Contract

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE LAW AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR STATE LAW OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE, OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. Void after 5:00 p.m., Pacific Standard Time on May 27, 2007 WARRANT This certifies that, for value received, Healthcare Enterprise Group, Inc.,a Delaware corporation, or registered assigns (the “Holder”), is entitled topurchase at a price of ($0.00384615384615) per share (the “Exercise Price”),subject to the provisions of this Warrant, from Cancer Therapeutics,Incorporated, a Tennessee corporation (the “Company”), Six Million, Five HundredThousand (6,500,000) shares of the unregistered Common Stock of the Company. Theshares of common stock issuable from the exercise of the Warrant are hereafterreferred to as the “Warrant Stock”.1. Exercise of Warrant. This Warrant may be exercised in whole or in part at anytime or from time to time on or after January 1, 2005, but not later than 5:00p.m., Pacific Daylight Time, on May 27, 2007, or if such date is a day on whichfederal or state chartered banking institutions are authorized by law to close,then on the next succeeding day which shall not be such a day, by presentationand surrender thereof to the Company at its principal office, with the PurchaseForm annexed hereto duly executed and accompanied by payment, in cash or bycertified or official bank check, payable to the order of the Company, of theExercise Price for the number of shares of Warrant Stock specified in such form,together with all taxes applicable upon such exercise. If this Warrant should beexercised in part only, the Company shall upon surrender of this Warrant forcancellation, execute and deliver a new Warrant of the same tenor evidencing theright of the Holder to purchase the balance of the shares of Warrant Stockpurchasable hereunder upon the same terms and conditions as herein set forth.2. Fractional Shares. No fractional shares or stock representing fractionalshares shall be provided by the Company upon the exercise of this Warrant. Inlieu of any fractional shares which would otherwise be issuable, the Companyshall pay cash equal to the product of such fraction multiplied by the fairmarket value of one share of the Warrant Stock on the date of exercise, asdetermined in good faith by the Company.3. Transfer, Exchange, Assignment or Loss of Warrant. 1 3.1 This Warrant may not be assigned or transferred except as providedherein and in accordance with and subject to the provisions of the SecuritiesAct of 1933 and the Rules and Regulations promulgated thereunder (said Act andsuch Rules and Regulations being hereinafter collectively referred to as the”Act”). Any purported transfer or assignment made other than in accordance withthis Section 3 and Section 7 hereof shall be null and void and of no force andeffect. 3.2 This Warrant may be transferred or assigned only with the writtenconsent of the Company, which shall not be unreasonably withheld. In addition,this Warrant shall be transferable only upon the opinion of counsel satisfactoryto the Company, which may be counsel to the Company, that (i) the transferee isa person to whom the Warrant may be legally transferred without registrationunder the Act; and (ii) such transfer will not violate any applicable law orgovernmental rule or regulation including, without limitation, any applicablefederal or state securities law, as further referenced in Section 7 below. Priorto the transfer or assignment, the assignor or transferor shall reimburse theCompany for its reasonable expenses, including attorneys’ fees, incurred inconnection with the transfer or assignment. 3.3 Any assignment permitted hereunder shall be made by surrender of thisWarrant to the Company at its principal office with the Assignment Form annexedhereto duly executed and funds sufficient to pay any transfer tax. In such eventthe Company shall, without charge, execute and deliver a new Warrant in the nameof the assignee named in such instrument of assignment and this Warrant shallpromptly be cancelled. This Warrant may be divided or combined with otherWarrants which carry the same rights upon presentation thereof at the principaloffice of the Company together with a written notice signed by the Holderthereof, specifying the names and denominations in which new Warrants are to beissued. The terms “Warrant” and “Warrants” as used herein includes any Warrantsin substitution for or replacement of this Warrant, or into which this Warrantmay be divided or exchanged. 3.4 Upon receipt by the Company of evidence satisfactory to it of the loss,theft, destruction or mutilation of this Warrant, and (in the case of loss,theft or destruction) of reasonably satisfactory indemnification, and uponsurrender and cancellation of this Warrant, if mutilated, the Company willexecute and deliver a new Warrant of like tenor and date and any such lost,stolen, destroyed or mutilated Warrant shall thereupon become void. Any such newWarrant executed and delivered shall constitute an additional contractualobligation on the part of the Company, whether or not the Warrant so lost,stolen, destroyed or mutilated shall be at any time enforceable by anyone. 3.5 Each Holder of this Warrant, the shares of Warrant Stock issuedhereunder or any other security issued or issuable upon the exercise of thisWarrant shall indemnify and hold harmless the Company, its directors andofficers, and each person, if any, who controls the Company, against any losses,claims, damages or liabilities, joint or several, to which the Company or anysuch director, officer or any such person may become subject under the Act orstatute or common law, insofar as such losses, claims, damages or liabilities,or actions in respect thereof, arise out of or are based upon the disposition bysuch Holder of the Warrant, the shares of Warrant Stock acquired under theWarrant, or other such securities in violation of this Warrant.4. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled toany rights of a shareholder in the Company, either at law or equity, and the 2rights of the Holder are limited to those expressed in this Warrant and are notenforceable against the Company except to the extent set forth herein.5. Demand Registration Rights. 5.1 Demand Registration. (a) If the Company shall receive, at any time during the two (2) year period commencing January 1, 2005, a written request from the Holder that the Company file a registration statement under the Act covering the registration of the Warrant Stock, then as soon as practicable thereafter, and subject to the limitations and restrictions contained in this Section 5, the Company shall use its reasonable best efforts to effect the registration of all of the shares of Warrant Stock which the Holder requests to be registered. (b) The Company is obligated to effect only one (1) demand registration pursuant to this Section 5. 5.2 Obligations of the Company. Whenever required under Section 5 to use its reasonable best efforts to effect the registration of any Warrant Stock, the Company shall do the following as expeditiously as possible: (a) Prepare and file with the SEC a registration statement with respect to such Warrant Stock and use its reasonable best efforts to cause such registration statement to become and remain effective. (b) Prepare and file with the SEC such amendments and supplements to such registration statements and the prospectus used in connection therewith to comply with the requirements of the Act. (c) Furnish to the Holder such number of copies of a prospectus (including a preliminary prospectus), in conformity with the requirements of the Act, and such other documents as the Holder may reasonably request in order to facilitate the disposition of the Warrant Stock to be sold under the registration statement. (d) Use its reasonable best efforts to register and qualify the securities covered by such registration statements under the securities laws of such states of the United States as shall be reasonably appropriate for the distribution of the securities covered by such registration statement. 5.3 Expenses of Registration. All expenses incurred in connection with anyregistration, qualification, or compliance pursuant to Section 5 of this Warrantshall be borne by the Company. 5.4 Rule 144 Reporting. With a view to making available the benefits ofcertain rules and regulations of the SEC which may permit the sale of anyoutstanding shares to the public without registration, the Company agrees afterany registration to use its best efforts to: 3 (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times; and (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the Securities Exchange Act of 1934, as amended, as long as it is subject to such reporting requirements. 5.5 No Transfer of Registration Rights. The rights to cause the Company toregister the Warrant Stock under this Warrant may not be assigned by the Holderwithout the written consent of the Company.6. Adjustment of Exercise Price and Number of Shares. The number and kind ofsecurities issuable upon the exercise of this Warrant and the Exercise Price ofsuch securities shall be subject to adjustment from time to time upon thehappening of certain events as follows: 6.1 Adjustment for Dividends in Stock. In case at any time or from time totime on or after the date hereof the holders of the Common Stock of the Company(or any shares of stock or other securities at the time receivable upon theexercise of this Warrant) shall have received, or, on or after the record datefixed for the determination of eligible stockholders, shall have become entitledto receive without payment therefor, other or additional stock of the Company byway of dividend, then and in each case, the Holder of this Warrant shall, uponthe exercise hereof be entitled to receive, in addition to the number of sharesof Warrant Stock receivable thereupon, and without payment of any additionalconsideration therefor, the amount of such other or additional stock of Companywhich such Holder would hold on the date of such exercise had it been the holderof record of such shares of Warrant Stock on the date hereof and had thereafter,during the period from the date hereof to and including the additional stockreceivable by it as aforesaid during such period, giving effect to alladjustments called for during such period by paragraphs (a) and (b) of thisSection 6. 6.2 Adjustment for Reclassification, Reorganization or Merger. In case ofany reclassification or change of the outstanding securities of the Company orof any reorganization of the Company (or any other corporation the stock orsecurities of which are at the time receivable upon the exercise of thisWarrant) on or after the date hereof, or in case, after such date, the Company(or any such other corporation) shall merge with or into another corporation orconvey all or substantially all of its assets to another corporation, then andin each such case the Holder of this Warrant, upon the exercise hereof at anytime after the consummation of such reclassification, change, reorganization,merger or conveyance, shall be entitled to receive, in lieu of the stock orother securities and property receivable upon the exercise hereof prior to suchconsummation, the stock or other securities or property which such Holder wouldhave been entitled upon such consummation if such Holder had exercised thisWarrant immediately prior thereto. In each such case, the terms of this Section6 shall be applicable to the shares of stock or other securities properlyreceivable upon the exercise of this Warrant after such consummation. 6.3 Stock Splits and Reverse Stock Splits. If at any time on or after thedate hereof the Company shall subdivide its outstanding shares of Warrant Stockinto a greater number of shares, the Exercise Price in effect immediately prior 4to such subdivision shall thereby be proportionately reduced and the number ofshares of Warrant Stock receivable upon exercise of the Warrant shall thereby beproportionately increased; and, conversely, if at any time on or after the datehereof the outstanding number of shares of Warrant Stock shall be combined intoa smaller number of shares, the Exercise Price in effect immediately prior tosuch combination shall thereby be proportionately increased and the number ofshares of Warrant Stock receivable upon exercise of the Warrant shall thereby beproportionately decreased.7. Transfer to Comply with the Securities Act of 1933. 7.1 Unless registered under the Act pursuant to Section 5 herein, thisWarrant and the shares of Warrant Stock issued hereunder or any other securityissued or issuable upon exercise of this Warrant may not be sold, transferred orotherwise disposed of, except to a person who, in the opinion of counselreasonably satisfactory to the Company, is a person to whom this Warrant or suchshares of Warrant Stock may legally be transferred pursuant to Section 3 hereofwithout registration and without the delivery of a current prospectus under theAct with respect thereto and then only against receipt of an agreement of suchperson to comply with the provision of this Section 7 with respect to any resaleor other disposition of such securities unless, in the opinion of such counsel,such agreement is not required. 7.2 Unless registered under the Act pursuant to Section 5 herein, theCompany may cause the following legend to be set forth on each certificaterepresenting shares of Warrant Stock acquired under this Warrant or any othersecurity issued or issuable upon exercise of this Warrant, unless counsel forthe Company is of the opinion as to any such certificate that such legend isunnecessary: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE LAW AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR STATE LAW OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE, OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. 7.3 Governing Law. This Warrant shall be governed by, and construed inaccordance with, the laws of the State of California excluding that body of lawpertaining to conflicts of law. 7.4 Notice. Notices and other communications to be given to the Holder ofthe Warrants evidenced by this certificate shall be delivered by hand or mailed,postage prepaid, to or such other address as the Holder shall have designated bywritten notice to the Company as provided herein. Notices or othercommunications to the Company shall be deemed to have been sufficiently given ifdelivered by hand or mailed postage prepaid to the Company at 412 Chelsa Cove,Franklin, Tennessee 37064, attn: Robert K. Oldham, or such other address as theCompany shall have designated by written notice to such registered owner asherein provided. Notice by mail shall be deemed given when deposited in theUnited States mail, postage prepaid, as herein provided. 5 [CONTINUED ON NEXT PAGE] 6 IN WITNESS WHEREOF, the authorized officer of the Company has executedthis Warrant to be effective as of the date first set forth above. Cancer Therapeutics, Incorporated a Tennessee corporation By: _________________________________________ Robert K. Oldham, President 7 PURCHASE FORM The undersigned hereby irrevocably elects to exercise the withinWarrant to the extent of purchasing _________ shares of Warrant Stock, andhereby makes payment of $________ in payment of the actual exercise pricethereof. ___________________________________ Signature________________________________________________________________________________ ASSIGNMENT FORMFOR VALUE RECEIVED, _______________________ hereby sells, assigns and transfers (please type or print)unto __________________________________________________________________________ (please type or print)_______________________________________________________________________________ (address)the right to purchase shares of Warrant Stock represented by this Warrant to theextent of __________ shares as to which such right is exercisable, and doeshereby irrevocably constitute and appoint the Company and/or its transfer agentas attorney to transfer the same on the books of the Company with full power ofsubstitution in the premises. _________________________________ Signature 8