COMMON STOCK PURCHASE WARRANT To Purchase _________ Shares of Common Stock of ECHO THERAPEUTICS, INC.
Exhibit 4.1
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
WARRANT NO. _________
COMMON STOCK PURCHASE WARRANT
To Purchase _________ Shares of Common Stock of
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
_____________________ (the “Holder”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after February
9, 2010 (the “Initial Exercise Date”) and on or prior to the close of business on February
9, 2015 (the “Termination Date”) but not thereafter, to subscribe for and purchase from
Echo Therapeutics, Inc., a Delaware corporation (the “Company”), up to
_________________ shares (the “Warrant Shares”) of Common Stock, par value $0.01 per
share, of the Company (the “Common Stock”). The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b) below.
This is the Warrant referenced in the Common Stock and Warrant Purchase Agreement by and among the
Company and the other parties thereto dated February 4, 2010 (the “Purchase Agreement”).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on
or before the Termination Date by delivery to the Company of a duly executed original or facsimile
copy of the Notice of Exercise form annexed hereto (or such other office or agency of
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the Company as it may designate by notice in writing to the registered Holder at the address
of such Xxxxxx appearing on the books of the Company). Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has
been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for
cancellation within 5 Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number
of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares
purchased. For purposes of this Warrant, the term “Trading Days” means any day during which the
market or exchange on which the Company’s common stock is listed or quoted for trading on the date
in question shall be open for business or, if the Common Stock is not listed or quoted on any
recognized market or exchange, then a business day.
b) Exercise Price. The exercise price of the Common Stock under this Warrant shall be
$2.25 per share, subject to adjustment hereunder (the “Exercise Price”). Within 5 Trading
Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have
surrendered this Warrant (if required) to the Company and the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check
drawn on a United States bank.
c) Cashless Exercise. This Warrant may be exercised at any time otherwise permitted
by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient obtained by the following formula:
(A-B)*(X)
(A)
(A)
Where:
(A) = the Closing Price on the Trading Day immediately preceding the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the
terms of this Warrant by means of a cash exercise rather than a cashless exercise.
As used herein, “Closing Price”, shall mean the first of the following clauses that applies: (1)
if, at the time of any such calculation, the Common Stock is listed or quoted on the American Stock
Exchange, or the New York Stock Exchange, or the NASDAQ Market, the NASDAQ Capital Market or the
Archipelago Exchange, the Closing Price shall be the closing or last sale price reported for the
last business day immediately preceding the date of any such calculation; (2) if, at the time of
any such calculation, the Common Stock is quoted on the OTC Bulletin Board or listed in the “Pink
Sheets” published by the National Quotation Bureau Inc. or a similar agency or organization
succeeding to its function or reporting prices, the Closing Price shall be the average of the high
closing bid and low ask prices reported for the last five (5) Trading Days immediately preceding
the date of any such calculation, or (3) in all other cases, the Closing
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Price of a share of Common Stock shall be the price determined by an independent appraiser selected
in good faith by the Holder and reasonably acceptable to the Company.
d) Exercise Limitations; Xxxxxx’s Restrictions. The Company shall not effect
any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, to the extent that, after giving effect to the exercise set forth on the applicable Notice
of Exercise, such Holder (together with such Holder’s Affiliates, and any other person or entity
acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon exercise of the Warrant
with respect to which such determination is being made, but shall exclude the number of shares of
Common Stock which are issuable upon (A) exercise of the remaining, unexercised number of Warrants
Shares beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Company owned by such Holder
or any of its Affiliates subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence, for purposes of this
Section 2(d), beneficial ownership shall be calculated in accordance with Rule 13d-3 promulgated
under the Exchange Act. To the extent that the limitation contained in this Section 2(d) applies,
the determination of whether the Warrant is exercisable (in relation to other securities owned by
such Holder together with any Affiliates) and of how many Warrant Shares are exercisable shall be
in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed
to be such Holder’s determination of whether the shares of this Warrant may be exercised (in
relation to other securities owned by such Holder together with any Affiliates) and how many shares
of the Warrant are exercisable, in each case subject to such aggregate percentage limitations. To
ensure compliance with this restriction, each Holder will be deemed to represent to the Company
each time it delivers a Notice of Exercise that such Notice of Exercise has not violated the
restrictions set forth in this paragraph and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the following: (A) the Company’s most recent
Form 10-Q or Form 10-K, as the case may be, (B) a more recent public announcement by the Company or
(C) a more recent notice by the Company or the Company’s transfer agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company
shall within two (2) Trading Days confirm orally and in writing to such Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of securities of the Company
by such Holder or its Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon exercise of this Warrant held by the applicable Holder. The Beneficial
Ownership Limitation provisions of this Section 2(d) may be waived by such
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Holder, at the election of such Holder, upon not less than 61 days’ prior notice to the
Company, to change the Beneficial Ownership Limitation to 9.99% of the number of shares of Common
Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
conversion of this Warrant held by the applicable Holder, and the provisions of this Section 2(d)
shall continue to apply. Upon such a change by a Holder of the Beneficial Ownership Limitation
from such 4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation may not be
further waived by such Holder. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 2(f) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.
e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue
and liens imposed upon such shares as a result of Holder’s actions).
ii. Delivery of Certificates Upon Exercise. Certificates for shares issuable upon the
exercise hereof shall be transmitted by the transfer agent of the Company to the Holder by
crediting the account of the Holder’s broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system
and such shares are eligible for legend removal, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise within 5 Trading Days (the “Warrant Share
Delivery Date”) from the delivery to the Company of the Notice of Exercise form, surrender of
this Warrant (if required) and payment of the aggregate Exercise Price as set forth above. This
Warrant shall be deemed to have been exercised on the date the Notice of Exercise is transmitted to
the Company. The shares issuable upon the exercise of the Warrant shall be deemed to have been
issued, and the Holder or any other person designated in the Notice of Exercise as the person in
whose name the shares issuable upon the exercise of this Warrant shall be issued, shall be deemed
to have become a holder of record of such shares for all purposes, as of the date the Warrant has
been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by
the Holder, if any, pursuant to Section 2(h)(vii) prior to the issuance of such shares, have been
paid. The Warrant Shares shall be issued without any legend or stop transfer orders provided (i)
a registration statement under the Securities Act covering the proposed disposition of such Warrant
Shares has become effective under the Securities Act, (ii) the Company has received other evidence
reasonably satisfactory to the Company that such registration and qualification under the
Securities Act and state securities laws are not required, or (iii) the Holder provides the Company
with reasonable documentation confirming the legend can be removed pursuant to applicable
provisions of the Securities Act (such as Rules 144 or 144(k)).
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iii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, and if the Holder shall have surrendered this Warrant together with the Notice
of Exercise, the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant.
iv. Rescission Rights. If the Company fails to cause its transfer agent to transmit
to the Holder a certificate or certificates representing the Warrant Shares by the Warrant Share
Delivery Date, then the Holder will have the right to unconditionally rescind such exercise and the
Company shall within three (3) business days return any monies paid to the Company by the Holder in
connection with such rescinded exercise.
v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.
In addition to any other rights available to the Holder, if the Company fails to cause its transfer
agent to transmit to the Holder a certificate or certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the
Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1)
pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (B) the price at which the sell order
giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such
exercise was not honored or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other evidence reasonably requested by the
Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.
vi. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall
issue to the Holder one whole share.
vii. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax or other incidental
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expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event certificates
for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed
by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto.
viii. Closing of Books; No Impairment. The Company will not close its stockholder
books or records or take any other action which in any manner prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger
number of shares, (C) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event
and the number of shares issuable upon exercise of this Warrant shall be proportionately and
equitably adjusted upward. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b) [Intentionally omitted]
c) Pro Rata Distributions. If the Company, at any time prior to the Termination Date,
shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of
its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)),
then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be the Closing Price
determined as of the record date mentioned above, and of which the numerator shall be such Closing
Price on such record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to one outstanding
share of the Common Stock as determined by the Board of Directors in good
faith, or at the option of MKM Capital Advisors, LLC, by an independent appraiser selected by
MKM Capital Advisors, LLC and reasonably acceptable to the Company. In either case the
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adjustments
shall be described in a statement provided by the Company to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable to one share of
Common Stock. Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above. At the time of such
adjustment, the number of Warrant Shares issuable following such adjustment shall be equitably and
proportionally adjusted upward.
d) Adjustment for Reorganization, Consolidation, Merger, etc. In the event that the
Company shall 1) effect a reorganization, 2) consolidate with or merge into any other entity or 3)
transfer all or substantially all of its properties or assets to any other entity under any plan or
arrangement contemplating the dissolution of the Company, then, in each such case, as a condition
precedent to the consummation of such a transaction, proper and adequate provision shall be made
whereby the Holder of this Warrant, on the exercise hereof as provided in Section 2 above, at any
time after the consummation of any such reorganization, consolidation or merger or the effective
date of any such dissolution, shall receive in lieu of the shares of Common Stock issuable on such
exercise immediately prior to any such consummation or effective date, the stock and other
securities and property (including cash) to which such Holder would have been entitled to receive
upon any such consummation or dissolution if the Holder had so exercised this Warrant immediately
prior to such consummation or dissolution.
e) Certificate as to Adjustments. The computation of any adjustments described in
this Section 3 shall be the sole responsibility of the Company, which shall expeditiously prepare
and mail to the Holder a notice setting forth the nature of any necessary adjustment together with
the basis thereof and the calculations therefor. The Company shall immediately notify the Holder
of any information which bears on any of the events referenced in this Section 3 and which may have
an effect on the exercise of this Warrant. If the Company issues a variable rate security, despite
the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued
Common Stock or “Common Stock Equivalents” (defined below) at the lowest possible conversion or
exercise price at which such securities may be converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement). The term “Common Stock Equivalents” means
any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exchangeable for or otherwise
entitles the holder thereof to receive Common Stock.
f) Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be
the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
g) Voluntary Adjustment By Company. The Company may at any time during the term of
this Warrant reduce (but not increase) the then-current Exercise Price, as the case may
be, to any amount and for any period of time deemed appropriate by the Board of Directors of the
Company.
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h) Notice to Allow Exercise by Xxxxxx. If (1) the Company shall declare a dividend (or
any other distribution) on the Common Stock; or (2) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; or (3) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; or (4) the approval of any
stockholders of the Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or (5) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it
shall appear upon the Warrant Register (defined in Section 4(c)) of the Company, at least 20
calendar days prior to the applicable record or effective date hereinafter specified, a notice
stating (y) the date on which a survey of the holders of record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the
date as of which the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (z) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share
exchange; provided, that the unintentional failure to mail such notice or any unintentional
defect therein or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. The Holder is entitled to exercise this Warrant during
the 20-day period commencing on the date of such notice to the effective date of the event
triggering such notice.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the
conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Article V of the
Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of
such transfer. Upon such surrender and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section 3(a), as to any transfer which
may be involved in such division or combination, the Company shall execute and deliver a new
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Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
c) Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the
record Holder hereof from time to time. The Company may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i)
that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made without
registration under the Securities Act and under applicable state securities or blue sky laws, (ii)
that the holder or transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as
defined in Rule 501(a) promulgated under the Securities Act or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act.
Section 5. Miscellaneous.
a) Title to Warrant. Prior to the Termination Date and subject to compliance with
applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the Holder in person
or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
b) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.
Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of
a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the later of the date of
such surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares or any portion
thereof, and in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of
such cancellation, in lieu of such Warrant or stock certificate.
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d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or
a legal holiday, then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
e) Authorized Shares.
The Company covenants that during the period that any of this Series of Warrants is
outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the shares of Common Stock issuable upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder in writing, the Company shall
not by any action, including, without limitation, amending its certificate 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 of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Xxxxxx as set forth in this Warrant against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of any shares of
Common Stock issuable upon the exercise of this Warrant above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of shares of Common
Stock for which this Warrant is exercisable or in the Exercise Price in effect on the date of such
action, the Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
f) Jurisdiction and Governing Law. All questions concerning the construction,
validity, enforcement, governing law and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.
g) Restrictions. The Holder acknowledges that the shares of Common Stock acquired
upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by
state and federal securities laws.
10
h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise
prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
i) Notices. Any notice, request or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Xxxxxx to exercise this Warrant or purchase shares of Common Stock issuable upon the
exercise of this Warrant, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by creditors of the Company.
k) Remedies. Holder, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of its rights under
this Warrant. The Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders of this Warrant from the Initial
Exercise Date through the Termination Date, and shall be enforceable by any such Holder or holder
of Warrant Shares.
m) Amendment. This Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and the Holder.
n) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.
o) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.
********************
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.
Dated: February 9, 2010
| ECHO THERAPEUTICS, INC. |
||||
| By: | ||||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Chief Financial Officer and Chief Operating Officer | |||
12
NOTICE OF EXERCISE
(1) The undersigned, pursuant to the provisions set forth in the attached Warrant No. ,
hereby irrevocably elects to purchase (check applicable box):
o shares of the Common Stock of Echo Therapeutics, Inc. covered by such Warrant;
or
o the maximum number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in Section 2(c), calculated as follows:
(insert calculation)
(2) The undersigned herewith makes payment of the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check applicable box or
boxes):
o $ in lawful money of the United States; and/or
o if the provisions of Section 2(c) of this Warrant are in effect, the cancellation of such
portion of the attached Warrant as is exercisable for a total of Warrant Shares (using a
Closing Price of $ per share for purposes of this calculation); and/or
(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the
undersigned or in such other name as is specified below:
| (please print or type name and address) | ||||||
| (please insert social security or other identifying number) | ||||||
| The Warrant Shares shall be delivered to the following: | ||||||
| (please print or type name and address) | ||||||
and if such number of shares of Common Stock shall not be all the shares evidenced by this Warrant
Certificate, that a new Warrant for the balance of such shares be registered in the name of, and
delivered to, Holder.
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.
Name of Holder:
|
||
Signature of Holder:
|
||
| Name of Authorized Signatory (if Holder is an entity): | ||
| Title of Authorized Signatory (if Holder is an entity): | ||
Date:
|
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
, whose address is
Dated: ,
Holder’s Name:
|
||
Holder’s Signature:
|
||
Holder’s Address:
|
Signature Guaranteed: &nbs
p;
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.
