Exhibit 10.1
ECHO THERAPEUTICS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
          This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”),
dated as of the 22nd day of December, 2007 (the “Grant Date”), is between Echo
Therapeutics, Inc., a Minnesota corporation (the “Company”), and ___(the
“Optionee”), an [employee] [director] of the Company.
          WHEREAS, the Company desires to give the Optionee the opportunity to
purchase shares of common stock of the Company (“Common Stock”) as hereinafter
provided;
          NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto,
intending to be legally bound hereby, agree as follows:
          1. Grant of Option. The Company hereby grants to the Optionee the
right and option (the “Option”) to purchase all or any part of an aggregate of
___shares of Common Stock. The Option is in all respects limited and conditioned
as hereinafter provided. It is intended that the Option granted hereunder be a
nonqualified stock option (“NQSO”) and not an incentive stock option (“ISO”) as
such term is defined in section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).
          2. Exercise Price. The exercise price of the shares of Common Stock
covered by this Option shall be $1.39 per share. It is the determination of the
Board of Directors of the Company (the “Board”) that on the Grant Date the
exercise price was not less than the greater of (i) 100% of the “Fair Market
Value,” or (ii) the par value of the Common Stock. The term “Fair Market Value”
for purposes of this Option Agreement means the average of the closing sale
prices of a share of Common Stock for the five (5) trading day-period
immediately preceding the Grant Date.
          3. Term. Except as otherwise provided in Paragraph 8 or Paragraph 12,
this Option shall expire on December 22, 2017 (the “Expiration Date”), which
date is not more than 10 years from the Grant Date. This Option shall not be
exercisable on or after the Expiration Date.
          4. Exercise of Option. The Optionee shall have the right to purchase
from the Company, on and after the following dates, the following number of
Shares:

 

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      Date Installment Becomes     Exercisable   Number of Option Shares
December 22, 2007
                       Shares
December 22, 2008
                       Shares
December 22, 2009
                       Shares

Once options become exercisable, they will remain exercisable until they are
exercised or until they terminate.
          5. Method of Exercising Option. Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by written notice to the
Company at its principal office, which is presently located at 10 Forge Parkway,
Franklin, Massachusetts 02038, Attn: Chief Executive Officer. Such notice (a
suggested form of which is attached hereto) shall state the election to exercise
the Option and the number of whole shares with respect to which it is being
exercised; shall be signed by the person or persons so exercising the Option;
shall, unless the Company otherwise notifies the Optionee, be accompanied by the
investment certificate referred to in Paragraph 6; and shall be accompanied by
payment of the full exercise price of such shares. Only full shares will be
issued.
          The exercise price shall be paid to the Company —
          (a) in cash, or by certified check, bank draft, or postal or express
money order;
          (b) through the delivery of shares of Common Stock which shall be
valued at the closing sale price of the Common Stock on the date of exercise
(“Exercise Fair Market Value”);
          (c) by having the Company withhold shares of Common Stock at the
Exercise Fair Market Value on the date of exercise;
          (d) by delivering a properly executed notice of exercise of the Option
to the Company and a broker, with irrevocable instructions to the broker
promptly to deliver to the Company the amount of sale or loan proceeds necessary
to pay the exercise price of the Option; or
          (e) in any combination of (a), (b), (c) or (d) above.
          In the event the exercise price is paid, in whole or in part, with
shares of Common Stock, the portion of the exercise price so paid shall be equal
to the Exercise Fair Market Value of the Common Stock surrendered.
          Upon receipt of notice of exercise and payment, the Company shall
deliver a certificate or certificates representing the shares with respect to
which the Option is so exercised. Such certificate(s) shall be registered in the
name of the person or persons so exercising the

 

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Option (or, if the Option is exercised by the Optionee and if the Optionee so
requests in the notice exercising the Option, shall be registered in the name of
the Optionee and the Optionee’s spouse, jointly, with right of survivorship) and
shall be delivered as provided above to, or upon the written order of, the
person or persons exercising the Option. In the event the Option is exercised by
any person or persons after the death or disability of the Optionee, the notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise the Option. All shares that are purchased upon the exercise of the
Option as provided herein shall be fully paid and non-assessable.
          6. Shares to be Purchased for Investment. Unless the Company has
theretofore notified the Optionee that a registration statement covering the
shares to be acquired upon the exercise of the Option has become effective under
the Securities Act of 1933, as amended (the “1933 Act”), and the Company has not
thereafter notified the Optionee that such registration statement is no longer
effective, it shall be a condition to any exercise of this Option that the
shares acquired upon such exercise be acquired for investment and not with a
view to distribution, and the person effecting such exercise shall submit to the
Company a certificate of such investment intent, together with such other
evidence supporting the same as the Company may request. The Company shall be
entitled to restrict the transferability of the shares issued upon any such
exercise to the extent necessary to avoid a risk of violation of the 1933 Act
(or of any rules or regulations promulgated thereunder), or of any state laws or
regulations. Such restrictions may, in the discretion of the Company, be noted
or set forth in full on the share certificates.
          7. Transferability of Option. This Option is not assignable or
transferable, in whole or in part, by the Optionee other than by will or by the
laws of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee or, in the event of his or her
disability, by his or her guardian or legal representative.
          8. Termination of Service. If the Optionee’s service with the Company
is terminated for any reason prior to the Expiration Date, this Option may be
exercised, to the extent of the number of shares with respect to which the
Optionee could have exercised it on the date of such termination of service, or
to any greater extent permitted by the Company, by the Optionee at any time
prior to the earlier of (i) the Expiration Date, or (ii) six months after the
date of such termination of service.
          9. Withholding of Taxes. The obligation of the Company to deliver
shares of Common Stock upon the exercise of this Option shall be subject to
applicable federal, state and local tax withholding requirements. If the
exercise of the Option is subject to the withholding requirements of applicable
federal, state and/or local tax law, the Optionee, subject to such additional
withholding rules (the “Withholding Rules”) as shall be adopted by the Company,
may satisfy the withholding tax, in whole or in part, by electing to have the
Company withhold (or by returning to the Company) shares of Common Stock, which
shares shall be valued, for this purpose, at their Fair Market Value on the date
the amount attributable to the exercise of the Option is includable in income by
the Optionee under section 83 of the Code. Such election must be made in
compliance with and subject to the Withholding Rules, and the Company may

 

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limit the number of withheld shares to the extent necessary to avoid adverse
accounting consequences.
          10. Change in Control. Notwithstanding any other Paragraph of this
Option Agreement, each outstanding Option shall become fully vested and
exercisable upon a “Change in Control” (as defined below). However, this
Paragraph shall not increase the extent to which an Option is vested or
exercisable if the Optionee’s termination of service occurs prior to the Change
in Control. “Change in Control” means the date on which occurs a merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination or exchange of shares, spin-off, split-up, or other similar change
in capitalization or event in which the stockholders of the Company immediately
prior to the transaction own less than 50% of the Company’s outstanding shares
immediately after such transaction.
          11. Adjustment in Case of Changes in Common Stock. The maximum number
of shares with respect to which Options may be granted under this Agreement, and
the number of shares issuable upon the exercise of outstanding Options under
this Agreement (Paragraph 4), as well as the option price per share of such
outstanding Options (Paragraph 2), shall be adjusted, as may be deemed
appropriate by the Company, to reflect any stock dividend, stock split,
spin-off, share combination or similar change in the capitalization of the
Company. In the event any such change in capitalization cannot be reflected in a
straight mathematical adjustment of the number of shares issuable upon the
exercise of outstanding Options (and a straight mathematical adjustment of the
exercise price thereof), the Committee shall make such adjustments as are
appropriate to reflect most nearly such straight mathematical adjustment. Such
adjustments shall be made only as necessary to maintain the proportionate
interest of Optionees, and preserve, without exceeding, the value of Options.
          12. Certain Corporate Transactions. In the event of a corporate
transaction (such as, for example, a merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation), the surviving or
successor corporation shall assume each outstanding Option or substitute a new
option for each outstanding Option; provided, however, that, in the event of a
proposed corporate transaction, the Company may terminate all or a portion of
the outstanding Options, effective upon the closing of the corporate
transaction, if it determines that such termination is in the best interests of
the Company. If the Company decides so to terminate outstanding Options, the
Company shall give the Optionee not less than seven days’ notice prior to any
such termination, and any Option which is to be so terminated may be exercised
(if and only to the extent that it is then exercisable, but taking into
consideration the full vesting that occurs under Paragraph 10 if the transaction
constitutes a Change in Control) up to, and including the time of, such
termination. Further, the Company, in its discretion, may accelerate, in whole
or in part, the date on which any or all Options become exercisable. The Company
also may, in its discretion, change the terms of any outstanding Option to
reflect any such corporate transaction.
          13. Governing Law. This Option Agreement shall be governed by the
applicable Code provisions to the maximum extent possible. Otherwise, the laws
of the State of

 

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Minnesota (without reference to the principles of conflict of laws) shall govern
the operation of, and the rights of the Optionee under, this Option Agreement.
     IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly
executed by its duly authorized officer and the Optionee has hereunto set his
hand and seal, all as of the day and year first above written.

              ECHO THERAPEUTICS, INC.
 
       
 
  By:    
 
       
 
                  Optionee

 

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ECHO THERAPEUTICS, INC.
Notice of Exercise of Nonqualified Stock Option
     I hereby exercise the nonqualified stock option granted to me pursuant to
the Nonqualified Stock Option Agreement, dated as of December 22, 2007 by Echo
Therapeutics, Inc. (the “Company”), with respect to the following number of
shares of the Company’s common stock (“Shares”), par value $.01 per Share,
covered by said option:

                      Number of Shares to be purchased        
 
                  Exercise price per Share   $    
 
                  Total exercise price   $    
 
             
 
                                       A.   Enclosed is cash or my certified
check, bank draft, or postal or express money order in the amount of
$                    in full/partial [circle one] payment for such Shares;

and/or

                                         B.   Enclosed is/are________ Share(s)
with a total Exercise Fair Market Value of $                     on the date
hereof in full/partial [circle one] payment for such Shares;

and/or

                                         C.   Please withhold ______ Shares with
a total Exercise Fair Market Value of $                    on the date hereof in
full/partial [circle one] payment for such Shares;

and/or

         
                    
  D.   I have provided notice to                                        [insert
name of broker], a broker, who will render full/partial [circle one] payment for
such Shares. [Optionee should attach to the notice of exercise provided to such
broker a copy of this Notice of Exercise and irrevocable instructions to pay to
the Company the full exercise price for the number of Shares purchased in this
method.]

     Please have the certificate or certificates representing the purchased
Shares registered in the following name or
names*                                                             and sent to:

     
 
   

     If the condition in Paragraph 6 (“Shares to be Purchased for Investment”)
of the Nonqualified Stock Option Agreement related to the Shares purchased
hereby is applicable, the
 

*   Certificates may be registered in the name of the Optionee alone or in the
joint names (with right of survivorship) of the Optionee and his or her spouse.

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undersigned hereby certifies that the Shares purchased hereby are being acquired
for investment and not with a view to the distribution of such Shares.

         
DATED:
       
 
       
 
      Optionee’s Signature