Issue Date: March 24, 2008 Warrant No.
Exhibit 10.3
THIS WARRANT (THIS “WARRANT”) AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS A REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN
CONNECTION WITH SUCH OFFER OR SALE. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
MAY NOT BE TRANSFERRED OR ASSIGNED TO ANY PERSON EXCEPT IN COMPLIANCE WITH APPLICABLE SECURITIES
LAWS.
WARRANT
TO PURCHASE COMMON STOCK
OF
| Issue Date: Xxxxx 00, 0000 | Xxxxxxx No. |
THIS WARRANT of ECHO THERAPEUTICS, INC., a Minnesota corporation (the “Company”), certifies
that ., a company, and its successors and permitted assigns (the
“Holder”), has the right to purchase up to
shares (such shares, the number of which may
be adjusted hereunder, are referred to herein as the “Warrant Shares”) of the Company’s common
stock, par value $0.01 per share (the “Common Stock”). The per share purchase price payable by the
Holder for the Warrant Shares shall be $2.00 (such price, as may be adjusted hereunder, is referred
to herein as the “Exercise Price”). The Holder may exercise this Warrant at any time and from time
to time beginning on the Issue Date and ending at 5:00 p.m., New York City time, on the fifth
anniversary of the Issue Date or, if such day is not a Business Day, on the next succeeding
Business Day.
This Warrant has been issued pursuant to a Securities Purchase and Loan Agreement, dated as of
the date hereof (the “Securities Purchase Agreement”), by and between the Company and the Holder.
“Assumed Variable Market Price” has the meaning set forth in Section 4(d)(ii)(B) of this
Warrant.
“Cash Exercise” and “Cashless Exercise” have the respective meanings set forth in Section 2(c)
of this Warrant.
“Common Stock” has the meaning set forth in the preamble to this Warrant.
“Company” has the meaning set forth in the preamble to this Warrant.
“Convertible Securities” means any stock or securities (other than Options) of the Company
convertible into or exercisable or exchangeable for Common Stock.
“Delivery Date” has the meaning set forth in Section 3(a) of this Warrant.
“Determination Date” has the meaning set forth in Section 4(b) of this Warrant.
“Dilutive Issuance” has the meaning set forth in Section 4(d)(i) of this Warrant.
“Dispute Procedure” has the meaning set forth in Section 2(b) of this Warrant.
“Distribution”, “Distribution Date” and Distribution Notice” have the respective meanings set
forth in Section4(b) of this Warrant.
“Distribution Per Share Value” means, with respect to a Distribution, the aggregate fair
market value of the assets to be so distributed divided by the number of shares of Common Stock as
to which such Distribution is to be made. For purposes of this definition, the fair market value
of any distributed assets shall be the value agreed to by the Company and the Holder in good faith.
If the Company and the Holder are unable to agree on such fair market value within three Business
Days, the Company shall submit such dispute to an independent investment banking firm of national
reputation reasonably acceptable to the Holder, and shall cause such investment banking firm to
perform such determination and notify the Company and the Holder of the results of determination no
later than five Business Days from the time such dispute was submitted to it by the Company. Such
investment bank’s determination shall be deemed conclusive absent manifest error. The fees of any
such investment bank shall be borne by the party whose calculations were most at variance with
those of such investment bank.
“DTC” has the meaning set forth in Section 3(b) of this Warrant.
“Excluded Securities” means (i) issuances of shares of Common Stock or Options to employees,
officers, directors or consultants of the Company duly approved by a majority of the disinterested
members of the Board of Directors or a majority of the disinterested
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members of a committee of the Board of Directors established for such purpose; (ii) issuances
of securities upon the exercise or exchange of or conversion of any securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and outstanding on the Issue
Date, provided that such securities have not been amended since the Issue Date to increase the
number of such securities or to decrease the exercise, exchange or conversion price of any such
securities; (iii) securities issued at fair market value in connection with acquisitions or
strategic transactions approved by a majority of the disinterested members of the Board of
Directors, but not including a transaction with an entity whose primary business is investing in
securities or a transaction, the primary purpose of which is to raise capital; (iv) the exercise of
this Warrant or any portion hereof; (v) the issuance of securities at fair market value pursuant to
any equipment financing or commercial business arrangement with one or more banks or similar
financial or lending institutions approved by the Board of Directors to the extent such issuances
do not, in the aggregate, exceed two percent (2%) of the issued and outstanding shares of Common
Stock on the date hereof; (vi) the issuance of any shares of Common Stock or Convertible Securities
as payment of interest in connection with the Company’s 8% Senior Convertible Promissory Notes, due
February 12, 2011, in accordance with the terms of such notes as in effect as of the Execution
Date; (vii) securities issued in any transaction that is approved in writing by the Holder; and
(viii) shares of Common Stock issued in connection with any subdivision of Common Stock covered by
Section 4(a).
“Exercise Date” has the meaning set forth in Section 2(a) of this Warrant.
“Exercise Default” has the meaning set forth in Section 3(c) of this Warrant.
“Exercise Notice” has the meaning set forth in Section 2(a) of this Warrant.
“Exercise Price” has the meaning set forth in the preamble to this Warrant.
“Holder” has the meaning set forth in the preamble to this Warrant.
“Issue Date” means the Issue Date set forth on the front page of this Warrant.
“Major Transaction” means the existence, occurrence or public announcement of, or entering
into an agreement contemplating, a merger, consolidation, business combination, tender offer,
exchange of shares, recapitalization, reorganization, redemption or other similar event, as a
result of which shares of Common Stock shall be changed into, or exchanged or tendered for, the
same or a different number of shares of the same or another class or classes of stock or securities
or other assets of the Company or another entity, or the Company shall sell all or substantially
all of its assets. A subdivision or combination of Common Stock that is covered by Section 4(a)
shall not constitute a “Major Transaction”.
“Market Price” means, as of a particular date, the highest daily VWAP during the period of 20
consecutive Trading Days occurring immediately prior to (but not including) such date.
“Options” means any rights, warrants or options to subscribe for, purchase or receive Common
Stock or Convertible Securities.
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“Record Date” has the meaning set forth in Section 4(b) of this Warrant.
“Securities Purchase Agreement” has the meaning set forth in the preamble to this Warrant.
“VWAP” means, with respect to a Trading Day, the volume weighted average price of the Common
Stock for such Trading Day on the Principal Market as reported by Bloomberg Financial Markets or,
if Bloomberg Financial Markets is not then reporting such prices, by a comparable reporting service
of national reputation selected by the Company and reasonably satisfactory to the Holder. If VWAP
cannot be calculated for the Common Stock on such Trading Day on the foregoing bases, then the
Company shall, at its sole cost and expense, submit such calculation to an independent investment
banking firm of national reputation reasonably acceptable to the Holder, and shall cause such
investment banking firm to perform such determination and notify the Company and the Holder of the
results of determination no later than five Business Days from the time such calculation was
submitted to it by the Company.
“Warrant Shares” has the meaning set forth in the preamble to this Warrant.
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notify the Company and the Holder of the results in writing no later than three Business Days
following the day on which such accountant received the disputed calculations (the “Dispute
Procedure”). Such accountant’s calculation shall be deemed conclusive absent manifest error. The
fees of any such accountant shall be borne by the party whose calculations were most at variance
with those of such accountant.
(i) through a cash exercise (a “Cash Exercise”) by delivering immediately available funds, or
(ii) if an effective Registration Statement is not available for the resale of all of the
Warrant Shares issuable hereunder at the time an Exercise Notice is delivered to the Company,
through a cashless exercise (a “Cashless Exercise”), as hereinafter provided. The Holder may
effect a Cashless Exercise by surrendering this Warrant to the Company and noting on the Exercise
Notice that the Holder wishes to effect a Cashless Exercise, upon which the Company shall issue to
the Holder the number of Warrant Shares determined as follows:
| where: | A = | the number of Warrant Shares to be issued to the Holder in such Cashless Exercise. | ||||
| B = | the number of Warrant Shares subject to such Cashless Exercise. | |||||
| C = | the Market Price as of the Exercise Date. | |||||
| D = | the Exercise Price as of the Exercise Date. |
For purposes of Rule 144, it is intended and acknowledged that the Warrant Shares issued in a
Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares required by Rule 144 shall be deemed to have been commenced, on the
Issue Date.
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and deliver to the Holder a certificate representing such new warrant, with terms identical in all
respects to this Warrant (except that such new warrant shall be exercisable into the number of
shares of Common Stock with respect to which this Warrant shall remain unexercised); provided,
however, that the Holder shall be entitled to exercise all or any portion of such new warrant at
any time following the time at which this Warrant is exercised, regardless of whether the Company
has actually issued such new warrant or delivered to the Holder a certificate therefor.
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only) to the Holder or its nominee physical certificates representing such Warrant Shares, and such
certificates shall not contain any restrictive legend unless required under the Securities Purchase
Agreement.
The Exercise Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.
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“Distribution”), the Company shall deliver written notice of such Distribution (a
“Distribution Notice”) to the Holder at least fifteen (15) days prior to the earlier to occur of
(i) the record date for determining stockholders entitled to such Distribution (the “Record Date”)
and (ii) the date on which such Distribution is made (the “Distribution Date”) (the earlier of such
dates being referred to as the “Determination Date”). Upon receipt of the Distribution Notice, the
Holder shall promptly (but in no event later than three Business Days) notify the Company whether
it has elected (A) to receive the same amount and type of assets (including, without limitation,
cash) being distributed as though the Holder were, on the Determination Date, a holder of a number
of shares of Common Stock into which this Warrant is exercisable as of such Determination Date
(such number of shares to be determined without giving effect to any limitations on such exercise)
or (B) upon any exercise of this Warrant on or after the Distribution Date, to reduce the Exercise
Price in effect on the Business Day immediately preceding the Record Date (such date being deemed
the Exercise Date for purposes hereof) by an amount equal to the Distribution Per Share Value.
Upon receipt of such election notice from the Holder, the Company shall timely effectuate the
transaction or adjustment contemplated in the foregoing clauses (A) or (B), as applicable. If the
Holder does not notify the Company of its election pursuant to the preceding sentence on or prior
to the Determination Date, the Holder shall be deemed to have elected clause (A) of the preceding
sentence.
where:
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| N0 = | the number of shares of Common Stock outstanding immediately prior to the issuance, sale or deemed issuance or sale of such additional shares of Common Stock in such Dilutive Issuance (without taking into account any shares of Common Stock issuable upon conversion, exchange or exercise of any outstanding Options or Convertible Securities (other than the Warrant)); | ||
| N1 = | the number of shares of Common Stock which the aggregate consideration, if any, received or receivable by the Company for the total number of such additional shares of Common Stock so issued, sold or deemed issued or sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale, shall be calculated in accordance with Section 4(d)(ii)) would purchase at the Exercise Price in effect immediately prior to such Dilutive Issuance; and | ||
| N2 = | the number of Common Stock issued, sold or deemed issued or sold in such Dilutive Issuance. |
Notwithstanding the foregoing, no adjustments to the Exercise Price shall be made pursuant to this
Section 4(d)(i) for any issuance of Excluded Securities.
(ii) Effect on Exercise Price of Certain Events. For purposes of determining the
adjusted Exercise Price under Section 4(d)(i), the following will be applicable:
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exercise of such Options or upon the conversion, exercise or exchange of Convertible
Securities issuable upon exercise of such Options. To the extent that shares of Common Stock or
Convertible Securities are not delivered pursuant to such Options, upon the expiration or
termination of such Options, the Exercise Price shall be readjusted to the Exercise Price that
would then be in effect had the adjustments made upon the issuance of such Options been made on the
basis of delivery of only the number of shares of Common Stock actually delivered.
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Section 2(f), the Holder would beneficially own more than 9.9% of the Common Stock then
outstanding) prior to the date on which such transaction is consummated, and (B) the date that is
fifteen (15) days prior to the record date for the determination of the Company’s stockholders
entitled to vote with respect to such transaction, and (2) the resulting successor or acquiring
entity (if not the Company) assumes by written instrument (in form and substance reasonably
satisfactory to the Holder) the obligations of the Company under this Warrant, with such
adjustments to the Exercise Price and the securities covered hereby as may be necessary in order to
preserve the economic benefits of this Warrant to the Holder. The above provisions shall apply
regardless of whether or not there would have been a sufficient number of shares of Common Stock
authorized and available for issuance upon exercise of this Warrant as of the date of such
transaction, and shall similarly apply to successive Major Transactions. For purposes of clarity, a
migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of
the Company shall not itself give rise to the repurchase rights, the Black-Scholes rights nor the
notification obligations of the Company described in this Section 4(e).
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thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof. All rights and remedies of the Holder hereunder are
cumulative and not exclusive of any rights or remedies otherwise available. In the event that the
Company breaches any of its obligations hereunder to issue Warrant Shares or pay any amounts as and
when due, the Company shall bear all costs incurred by the Holder in collecting such amount,
including without limitation reasonable legal fees and expenses.
If to the Company:
00 Xxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
00xx & Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
One Xxxxx Square
00xx & Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Holder:
; or as shall otherwise be designated by such party in writing to the other parties hereto in
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accordance this Section 5(b).
(f) Governing Law. This Warrant shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be performed entirely within
the State of New York.
[Signature Page to Follow]
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| ECHO THERAPEUTICS, INC. |
||||
| By: | ||||
| Xxxxxxx X. Xxxxxx, M.D. | ||||
| Chief Executive Officer | ||||
EXHIBIT A to WARRANT
EXERCISE NOTICE
THIS EXERCISE NOTICE is being delivered by the undersigned to exercise the Warrant No. ,
dated March 24, 2008 (the “Warrant”), issued by ECHO THERAPEUTICS, INC., a Minnesota corporation
(the “Company”), to the undersigned holder of the Warrant (the “Holder”).
| 1. | The Holder hereby irrevocably exercises the Warrant to purchase shares of the Company’s Common Stock, par value $0.01 per share (the “Warrant Shares”). | ||
| 2. | The Exercise Price (as defined in the Warrant) as of the date of this Exercise Notice is $ . | ||
| 3. | The Holder intends that payment of the Exercise Price be made as: | ||
| a Cash Exercise with respect to Warrant Shares; and/or | |||
| a Cashless Exercise with respect to Warrant Shares. | |||
| 4. | If the Warrant Shares are to be issued to a nominee of the Holder, the name of such nominee is . |
Date:
, 20
Name of Holder
By: |
||||
| Title: |
Holder Requests Delivery to be made: (check one)
By Delivery of Physical Certificates to the Following Address:
Through Depository Trust Corporation (Account )