORD DATE") shall be entitled to receive, out of funds legally
available for that purpose, prior and in preference to any declaration or
payment of any dividends (payable other than in Common Stock or other securities
convertible into or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock) on the Common Stock, cumulative
dividends ("CUMULATIVE DIVIDENDS"), at an annual rate of 6% of the Original
Purchase Price per share, as adjusted for stock splits, stock dividends,
recapitalizations, combinations, reclassifications and similar events which
affect such shares of Series A-1 Preferred Stock (each an "ADJUSTMENT").
If the Board fails to declare a Cumulative Dividend , the Cumulative Dividend
shall cumulate and become part of the Liquidation Preference (as defined below)
and Cumulative Dividends shall be payable pro rata for partial year periods and
shall not be payable upon conversion of the
<PAGE>
Series A-1 Preferred Stock in accordance with the terms of Sections 5 or 6 or
upon a Redemption in accordance with the terms of Section 7.
(b) If the Corporation fails to redeem the Series A-1
Preferred Stock by May 31, 2004, then on and annually after May 31, 2004, the
holders of record of shares of Series A-1 Preferred Stock as of the Dividend
Record Date of such year shall be entitled to receive, out of funds legally
available for that purpose, prior and in preference to any declaration or
payment of any dividends (payable other than in Common Stock or other securities
convertible into or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock) on the Common Stock and in
addition to the dividends described in Section 2(a), an additional annual
dividend, at a rate of 20% of the Original Purchase Price per share, subject to
an Adjustment (the "ADDITIONAL DIVIDENDS").
3. LIQUIDATION EVENTS.
(a) Upon the occurrence of any Liquidation Event (defined
herein), the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings (the "CORPORATE ASSETS")
shall be distributed as follows: before any distribution of assets shall be made
to the holders of Common Stock, the holder of each share of Series A-1 Preferred
Stock then outstanding shall be entitled to be paid out of the Corporate Assets
an amount per share equal to the Original Purchase Price (subject to any
Adjustment) plus all dividends, including any accrued and unpaid Cumulative
Dividends on such share up to the date of distribution of the assets of the
Corporation (the "LIQUIDATION PREFERENCE"). If upon the occurrence of a
Liquidation Event, the Corporate Assets shall be insufficient to pay the holders
of shares of Series A-1 Preferred Stock the Liquidation Preference, the holders
of shares of Series A-1 Preferred Stock and any class or series of stock ranking
on liquidation on a parity with the shares of Series A-1 Preferred Stock shall
share ratably in the distribution of the entire remaining Corporate Assets in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if the full Liquidation
Preference payable on or with respect to such shares were paid in full.
(b) For purposes of this Section 3, the term "LIQUIDATION
EVENT" shall mean (i) any liquidation, dissolution or winding up of the
Corporation or (ii) the merger or consolidation of the Corporation into or with
another corporation (except if the Corporation is the surviving entity) or other
similar transaction or series of related transactions in which all or
substantially all of the assets of the Corporation are sold, transferred or
otherwise disposed.
(c) The amount available for distribution for purposes of
satisfying the obligation to pay the Liquidation Preference and other amounts
payable under Section 3(a) to the holders of shares of Series A-1 Preferred
Stock upon any Liquidation Event described in Section 3(b)(ii) shall be the cash
or the value of the property, rights or securities distributed to such holders
by the acquiring person, firm or other entity. The value of such property,
rights or other securities shall be determined in good faith by the Board of
Directors of the Corporation.
(d) Written notice of such Liquidation Event, stating a
payment date, the Liquidation Preference and other amounts payable under Section
3(a), and the place where said
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<PAGE>
Liquidation Preference and other amounts shall be payable, shall be delivered in
person, mailed by certified or registered mail, return receipt requested, or
sent by telecopier or electronic mail, not less than 20 days prior to the
payment date stated therein, to the holders of record of the Series A-1
Preferred Stock, such notice to be addressed to each such holder at its address
as shown by the records of the Corporation.
4. VOTING.
(a) Each holder of outstanding shares of Series A-1 Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series A-1 Preferred Stock held
of record by such holder are convertible (as adjusted from time to time pursuant
to Section 5), at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration. Except as provided by law and by the provisions of Sections 4(b),
the holders of shares of Series A-1 Preferred Stock shall vote together with the
holders of Common Stock as a single class.
(b) So long as at least 1,551 shares of Series A-1 Preferred
Stock (subject to any Adjustment) are outstanding, the holders of the Series A-1
Preferred Stock shall have the right, voting together as a single class, to
elect one director of the Corporation. Such right to vote separately as a class
shall be in addition to all other rights of the holders of Series A-1 Preferred
Stock to vote with other classes of stock in the election of members of the
Corporation's Board of Directors.
(c) So long as at least 1,551 shares of Series A-1 Preferred
Stock (subject to any Adjustment) are outstanding, if and whenever (i) the
Corporation breaches the terms and conditions contained herein, or (ii) an Event
of Default (as defined in the Preferred Stock Purchase Agreement between the
Corporation and the original purchasers of the Series A-1 Preferred Stock named
therein) occurs and is continuing, the holders of any outstanding shares of
Series A-1 Preferred Stock shall have the exclusive and special right, voting as
a single class, to elect by a plurality of the votes cast the largest whole
number of directors of the Corporation that, together with the director elected
by the holders of the Series A-1 Preferred Stock pursuant to Section 4(b), shall
not constitute a majority of the total number of directors of the Corporation
(and if there are not a sufficient number of resignations by the members of the
Board of Directors at the time of such default, the Board of Directors shall be
expanded as is necessary to give effect to the foregoing right). The right
granted to the holders of Series A-1 Preferred Stock in this Section 4(c) (the
"DEFAULT RIGHT") shall continue until the breach or Event of Default has been
cured or waived and, when so cured or waived the Default Right shall cease until
such time as the Corporation commits another breach or Event of Default. At any
time the Default Right becomes applicable, the Corporation may, upon receipt of
a written request from the holders in interest of at least 20% of the
outstanding shares of Series A-1 Preferred Stock, call a special meeting of
shareholders for the election of directors. Such meeting, if called, shall be
held (i) no later than 45 days after the receipt of the request and (ii) at the
place and upon the notice required by law and the bylaws of the Corporation;
PROVIDED, HOWEVER, that the Corporation shall not call such a special meeting if
such request is received less than 60 days prior to the date fixed for any
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<PAGE>
annual meeting of the shareholders of the Corporation. Directors elected
pursuant to this Section 4(c) shall serve until the next annual meeting of the
shareholders of the Corporation or until their respective successors shall be
elected and qualify.
(d) Any director elected by the holders of the Series A-1
Preferred Stock (each, a "PREFERRED DIRECTOR") may be removed only by the vote
of the holders of record of a plurality of the outstanding shares of Series A-1
Preferred Stock, voting together as a single class, at a meeting of the holders
of shares of Series A-1 Preferred Stock called for such purpose. Any vacancy in
the office of a Preferred Director may be filled only in accordance with Section
4(b) or 4(c) as the case may be.
(e) At any meeting held for the purpose of electing directors,
the presence in person or by proxy of the holders of a majority of the shares of
Series A-1 Preferred Stock then outstanding shall constitute a quorum of the
Series A-1 Preferred Stock for the purpose of electing any directors to be
elected solely by the holders of Series A-1 Preferred Stock and for all such
other matters upon which the holders of shares of Series A-1 Preferred Stock
vote as a single class, and the presence in person or by proxy of the holders of
a majority of the shares of Common Stock then outstanding shall constitute a
quorum of the Common Stock for the purpose of electing any directors to be
elected solely by the holders of the Common Stock.
(f) So long as 1,551 or more shares of Series A-1 Preferred
Stock (subject to any Adjustments) are outstanding, the Corporation shall not,
without first obtaining the written consent or affirmative vote of the holders
of at least a majority of the then outstanding shares of Series A-1 Preferred
Stock, given in writing or by vote at a meeting, consenting or voting, as the
case may be, separately as a class:
(i) authorize any series of preferred stock or
other security of the Corporation having (i) dividend rights or liquidation
preference senior to the Series A-1 Preferred Stock or (ii) voting rights
entitling the holders thereof to more than one vote per share of Common Stock on
an as-converted basis;
(ii) amend, alter or repeal any rights of the
Series A-1 Preferred Stock; or
(iii) approve any liquidation, dissolution, merger
or sale of the all or substantially all of the assets of the Corporation if such
event would result in a payment to the holders of Series A-1 Preferred Stock of
less than the Liquidation Preference.
5. OPTIONAL CONVERSION. The holders of shares of Series A-1 Preferred
Stock shall have conversion rights as follows (the "CONVERSION RIGHTS"):
(a) RIGHT TO CONVERT. Each share of Series A-1 Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Original Purchase Price by the Conversion
Price (as defined herein) in effect at the time of
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<PAGE>
conversion. The conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series A-1 Preferred Stock without payment of
additional consideration by the holder thereof (the "CONVERSION PRICE") shall
initially be $1.50. The Conversion Price in effect from time to time, and the
rate at which shares of Series A-1 Preferred Stock may be converted into shares
of Common Stock, shall be subject to adjustment as provided herein. Upon a
Liquidation Event or a Redemption, the Conversion Rights shall terminate at the
close of business on the first full day preceding the date fixed for the payment
of any amounts distributable upon such Liquidation Event or Redemption to the
holders of shares of Series A-1 Preferred Stock.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of the shares of Series A-1 Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Whether or not a holder would otherwise be entitled
to a fractional share shall be determined on the basis of the total number of
shares of Series A-1 Preferred Stock the holder is at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(c) MECHANICS OF CONVERSION.
(i) In order for a holder to convert shares of
Series A-1 Preferred Stock into shares of Common Stock, such holder shall
surrender the certificate or certificates for such shares of Series A-1
Preferred Stock at the office of the transfer agent for such shares (or at the
principal office of the Corporation if the Corporation serves as its own
transfer agent), together with written notice that such holder elects to convert
all or any number of the shares of the Series A-1 Preferred Stock represented by
such certificate or certificates. Such notice shall state such holder's name or
the names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or his
or its attorney-in-fact duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date (the
"CONVERSION DATE"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of shares of
Series A-1 Preferred Stock, or to his or its nominees, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled, together with cash in lieu of any fraction of a share. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A-1 Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.
Other than as set forth in Section 6, if the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, as amended (the "SECURITIES ACT"), the conversion may, at the option of
any holder tendering shares of Series A-1 Preferred Stock for conversion, be
conditioned upon the closing of the sale of securities pursuant to such
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<PAGE>
offering, in which event the person entitled to receive the Common Stock
issuable upon such conversion of the shares of Series A-1 Preferred Stock shall
not be deemed to have converted such shares of Series A-1 Preferred Stock until
immediately prior to the closing of such sale of securities.
(ii) The Corporation shall, at all times when the
Series A-1 Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting the
conversion of the shares of Series A-1 Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series A-1 Preferred Stock.
Before taking any action that would cause an adjustment reducing the Conversion
Price below the then par value of the shares of Common Stock issuable upon
conversion of the shares of Series A-1 Preferred Stock, the Corporation will
take any corporate action that may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Conversion Price. If at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of Series
A-1 Preferred Stock, in addition to such other remedies as shall be available to
the holder of such shares of Series A-1 Preferred Stock, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for, nor shall any payment be made of, any
declared and unpaid dividends on the shares of Series A-1 Preferred Stock
surrendered for conversion or on the Common Stock delivered upon conversion.
(iv) All shares of Series A-1 Preferred Stock that
shall have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall immediately cease and
terminate on the Conversion Date, except only the right of the holders thereof
to receive shares of Common Stock in exchange therefor. Any shares of Series A-1
Preferred Stock so converted shall be retired and canceled and shall not be
reissued, and the Corporation may from time to time take such appropriate action
as may be necessary to eliminate the authorized Series A-1 Preferred Stock or
reduce the authorized number thereof as may be appropriate accordingly.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES:
(i) SPECIAL DEFINITIONS. For purposes of this
Section 5(d), the "FIRST ORIGINAL ISSUE DATE" means the Original Issue Date of
the first issued share of Series A-1 Preferred Stock.
(ii) ADJUSTMENT FOR COMBINATIONS OR
CONSOLIDATION OF COMMON STOCK. If, at any time after the First Original Issue
Date the number of shares of Common Stock outstanding are decreased by a
combination of the outstanding shares of Common Stock, then
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<PAGE>
following the record date fixed for such combination (or the date of such
combination, if no record date is fixed), the applicable Conversion Price shall
be increased so that the number of shares of Common Stock issuable on conversion
of each share of Series A-1 Preferred Stock shall be decreased in proportion to
such decrease in outstanding shares of Common Stock.
(iii) ADJUSTMENT FOR STOCK DIVIDENDS, SPLITS,
ETC. If the Corporation shall at any time after the applicable First Original
Issue Date fix a record date for the subdivision, split-up or stock dividend of
shares of Common Stock, then, following the record date fixed for the
determination of holders of shares of Common Stock entitled to receive such
subdivision, split-up or dividend (or the date of such subdivision, split-up or
dividend, if no record date is fixed), the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of Series A-1 Preferred Stock shall be increased in
proportion to such increase in outstanding shares; PROVIDED, HOWEVER, that the
Conversion Price shall not be decreased at such time if the amount of such
reduction would be an amount less than $.01, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction that, together with such amount and any
other amount or amounts so carried forward, shall aggregate $.01 or more.
(iv) ADJUSTMENT FOR MERGER OR REORGANIZATION,
ETC. In case of any consolidation, recapitalization or merger of the Corporation
with or into another corporation or the sale of all or substantially all of the
assets of the Corporation to another corporation (other than a subdivision or
combination provided for elsewhere in this Section 5 and other than a
consolidation, merger or sale that is treated as a Liquidation Event pursuant to
Section 3), each share of Series A-1 Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such shares of Series A-1 Preferred
Stock would have been entitled upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the Board of
Directors ) shall be made in the application of the provisions in this Section 5
set forth with respect to the rights and interest thereafter of the holders of
the shares of Series A-1 Preferred Stock, to the end that the provisions set
forth in this Section 5 (including provisions with respect to changes in and
other adjustments of the Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the shares of Series A-1
Preferred Stock.
(e) NO IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation 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 hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
shares of Series A-1 Preferred Stock against impairment.
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<PAGE>
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
shares of Series A-1 Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series A-1 Preferred Stock, furnish or cause to be
furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property that then would be received upon the conversion of the shares of Series
A-1 Preferred Stock.
(g) NOTICE OF RECORD DATE. In the event:
(i) that the Corporation takes a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend) or
any other distribution, any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property, or
to receive any other right;
(ii) that the Corporation subdivides or combines
its outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of
the Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution thereon), or of
any consolidation or merger of the Corporation into or with another corporation,
or of the sale of all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or
at the office of the transfer agent of the Series A-1 Preferred Stock, and shall
cause to be mailed to the holders of the Series A-1 Preferred Stock at their
last addresses as shown on the records of the Corporation or such transfer
agent, at least ten days prior to the record date specified in (A) below or
twenty days before the date specified in (B) below, a notice stating
(A) the record date of such dividend,
distribution, subdivision or combination, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange
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<PAGE>
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, dissolution or winding up.
6. AUTOMATIC CONVERSION.
(a) TRIGGERING EVENT. All outstanding shares of Series A-1
Preferred Stock shall automatically convert to shares of Common Stock, at the
then effective Conversion Price pursuant to Section 5, if, at any time after the
first anniversary of the First Original Issue Date, (i) the average closing bid
price of the Common Stock for twenty (20) consecutive trading days is greater
than four times the then current Conversion Price and the average daily trading
volume (as reported by Nasdaq) for the same twenty day period is not less than
35,000 shares or (ii) upon the date of the consummation of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act, resulting in at least $20,000,000 of gross proceeds to the
Corporation, at a per share price of at least four times the then current
Conversion Price.
(b) NO FURTHER ACTION. In the case of an automatic conversion
pursuant to this Section 6, the outstanding shares of Series A-1 Preferred Stock
shall be converted automatically without any further action by the holders of
such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; PROVIDED, that the
Corporation shall not be obligated to issue to any holder certificates
evidencing the shares of Common Stock issuable upon such conversion unless
certificates evidencing such shares of Series A-1 Preferred Stock are delivered
either to the Corporation or any transfer agent of the Corporation.
(c) SURRENDER OF CERTIFICATES; RETIREMENT AND CANCELLATION OF
CONVERTED SHARES. All certificates evidencing shares of Series A-1 Preferred
Stock that are required to be promptly surrendered for conversion in accordance
with the provisions hereof shall, from and after the date such certificates are
so required to be surrendered, be deemed to have been retired and canceled and
the shares of Series A-1 Preferred Stock represented thereby converted into
Common Stock for all purposes, notwithstanding the failure of the holder or
holders thereof to surrender such certificates on or prior to such date. The
Corporation may thereafter take such appropriate action as may be necessary to
reduce the authorized Series A-1 Preferred Stock accordingly.
7. REDEMPTION.
(a) The Corporation may, at its option redeem any or all of
the then outstanding shares of Series A-1 Preferred Stock, out of funds legally
available for such purpose, on or after April 1, 2004, by providing notice to
the holders of outstanding shares of Series A-1 Preferred Stock (a "REDEMPTION
NOTICE").
The Redemption Notice shall specify the Redemption Date, the
Redemption Price, the aggregate number of shares to be redeemed, and with expect
to each holder of record, the number of shares to be redeemed; shall state that
payment of the Redemption Price will be made at the principal office of the
Corporation or if an agent for redemption if appointed, the
-9-
<PAGE>
office of the agent for redemption, upon presentation and surrender of
certificates for such shares; that dividends accrued to the Redemption Date will
be paid as specified in the Redemption Notice and that on and after the
Redemption Date dividends will cease to accrue; shall state that the right to
convert the shares to be redeemed into shares of Common Stock in accordance with
the provisions hereof will terminate on the last business day prior to the
redemption Date which date shall be specified in the Redemption Notice; and
shall state the then current Conversion Price. In case of the redemption of a
part only of the Series A-1 Preferred Stock at the time outstanding, the shares
to be redeemed shall be selected by lot or in such other manner as the Board of
Directors may determine to be equitable;
(b) The date of any Redemption Notice shall be the "REDEMPTION
NOTICE DATE." The Corporation shall, no later than 30 days after the applicable
Redemption Notice Date (the "REDEMPTION DATE"), redeem the shares of Series A-1
Preferred Stock set forth in the notice (such redeemed shares being referred to
as the "REDEMPTION SHARES"), by paying in cash, out of funds legally available
therefor, a sum per share equal to the Liquidation Preference (the "Redemption
Price");
(c) If the Corporation delivers a Redemption Notice to the
holders of Series A-1 Preferred Stock, each such holder shall, no later than the
close of business on the last business day before the Redemption Date, surrender
his or its certificate or certificates representing the applicable Redemption
Shares to the Corporation. From and after the Redemption Date and the holders'
receipt of the Redemption Price, all rights of each holder with respect to such
applicable Redemption Shares shall cease and such shares shall not be deemed to
be outstanding for any purpose whatsoever. Such Redemption Shares shall not be
reissued, and the Corporation may from time to time take such appropriate action
as may be necessary to reduce the authorized Series A-1 Preferred Stock
accordingly;
THIRD: As a result of the reclassifications described herein, the
Corporation's authorized capital stock currently consists of the following:
7,984,490 shares of Class A Common Stock, par value $.01 per
share;
2,000,000 shares of Class B Common Stock, par value $.01 per
share;
15,510 shares of Series A Convertible Preferred Stock, par
value $.01 per share; and
15,510 shares of Series A-1 Convertible Preferred Stock, par
value $.01 per share.
<PAGE>
EXHIBIT 4.8
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") NOR IS SUCH REGISTRATION CONTEMPLATED. SUCH SECURITIES MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME
WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO A CALL OPTION AS IS FURTHER DESCRIBED
BELOW.
WARRANT TO PURCHASE COMMON STOCK OF
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
This is to certify that, for value received, FIRST UNION NATIONAL BANK, or
registered assigns (in each case, the "Holder"), is entitled to purchase,
subject to the provisions of this Warrant (the "Warrant"), from CHESAPEAKE
BIOLOGICAL LABORATORIES, INC., a Maryland corporation (the "Company"), having
its principal place of business at 1111 South Paca Street, Baltimore City,
Maryland 21230, at any time during the period from the date hereof (the
"Commencement Date") to 5:00 P.M., Baltimore, Maryland time, on June 11, 2003,
as such date may be extended pursuant to Section 4.6 hereof (the "Expiration
Date"), at which time this Warrant shall expire and become void, 75,000 shares
("Warrant Shares") of the Company's Common Stock, no par value (the "Common
Stock"). This Warrant shall be exercisable at a price ("Exercise Price") which
shall initially be Two Dollars and Twenty-Five Cents ($2.25) per share. The
number of shares of Common Stock to be received upon exercise of this Warrant
shall be adjusted from time to time as set forth below, and the Exercise Price
per share shall be subject to adjustment as provided in this Warrant. This
Warrant also is subject to the following terms and conditions:
1. EXERCISE OF WARRANT AND PAYMENT OF EXERCISE PRICE.
(a) EXERCISE OF WARRANT. This Warrant may be exercised in
accordance with the terms hereof at any time from and after the Commencement
Date until the Expiration Date, but if such date is a day on which federal or
state chartered banking institutions located in the State of Maryland are
authorized to close, then on the next succeeding day which shall not be such a
day. Exercise shall be by presentation and surrender to the Company at its
principal office, or at the office of any transfer agent designated by the
Company, of (i) this Warrant, (ii) the attached exercise form properly executed,
and either (iii) cash, certified or cashiers check or wire transfer for the
Exercise Price for the number of Warrant Shares specified in the exercise
<PAGE>
form, or (iv) if the exercise is to be a cashless exercise pursuant to Section
1.(b), written notice of the number of shares of Common Stock with respect to
which this Warrant is being surrendered in payment of the aggregate Exercise
Price for the Common Stock to be delivered to Holder. If this Warrant is
exercised in part only, the Company or its transfer agent shall, upon surrender
of the Warrant, execute and deliver a new Warrant evidencing the rights of the
Holder to purchase the remaining number of Warrant Shares purchasable hereunder.
Upon receipt by the Company of this Warrant in proper form for exercise,
accompanied by payment as aforesaid, the Holder shall be deemed to be the holder
of record of the Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually
delivered by the Holder.
(b) PAYMENT OF WARRANT EXERCISE PRICE.
Payment of the Exercise Price may be made by any of the
following, or a combination thereof, at the election of Holder:
(i) cash, certified check or cashiers check or wire transfer;
or
(ii) surrender of this Warrant at the principal office of the
Company together with notice of election, in which event the Company shall issue
Holder a number of shares of Common Stock computed using the following formula:
X = Y(A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder (not to
exceed the number of Warrant Shares set forth on the cover page of this
Warrant, as adjusted pursuant to the provisions of Section 4 of this Warrant);
Y = the number of shares of Common Stock for which this Warrant is
being exercised;
A = the Fair Market Value of one share of Common Stock (for purposes of
this Section 1.(b), the "Fair Market Value" shall be defined in
accordance with Section 4.4 hereof;
B = the Exercise Price (as adjusted to the date of such calculation).
It is intended that the Common Stock issuable upon exercise of this Warrant in a
cashless exercise transaction, if any, shall be deemed to have been acquired at
the time this Warrant was issued, for purposes of Sec Rule 144(d)(3)(ii).
2. RESERVATION OF SHARES AND EXPENSES. The Company shall, at all times
until the expiration of this Warrant, reserve for issuance and delivery upon
exercise of this Warrant the
2
<PAGE>
number of Warrant Shares which shall be required for issuance and delivery upon
exercise of this Warrant, and the Company represents and warrants to the Holder
that its Board of Directors has authorized and approved the same. The Company
covenants that the shares of Common Stock issuable on exercise of the Warrant
shall be duly and validly issued and fully paid and non-assessable and free of
liens, charges and all taxes with respect to the issue thereof. The Company
shall pay all expenses, taxes (other than income or similar taxes imposed on
Holder) and other charges payable in connection with the preparation, issue and
delivery of stock certificates pursuant to this Warrant. The transfer agent for
the Common Stock, which may be the Company ("Transfer Agent"), and every
subsequent Transfer Agent for any shares of the Company's stock issuable upon
the exercise of this Warrant, are hereby irrevocably authorized and directed at
all times until the Expiration Date to reserve such number of authorized and
unissued shares as shall be requisite for such purpose. The Company shall keep
copies of this Warrant on file with the Transfer Agent.
3. NO RIGHTS AS STOCKHOLDERS. This Warrant shall not entitle the Holder to
any rights as a stockholder of the Company, either at law or in equity.
4. ADJUSTMENTS.
4.1. SUBDIVISION OR COMBINATION OF SHARES. If the Company is
recapitalized through the subdivision or combination of its outstanding shares
of Common Stock into a larger or smaller number of shares, the number of Warrant
Shares shall be increased or reduced, as of the record date for such
recapitalization, in the same proportion as the increase or decrease in the
outstanding shares of Common Stock, and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all of the Warrant Shares
issuable hereunder immediately after the record date for such recapitalization
shall equal the aggregate amount so payable immediately before such record date.
4.2. DIVIDENDS IN COMMON STOCK OR SECURITIES CONVERTIBLE INTO COMMON
STOCK. If the Company declares a dividend or distribution on Common Stock
payable in Common Stock or securities convertible into Common Stock, the number
of shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common Stock
shall be entitled to receive such dividend, in proportion to the increase in the
number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock) of Common Stock
as a result of such dividend or distribution, and the Exercise Price shall be
adjusted so that the aggregate amount payable for the purchase of all the
Warrant Shares issuable hereunder immediately after the record date for such
dividend or distribution shall equal the aggregate amount so payable immediately
before such record date.
4.3. DISTRIBUTIONS OF OTHER SECURITIES OR PROPERTY. If the Company
distributes to holders of any of its securities (other than Common Stock or
securities convertible into Common Stock), property or any evidence of
indebtedness, then in each case, the number of
3
<PAGE>
Warrant Shares thereafter purchasable upon exercise of this Warrant shall be
determined by multiplying the number of Warrant Shares theretofore purchasable
by a fraction, of which the numerator shall be the Fair Market Value price per
share of Common Stock (as determined pursuant to Section 4.4) on the record date
mentioned below in this Section 4.3, and of which the denominator shall be the
Fair Market Value price per share of Common Stock on such record date, less the
then fair value (as determined by the Board of Directors of the Company in good
faith) of the portion of the shares of the Company's capital stock, property or
evidence of indebtedness distributable with respect to each share of Common
Stock. Such adjustment shall be made whenever any such distribution is made, and
shall become effective retroactively as of the record date for the determination
of stockholders entitled to receive such distribution.
4.4. FAIR MARKET VALUE. Fair market value of the Common Stock
("Fair Market Value") shall be determined as follows:
(a) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange, or is
listed on the NASDAQ National Market or Small Cap Market, the current Fair
Market Value shall be the average closing bid price for the Common Stock on such
exchange or NASDAQ during the last thirty (30) trading days; or
(b) If the Common Stock is not so listed or admitted to
unlisted trading privileges or quoted on NASDAQ, the current Fair Market Value
shall be the last bid price reported on the last business day prior to the date
of the exercise of this Warrant (i) by NASDAQ, or (ii) if reports are
unavailable under clause (i) above, by the National Quotation Bureau
Incorporated; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid prices are not so reported, the current Fair
Market Value shall be determined in good faith as promptly as reasonably
practicable by the mutual agreement of the Board of Directors and the Holder. If
such parties are unable to reach agreement within 20 days after the need for
such determination arises, the Board of Directors shall appoint a nationally
recognized investment banking firm acceptable to the Holder (the "Appointed
Firm") to make such determination. The parties shall use their best efforts to
cause the Appointed Firm to resolve all disagreements as soon as practicable,
but in any event within 45 days after the submission of the disputes to such
Appointed Firm. The resolution of such disagreements and the determination of
Fair Market Value by the Appointed Firm shall be final and binding on the
Company and the Holder. The Appointed Firm will determine the allocation of its
fees and expenses in connection with its determination of Fair Market Value
based upon the percentage which the portion of the contested amount not awarded
to each party bears to the amount actually contested by such party. For example,
if the Board of Directors claims that the Fair Market Value is $1,000 less than
the amount claimed by the Holder, and if the Appointed Firm ultimately resolves
the dispute by awarding the Holder $300 of the $1,000
4
<PAGE>
contested, then the fees and expenses of the Appointed Firm will be allocated
70% (I.E.: 700/1000) to the Holder and 30% (I.E. : 300/1000) to the Company.
4.5. RIGHTS OFFERING. If the Company offers rights or warrants to
persons which entitle them to subscribe to or purchase Common Stock or
securities convertible into Common Stock, and if the price per share (together
with the value of the consideration, if any, paid for such rights or warrants)
is lower on the record date referred to below than the then Fair Market Value
price per share of Common Stock, the Company shall immediately pay an Adjustment
Fee (as hereinafter defined) in cash to the Holder calculated in accordance with
the formula set forth below. As used herein, the following terms shall have the
following meanings:
(i) "WS" shall mean the number of shares of Common
Stock of the Company for which this Warrant is exercisable;
(ii) "CDO" shall mean Common Stock of the Company
deemed outstanding at the time of a dilutive issuance;
(iii) "DI" shall mean the number of shares of Common
Stock of the Company deemed issued in a dilutive issuance;
(iv) "NDI" shall mean the number of shares of Common
Stock of the Company that would have been issued in a dilutive issuance had Fair
Market Value been paid;
(iv) "FMV" shall mean Fair Market Value;
(vi) "EP" shall mean the Exercise Price then in
effect;
(vii) "AWS" shall mean (CDO +DI) /(CDO +NDI) x WS;
and
(viii) "AEP" shall mean (EP x WS) /AWS.
The term "Adjustment Fee," as used herein, shall mean and be calculated in
accordance with the following formula:
Adjustment Fee = ((AWS - WS) x (FMV - AEP)) + (WS x (EP - AEP))
The following is an example of a calculation of the Adjustment Fee as defined
above:
Example:
<TABLE>
<S> <C>
WS = $ 75,000.00
EP = $ 2.25
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
FMV = $ 4.00
NDI = $1,000,000.00
DI = $1,500,000.00
CDO = $5,500,000.00
</TABLE>
Adjustment Fee = ((80,775 - 75,000) x ($4.00 - $2.089)) + ((75,000 x ($2.25 -
$2.089))
= (5775 x $1.911) + (75,000 x $0.161)
= $11,036.03 + $12,075
= $23,111.03
<TABLE>
<S> <C>
AWS = ((5,500,000 + 1,500,000) / (5,500,000 + 1,000,000)) x 75,000
= ((7,000,000) /(6,500,000)) x 75,000
= 1.077 x 75,000
= 80,775
</TABLE>
<TABLE>
<S> <C>
AEP = ($2.25 x 75,000) /80,775
= $168,750 /80,775
= $2,089
</TABLE>
An Adjustment Fee shall be immediately paid by the Company to the Holder
whenever such rights or warrants are issued, and shall become effective
retroactively as of the record date for the determination of stockholders
entitled to receive such rights or warrants.
4.6. MERGER, SALE OF ASSETS. If at any time while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be: (a) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein); (b) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise; or (c) a sale or transfer of the Company's properties and assets as,
or substantially as, an entirety to any other person, then, (x) the Expiration
Date shall be extended to June 11, 2004, and (y) as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a Holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as
6
<PAGE>
provided in this Section 4. The foregoing provisions of this Section 4.6 shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the exercise of this Warrant. In all events,
appropriate adjustment shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of the Holder after the
transaction, to the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant.
4.7. RECLASSIFICATION. If the Company, at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired, shall change
any of the securities as to which purchase rights under this Warrant exist, by
reclassification of securities or otherwise, into the same or a different number
of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4.
4.8. ADJUSTMENT OF EXERCISE PRICE. Whenever the number of Warrant
Shares purchasable upon the exercise of the Warrant is adjusted, the Exercise
Price with respect to the Warrant Shares shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and of which the denominator
shall be the number of Warrant Shares so purchasable immediately thereafter.
4.9. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
purchasable upon the exercise of the Warrant or the Exercise Price of the
Warrant Shares is adjusted as provided herein, the Company shall mail to the
Holder a notice of such adjustment or adjustments, prepared and signed by the
Chief Financial Officer or Secretary of the Company, which sets forth the number
of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise
Price of such Warrant Shares after such adjustment, a brief statement of the
facts requiring such adjustment, and the computation by which such adjustment
was made.
5. NOTICES TO HOLDER. So long as this Warrant shall be outstanding: (a)
if the Company shall pay any dividends or make any distribution upon the Common
Stock otherwise than in cash; or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or purchase any shares of any
class of Common Stock or securities convertible into Common Stock or any similar
rights; or (c) if there shall be any capital reorganization of the Company in
which the Company is not the surviving entity, recapitalization of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or other transfer of all or substantially all
of the property and assets of
7
<PAGE>
the Company, or voluntary or involuntary dissolution, liquidation or winding up
of the Company, then in such event, the Company shall cause to be mailed to the
Holder, at least fifteen (15) days prior to the relevant date described below, a
notice containing a description of the proposed action and stating the date or
expected date on which a record of the Company's stockholders is to be taken for
the purpose of any such dividend, distribution of rights, or such
reclassification, reorganization, consolidation, merger, conveyance, lease or
transfer, dissolution, liquidation or winding up is to take place, the effect of
the action, to the extent such effect may be known on the date of such notice,
on the Exercise Price and the kind and amount of shares of stock or other
securities or property deliverable on the exercise of the Warrant, and the date
or expected 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 event. All such notices shall
be deemed to have been received (i) in the case of personal delivery, on the
date of such delivery, and (ii) in the case of mailing, on the third business
day following the date of such mailing.
6. WARRANT REGISTRATION; TRANSFER OR LOSS OF WARRANT.
6.1. WARRANT REGISTER. This Warrant shall be numbered and registered in
a warrant register as it is issued and transferred, which warrant register shall
be maintained by the Company at its principal office or, at the Company's
election and expense, by a warrant agent or the Company's Transfer Agent.
6.2. TRANSFER. This Warrant may be transferred, exercised, exchanged or
assigned ("transferred"), in whole or in part, subject to the provisions of this
Section 6.2. The Holder shall have the right to transfer all or a part of this
Warrant and all or part of the Warrant Shares. The Company shall register in the
warrant register any transfer of the Warrant, upon surrender of same to the
Company with a written instrument of transfer duly executed by the registered
Holder or by a duly authorized attorney. Upon any such registration of a
transfer, new Warrant(s) shall be issued to the transferee(s) and the
surrendered Warrant shall be canceled by the Company. A Warrant may also be
exchanged, at the option of the Holder, for one or more new Warrants
representing the aggregate number of Warrant Shares evidenced by the Warrant
surrendered. This Warrant and the Warrant Shares or any other securities ("Other
Securities") received upon exercise of this Warrant or the conversion of the
Warrant Shares shall be subject to restrictions on transferability unless
registered under the SECURITIES ACT OF 1933, as amended ("1933 Act"), or unless
an exemption from registration is available. Until this Warrant and the Warrant
Shares are so registered, this Warrant and any certificate for Warrant Shares
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, stating that this Warrant or the Warrant Shares may not be sold,
transferred or otherwise disposed of unless the Warrant or the Warrant Shares
may be transferred without such registration under the 1933 Act. This Warrant
and the Warrant Shares may also be subject to restrictions on transferability
under applicable state securities or blue sky laws.
8
<PAGE>
6.3. COMPLIANCE WITH LAWS. Until this Warrant or the Warrant Shares
are registered under the 1933 Act, the Company may require, as a condition of
transfer of this Warrant or the Warrant Shares that the transferee (who may be
the Holder in the case of an exchange) represent that the securities being
transferred are being acquired for investment purposes and for the transferee's
own account and not with a view to or for sale in connection with any
distribution of the security.
6.4. LOSS OF WARRANT. Upon receipt by the Company of evidence
reasonably satisfactory to it of loss, theft, destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, of reasonable
satisfactory indemnification, or, in the case of mutilation, upon surrender of
this Warrant, the Company will execute and deliver, or instruct its Transfer
Agent to execute and deliver, a new Warrant of like tenor and date, any such
lost, stolen or destroyed Warrant thereupon shall become void.
7. REGISTRATION RIGHTS. The Company shall be obligated to the Holder of the
Warrants and the Warrant Shares as follows:
(a) Whenever the Company proposes to file with the Securities and
Exchange Commission a Registration Statement (other than on Form S-8 or as to
securities issued pursuant to an employee benefit plan or a transaction subject
to Rule 145 promulgated under the 1933 Act), it shall, at least 15 days prior to
each such filing, give written notice of such proposed Filing (a "Filing
Notice") to the Holder and each holder of Warrant Shares at their respective
addresses as they appear on the records of the Company, pursuant to which the
Company shall offer to include in such Filing any or all of the Warrant Shares
purchasable under the Warrant and any Warrant Shares theretofore issued on
exercise of any portion of the Warrant. The Holder and holders of Warrant Shares
shall have until the 10th day after receipt of such notice to send to the
Company a written request or requests (a "Registration Request") that shall
specify the number of Warrant Shares which the Holder or holder of Warrant
Shares desires to have included in such filing (the aggregate amounts of which
specified in all such Registration Requests of the Holder and the holders of
Warrant Shares shall be referred to hereinafter as the "Registrable Securities")
and the manner of disposition for such Registrable Securities proposed by the
Holder or holders of Warrant Shares. The Company shall include in such filing,
for registration under the 1933 Act and disposition in accordance with the
method of disposition set forth in such Registration Requests, the aggregate
number of Registrable Securities which the Holder or holders of Warrant Shares
requested be included in such filing. In the event that the managing underwriter
for said offering advises the Company and the holders of the Registrable
Securities in writing that the inclusion of such securities in the offering
would be detrimental to the offering of any shares or other securities to be
sold and issued by the Company pursuant to such Registration Statement, the
Company will include in such Registration Statement the number of Registrable
Securities which in the opinion of such managing underwriter can be included in
such Registration Statement, together with the shares of all other shareholders
who exercised similar registration rights to have their shares sold pursuant to
such Registration Statement ("Other Shares"), on a pro rata basis among all
holders of such Registrable Securities and Other Shares according to the ratio
that the number
9
<PAGE>
of Registrable Securities owned by the Holder hereof and any such other holder
bears to the total number of Registrable Securities and Other Shares owned by
all such holders.
(b) In addition to any Registration Statement required pursuant to
subsection (a) above, the Company: (a) shall, within thirty (30) days after the
execution of this Warrant by the Company, prepare and file, at the Company's own
expense, a Registration Statement with the Securities and Exchange Commission
and appropriate Blue Sky authorities sufficient to immediately render the
Warrant Shares appropriately registered under all applicable federal and state
laws, and will use its best efforts, at its own expense, through its officers,
directors, auditors and counsel, in all matters necessary or advisable, to cause
such Registration Statement to become effective as promptly as practicable and
to maintain such effectiveness so as to permit resale of the Warrant Shares
covered by this Warrant at all times; and (b) at any time prior to the
Expiration Date, the Company shall, as promptly as practicable (but in any event
within thirty (30) days), after written request (the "Request") by Holder, or by
a person or persons holding (or having the right to acquire by virtue of holding
the Warrant) at least fifty percent (50%) of the shares of Common Stock which
have been (or may be) issued upon exercise of the Warrant, prepare and file, at
the Company's own expense, a Registration Statement with the Securities and
Exchange Commission and appropriate Blue Sky authorities sufficient to permit
the public offering of the Warrant Shares and will use its best efforts at its
own expense through its officers, directors, auditors and counsel, in all
matters necessary or advisable, to cause such Registration Statement to become
effective as promptly as practicable and to maintain such effectiveness so as to
permit resale of the Warrant Shares covered by the Request under applicable
federal and state securities law without restriction. Notwithstanding the
foregoing, if a Registration Statement is filed pursuant to this Section 7.2(b)
but is not declared effective within 120 days of the date of the filing thereof
or, despite being declared effective within such period of time, is not kept
effective as required above, then, it shall not be deemed to be a Registration
Statement meeting the requirements hereunder and shall not satisfy or discharge
the Company's obligations under this Section 7.2(b).
(c) The Company shall not be required to file a Registration Statement
pursuant to Section 7.2(b) if, in the opinion of counsel for the Holder and
holders of Warrant Shares and counsel for the Company (or, should they not
agree, in the opinion of another counsel experienced in securities law matters
acceptable to counsel for such holders and the Company), the proposed public
offering or other disposition as to which such Registration Statement is
requested is exempt from registration and no longer subject to the volume and
manner of sales restrictions of Rule 144 under federal securities law, and also
exempt from qualification under applicable state securities laws and such
offering or other disposition would result in all purchasers or transferees of
such Warrant Shares proposed to be sold by any holders of the Warrants or
Warrant Shares obtaining Warrant Shares may be sold publicly pursuant to Section
4(1) of, the 1933 Act.
(d) In consideration for the Company agreeing to its obligations under
this Section 7, the holder of Registrable Securities agrees in connection with
any registration of the
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Company's securities that, upon the request of the Company or the underwriters
managing any underwritten-offering of the Company's securities, not to sell,
make any short sale of, loan, grant any option for the purchase of or otherwise
dispose of any Registrable Securities (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed the
lesser of the lowest number of days any other holder of the Company's securities
which are included in such registration is required not to take the actions
described in this Section 7(d), and 180 days) from the effective date of such
registration as the Company or the underwriters may specify.
(e) If requested by the underwriters for any underwritten offering by
holders of Registrable Securities pursuant to a registration requested under
Section 7(b), the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, each such holder and the underwriters, and to
contain such representations and warranties by the Company and such other terms
as are generally prevailing in agreements of this type, including, without
limitations, indemnities to the effect and to the extent provided in Section 8
hereof.
8. INDEMNIFICATION.
(a) The Company will, and does hereby undertake to, indemnify and hold
harmless each Holder, each of such Holder's officers, directors, partners and
agents, and each person controlling such Holder, with respect to any
registration, qualification, or compliance effected pursuant to Section 7, and
each underwriter, if any, and each person who controls any underwriter, of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, damages, and liabilities (or actions in respect thereto) to which they
may become subject under the 1933 Act, the Securities Exchange Act of 1934, as
amended, (the "1934 Act"), or other federal or state law arising out of or based
on (i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other similar document
(including any related Registration Statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any violation or alleged violation by the Company of any federal, state or
common law rule or regulation applicable to the Company in connection with any
such registration, qualification, or compliance, and will reimburse, as
incurred, each Holder, each underwriter, and each director, officer, partner,
agent and controlling person, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability, or action; provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense, arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by an instrument duly executed
by any of the Holders or underwriter and stated to be specifically for use
therein.
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(b) Each Holder will, if Registrable Securities held by or issuable to
such Holder are included in such registration, qualification, or compliance,
severally and not jointly, indemnify the Company, each of its directors, and
each officer who signs a Registration Statement in connection therewith, and
each person controlling the Company, each underwriter, if any, and, each person
who controls any underwriter, of the Company's securities covered by such a
Registration Statement, against all claims, losses, damages, and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such Registration
Statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse,
as incurred, the Company, and each such underwriter or other person, for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability, or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was made in such
Registration Statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the liability of each such
Holder hereunder shall be limited to the net proceeds received by such Holder
from the sale of securities under such Registration Statement. In no event will
any Holder be required to enter into any agreement or undertaking in connection
with any registration under this Section 8 providing for any indemnification or
contribution obligations on the part of such Holder greater than such Holder's
obligations under this Section 8.
(c) Each party entitled to indemnification under this Section 8 (the
"Indemnified Party") shall give notice to the party required to provide such
indemnification (the "Indemnifying Party") of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and the Indemnifying Party shall assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be subject to approval by the Indemnified Party (whose approval shall not
be unreasonably withheld) and the Indemnified Party may participate in such
defense with its separate counsel at the Indemnifying Party's expense if
representation of such Indemnified Party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 8, except
to the extent that such failure to give notice shall materially adversely affect
the Indemnifying Party in the defense of any such claim or any such litigation.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the
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giving by the claimant or plaintiff therein, to such Indemnified Party, of a
release from all liability in respect to such claim or litigation.
(d) If any Holder includes Registrable Securities in any registration,
such Holder shall furnish to the Company such information regarding such Holder,
and the distribution proposed by such or Holder, as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification, or compliance referred to in Sections 7 and 8.
9. CONTRIBUTION. In order to provide for just and equitable contribution
under the 1933 Act in any case in which: (a) the Holder or any holder of the
Warrant Shares or controlling person makes a claim for indemnification pursuant
to Section 8 hereof but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of Section 8 hereof provide for indemnification in such
case; or (b) contribution under the 1933 Act may be required on the part of the
Holder or any holder of the Warrant Shares or controlling person, then the
Company and the Holder or any such holder of the Warrant Shares or controlling
person shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Holder or holder of Warrant
Shares or controlling person on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and such holders of such securities and such
controlling persons agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method which does not take account of the equitable
considerations referred to in this Section 9. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
12(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
10. CALL OPTION. The Company shall have the right to purchase all of this
Warrant from the Holder, to the extent the Holder has not exercised this Warrant
or provided notice to the Company of its decision to exercise this Warrant, for
a cash purchase price equal to (a) the number of Warrant Shares still subject to
this Warrant, multiplied by (b) three and one-half
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<PAGE>
times the Exercise Price. Payment of the purchase price shall be made by the
Company to the Holder in cash within seven (7) calendar days after notice from
the Company to the Holder of its election to purchase all or a portion of this
Warrant. In the event the Holder has acquired any Common Stock as a result of
exercising all or any portion of this Warrant and the Holder still owns such
Common Stock for its own account and has not entered into any agreement to sell
such Common Stock to any other party, the Company shall have the right to
repurchase such Common Stock from the Holder for a per share purchase price
equal to five times the Exercise Price paid by the Holder for such Common Stock.
Such purchase price shall be paid in cash within seven (7) calendar days after
notice from the Company to the Holder of its election to acquire such Common
Stock. The Holder also agrees that prior to selling any Common Stock acquired
from the exercise of this Warrant to any third-party or entering into any
agreement to sell any such Common Stock to any third-party, the Holder shall
provide written notice to the Company of its intent to sell Common Stock
acquired from the exercise of this Warrant and the purchase price and other
relevant terms of the proposed sale of such Common Stock ("Sale Notice"). The
Company shall have a period of forty-eight (48) hours to purchase such Common
Stock from the Holder for a per share purchase price equal to five times the
Exercise Price paid by the Holder for such Common Stock. If the Company fails to
purchase such Common Stock from the Holder within such forty-eight (48) hour
period and as otherwise provided for above, the Holder shall have the right to
sell such Common Stock to any party, free and clear of the options in this
Section 10, on the terms set forth in the Sale Notice.
11. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or otherwise, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times, in good faith, take
all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment.
12. RESTRICTIVE LEGEND. Unless and until otherwise permitted by this
Section 12, each certificate for Warrants issued under this Agreement, each
certificate for any Warrants issued to any transferee of any such certificate,
each certificate for any Common Stock issued upon exercise of any Warrant and
each certificate for any Common Stock issued to any transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") NOR IS SUCH REGISTRATION CONTEMPLATED. SUCH SECURITIES MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME
WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO
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SUBJECT TO A CALL OPTION DESCRIBED IN A WARRANT AGREEMENT DATED JUNE 11, 1999."
13. NOTICES. Notices and other communications to be given to the Holder
shall be deemed sufficiently given if delivered by hand, or three (3) business
days after mailing if mailed by registered or certified mail, postage prepaid,
addressed in the name and at the address of such Holder appearing on the records
of the Company. Notices or other communications to the Company shall be deemed
to have been sufficiently given if delivered by hand or three (3) business days
after mailing if mailed by registered or certified mail, postage prepaid, to the
Company at:
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
1111 South Paca Street
Baltimore, Maryland 21230
Attn.: Thomas P. Rice, President
Either party may change the address to which notices shall be given by notice
pursuant to this Section 13.
14. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Maryland.
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ANNEX A
[FORM OF EXERCISE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by
the Warrant dated June 11, 1999, to purchase ________________ shares of Common
Stock and herewith tenders payment for such shares. The undersigned requests
that a certificate for such shares of Common Stock be registered in the name of
_________________________________________, whose address is
___________________________________. If such number of shares of Common Stock is
less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of the shares of Common Stock be registered in the name of
_________________________________, whose address is
______________________________________________.
Dated:
Signature:
------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
- -------------------------------
Insert Social Security or Taxpayer
I.D. No. of Holder)
<PAGE>
EXHIBIT 5.1
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530 WASHINGTON
FAX: 410-539-0489 NEW YORK
PHILADELPHIA
EASTON
September 8, 1999
Chesapeake Biological Laboratories, Inc.
1111 South Paca Street
Baltimore, Maryland 21230
Re: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Chesapeake Biological Laboratories, Inc., a
Maryland corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-3 (the "Registration Statement") filed on the
date hereof with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to 1,385,751 shares of the Company's common stock, par value $.01 per
share (the "Shares"), which were previously issued by the Company or are subject
to issuance upon conversion of outstanding Preferred Stock or Warrants. All
shares are being registered for resale by the holders thereof.
In this capacity, we have examined the Company's Charter and By-Laws,
the proceedings of the Board of Directors of the Company relating to the
issuance of the Shares and such other documents, instruments and matters of law
as we have deemed necessary to the rendering of this opinion. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity with originals
of all documents submitted to us as copies.
Based upon the foregoing, we are of the opinion and advise you that
each of the Shares that is currently outstanding has been, and all Shares
issuable upon conversion of Preferred Stock or exercise of Warrants will be upon
conversion or exercise, duly authorized and validly issued and is fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ Piper &
Marbury L.L.P.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of Chesapeake Biological
Laboratories, Inc. (the Company), which pertains to the Company's registration
of 1,385,751 shares of common stock, of our report dated June 11, 1999 (and to
all references to our Firm), with respect to the consolidated financial
statements of the Company in its Annual Report (Form 10-K) for the year ended
March 31, 1999, previously filed with the Securities and Exchange Commission
(File No. 333-44873).
/s/ARTHUR ANDERSEN LLP
Baltimore, Maryland,
September 8, 1999
