EXHIBIT 10.1
PURCHASE AGREEMENT

Echo Therapeutics, Inc.
8 Penn Center
1628 JFK Blvd., Suite 300
Philadelphia, Pennsylvania 19103

Attention:  Chief Executive Officer
 
 
Ladies and Gentlemen:

The undersigned (the “Investor”) hereby confirms and agrees with you as follows:

1.           This Purchase Agreement (the “Agreement”) is made as of December 5,
2011 between Echo Therapeutics, Inc., a Delaware corporation (the “Company”),
and the Investor.

2.           The Investor agrees to purchase from the Company, and the Company
agrees to issue and sell to the Investor the number of units (“Units”) set forth
below the Investor’s name on Schedule A for a purchase price of $2.25 per share,
or the aggregate purchase price set forth on Schedule A, subject to the terms
and conditions hereof.  Each Unit shall consist of (i) one share of the common
stock, $0.01 par value per share, of the Company (the “Common Stock”), and (ii)
a warrant of the Company in the form set forth in Exhibit A hereto, to purchase
0.40 of a share of Common Stock.  The Units have been registered and are offered
for sale under the Securities Act of 1933, as amended, pursuant to a
registration statement filed with the Securities and Exchange Commission on Form
S-3, Registration No. 333-175938, and the prospectus dated October 28, 2011 and
prospectus supplement dated December 2, 2011, which form part of such
registration statement.

3.           The completion of the purchase and sale of the Units (the
“Closing”) shall occur on December 7, 2011 or at such other time as the Company
and the Investor mutually agree.  At the Closing, the Investor shall deliver, or
cause to be delivered, to the Company by wire transfer funds in the full amount
of the purchase price for the Units being purchased.  Upon receipt by the
Company of the full amount of the purchase price for such Units, the Company
shall deliver to the Investor, (i) using customary book-entry procedures, the
number of shares of Common Stock included in the Units purchased by the Investor
as set forth for the Investor on Schedule A, and (ii) a Warrant to purchase that
number of shares of Common Stock identified as “Warrant Shares” on Schedule A
for the Investor.  The delivery of any and all Units to the Investor shall be
conditioned upon receipt by the Company of funds in the full amount of the
purchase price for the Units being purchased by the Investor as set forth on
Schedule A.

4.           This Agreement shall be independent of any other agreement between
the Company and any other purchaser of securities of the Company, and the
obligations of each party hereunder shall not be conditioned upon the completion
of the sale of securities by the Company to any other purchaser.

5.           This Agreement shall terminate as of December 19, 2011, in the
event that the Company has not received payment from the Investor of the full
amount of the purchase price for the Units being purchased; provided, that the
termination of this Agreement shall not relieve the Investor from any liability
arising out of its failure to perform its obligations hereunder.

6.           This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Delaware, without giving effect to the
principles of conflicts of law.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party.

 
 

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Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
 

 
Name of Investor:    
         
By:  
         
Print Name: 
         
Title:   
         
Address:
                 
Tax ID No.:
         
Contact  Name:
         
Telephone:
         
Name in which book-entry should be made (if different):
           
DWAC Instructions:
             
DTC Participant Code:
 

 
AGREED AND ACCEPTED:
       
ECHO THERAPEUTICS, INC.
        By:    
Name:  
   
Title:
   

 
 
 

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SCHEDULE A

Name of Investor

 
Aggregate Purchase Price

Number of Units

Number of Shares of Common Stock Included in Units

Number of Warrant Shares Included in Units

 
 

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Exhibit A
 
ECHO THERAPEUTICS, INC.

Warrant to Purchase Common Stock

Warrant No.: CSW-________
Maximum Number of Shares of Common Stock:  _____________
Date of Issuance: December ____, 2011 (“Issuance Date”)
Expiration Date: December ____, 2014 (“Expiration Date”)

Echo Therapeutics, Inc., a Delaware corporation (the “Company”), certifies that,
for good and valuable consideration, the receipt and sufficiency of which are
acknowledged,
__________________________________________________________________, the
registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, upon
surrender of this Warrant to Purchase Common Stock (including any Warrants to
Purchase Common Stock issued in exchange, transfer or replacement hereof, the
“Warrant”) up to ____________ fully paid and nonassessable shares of Common
Stock (as defined below) (the “Warrant Shares”) at a price of $3.00 per share
(subject to adjustment as provided herein, the “Exercise Price”).  This Warrant
may be exercised at any time or times on or after the six (6) month anniversary
of the Issuance Date (the “Exercisability Date”), but not after 5:30 p.m., New
York time, on the Expiration Date.  Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section
15.
 
1. EXERCISE OF WARRANT.
 
(a) Cash Exercise.  Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(d)), this Warrant may
be exercised by the Holder on any day on or after the Exercisability Date, in
whole or in part (but not as to fractional shares), by (i) delivery of a written
notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant and (ii) if a registration statement
registering the issuance of the Warrant Shares under the Securities Act of 1933,
as amended (the “Securities Act”), is effective and available for the issuance
of the Warrant Shares, or an exemption from registration under the Securities
Act is available for the issuance of the Warrant Shares, payment to the Company
of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate
Exercise Price”) in cash or wire transfer of immediately available funds (a
“Cash Exercise”).
 
(b) Cashless Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(d)), if a
registration statement registering the issuance of the Warrant Shares under the
Securities Act is not effective or available for the issuance of the Warrant
Shares or an exemption from registration under the Securities Act is not
available for the issuance of the Warrant Shares, the Holder may exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise
contemplated by Section 1(a) to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):
 
Net Number = (A x B) - (A x C)
B

 
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For purposes of the foregoing formula:
 
 
A= the total number of shares with respect to which this Warrant is then being
exercised.

 
 
B= the Weighted Average Price of the shares of Common Stock (as reported by
Bloomberg) on the date immediately preceding the date of the Exercise Notice.

 
 
C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

(c) Mechanics of Exercise.  The Holder shall not be required to surrender this
Warrant in order to effect an exercise hereunder, provided that in the event of
an exercise of this Warrant for all Warrant Shares then issuable hereunder, this
Warrant is surrendered to the Company by the second (2nd) Trading Day following
the date on which the Company has received each of the Exercise Notice and, if
this Warrant is being exercised pursuant to a Cash Exercise, the Aggregate
Exercise Price (the “Exercise Delivery Documents”).  On or before the first
(1st) Trading Day following the date on which the Company has received the
Exercise Delivery Documents, the Company shall transmit by email or facsimile an
acknowledgment of confirmation of receipt of the Exercise Delivery Documents to
the Holder and the Company’s transfer agent for the Common Stock (the “Transfer
Agent”).  The Company shall deliver any objection to the Exercise Delivery
Documents on or before the first (1st) Trading Day following the date on which
the Company has received all of the Exercise Delivery Documents.  In the event
of any discrepancy or dispute, the records of the Company shall be controlling
and determinative in the absence of manifest error.  On or before the fifth
(5th) Trading Day following the date on which the Company has received the
Exercise Notice duly completed and executed by the Holder, and in the case of a
Cash Exercise, the Aggregate Exercise Price (the “Share Delivery Date”), the
Company shall, upon the request of the Holder, credit such aggregate number of
shares of Common Stock to which the Holder is entitled pursuant to such exercise
to the Holder’s or its designee’s balance account with The Depository Trust
Company (“DTC”) through its Deposit Withdrawal Agent Commission system, or if
the Transfer Agent is not participating in the Fast Automated Securities
Transfer Program (the “FAST Program”) or if the certificates are required to
bear a legend regarding restriction on transferability, issue and dispatch by
overnight courier to the address as specified in the Exercise Notice, a
certificate, registered in the Company’s share register in the name of the
Holder or its designee, for the number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise
Delivery Documents and surrender of this Warrant, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificates evidencing such Warrant Shares, as the case may
be.  If this Warrant is submitted in connection with any exercise pursuant to
this Section 1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as practicable and in
no event later than five (5) Trading Days after any exercise and at its own
expense, issue a new Warrant (in accordance with Section 7(e)) representing the
right to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under this Warrant, less the number of Warrant Shares with respect
to which this Warrant is exercised.  The Company shall pay any and all taxes
that may be payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant; provided, however, that the Company shall not be
required to pay any tax which may be payable based on the income of the Holder
or in respect of any transfer involved in the registration of any certificates
for Warrant Shares or Warrants in a name other than that of the Holder or an
affiliate thereof.  The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

 
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(d) Limitations on Exercises.  The Company shall not effect the exercise of this
Warrant, and the Holder shall not have the right to exercise this Warrant, to
the extent that after giving effect to such exercise, such Holder (together with
such Holder’s affiliates and any other Persons acting as a group together) would
beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of
Common Stock outstanding immediately after giving effect to such exercise.  For
purposes of the foregoing sentence, the aggregate number of shares of Common
Stock beneficially owned by such Person and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by such Person
and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by
such Person and its affiliates (including, without limitation, any convertible
notes or convertible preferred stock or warrants) 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 paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), it being acknowledged
that the Company is not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act, and the Holder is solely
responsible for any schedules required to be filed in accordance therewith. For
purposes of this Warrant, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-K, Proxy Statement,
Form 10-Q, Current Report on Form 8-K or other public filing with the Securities
and Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock
outstanding.  For any reason at any time, upon the written or oral request of
the Holder, where such request indicates that it is being made pursuant to this
Warrant, the Company shall within one (1) Trading Day confirm orally and in
writing to the 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,
including the Warrants, by the Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported.  By
written notice to the Company, the Holder may increase or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% specified in such
notice; provided, that (i) any such increase will not be effective until the
61st day after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and not to any other holder
of Warrants.
 
(e) 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 that the Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise Price.
 
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise
Prices and the number of Warrant Shares shall be adjusted from time to time as
follows:
 
(a) Adjustment upon Subdivision or Combination of Shares of Common Stock.  If
the Company at any time on or after the Issuance Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Prices in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased.  If
the Company at any time on or after the Issuance Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Prices in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased.  Any adjustment
under this Section 2(a) shall become effective at the close of business on the
date the subdivision or combination becomes effective.

 
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(b) Other Events.  If any event occurs of the type contemplated by the
provisions of Section 2(a) but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features to the holders of the
Company’s equity securities), then the Company’s Board of Directors will make an
appropriate adjustment in the Exercise Prices and the number of Warrant Shares
so as to protect the rights of the Holder; provided, that no such adjustment
pursuant to this Section 2(b) will increase the Exercise Prices or decrease the
number of Warrant Shares as otherwise determined pursuant to this Section 2.
 
(c) Par Value.  Notwithstanding anything to the contrary in this Warrant, in no
event shall any Exercise Price be reduced below the par value of the Company’s
Common Stock.
 
3. RIGHTS UPON DISTRIBUTION OF ASSETS.  If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution”), at any time after the issuance of this
Warrant, then, in each such case:
 
(a) any Exercise Price in effect immediately prior to the close of business on
the record date fixed for the determination of holders of shares of Common Stock
entitled to receive the Distribution shall be reduced, effective as of the close
of business on such record date, to a price determined by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the Weighted
Average Price of the shares of Common Stock on the Trading Day immediately
preceding such record date minus the value of the Distribution (as determined in
good faith by the Company’s Board of Directors) applicable to one share of
Common Stock, and (ii) the denominator shall be the Weighted Average Price of
the shares of Common Stock on the Trading Day immediately preceding such record
date; and
 
(b) the number of Warrant Shares shall be increased to a number of shares equal
to the number of shares of Common Stock obtainable immediately prior to the
close of business on the record date fixed for the determination of holders of
shares of Common Stock entitled to receive the Distribution multiplied by the
reciprocal of the fraction set forth in the immediately preceding paragraph (a);
provided, that in the event that the Distribution is of shares of Common Stock
or common stock of a company whose common shares are traded on a national
securities exchange or a national automated quotation system (“Other Shares of
Common Stock”), then the Holder may elect to receive a warrant to purchase Other
Shares of Common Stock in lieu of an increase in the number of Warrant Shares,
the terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable for the number of shares of Other Shares of Common
Stock that would have been payable to the Holder pursuant to the Distribution
had the Holder exercised this Warrant immediately prior to such record date and
with an aggregate exercise price equal to the product of the amount by which the
exercise price of this Warrant was decreased with respect to the Distribution
pursuant to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).
 
4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
 
(a) Purchase Rights.  In addition to any adjustments pursuant to Section 2
above, if at any time prior to the Expiration Date the Company grants, issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to all of the record holders of any class
of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on the exercise of this Warrant)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.

 
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(b) Fundamental Transactions.  Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of
this Warrant referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume
all of the obligations of the Company under this Warrant with the same effect as
if such Successor Entity had been named as the Company herein.  Upon
consummation of the Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the Fundamental Transaction, in
lieu of the shares of the Common Stock (or other securities, cash, assets or
other property purchasable upon the exercise of the Warrant prior to such
Fundamental Transaction), such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription
rights), if any, that the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had this Warrant been exercised
immediately prior to such Fundamental Transaction, as adjusted in accordance
with the provisions of this Warrant.  In addition to and not in substitution for
any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon
exercise of this Warrant within 90 days after the consummation of the
Fundamental Transaction but, in any event, prior to the Expiration Date, in lieu
of the shares of the Common Stock (or other securities, cash, assets or other
property) purchasable upon the exercise of the Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had the Warrant been exercised immediately prior
to such Fundamental Transaction.  Provision made pursuant to the preceding
sentence shall be in a form and substance reasonably satisfactory to the Holder.
 
5. RESERVATION OF WARRANT SHARES.  The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of shares of Common Stock which are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive or
any other contingent purchase rights of Persons other than the Holder (taking
into account the adjustments and restrictions in Section 2).  Such reservation
shall comply with the provisions of Section 1.  The Company covenants that all
shares of Common Stock so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.  The
Company will take all such actions as may be reasonably necessary to assure that
such shares of Common Stock may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of any securities
exchange or automated quotation system upon which the Common Stock may be
listed.
 
6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically
provided herein, the Holder, solely in such Person’s capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in such
Person’s capacity as the Holder of this Warrant, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant.  In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the
Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

 
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7. REGISTRATION AND REISSUANCE OF WARRANTS.
 
(a) Registration of Warrant.  The Company shall register this Warrant, upon the
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.  The
Company shall also register any transfer, exchange, reissuance or cancellation
of any portion of this Warrant in the Warrant Register.
 
(b) Transfer of Warrant.  This Warrant may be offered for sale, sold,
transferred or assigned without the consent of the Company, except as may
otherwise be required by applicable securities laws.  Subject to applicable
securities laws, if this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company together with all applicable transfer
taxes, whereupon the Company will forthwith issue and deliver upon the order of
the Holder a new Warrant (in accordance with Section 7(e)), registered as the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 7(e)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.  The acceptance of
the new Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations in respect of the new Warrant
that the Holder has in respect of this Warrant.
 
(c) Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
or the provision of reasonable security by the Holder to the Company and, in the
case of mutilation, upon surrender and cancellation of this Warrant, the Company
shall execute and deliver to the Holder a new Warrant (in accordance with
Section 7(e)) representing the right to purchase the Warrant Shares then
underlying this Warrant.
 
(d) Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company together
with all applicable transfer taxes, for a new Warrant or Warrants (in accordance
with Section 7(e)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as is
designated by the Holder at the time of such surrender; provided, however, that
the Company shall not be required to issue Warrants for fractional shares of
Common Stock hereunder.
 
(e) Issuance of New Warrants.  Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant shall (i) be of
like tenor with this Warrant, (ii) represent, as indicated on the face of such
new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(b)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) have an issuance date, as indicated on the
face of such new Warrant which is the same as the Issuance Date and (iv) have
the same rights and conditions as this Warrant.

 
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8. NOTICES.  Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with the
information set forth in the Warrant Register.  The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Warrant,
including, in reasonable detail, a description of such action and the reason or
reasons therefore.  Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least ten (10) days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the shares of Common Stock,
(B) with respect to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation; provided, that in each case, such information shall
be made known to the public prior to or in conjunction with such notice being
provided to the Holder.  Upon receipt or delivery by the Company of any notice
in accordance with the terms of this Warrant, unless the Company has in good
faith determined that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its subsidiaries, the
Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, nonpublic information on Form 8-K or
otherwise.  In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its subsidiaries, the
Company shall so indicate to such Holder contemporaneously with delivery of such
notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its subsidiaries.  Unless
otherwise provided, any notice required or permitted under this Warrant shall be
given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given upon
such delivery, (ii) if given by e-mail then such notice shall be deemed given
upon transmission, (iii) if given by facsimile, then such notice shall be deemed
given upon receipt of confirmation of complete transmittal, (iv) if given by
mail, then such notice shall be deemed given upon the earlier of (A) receipt of
such notice by the recipient or (B) three days after such notice is deposited in
first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one
Business Day after delivery to such carrier.
 
9. AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of
this Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Holder.
 
10. LIMITATION OF LIABILITY.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, 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 Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
 
11. GOVERNING LAW.  This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware.
 
12. CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted
by the Company and all the Holders and shall not be construed against any person
as the drafter hereof.  The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant.

 
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13. DISPUTE RESOLUTION.  In the case of a dispute as to the determination of any
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall submit the disputed determinations or arithmetic calculations via email or
facsimile within two (2) Trading Days of receipt of the Exercise Notice giving
rise to such dispute, as the case may be, to the Holder.  If the Holder and the
Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within five (5) Trading Days of such
disputed determination or arithmetic calculation being submitted to the Holder,
then the Company shall, within two (2) Trading Days submit via email or
facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by
the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to
the Company’s independent, outside accountant.  The Company shall cause the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than ten (10) Trading Days from the time it receives the
disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.  The expenses of the investment bank and
accountant will be borne by the Company unless the investment bank or accountant
determines that the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares by the Holder was incorrect, in which case the
expenses of the investment bank and accountant will be borne by the Holder.
 
14. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to pursue actual damages for any failure by
the Company to comply with the terms of this Warrant.  The Company acknowledges
that a breach by it of its obligations hereunder may cause irreparable harm to
the Holder and that the remedy at law for any such breach may be
inadequate.  The Company therefore agrees that, in the event of any such breach
or threatened breach, the holder of this Warrant shall be entitled, in addition
to all other available remedies, to seek an injunction restraining any
breach.  Notwithstanding the foregoing or anything else herein to the contrary,
if the Company is for any reason unable to issue and deliver Warrant Shares upon
exercise of this Warrant as required pursuant to the terms hereof, the Company
shall have no obligation to pay to the Holder any cash or other consideration or
otherwise “net cash settle” this Warrant.
 
15. CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms
shall have the following meanings:
 
(a) “Bloomberg” means Bloomberg Financial Markets.
 
(b) “Change of Control” means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving entity
or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities, or (ii) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company.
 
(c) “Common Stock” means (i) the Company’s shares of Common Stock, $0.01 par
value per share, and (ii) any share capital into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.
 
(d) “Convertible Securities” means any stock or other securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.
 
(e) “Eligible Market” means the Principal Market, The New York Stock Exchange,
Inc., the NYSE Amex LLC, The Nasdaq Stock Market, or the OTC Bulletin Board®.

 
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(f)  “Fundamental Transaction” means that (A) the Company shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another
Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person,
or (iii) allow another Person to make a purchase, tender or exchange offer that
is accepted by the holders of more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the Person or Persons
making or party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganize, recapitalize or
reclassify the Common Stock or (B) any “person” or “group” (as these terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall
become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock.
 
(g) “Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
 
(h) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.
 
(i) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.
 
(j) “Principal Market” means the Nasdaq Capital Market.
 
(k) “Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.
 
(l) “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded; provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time).

 
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(m) “Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during
the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m.,
New York time, as reported by Bloomberg through its “Volume at Price” function
or, if the foregoing does not apply, the dollar volume-weighted average price of
such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York City
time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or,
if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC.  If the Weighted Average Price
cannot be calculated for such security on such date on any of the foregoing
bases, the Weighted Average Price of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder.  If the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 13 with the
term “Weighted Average Price” being substituted for the term “Exercise
Price.”  All such determinations shall be appropriately adjusted for any share
dividend, share split or other similar transaction during such period.
 

[Signature Page Follows]

 
 

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.
 
 

  ECHO THERAPEUTICS, INC.             By:          Name:        Title:    

 
 
 

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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK

ECHO THERAPEUTICS, INC.
The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of Echo Therapeutics, Inc., a
Delaware corporation (the “Company”), evidenced by the attached Warrant to
Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

1.           Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as (check one):
 

o   Cash Exercise under Section 1(a). o   Cashless Exercise under Section 1(b).

 
2.           Cash Exercise.  In the case of a Cash Exercise, the Holder shall
pay the sum of $  to the Company in accordance with the terms of the Warrant.

3.           Delivery of Warrant Shares.  The Company shall deliver to the
holder __________ Warrant Shares in accordance with the terms of the Warrant.

4.           Representations and Warranties.  By its delivery of this Exercise
Notice, the undersigned represents and warrants to the Company that in giving
effect to the exercise evidenced hereby the Holder will not beneficially own in
excess of the number of shares of Common Stock (determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended) permitted to
be owned under Section 1(d) of this Warrant to which this notice relates.

DATED: _______________ __, ______

(Signature must conform in all respects
to name of the Holder as specified on
the face of the Warrant)
 

 

          Registered Holder                     By:            Name:    
Address:      Title:        

 
 
 

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ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice.
 
 

  ECHO THERAPEUTICS, INC.             By:        Name:       Title: