Exhibit 10.1

 

AMENDMENT TO SERIES A WARRANTS AND SERIES C WARRANTS TO PURCHASE COMMON STOCK

 

This Amendment to Series A Warrants and Series C Warrants to Purchase Common
Stock (the “Amendment”) by and between Arch Therapeutics, Inc., a Nevada
corporation (the “Company”), and Cranshire Capital Master Fund, Ltd.
(“Cranshire”) is made as of June 22, 2015 (the “Effective Date”).

 

RECITALS

 

WHEREAS, on January 30, 2014, the Company entered into that certain Securities
Purchase Agreement (the “Securities Purchase Agreement”) with the investors
named on the Schedule of Buyers attached thereto (collectively, the “Holders”)
pursuant to which, among other things, the Company issued to the Holders shares
of Common Stock (as defined in the Series A Warrants and Series C Warrants (each
as defined in the Securities Purchase Agreement)) and the Series A Warrants and
Series C Warrants;

 

WHEREAS, Section 2(b) of the Series A Warrants and Series C Warrants provides
that upon certain issuances or sales or deemed issuances or sales of shares of
Common Stock for a consideration per share (the “New Issuance Price”) at less
than a price equal to the Exercise Price in effect immediately prior to such
issuance or sale or deemed issuance or sale (a “Dilutive Issuance”), the
Exercise Price in effect immediately prior to such Dilutive Issuance shall be
reduced to an amount equal to the New Issuance Price (the “Anti-Dilution
Adjustment Provision”);

 

WHEREAS, the Expiration Date of the Series C Warrants is 5:00 p.m., New York
time, on July 2, 2015;

 

WHEREAS, Section 9 of the Series A Warrants and Series C Warrants provides that
the provisions of the Series A Warrants and Series C Warrants may be amended
only with the written consent of the Company and the Significant Buyers (as
defined in the Securities Purchase Agreement);

 

WHEREAS, Cranshire is the only Significant Buyer;

 

WHEREAS, the Company and Cranshire, in its capacity as the only Significant
Buyer, now wish to amend (i) the Series A Warrants and Series C Warrants to
terminate the Anti-Dilution Adjustment Provision; and (ii) the Series C Warrants
to extend the Expiration Date, in each case on the terms and conditions set
forth herein (collectively, the “Warrant Amendments”); and

 

WHEREAS, in consideration for Cranshire entering into the Warrant Amendments,
the Company has agreed to offer to issue to the Holders or their successors and
assigns, as applicable, the Inducement Shares (as defined below), on the terms
and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and for good and valuable
consideration, the receipt and sufficiency which are hereby acknowledged, the
Parties hereby agree as follows:

 

1.Definitions. Capitalized terms not otherwise defined in this Amendment shall
have the meaning given to them in the Series A Warrants and Series C Warrants.

 

 

 

 

2.Amendments to Series B Warrants.

 

a.Section 2(b). Section 2(b) to the Series A Warrants is hereby deleted in its
entirety and replaced with the following as of the Effective Date:

 

“(b)     [Reserved]”

 

3.Amendments to Series C Warrants.

 

a.Section 2(b). Section 2(b) to the Series C Warrants is hereby deleted in its
entirety and replaced with the following as of the Effective Date:

 

“(b)     [Reserved]”

 

b.Section 16(h). Section 16(h) of the Series C Warrants is hereby deleted in its
entirety and replaced with the following as of the Effective Date:

 

“(h)     “Expiration Date” means 5:00 p.m., New York time, on July 2, 2016.”

 

4.Inducement Shares. In consideration for Cranshire entering into the Warrant
Amendments, and subject to each Holder’s (or such Holder’s successors or
assigns, as applicable) execution and delivery to the Company of an investor
certificate, substantially in the form attached hereto as Exhibit A (an
“Investor Certificate”), the Company shall issue to the Holders or their
successors and assigns, as applicable, an aggregate total of 570,000 shares of
Common Stock (the “Inducement Shares”) in direct proportion to the amount
invested by such Holders under the Securities Purchase Agreement. The allocation
of the Inducement Shares, is set forth on Exhibit B hereto.

 

5.Representations and Warranties of the Company. The Company represents and
warrants to Cranshire that:

 

a.After giving effect to the Amendment, the Warrant Shares shall remain eligible
for resale under the Company’s resale registration statement on Form S-1 (File
Number 333-194745) that became effective July 2, 2014.

 

b.The Company has the requisite power and authority to enter into and perform
its obligations under this Amendment and to issue the Inducement Shares in
accordance with the terms hereof. The execution and delivery of this Amendment
by the Company and the consummation by the Company of the transactions
contemplated hereby (including, without limitation, the issuance of the
Inducement Shares) have been duly authorized by the Company’s board of directors
and (other than the filing with the SEC of a Current Report on Form 8-K to
disclose the transactions contemplated hereby and any other filings as may be
required by any state securities agencies) no further filing, consent or
authorization is required by the Company, its board of directors or its
stockholders or other governing body. This Amendment has been duly executed and
delivered by the Company, and constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
it terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law.

 

-2-

 

 

c.The issuance of the Inducement Shares are duly authorized and, upon issuance
in accordance with the terms of the Amendment, will be validly issued, fully
paid and non-assessable and free from all preemptive or similar rights, taxes,
liens, charges and other encumbrances with respect to the issue thereof, with
the holders thereof being entitled to all rights accorded to a holder of Common
Stock with respect to the Inducement Shares issued to such holder hereunder.

 

d.The execution, delivery and performance of the Amendment by the Company and
the consummation by the Company of the transactions contemplated hereby
(including, without limitation, the issuance of the Inducement Shares) will not
(i) result in a violation of the Company’s articles of incorporation (including,
without limitation, any certificates of designation contained therein) or other
organizational documents of the Company or any of its subsidiaries, any capital
stock of the Company, or bylaws; (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party; or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including, without limitation,
federal and state securities laws and regulations and the rules and regulations
of the OTCQB tier of the OTC Marketplace applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected except, in the case of clause (ii) above, for
such conflicts, defaults or rights that could not reasonably be expected to have
a any material adverse effect on the business, properties, assets, liabilities,
operations (including results thereof), condition (financial or otherwise) or
prospects of the Company or any subsidiary, either individually or taken as a
whole.

 

6.Miscellaneous. To the extent that there are any inconsistencies between the
terms of any Series A Warrant or Series C Warrant and the terms of this
Amendment, the terms of this Amendment shall prevail in effect. This Amendment
may be executed by the Parties in counterparts and may be executed and delivered
by facsimile or other means of electronic communication and all such
counterparts, taken together, shall constitute one and the same agreement. A
signed copy of this Amendment delivered by facsimile, e-mail or other means of
electronic transmission shall be deemed to have the same legal effect as
delivery of an original signed copy of this Amendment. It is expressly
understood and agreed that (i) this Amendment shall be a Transaction Document
and (ii) the Transaction Documents are hereby amended to give full force and
effect to the transactions contemplated by this Amendment. Except as otherwise
expressly provided herein, (1) the Series A Warrants and Series C Warrants and
each other Transaction Document is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that on and
after the Effective Date (A) all references in the Series A Warrants and Series
C Warrants to “this Warrant,” “hereto,” “hereof,” “hereunder” or words of like
import referring to the Series A Warrants and Series C Warrants shall mean the
Series A Warrants and Series C Warrants as amended by this Amendment, (B) all
references in the other Transaction Documents to the “Warrants,” “thereto,”
“thereof,” “thereunder” or words of like import referring to the Series A
Warrants and Series C Warrants shall mean the Series A Warrants and Series C
Warrants as amended by this Amendment and (C) all references in Transaction
Documents to the “Transaction Documents,” “thereto,” “thereof,” “thereunder” or
words of like import referring to the Transaction Documents shall mean the
Transaction Documents as amended by this Amendment and (2) the execution,
delivery and effectiveness of this Amendment shall not operate as an amendment
or waiver of any right, power, benefit or remedy of any Holder under any
Transaction Document, nor constitute an amendment of any provision of any
Transaction Document and all of them shall continue in full force and effect, as
amended or modified by this Amendment. The Company shall, on or before 8:30
a.m., New York time, on the first (1st) Business Day after the date of this
Agreement, file a Current Report on Form 8-K describing all the material terms
of the transactions contemplated by this Amendment in the form required by the
1934 Act and attaching this Amendment.

 

[signature page follows]

 

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IN WITNESS WHEREOF, Cranshire and the Company have caused their respective
signature page to this Amendment to be duly executed as of the date first
written above.

 

  ARCH THERAPEUTICS, INC.         By: /s/ Terrence W. Norchi, M.D.   Name:
Terrence W. Norchi, M.D   Title: President, Chief Executive Officer        
SIGNIFICANT BUYER:       CRANSHIRE CAPITAL MASTER FUND, LTD.         By:
Cranshire Capital Advisors, LLC   Its: Investment Manager         /s/ Keith
Goodman   By: Keith Goodman   Its: Authorized Signatory

 

 

 

 

Exhibit A

Form of Investor Certificate

 

Arch Therapeutics, Inc.

235 Walnut St., Suite 6

Framingham, MA 01702

 

Ladies and Gentlemen:

 

Reference is made to that certain Amendment to Series A Warrants and Series C
Warrants to Purchase Common Stock (the “Amendment”) by and between Arch
Therapeutics, Inc., a Nevada corporation (the “Company”), and Cranshire Capital
Master Fund, Ltd. dated as of June 22, 2015 (the “Amendment”). Capitalized terms
not otherwise defined in this Investor Certificate shall have the meaning given
to them in the Amendment.

 

As a condition to receiving the undersigned’s allocation of the Inducement
Shares in accordance with the Amendment and as set forth on Exhibit B thereto
(the “Allocation Schedule”), the undersigned hereby represents and warrants to
the Company as follows:

 

1.The undersigned was not contacted for purposes of acquiring the Inducement
Shares through use of any form of general or public advertising, such as media,
public seminars or presentations, the Internet, or other means generally
available to the public.

 

2.The undersigned is aware of the Company’s business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire the Inducement Shares. The
undersigned is acquiring the Inducement Shares for its own account for
investment purposes only and not with a view to, or for the resale in connection
with, any “distribution” thereof for purposes of the the Securities Act of 1933,
as amended (the “1933 Act”). The undersigned is an “accredited investor” as that
term is defined in Securities and Exchange Commission Rule 501(a) of Regulation
D.

 

3.The undersigned understands that the Inducement Shares (i) have not been
registered under the 1933 Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the truth and accuracy of the
undersigned’s representations and warranties set forth herein; and (ii) shall
bear any legend as required by the “blue sky” laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

 

 

4.The undersigned further understands that the Inducement Shares must be held
indefinitely unless subsequently registered under the 1933 Act and any
applicable state securities laws, or unless exemptions from registration are
otherwise available.

 

5.The undersigned is aware of the provisions of Rule 144, promulgated under the
1933 Act, which, in substance, permit limited public resale of “restricted
securities” acquired, directly or indirectly, from the issuer (or from an
affiliate of such issuer), in a non-public offering subject to the satisfaction
of certain conditions, if applicable, including, among other things, the
availability of certain public information about the Company and the resale
occurring not less than six (6) months after the party has purchased and paid
for the securities to be sold.

 

6.The undersigned further understands that at the time its wishes to sell
Inducement Shares there may be no public market upon which to make such a sale,
and that, even if such a public market then exists, the Company may not have
filed all reports and other materials required under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, other than certain Form 8-K
reports, during the preceding 12 months, and that, in such event, because the
Company used to be a “shell company” as contemplated under Rule 144(i), Rule 144
will not be available to the undersigned.

 

7.The undersigned further understands that in the event all of the requirements
of Rule 144 are not satisfied, registration under the 1933 Act, compliance with
Regulation A, or some other registration exemption will be required and that,
notwithstanding the fact that Rule 144 is not exclusive, the staff of the
Securities and Exchange Commission has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.

 

[signature page follows]

 

 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Investor Certificate to be
duly executed as of the date set forth below.

 

  [HOLDER]       By:     Name:     Title:     Date:  

 

 

 

 

Exhibit B

Allocation of Inducement Shares

 

   Amount Invested Under
the Securities Purchase
Agreement   Inducement Shares to be
Issued Pursuant to the
Amendment  Warrant Holder  Dollars   % of Total   Shares   % of Total  Cranshire
Capital Master Fund, Ltd.  $800,000    28.07%   160,000    28.07% Intracoastal
Capital LLC*  $200,000    7.02%   40,000    7.02% Anson Investments Master Fund,
Ltd.  $500,000    17.54%   100,000    17.54% Capital Ventures International 
$500,000    17.54%   100,000    17.54% Heng Hong Ltd  $525,000    18.42% 
 105,000    18.42% Punit Dhillon**  $175,000    6.14%   35,000    6.14% Ocean
Creation Investments Limited  $50,000    1.75%   10,000    1.75% Ong Kim Kiat 
$50,000    1.75%   10,000    1.75% Karmdeep & Harpreet Bains  $50,000    1.75% 
 10,000    1.75% Total  $2,850,000    100.00%   570,000    100.00%

* Assignee of Equitec Specialists, LLC

** Assignee of 0903746 B.C. Ltd