<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB/A
(Amendment No. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended August 31, 1999
---------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 0-27380
ECHOCATH, INC.
(Name of small business issuer in its charter)
<TABLE>
<CAPTION>
<S> <C>
New Jersey 22-3273101
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
P.O. Box 7224, Princeton, New Jersey 08543
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's telephone number: (609) 987-8400
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Class A Common Stock, no par value
Redeemable Class A Warrants
Redeemable Class B Warrants
Units, Each Consisting Of One Share Of Class A Common Stock,
One Redeemable Class A Warrant And One Redeemable Class B Warrant
-----------------------------------------------------------------
(Title Of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
___ X ___ Yes ____ No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for the fiscal year ended August 31, 1999 were $395,197.
The aggregate market value of the issuer's outstanding voting stock held by
non-affiliates on November 17, 1999, based on the closing sale price of its
common stock on the Nasdaq OTC Bulletin Board on such date, was approximately
$2,600,000.
As of November 17, 1999, there were outstanding 3,524,036 shares of the issuer's
Class A and Class B Common Stock, no par value.
Transitional Small Business Disclosure Format (check one):
____ Yes ___ X ___ No
<PAGE>
Item 10. Executive Compensation.
Summary Compensation Table
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company for the fiscal years ended August
31, 1999, 1998 and 1997 to Frank A. DeBernardis, the Company's Chief Executive
Officer and David Vilkomerson, the Company's Executive Vice President (the
"Named Executive Officers"). No other executive officer received annual
compensation in excess of $100,000 for the fiscal years ended August 31, 1999,
1998 or 1997.
Summary Compensation Table
Annual Compensation
<TABLE>
<CAPTION>
Long Term
Compensation
Awards Payouts
------------ ---------------
Securities
Underlying All Other
Name and Principal Other Annual Options/SARs Compensation
Position Year Salary Bonus Compensation ($) ($)
- --------------------- ------ ----------- ------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Frank A. DeBernardis 1999 $130,000 (3) -- -- -- --
Chief Executive Officer 1998 $130,000 -- -- -- --
1997 $130,000 $16,000 -- 150,000(1)(2) --
David Vilkomerson 1999 $139,560 (3) -- -- -- --
Executive Vice President 1998 $134,600 -- -- -- --
1997 $130,000 $16,000 -- 150,000(1)(2) --
</TABLE>
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(1) The security underlying all options is Class A Common Stock.
(2) Each option vested as to 50,000 shares on April 29, 1998 and vested as to
50,000 shares on April 29, 1999 and vests as to 50,000 shares on April 29,
2000.
(3) Mr. DeBernardis and Dr. Vilkomerson voluntarily deferred a portion of their
compensation to preserve cash flow until the completion of the private
placement. After the completion of the private placement the deferred
compensation was paid. The table reflects compensation due before the
voluntary deferral.
Stock Option Tables
Option/SAR Grants in Last Fiscal Year The following table sets forth the
options granted to the Named Executive Officers during the fiscal year, 1999.
The Company granted 210,000 in stock options during such fiscal year. The
Company has granted options to its directors and certain of its Company's
officers to purchase 50,000 shares of the Class A Common Stock. Such options
were all issued pursuant to the options plan and are exercisable for ten years
following the date of grant. During fiscal year 2000, grants were issued for
665,000 shares subject to shareholder approval to certain directors, officers
and employees.
2
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Individual Grants
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options/SARs Market Price as
Underlying Granted to Exercise or Reported on
Options/SARs Employees in Base Price($/Sh) Bulletin Board on Expiration
Name Granted Fiscal Year(1) Date of Grant Date
<S> <C> <C> <C> <C> <C>
Anthony Dimun
Director 50,000 23.8% 1.125 1.125 10/23/08
Irwin Rosenthal
Director 50,000 23.8% 1.125 1.125 10/23/08
Daniel Mulvena
Chairman 50,000 23.8% 1.125 1.125 10/23/08
</TABLE>
Aggregated Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End
Option/SAR Values The following table sets forth information (on an aggregate
basis) concerning each exercise of stock options during the fiscal year ended
August 31, 1999 by each of the Named Executive Officers and the final year-end
value of unexercised options. The table reflects options exercisable within 60
days of the date of this Report.
<TABLE>
<CAPTION>
Number Of Securities Underlying Value Of Unexercised "In-
Unexercised Options/SARs At Fiscal The Money" Options/SARs At
Year-End Fiscal Year End(2)
Shares
Acquired on Value
Exercise (1) Realized(3) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Frank DeBernardis
Chief Executive Officer 0 0 120,000 50,000 0 0
David Vilkomerson
Executive Vice President 0 0 190,000 50,000 0 0
</TABLE>
- -----------
(1) As of the date of this Report, none of the Named Executive Officers have
exercised any of their options.
(2) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option. The last sales price of the securities underlying the options on
November 9,1999, was $0.81125 per share, and the exercise price of the
applicable options has been reset from $5.00 per share to $3.375 per share
on April 29, 1997.
(3) Value realized is the closing market price of the stock on the date of
exercise less the option price, multiplied by the number of shares acquired
on exercise.
Compensation of Directors
The Company pays all outside directors $500 for each board or committee
meeting attended. Outside directors may also be reimbursed for expenses incurred
by them in acting as a director or as a member of any committee of the Board of
Directors.
3
<PAGE>
Employment Agreements
The Company entered into employment agreements with Mr. Frank DeBernardis,
to serve as President and Chief Executive Officer of the Company, and Dr. David
Vilkomerson, to serve as Executive Vice President and Director of Research and
Development of the Company, which expired in November 1996. Pursuant to such
agreements, Mr. DeBernardis and Dr. Vilkomerson received a base salary of
$130,000 at the time of expiration of the agreements. The employment agreements
provided that each such agreement could be terminated by the Company only if
such executive officer had materially breached his obligations under the
agreement, engaged in willful misconduct against the Company or was found guilty
of a felony by a court of competent jurisdiction which, in the discretion of the
Board of Directors, would interfere with the performance of such executive
officer's duties and responsibilities or would materially adversely affect the
Company. The agreements also contained confidentiality and non-competition
provisions. Under the terms of the agreement his base salary increased from
$130,000 in the first year of his agreement, ending November 1, 1997, to
$135,000 in the second year of his agreement, ending November 1, 1998, and
$140,600 the last year of his agreement. Dr. David Vilkomerson signed an
extended employment agreement on March 10, 1998. That agreement has expired as
of November 1, 1999. The terms of an extended agreement should be similar to the
original agreement.
Mr. DeBernardis has worked without a contract extension since November
1996, but is currently in discussion with the Compensation Committee to extend
his employment agreement. The terms of an extended agreement should be similar
to the original agreement.
The Company entered into a consulting agreement with Mr. Mulvena, which
expired on June 30, 1997. Pursuant to such agreement, Mr. Mulvena provided
consulting services to the Company from July 1, 1995 through June 30, 1997, for
up to 27 days per quarter, at a rate of $1,000 per day. The agreement provided
for Mr. Mulvena to be reimbursed for his reasonable expenses and to be provided
with Company benefits. The agreement also contained confidentiality and
non-compete provisions. An extension of such consulting agreement has been
negotiated and Mr. Mulvena will provide for up to four days per quarter, at a
rate of $1,700 per day. Upon the extension of his contract with the Company, Mr.
Mulvena was granted an option to purchase 40,000 shares of Class A Common Stock
at an exercise price of $0.39 per share. The option vests immediately upon grant
and has a term of ten years.
Option Plan
In August 1995, the Board of Directors adopted and the shareholders
approved option plan (the "Option Plan"). The Option Plan provides for the grant
of incentive stock Option ("ISOs") (within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and non-qualified stock
options ("NQSOs") to certain directors, officers and employees of the Company.
The Option Plan further provides for the grant of NQSOs and stock appreciation
rights ("SARs") to directors, agents of, and consultants to, the Company,
whether or not employees of the Company. The purpose of the Option Plan is to
attract and retain employees, agents, consultants and directors. Options and
SARs granted under the Plan may not be exercisable for terms in excess of 10
years from the date of grant. In addition, no options or SARs may be granted
under the Option Plan later than 10 years after the Option Plan's effective
date.
The Board of Directors has approved grants that total 1,657,500. The
additional grants of 690,000 above the authorized total of 1,020,000 will
require shareholder approval.
The total number of shares of Class A Common Stock with respect to which
options and SARs will be granted under the Option Plan is 1,020,000. The shares
subject to and available under the Option Plan may consist, in whole or in part,
of authorized but unissued stock or treasury stock not reserved for any other
purpose. Any shares subject to an option or SAR that terminates, expires or
lapses for any reason, and any shares purchased pursuant to an option and
subsequently repurchased by the Company pursuant to the terms of the option,
shall again be available for grant under the Option Plan.
4
<PAGE>
The Option Plan is administered by the Board of Directors of the Company,
which will determine, in its discretion, among other things, the recipients of
grants, whether a grant will consist of ISOs, NQSOs or SARs, or a combination
thereof, and the number of shares of Class A Common Stock to be subject to such
options or SARs. The Board of Directors of the Company may, in its discretion,
delegate its power, duties and responsibilities under the Option Plan to a
committee consisting of two or more "Non-Employee" directors within the meaning
of (b)(3) of Rule 16b-3 promulgated under the Exchange Act. The Compensation and
Stock Option Committee, which is responsible for administering the Option Plan,
is composed of Daniel Mulvena and Anthony Dimun. The exercise price of options
granted under the Plan shall not be less than the fair market value per share on
the date of grant, as determined by the Board of Directors.
The Option Plan contains certain limitations applicable only to ISOs
granted thereunder. To the extent that the aggregate fair market value, as of
the date of grant, of the shares to which ISOs become exercisable for the first
time by an optionee during the calendar year exceeds $100,000, the ISO will be
treated as a NQSO. In addition, if an optionee owns more than 10% of the
Company's stock at the time the individual is granted an ISO, the option price
per share cannot be less than 110% of the fair market value per share and the
term of the option cannot exceed five years.
The Company plans to seek shareholder approval at the next annual meeting
of shareholders of an amendment to the Option Plan to increase the number of
shares of Class A Common Stock available for grant thereunder.
On October 9, 1999, the Board of Directors approved a compensation
committee recommendation and granted options for 500,000 shares to management,
vesting over three years, 190,000 shares to the non-management members of the
Board that vest immediately, and 15,000 shares to employees and consultants that
vest equally over the next three years. These options were granted at fair
market value as of the date of grant. The grants issued to management and the
non-management Board members are subject to shareholder approval.
Profit Sharing 401(k) Plan
In February 1996, the Company established a 401(k) plan. All eligible
employees may elect to contribute a portion of their wages to the 401(k) plan,
subject to certain limitations. The Company is required to contribute 25% of the
employee contributions subject to a maximum equal to 6% of the employees'
compensation. The Company contributed approximately $13,126 in the fiscal year
ended August 31, 1999.
Investment Plan
In February 1997, the Company adopted an Investment Plan (the "Investment
Plan") covering 300,000 shares of Class A Common Stock. The Investment Plan
provides eligible employees of the Company with an opportunity to purchase
shares of Class A Common Stock through payroll deductions, or otherwise, and to
receive options to purchase Class A Common Stock. The Investment Plan is
administered by the Company's Compensation and Stock Option Committee, or by a
Plan Administrator appointed by the Company's Compensation and Stock Option
Committee.
Under the terms of the Investment Plan, options may be granted to
participants upon the purchase of shares under the Investment Plan. The number
of options to be granted in connection with each purchase of shares is a
function of the degree to which the Company attains pre-designated performance
goals.
One of the Company's employees participated in the Investment Plan during
the fiscal year ended August 31, 1999. During the fiscal year 1999, no shares of
Class A Common Stock were issued under the Investment Plan.
Item 11. Security Ownership Of Certain Beneficial Owners And Management.
The following table sets forth, as of November 8, 1999, certain
information as to the stock ownership and voting power of all persons (or groups
of persons) known by the Company to be the beneficial owner of more than five
percent (5%) of the Common Stock or the Series B Cumulative Convertible
Preferred Stock, each director of the Company, each of the executive officers
included in the Summary Compensation Table and all directors and executive
officers as a group.
5
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of Percent of
Beneficial Owner Title of Class Ownership(1)(2)(3) Class Voting Power
<S> <C> <C> <C> <C>
Cathtech Corp. (6) Class A Common Stock 311,953 26.6% 18.4%
c/o Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Anthony Dimun (7) Class A Common Stock 64,372 1.9% 1.6%
c/o Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Ultramed, Inc. (8) Class A Common Stock 234,544 6.8% 5.9%
c/o Frank Joworisak
EchoCath, Inc.
P.O. Box 7224
Princeton, New Jersey 08543
David Vilkomerson (9)(13) Class A Common Stock 284,068 8.2% 7.1%
c/o EchoCath, Inc.
P.O. Box 7224
Princeton, New Jersey 08543
Frank DeBernardis (10) Class A Common Stock 164,362 4.7% 4.1%
c/o EchoCath, Inc.
P.O. Box 7224
Princeton, New Jersey 08543
Terence D. Wall (5) Class A Common Stock 189,607 5.4% 4.8%
c/o Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Vital Signs, Inc. (6) Class A Common Stock 311,953 26.6% 18.4%
20 Campus Road
Totowa, New Jersey 07512
Medtronic, Inc. (4) Class A Common Stock 363,636 40.5% 9.1%
7000 Central Ave. NE
Minneapolis, MN 55482
Irwin M. Rosenthal (11) Class A Common Stock 162,084 4.7% 4.1%
c/o Irwin Rosenthal
885 Third Avenue
21st Floor
New York, New York 10022
Daniel M. Mulvena (12) Class A Common Stock 120,000 3.4% 3.0%
6 Fuller Lane
Marblehead, Mass. 01945
EP MedSystems, Inc. Series B Cumulative 280,000 100.0% 7.0%
58 Route 46 West Convertible Preferred
Budd Lake, NJ 07828 Stock
All officers and directors as a Class A Common Stock 794,886 27.6% 19.9%
group (5 persons)(14)
</TABLE>
- --------------
* Denotes less than 1%.
6
<PAGE>
(1) Unless otherwise set forth herein, all shares set forth are shares of the
Company's Class A Common Stock. The Class A Common Stock has one vote per
share and the Class B Common Stock has five votes per share. All shares are
beneficially owned and sole voting and investment power is held by the
persons named, except as otherwise noted.
(2) Certain holders have agreed that up to a portion of his or its shares of
the Class B Common Stock now converted to A Shares pursuant to the terms of
the Private Placement completed October 29, 1999, are subject to transfer
to the Company for no consideration upon the failure of certain conditions
to occur by certain dates. So long as such shares are subject to such
conditions, the holder may vote but not dispose of such shares.
(3) Does not include shares of Class A Common Stock underlying options not
exercisable within 60 days following November 22, 1999.
(4) Represents shares of Class A Common Stock held by Medtronic Asset
Management, Inc., a Minnesota corporation and a wholly-owned subsidiary of
Medtronic through which Medtronic holds certain investments. The amount of
shares beneficially owned by Medtronic is based upon a Schedule 13D filed
by Medtronic and Medtronic Asset Management, Inc. on November 10, 1997.
(5) Mr. Wall is a former director of the Company. Mr. Wall is currently an
officer, a director and a principal stockholder of Vital Signs and an
officer and director of Cathtech Corp., a privately-held corporation and
wholly-owned subsidiary of Vital Signs ("Cathtech"). Such shares include
139,607 shares of Class A Common Stock held directly by Mr. Wall, as
reported in a Schedule 13G filed by Mr. Wall on February 14, 1997, and an
option to purchase 50,000 shares of Class A Common Stock, which option is
exercisable within 60 days of November 22, 1999. These shares also include
the 311,953 shares of Class A Common Stock owned by Cathtech.
(6) Cathtech is the beneficial owner of approximately 13% of the Common Stock
of Ultramed. Vital Signs may be deemed to be a beneficial owner of the
311,953 shares of Class A Common Stock owned by Cathtech. The amount of
shares beneficially owned by Cathtech is based upon a Schedule 13G filed by
Cathtech and Vital Signs on February 14, 1997.
(7) Mr. Dimun is an officer and a director of Vital Signs and Cathtech. These
shares do not include the 311,953 shares of Class A Common Stock owned by
Cathtech, as to which Mr. Dimun disclaims beneficial ownership, since Mr.
Dimun is not a principal stockholder of Vital Signs. These shares include
an option to purchase 50,000 shares of Class A Common Stock, which option
is exercisable within 60 days following November 22, 1999.
(8) All of the shares have been pledged to Vital Signs as collateral for a loan
and accounts payable, respectively. The pledgees disclaim beneficial
ownership of such shares. The amount of shares beneficially owned by
Ultramed is based upon a Schedule 13G filed by Ultramed on February 14,
1997.
(9) Includes (i) options granted by Ultramed to Dr. Vilkomerson to purchase
from Ultramed 7,526 shares of Class A Common Stock, which options are
exercisable within 60 days following November 22, 1999, and (ii) an option
granted by the Company to Dr. Vilkomerson to purchase 90,000 shares of
Class A Common Stock, which option is exercisable within 60 days following
November 22, 1999. Excludes (i) options granted by Ultramed to Dr.
Vilkomerson to purchase from Ultramed 1,882 shares of Class A Common Stock
of the Company, which options are not exercisable within 60 days following
November 22, 1999, and (ii) 234,544 shares of Class A Common Stock owned by
Ultramed (of which he is an officer, director and approximately 13%
stockholder), as to which Dr. Vilkomerson disclaims beneficial ownership.
Also excludes an option to purchase 150,000 shares of Class A Common Stock,
which option vested as to 50,000 shares on April 29, 1998, and vests as to
50,000 on April 29, 1999, and as to 50,000 shares on April 29, 2000.
(10) Includes options granted by the Company to Mr. DeBernardis to purchase
116,000 shares of Class A Common Stock, which options are exercisable
within 60 days following November 22, 1999. Excludes (i) 10,006 shares of
Class A Common Stock held in a trust for the benefit of Mr. DeBernardis'
children, as to which Mr. DeBernardis disclaims beneficial ownership and
(ii) options to purchase 4,000 shares of Class A Common Stock which are not
yet vested. Also excludes an option to purchase 150,000 shares of Class A
Common Stock, which option vests as to 50,000 shares on April 29, 1998, as
to 50,000 shares on April 29, 1999, April 29, 1999, and as to 50,000 shares
on April 29, 2000.
(11) Such shares include 16,667 shares of Class A Common Stock, and an option to
purchase 16,667 shares of Class A Common Stock, issued to Mr. Rosenthal in
connection with the Alliance Agreement. The option to purchase 16,667
shares of Class A Common Stock is exercisable within 60 days following
November 22, 1999. These shares also include an option to purchase 50,000
shares of Class A Common Stock, which option is exercisable within 60 days
following November 22, 1999.
(12) Includes options granted by the Company to Mr. Mulvena to purchase 70,000
shares of Class A Common Stock, which options are exercisable within 60
days following November 22,1999. These shares also include an option to
purchase 50,000 shares of Class A Common Stock, which option is exercisable
within 60 days following November 22, 1999.
7
<PAGE>
(13) Includes 107,526 shares of Class A Common Stock and issuable upon exercise
of options exercisable within 60 days following November 22, 1999. Excludes
(i) 1,882 shares of Class B Common Stock underlying options that are not
exercisable within 60 days following November 22, 1999 and (ii) options to
purchase 104,000 shares of Class A Common Stock which are not yet vested.
(14) Options were issued to Dr. Vilkomerson, Mr. DeBernardis and Mr. Mulvena to
purchase in the aggregate 290,000 shares of Class A Common Stock. These
options however, are still awaiting shareholder approval and therefore, are
not included in the Compensation Table or the Beneficial Ownership Table.
Mr. Dimun, Mr. Rosenthal, and Mr. Mulvena were also issued options in the
amount of 50,000 shares each of Class A Common Stock. These shares were not
included because they are subject to shareholder approval and therefore,
are not included in the Beneficial Ownership Tables.
8
<PAGE>
Item 12. Certain Relationships and Related Transactions.
Since October 1, 1992, Vital Signs has provided certain management
services to the Company and incurred certain out-of-pocket expenses on behalf of
the Company. In fiscal 1999, the Company paid Vital Signs approximately $26,004
for such services and costs incurred. Management believes that the fees incurred
by the Company did not exceed fees that would have been charged by unrelated
parties for similar services. Vital Signs provided legal services to the Company
for a portion of the fiscal year ended August 31, 1999.
Pursuant to an agreement, dated July 7, 1995, between Alliance and the
Company the ("Alliance Agreement"), Alliance satisfied a bank loan of the
Company in the principal amount of $750,000 and in exchange, the Company agreed
to repay Alliance if the Company receives at least $23,040,000 in gross proceeds
from the exercise of the Class B Warrants. In November 1995, Alliance loaned the
Company $100,000, which loan bore interest at a rate of 9% per annum and was
repaid in January 1996. In January 1996, Alliance agreed to arrange for the
payment of $750,000 by certain of the Company's existing shareholders to repay a
demand note due by the Company to a bank in connection with the Company's
repurchase of rights under the HRT Agreement. Alliance paid $75,000 of the
$575,000.
As of October 30, 1997, the Company amended certain provisions of the
Alliance Agreement. Under the terms of the Alliance Agreement, the Company had
agreed, among other things, to pay $750,000 to Alliance upon the receipt by the
Company of $23,040,000 in proceeds from the exercise of the Company's
outstanding Class B Warrants. The $750,000 Contingent Payment is reflected on
the Company's balance sheet as a capital contribution subject to repayment.
Under the terms of the Amendment to the Alliance Agreement, Alliance has agreed
to release and discharge the Company from making the Contingent Payment and the
Company has agreed to issue to Alliance (i) 50,000 shares of Class A Common
Stock and (ii) a six-year option to purchase 50,000 shares of Class A Common
Stock at an exercise price of $2.00 per share. Upon the closing of the
Amendment, the Contingent Payment was reclassified as equity of the Company.
Irwin M. Rosenthal, is a director, and a partner of Alliance. Irwin M.
Rosenthal is also a partner of Graham & James LLP, counsel to the Company.
For a description of employment and consulting agreements with, and
options granted to, certain officers and directors of the Company, see Item 10.
Executive Compensation.
Item 13. Exhibits, List and Reports On Form 8-K.
(a) Exhibits.
3.1 Restated Certificate of Incorporation of the Company.(1)
3.2 Certificate of Amendment to Restated Certificate of Incorporation of
the Company.(3)
3.3 By-Laws of the Company.(1)
4.1 Subscription Agreement, dated February 27, 1997, by and between the
Company and EP MedSystems.(2)
4.2 Subscription Agreement, dated October 29, 1997, by and between the
Company and Medtronic Asset Management, Inc.(4)
10.1 1995 Stock Option Plan of the Company.**(1)
10.2 Form of Indemnification Agreement to be entered into between the
Company and each officer and Director of the Company.(1)
10.3 Employment Agreement, dated as of June 11, 1991 between the Company and
Frank DeBernardis, as extended and amended.**(1)
9
<PAGE>
10.4 Employment Agreement, dated as of June 11, 1991 between the
Company and David Vilkomerson, as extended and
amended.**(1)
10.5 Letter Agreement, dated as of May 12, 1995, between the
Company and Daniel Mulvena.**(1)
10.6 Form of Medical Advisory Agreement between the Company and
Dr. Kurt Isselbacher.**(1)
10.7 Form of Consulting Agreement between the Company and Daniel
Mulvena.**(1)
10.8 Patent Assignment dated as of October 30, 1992 from
Catheter Technology to the EchoCath, Ltd.(1)
10.9 Patent Assignment dated as of October 30, 1992 from
EchoCath, Ltd. to the Company.(1)
10.10 Patent Assignment dated as of November 11, 1992 from
EchoCath, Ltd. to the Company.(1)
10.11 Development and Licensing Agreement, by and between Heart
Rhythm Technologies, Inc. and the Company, effective as of
September 21, 1992.(1)
10.12 Stock Purchase Agreement effective as of September 21, 1992
by and between the Company and Eli Lilly and Company.(1)
10.13 Development, Supply and License Agreement dated September
24, 1993 by and between the Company and Bard Radiology,
C.R. Bard, Inc., as amended.(1)
10.14 Lease Agreement, dated as of November 22, 1991, by and
between BGS Realty and EchoCath, Ltd.(1)
10.15 Agreement, dated as of July 7, 1995 by and between the
Company and Alliance.(1)
10.16 Agreement, dated as of July 14, 1995 by and between the
Company and Alliance.(1)
10.17 Agreement, dated as of November 30, 1995, among the
Company, Guidant Corporation and Heart Rhythm Technologies,
Inc.(1)
10.18 Agreement, dated as of January 3, 1996, among the Company,
Guidant Corporation and Heart Rhythm Technologies, Inc.(1)
10.19 Form of Warrant Agreement among the Company, the D.H. Blair
and American Stock Transfer & Trust Company, including
forms of Class A and Class B Warrant Certificates.(1)
10.20 Form of Stock Restriction Agreement among the Company,
certain holders of the Class B Common Stock and D.H. Blair
Investment Banking Corp.(1)
10.21 Second Amendment to Lease effective April 1, 1996 by and
between the Company and BGS Realty.(5)
10.22 Distribution Agreement, effective as of April 1, 1997, by
and between the Company and Medison.(6)
10.23 License and Development Agreement, dated as of October 29,
1997, by and between the Company and Medtronic.(7)
10.24 Agreement, dated October 30, 1997, by and between the
Company and Alliance.(8)
10.25 Employment Agreement, dated as of March 10, 1998, between
the Company and David Vilkomerson.*(9)
[check mark]10.26 Forms of 6 1/2% Convertible Promissory Notes issued in 1999.
10
<PAGE>
10.27 Forms of Warrants to purchase Class A Common Stock issued in 1999 to
purchasers of 6 1/2% Convertible Promissory Notes.
10.28 Form of Warrants issued for Conversion of Class B Common Stock to Class
A Common Stock.
24 Power of Attorney (included in signature page hereto).*
27 Financial Data Schedule.*
- ----------------
* Filed herewith.
** A management contract or compensatory plan or arrangement.
(1) Incorporated by reference to Registrant's Registration Statement on form
SB-2 (Reg. No. 33-97688) which was declared effective by the Securities and
Exchange Commission on January 17, 1996.
(2) Incorporated by reference to Exhibit 3 of the Company's Form 10-QSB for the
quarter ended February 28, 1997.
(3) Incorporated by reference to Exhibit 4 of the Company's Form 10-QSB for the
quarter ended February 28, 1997.
(4) Incorporated by reference to Exhibit 99.2 of the Company's Form 8-K dated
October 31, 1997.
(5) Incorporated by reference to Exhibit 10.21 of the Company's Form 10-KSB for
the fiscal year ended August 31, 1996.
(6) Incorporated by reference to Exhibit 10.22 of the Company's Form 10-QSB for
the quarter ended May 31, 1997.
(7) Incorporated by reference to Exhibit 99.3 of the Company's Form 8-K dated
October 31, 1997.
(8) Incorporated by reference to Exhibit 99.4 of the Company's Form 8-K dated
October 31, 1997.
(9) Incorporated by reference to Exhibit 10.25 of the Company's Form 10-QSB for
the quarter ended February 28, 1998.
(b) Reports on Form 8-K
During the quarter ended August 31, 1999, no reports on Form 8-K were
filed by the Company.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Amendment to its Report to be signed on its behalf by the
undersigned, thereunto dulyauthorized.
ECHOCATH, INC.
By: s/ Frank A. DeBernardis
--------------------------
Frank A. DeBernardis, Chief Executive
Officer and President (principal executive
officer and principal financial and
accounting officer)
March 10, 2000
11
<PAGE>
[An aggregate principal amount of $1,250,000
has been issued under this form of note.]
The securities represented by this instrument have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and neither such securities nor any interest therein
may be offered, sold, pledged, assigned or otherwise transferred unless
(i) a registration statement with respect thereto is effective under
the Act and any applicable, state securities laws, or (ii) the issuer
receives an opinion of counsel to the holder of such securities, which
counsel and opinion are satisfactory to the issuer, that such
securities may be offered, sold, pledged, assigned or transferred in
the manner contemplated without an effective registration statement
under the Act or applicable state securities laws.
No. _____
Dated: As of _______, 1999 $___________
EchoCath, Inc.
4326 US Route 1
Monmouth Junction, New Jersey 08852
6 1/2% Convertible Promissory Note
EchoCath, Inc., a New Jersey corporation (the "Company"), for value
received, promises to pay to Noteholder or registered assigns (the "Holder") the
principal amount of ______ dollars ($________) representing ____ unit(s) plus
interest on the unpaid principal balance at the rate of 6 1/2% per annum.
Principal and accrued and unpaid interest shall be due and payable on October
29, 2002 (the "Maturity Date"). Payment of principal and accrued and unpaid
interest shall be made at the offices of the Company in Princeton, New Jersey,
in lawful money of the United States of America, and shall be mailed to the
registered owner or owners hereof at the address appearing on the books of the
Company. This Note is one of a series of notes (collectively, the "Notes")
issued by the Company in connection with the Company's placement of units with
accredited investors (the "Financing"), each full unit consisting of one 6 1/2%
convertible promissory note in the principal amount of $25,000 and a warrant to
purchase 33,333 shares of class A common stock, no par value, of the Company
(the "Common Stock"). The Financing was made pursuant to a Confidential
Information Memorandum dated March 17, 1999, as the same may be supplemented or
amended.
1. Conversion.
(a) Optional Conversion. At any time commencing 90 days after the final
closing of the Financing and prior to the Maturity Date, the Holder shall have
the right to convert the principal amount hereof (and accrued and unpaid
interest hereon) or any portion thereof (but not less than $10,000.00 principal
amount (or lesser outstanding principal amount)), into shares of Common Stock
(the "Shares"), at the Conversion Rate (as defined in paragraph 1(d) hereof).
Conversion of this Note pursuant to this paragraph 1(a) shall be effected by
submitting to the Company the fully completed form of conversion notice attached
hereto as Exhibit A (a "Notice of Conversion"), executed by the Holder of this
Note evidencing such Holder's intention to convert this note or any portion
hereof. A Notice of
<PAGE>
Conversion may be submitted via facsimile to the Company at (609) 987-1019 (or
at such other number as provided in advance of such conversion in writing by the
Company), and if so submitted the original Notice of Conversion shall be
delivered to the Company within three (3) business days thereafter.
(b) Mandatory Conversion. At any time commencing October 30, 2000 and
on or prior to the Maturity Date, the Company may require the Holder to convert
the principal amount hereof (and accrued and unpaid interest hereon) or any
portion thereof, into shares of Common Stock at the Conversion Rate. Any such
conversion shall be effected by delivery of 30 days' prior written notice to the
Holder, and shall automatically occur at the expiration of such 30-day period.
(c) Automatic Conversion. The principal and accrued and unpaid interest
of this Note shall automatically be converted into shares of Common Stock at the
Conversion Rate in the event that the Company receives notice from Nasdaq that
the Common Stock shall be approved for trading on the Nasdaq SmallCap Market
subject only to conversion of the Notes into equity. If Nasdaq subjects grant of
trading approval to conversion of less than the full amount of principal and
accrued and unpaid interest outstanding on the Notes, then the conversion
required by this paragraph 1(c) shall be reduced pro rata among Holders of Notes
based on principal amount then outstanding.
(d) The term "Conversion Rate" means the rate at which principal and
accrued interest on this Note is convertible into Shares and
(i) for purposes of conversions effected pursuant to paragraph
1(a) hereof, the Conversion Rate shall be equal to $0.75 per
Share; and
(ii) for purposes of conversion effected pursuant to paragraphs
1(b) and 1(c) hereof, the Conversion Rate shall be equal to
the lesser of (i) $0.75 per Share (which shall be adjusted
proportionately for stock dividends, forward and reverse stock
splits and the like) or (ii) the market price (as defined in
paragraph 1(d) hereof) per share of Common Stock on the
Conversion Date (as defined in paragraph 1(e) hereof;
provided, however, that the Conversion Rate shall not be less
than $0.25 per share.
(e) The term "market price" for purposes of determining the price of a
share of the Common Stock, shall mean the average of the closing sales prices of
the Common Stock in the principal trading market therefor, for each of the five
trading days immediately preceding the date on which market price is to be
determined (or, for any of such five days where there is no closing sale price,
such day's average of the bid and asked price).
(f) The term "Conversion Date" means the date on which a Notice of
Conversion is given and
(i) for purposes of conversions effected pursuant to paragraph
1(b), shall be deemed to be the date on which the written
notice referred to therein is sent by the Company; and
2
<PAGE>
(ii) for purposes of conversions effected pursuant to paragraph
1(c), shall be deemed to be the date Nasdaq issues official
notification in writing of the approval referred to therein.
(g) Promptly following the conversion of this Note, the Company shall
issue and deliver to the Holder a certificate for the appropriate number of
securities to which the Holder shall be entitled and, if less than the full
principal amount of this Note is converted, a new Note in the same form reduced
by the principal amount converted; provided, however, that the Company shall not
be required to issue a new Note upon conversion of less than the full principal
amount of this Note if the original of this Note has not been delivered to the
Company for cancellation or if, in lieu thereof, the Holder has not complied
with the provisions of paragraph 10(b) hereof.
2. Adjustments to Conversion.
(a) In case the Company shall declare a dividend on the outstanding
Common Stock payable in shares of its capital stock, subdivide the outstanding
Common Stock, combine the outstanding Common Stock into a smaller number of
shares, or issue any shares of its capital stock by reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then, in each case, the number of shares of Common Stock (or other securities)
issuable upon conversion of this Note (the "Conversion Shares"), at the time of
the record date for such dividend or of the effective date of such subdivision,
combination, or reclassification, shall be proportionately adjusted so that the
Holder after such time shall be entitled to receive the aggregate number and
kind of shares which, if such Note had been converted immediately prior to such
time, the Holder would have been entitled to receive by virtue of such dividend,
subdivision, combination, or reclassification.
(b) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon conversion of this Note solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock into which this
Note might have been converted immediately prior to such consolidation, merger,
sale, lease, or conveyance, and (ii) make effective provision in its certificate
of incorporation or otherwise, if necessary, to effect such agreement.
(c) Notwithstanding anything to the contrary herein contained, in the
event of a transaction contemplated by paragraph 2(b) in which the surviving,
continuing, successor, or purchasing corporation demands that the Notes be
extinguished prior to the closing date of the contemplated transaction, the
Company shall give prior notice (the "Merger Notice") thereof to the Holders
advising them of such transaction. The Holders shall have ten days after the
date of the Merger Notice to elect to (i) convert the Notes in the manner
provided in paragraph 1(a) above or (ii) receive from the surviving, continuing,
3
<PAGE>
successor, or purchasing corporation the same consideration receivable by a
holder of the number of shares of Common Stock for which this Note might have
been converted immediately prior to such consolidation, merger, sale, or
purchase. If any Holder fails to timely notify the Company of its election, the
Holder shall be deemed for all purposes to have elected the option set forth in
(ii) above. Any amounts receivable by a Holder who has elected the option set
forth in (ii) above shall be payable at the same time as amounts payable to
stockholders in connection with any such transaction. For conversions effected
pursuant to clause (ii) above, the date of the Merger Notice shall be deemed the
Conversion Date.
(d) The above provisions of this paragraph 2 shall similarly apply to
successive stock dividends, subdivisions, combinations, and reclassifications of
Common Stock and to successive consolidations, mergers, sales, leases, or
conveyances.
3. Fractional Shares. In lieu of issuing any fraction of a share of
Common Stock upon the conversion of this Note, the Company shall pay to the
Holder hereof for any fraction of a share of the Common Stock otherwise issuable
upon the conversion, cash equal to the same fraction of the then current per
share market price of the Common Stock, as determined in accordance with
paragraph 1(e).
4. Prepayment. The Company may, without penalty or premium, at any
time following October 29, 2000, prepay, in whole or in part, the principal
amount, plus accrued interest to the date of prepayment, of this Note, upon 30
days' written notice by certified or registered mail to the Holder. Such notice
shall be mailed to the Holder's address appearing on the Company's books. The
Holder shall have until the last day of such 30-day period to convert the Note
into Common Stock in accordance with the provisions of paragraph 1 hereof.
5. Events of Default. If any one or more of the following events shall
occur:
(a) The Company shall fail to pay any amount under this Note when the
same shall become due and payable, whether at maturity or by acceleration or
otherwise; or
(b) (i) the Company shall commence any action (A) under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to the Company or its debts; or
(B) seeking appointment of a custodian, receiver or similar official for the
Company or any substantial part of its property; or (ii) any action of a nature
referred to above shall be commenced against the Company and results in an order
for relief or is not dismissed, discharged or fully bonded within 90 days; or
(iii) there shall be commenced against the Company any action seeking
attachment, execution or similar process against any substantial part of the
Company's property, which action is not within 90 days discharged or stayed or
fully bonded; or (iv) the Company shall, by act or omission, indicate its
consent to or acquiescence in any of the foregoing, without regard to the grace
periods set forth above; (v) the Company shaft transfer or conceal its property
with intent, to hinder, delay or defraud any creditors or to benefit any class
of creditors or creditors generally or shall suffer for 90 days or longer while
insolvent any lien on the Company's property resulting from judicial
proceedings; or
4
<PAGE>
(c) the dissolution or other winding up of the Company, then, in such
event and at any time thereafter, if such event shall then be continuing, Holder
may, at its option upon written notice to the Company, declare this Note to be
due and payable, whereupon (or without the necessity for in the case of any
event described in clause (i) or (ii) of subparagraph 5(b) above) the entire
balance of this Note shall forthwith become and be due and payable.
6. Release of Shareholders, Officers and Directors. This Note is the
obligation of the Company only, and no recourse shall be had for the payment of
any principal or interest hereon against any shareholder, officer or director of
the Company, either directly or through the Company, by virtue of any statute
for the enforcement of any assessment of otherwise. The Holder, by the
acceptance hereof, and as part of the consideration for this Note, releases all
such claims and waives all such liabilities against the foregoing persons in
connection with this Note.
7. Company's Representations. The Company represents and warrants to
Holder, to induce it to purchase this Note, that (a) this Note has been duly
authorized and represents a legal, valid and binding obligation of the Company
and (b) the Conversion Shares will, upon issuance in accordance with the terms
of this Note, be legally issued, fully-paid and nonassessable.
8. Securities Laws Matters. This Note and the Conversion Shares are
being issued pursuant to an exemption from the registration provisions of the
Securities Act of 1933, as amended (the "Act"), and neither the Note nor the
Conversion Shares may be sold, assigned or transferred in any manner whatsoever
without an opinion of counsel, satisfactory to the Company, that such sale,
transfer or assignment is not in violation of the registration provisions of the
Act and applicable state securities laws.
9. Subscription Agreement. All Notes of this issue are subject to, and
have the benefit of, the obligations and rights set forth in a Subscription
Agreement between the Company and Holder of even date herewith, including,
without limitation, registration rights relating to the Conversion Shares.
10. Miscellaneous.
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall (unless otherwise specified herein) be
mailed by certified mail, return receipt requested, or by Federal Express,
Express Mail or similar overnight delivery or courier service or delivered (in
person or by telecopy, telex or similar telecommunications equipment) against
receipt to the party to whom it is to be given, (i) if to the Company, at its
address at 4326 US Route 1, Monmouth Junction, New Jersey 08852, Attention: Mr.
Frank A. DeBernardis, President, (ii) if to the Holder, at its address set forth
on the first page hereof, or (iii) in either case, to such other address as the
party shall have furnished in writing in accordance with the provisions of this
Section 10(a). Notice to the estate of any party shall be sufficient if
addressed to the party as provided in this Section 10(a). Except as otherwise
5
<PAGE>
specified herein, any notice or other communication given by certified mail
shall be deemed given at the time of certification thereof, except for a notice
changing a party's address which shall be deemed given at the time of receipt
thereof. Except as otherwise specified herein, any notice given by other means
permitted by this Section 10(a) shall be deemed given at the time of receipt
thereof.
(b) Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (and upon surrender of this Note
if mutilated), and upon reimbursement of the Company's reasonable incidental
expenses and in the case of loss, theft or destruction, indemnity as the Company
shall at its option, reasonably request, the Company shall execute and deliver
to the Holder a new Note of like date, tenor and denomination.
(c) This Note has been negotiated and consummated in the State of New
Jersey and shall be governed by and construed in accordance with the laws of the
State of New Jersey, without giving effect to principles governing conflicts of
law.
(d) The Holder irrevocably consents to the jurisdiction of the courts
of the State of New Jersey and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with or
simultaneously with this Note, or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Company waives personal
service of any summons, complaint or other process and agrees that service
thereof may be made in accordance with Section 10(a).
(e) Neither this Note nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforced of the change, waiver, discharge or termination
is sought.
IN WITNESS WHEREOF, the Company has caused this Note to be signed as of
the ________, 1999.
ECHOCATH, INC.
By:________________________
Frank DeBernardis
President
ATTEST:
By:______________________________
Frank Joworisak
Chief Financial Officer
6
<PAGE>
Frank DeBernandis, President
EchoCath, Inc.
EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert $______________ of
the EchoCath, Inc. 6 1/2% Convertible Promissory Note registered in the name of
the Holder into shares of the Class A Common Stock of EchoCath, Inc., as of the
date written below. If securities are to be issued to a person other than the
undersigned, the undersigned agrees to pay all applicable transfer taxes with
respect thereto.
The undersigned represents that, as of this date, the undersigned is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the SEC under the 1933 Act.
The undersigned also represents that the shares to be issued upon this
conversion (the "Conversions Shares") are being acquired for the Holder's own
account and not as a nominee for any other party. The undersigned represents and
warrants that all offers and sales by the undersigned of the Conversion Shares
shall be made pursuant to registration of the same under the 1933 Act, or
pursuant to an exemption from registration under the 1933 Act. The undersigned
acknowledges that the Conversation Shares shall if (and only if) required by law
contain a legend substantially similar to the legend appearing on the first page
of the Note.
Conversion Date*:_______________
If held jointly, complete for second Holder:
Print Name of Holder:____________________________ _____________________________
Signature of Holder or Duly Authorized
Representative of Holder:________________________ _____________________________
Address of Holder:_______________________________ _____________________________
_______________________________ _____________________________
_______________________________ _____________________________
*This original Notice of Conversion must be received by the Company by the third
business day following the Conversion Date.
7
<PAGE>
[An aggregate principal amount of $1,275,000
has been issued under this form of note.]
The securities represented by this instrument have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and neither such securities nor any interest therein
may be offered, sold, pledged, assigned or otherwise transferred unless
(i) a registration statement with respect thereto is effective under
the act and any applicable, state securities laws, or (ii) the issuer
receives an opinion of counsel to the holder of such securities, which
counsel and opinion are satisfactory to the issuer, that such
securities may be offered, sold, pledged, assigned or transferred in
the manner contemplated without an effective registration statement
under the act or applicable state securities laws.
No. ______
Dated: As of ______, 1999 $__________
EchoCath, Inc.
4326 US Route 1
Monmouth Junction, New Jersey 08852
6 1/2% CONVERTIBLE PROMISSORY NOTE
EchoCath, Inc., a New Jersey corporation (the "Company"), for value
received, promises to pay to Noteholder or registered assigns (the "Holder") the
principal amount of _____ dollars ($ principal amount) representing ____ unit(s)
plus interest on the unpaid principal balance at the rate of 6 1/2% per annum.
Principal and accrued and unpaid interest shall be due and payable on _______
(the "Maturity Date"). Payment of principal and accrued and unpaid interest
shall be made at the offices of the Company in Princeton, New Jersey, in lawful
money of the United States of America, and shall be mailed to the registered
owner or owners hereof at the address appearing on the books of the Company.
This Note is one of a series of notes (collectively, the "Notes") issued by the
Company in connection with the Company's placement of units with accredited
investors (the "Financing"), each full unit consisting of one 6 1/2% convertible
promissory note in the principal amount of $25,000 and a warrant to purchase
33,333 shares of class A common stock, no par value, of the Company (the "Common
Stock"). The Financing was made pursuant to a Confidential Information
Memorandum dated March 17, 1999, as the same may be supplemented or amended.
1. Conversion. (a) Optional Conversion. At any time commencing 90 days
after the final closing of the Financing and prior to the Maturity Date, the
Holder shall have the right to convert the principal amount hereof (and accrued
and unpaid interest hereon) or any portion thereof (but not less than $10,000.00
principal amount (or lesser outstanding principal amount)), into shares of
Common Stock (the "Shares"), at a conversion rate equal to the lesser of (i)
$0.75 per Share or (ii) the market price (as defined in paragraph 1(d) hereof)
per share of Common Stock on the Conversion Date (as defined in paragraph 1(e)
hereof); provided, however, that the conversion rate shall not be less than
$0.25 per Share (the "Conversion Rate"). Conversion of this Note pursuant to
<PAGE>
this paragraph 1(a) shall be effected by submitting to the Company the fully
completed form of conversion notice attached hereto as Exhibit A (a "Notice of
Conversion"), executed by the Holder of this Note evidencing such Holder's
intention to convert this note or any portion hereof. A Notice of Conversion may
be submitted via facsimile to the Company at (609) 987-1019 (or at such other
number as provided in advance of such conversion in writing by the Company), and
if so submitted the original Notice of Conversion shall be delivered to the
Company within three (3) business days thereafter.
(b) Mandatory Conversion. At any time commencing ______, 2000 and on or
prior to the Maturity Date, the Company may require the Holder to convert the
principal amount hereof (and accrued and unpaid interest hereon) or any portion
thereof, into shares of Common Stock at the Conversion Rate. Any such conversion
shall be effected by delivery of 30 days' prior written notice to the Holder,
and shall automatically occur at the expiration of such 30-day period.
(c) Automatic Conversion. The principal and accrued and unpaid interest
of this Note shall automatically be converted into shares of Common Stock at the
Conversion Rate in the event that the Company receives notice from Nasdaq that
the Common Stock shall be approved for trading on the Nasdaq SmallCap Market
subject only to conversion of the Notes into equity. If Nasdaq subjects grant of
trading approval to conversion of less than the full amount of principal and
accrued and unpaid interest outstanding on the Notes, then the conversion
required by this paragraph 1(c) shall be reduced pro rata among Holders of Notes
based on principal amount then outstanding.
(d) The term "market price" for purposes of determining the price of a
share of the Common Stock, shall mean the average of the closing sales prices of
the Common Stock in the principal trading market therefor, for each of the five
trading days immediately preceding the date on which market price is to be
determined (or, for any of such five days where there is no closing sale price,
such day's average of the bid and asked price).
(e) The term "Conversion Date" means the date on which a Notice of
Conversion is given and
(i) for purposes of conversions effected pursuant to paragraph
1(a), shall be deemed to be either the date on which the
Company receives from the Holder an original Notice of
Conversion duly executed or, if earlier, the date set forth
in such Notice of Conversion if the original Notice of
Conversion is received by the Company within three (3)
business days after such date;
(ii) for purposes of conversions effected pursuant to paragraph
1(b), shall be deemed to be the date on which the written
notice referred to therein is sent by the Company; and
(iii) for purposes of conversions effected pursuant to paragraph
1(c), shall be deemed to be the date Nasdaq issues official
notification in writing of the approval referred to therein.
2
<PAGE>
(f) Promptly following the conversion of this Note, the Company shall
issue and deliver to the Holder a certificate for the appropriate number of
securities to which the Holder shall be entitled and, if less than the full
principal amount of this Note is converted, a new Note in the same form reduced
by the principal amount converted; provided, however, that the Company shall not
be required to issue a new Note upon conversion of less than the full principal
amount of this Note if the original of this Note has not been delivered to the
Company for cancellation or if, in lieu thereof, the Holder has not complied
with the provisions of paragraph 10(b) hereof.
2. Adjustments to Conversion. (a) In case the Company shall declare a
dividend on the outstanding Common Stock payable in shares of its capital stock,
subdivide the outstanding Common Stock, combine the outstanding Common Stock
into a smaller number of shares, or issue any shares of its capital stock by
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then, in each case, the number of shares of Common Stock (or other
securities) issuable upon conversion of this Note (the "Conversion Shares"), at
the time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification, shall be proportionately adjusted
so that the Holder after such time shall be entitled to receive the aggregate
number and kind of shares which, if such Note had been converted immediately
prior to such time, the Holder would have been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification.
(b) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon conversion of this Note solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock into which this
Note might have been converted immediately prior to such consolidation, merger,
sale, lease, or conveyance, and (ii) make effective provision in its certificate
of incorporation or otherwise, if necessary, to effect such agreement.
(c) Notwithstanding anything to the contrary herein contained, in the
event of a transaction contemplated by paragraph 2(b) in which the surviving,
continuing, successor, or purchasing corporation demands that the Notes be
extinguished prior to the closing date of the contemplated transaction, the
Company shall give prior notice (the "Merger Notice") thereof to the Holders
advising them of such transaction. The Holders shall have ten days after the
date of the Merger Notice to elect to (i) convert the Notes in the manner
provided in paragraph 1(a) above or (ii) receive from the surviving, continuing,
successor, or purchasing corporation the same consideration receivable by a
holder of the number of shares of Common Stock for which this Note might have
been converted immediately prior to such consolidation, merger, sale, or
purchase. If any Holder fails to timely notify the Company of its election, the
Holder shall be deemed for all purposes to have elected the option set forth in
(ii) above. Any amounts receivable by a Holder who has elected the option set
3
<PAGE>
forth in (ii) above shall be payable at the same time as amounts payable to
stockholders in connection with any such transaction. For conversions effected
pursuant to clause (ii) above, the date of the Merger Notice shall be deemed the
Conversion Date.
(d) The above provisions of this paragraph 2 shall similarly apply to
successive stock dividends, subdivisions, combinations, and reclassifications of
Common Stock and to successive consolidations, mergers, sales, leases, or
conveyances.
3. Fractional Shares. In lieu of issuing any fraction of a share of
Common Stock upon the conversion of this Note, the Company shall pay to the
Holder hereof for any fraction of a share of the Common Stock otherwise issuable
upon the conversion, cash equal to the same fraction of the then current per
share market price of the Common Stock, as determined in accordance with
paragraph 1(d).
4. Prepayment. The Company may, without penalty or premium, at any
time following _______, 2000, prepay, in whole or in part, the principal amount,
plus accrued interest to the date of prepayment, of this Note, upon 30 days'
written notice by certified or registered mail to the Holder. Such notice shall
be mailed to the Holder's address appearing on the Company's books. The Holder
shall have until the last day of such 30-day period to convert the Note into
Common Stock in accordance with the provisions of paragraph 1 hereof.
5. Events of Default. If any one or more of the following events shall
occur:
(a) The Company shall fail to pay any amount under this Note when the
same shall become due and payable, whether at maturity or by acceleration or
otherwise; or
(b) (i) the Company shall commence any action (A) under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to the Company or its debts; or
(B) seeking appointment of a custodian, receiver or similar official for the
Company or any substantial part of its property; or (ii) any action of a nature
referred to above shall be commenced against the Company and results in an order
for relief or is not dismissed, discharged or fully bonded within 90 days; or
(iii) there shall be commenced against the Company any action seeking
attachment, execution or similar process against any substantial part of the
Company's property, which action is not within 90 days discharged or stayed or
fully bonded; or (iv) the Company shall, by act or omission, indicate its
consent to or acquiescence in any of the foregoing, without regard to the grace
periods set forth above; (v) the Company shaft transfer or conceal its property
with intent, to hinder, delay or defraud any creditors or to benefit any class
of creditors or creditors generally or shall suffer for 90 days or longer while
insolvent any lien on the Company's property resulting from judicial
proceedings; or
(c) the dissolution or other winding up of the Company,
then, in such event and at any time thereafter, if such event shall
then be continuing, Holder may, at its option upon written notice to the
Company, declare this Note to be due and payable, whereupon (or without the
necessity for in the case of any event described in clause (i) or (ii) of
subparagraph 5(b) above) the entire balance of this Note shall forthwith become
and be due and payable.
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<PAGE>
6. Release of Shareholders, Officers and Directors. This Note is the
obligation of the Company only, and no recourse shall be had for the payment of
any principal or interest hereon against any shareholder, officer or director of
the Company, either directly or through the Company, by virtue of any statute
for the enforcement of any assessment of otherwise. The Holder, by the
acceptance hereof, and as part of the consideration for this Note, releases all
such claims and waives all such liabilities against the foregoing persons in
connection with this Note.
7. Company's Representations. The Company represents and warrants to
Holder, to induce it to purchase this Note, that (a) this Note has been duly
authorized and represents a legal, valid and binding obligation of the Company
and (b) the Conversion Shares will, upon issuance in accordance with the terms
of this Note, be legally issued, fully-paid and nonassessable.
8. Securities Laws Matters. This Note and the Conversion Shares are
being issued pursuant to an exemption from the registration provisions of the
Securities Act of 1933, as amended (the "Act"), and neither the Note nor the
Conversion Shares may be sold, assigned or transferred in any manner whatsoever
without an opinion of counsel, satisfactory to the Company, that such sale,
transfer or assignment is not in violation of the registration provisions of the
Act and applicable state securities laws.
9. Subscription Agreement. All Notes of this issue are subject to, and
have the benefit of, the obligations and rights set forth in a Subscription
Agreement between the Company and Holder of even date herewith, including,
without limitation, registration rights relating to the Conversion Shares.
10. Miscellaneous. (a) Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall (unless otherwise
specified herein) be mailed by certified mail, return receipt requested, or by
Federal Express, Express Mail or similar overnight delivery or courier service
or delivered (in person or by telecopy, telex or similar telecommunications
equipment) against receipt to the party to whom it is to be given, (i) if to the
Company, at its address at 4326 US Route 1, Monmouth Junction, New Jersey 08852,
Attention: Mr. Frank A. DeBernardis, President, (ii) if to the Holder, at its
address set forth on the first page hereof, or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 10(a). Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 10(a). Except
as otherwise specified herein, any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Except as otherwise specified herein, any notice
given by other means permitted by this Section 10(a) shall be deemed given at
the time of receipt thereof.
(b) Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (and upon surrender of this Note
if mutilated), and upon reimbursement of the Company's reasonable incidental
expenses and in the case of loss, theft or destruction, indemnity as the Company
shall at its option, reasonably request, the Company shall execute and deliver
to the Holder a new Note of like date, tenor and denomination.
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<PAGE>
(c) This Note has been negotiated and consummated in the State of New
Jersey and shall be governed by and construed in accordance with the laws of the
State of New Jersey, without giving effect to principles governing conflicts of
law.
(d) The Holder irrevocably consents to the jurisdiction of the courts
of the State of New Jersey and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with or
simultaneously with this Note, or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Company waives personal
service of any summons, complaint or other process and agrees that service
thereof may be made in accordance with Section 10(a).
(e) Neither this Note nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforced of the change, waiver, discharge or termination
is sought.
IN WITNESS WHEREOF, the Company has caused this Note to be signed as of
the ________, 1999.
ECHOCATH, INC.
By:________________________
Frank DeBernardis
President
ATTEST:
By:______________________________
David Vilkomerson
Executive Vice President
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<PAGE>
Frank DeBernandis, President
EchoCath, Inc.
EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert $______________ of
the EchoCath, Inc. 6 1/2% Convertible Promissory Note registered in the name of
the Holder into shares of the Class A Common Stock of EchoCath, Inc., as of the
date written below. If securities are to be issued to a person other than the
undersigned, the undersigned agrees to pay all applicable transfer taxes with
respect thereto.
The undersigned represents that, as of this date, the undersigned is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the SEC under the 1933 Act.
The undersigned also represents that the shares to be issued upon this
conversion (the "Conversions Shares") are being acquired for the Holder's own
account and not as a nominee for any other party. The undersigned represents and
warrants that all offers and sales by the undersigned of the Conversion Shares
shall be made pursuant to registration of the same under the 1933 Act, or
pursuant to an exemption from registration under the 1933 Act. The undersigned
acknowledges that the Conversation Shares shall if (and only if) required by law
contain a legend substantially similar to the legend appearing on the first page
of the Note.
Conversion Date*:_______________
If held jointly, complete for second Holder:
Print Name of Holder:____________________________ _____________________________
Signature of Holder or Duly Authorized
Representative of Holder:__________________________ ___________________________
Address of Holder:_____________________________ ______________________________
_____________________________ ______________________________
_____________________________ ______________________________
*This original Notice of Conversion must be received by the Company by the third
business day following the Conversion Date.
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<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED, EXCEPT IN ACCORDANCE WITH SECTION 3(B) HEREOF.
ECHOCATH, INC.
Warrants for the Purchase of Shares of Class A Common Stock,
no par value per share
Expiration Date: _______, 2002
No. _______ _________ Warrants
THIS CERTIFIES that, for value received, Noteholder(s), with
an address at Noteholder's address (including any permitted transferee, the
"Holder"), is the registered holder of the number of warrants set forth above,
each of which represents the right to purchase one fully paid and nonassessable
share of the Class A common stock, no par value ("Common Stock"), of EchoCath,
Inc., a New Jersey corporation (the "Company"), at an initial exercise price
equal to $0.75 (Seventy-Five cents) per share, subject to adjustment as provided
herein (the "Exercise Price"), upon the terms and conditions set forth herein,
at any time or from time to time before 5:00 P.M., Eastern Standard time on
_______, 2002 (the "Exercise Period").
This warrant certificate is one of a series of warrant certificates
evidencing warrants held by the Holder (collectively, including any warrants
issued upon the exercise or transfer of any such warrants in whole or in part,
the "Warrants") issued pursuant to an offering (the "Offering") by the Company
of units each full unit consisting of (i) a 6 1/2% convertible promissory note
in the principal amount of $25,000 (collectively, with all notes included in the
units, the "Notes"), and (ii) a warrant to purchase 33,333 shares of Common
Stock, pursuant to a Confidential Information Memorandum, dated March 17, 1999,
as it may be amended or supplemented (the "Memorandum"). As used herein, the
term "this Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of
these Warrants (the "Warrant Shares") and the Exercise Price may be adjusted
from time to time as hereinafter set forth.
The Holder is entitled to all rights described in the
subscription agreement between the Company and the original holder of this
Warrant executed and delivered in accordance with the terms of the Offering,
including, without limitation, certain registration rights.
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<PAGE>
1. This Warrant may be exercised during the Exercise Period, as to the full
number of Warrant Shares underlying the Warrants evidenced by this warrant
certificate (or any lesser portion thereof in increments of 1000 Warrant Shares
or lesser number of Warrant Shares then remaining unexercised), by the surrender
of this Warrant (with the election at the end hereof duly executed) to the
Company, 4326 US Route 1, Monmouth Junction, New Jersey 08852, Attention: Mr.
Frank DeBernardis, or at such other place as is designated in writing by the
Company. Such executed election must be accompanied by payment in an amount
equal to the Exercise Price multiplied by the number of Warrant Shares for which
this Warrant is being exercised. Such payment may be made by certified or bank
cashier's check payable to the order of the Company.
2. Upon each exercise of the Holder's rights to purchase Warrant Shares,
the Holder shall be deemed to be the holder of record of the Warrant Shares
issuable upon such exercise, notwithstanding that the transfer books of the
Company shall then be closed or certificates representing such Warrant Shares
shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Warrant, the Company shall issue
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be numbered and shall be registered in a Warrant Register as they
are issued. The Company shall be entitled to treat the registered holder of any
Warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person, and shall not be liable for any
registration or transfer of Warrants which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. This Warrant shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new Warrant or Warrants to the person entitled thereto. This
Warrant may be exchanged, at the option of the Holder thereof, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Warrant
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Act and the rules and regulations thereunder.
(b) The Holder acknowledges that the Holder has been advised by the
Company that neither this Warrant nor the Warrant Shares have been registered
under the Act,
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<PAGE>
that this Warrant is being or has been issued and the Warrant Shares may be
issued on the basis of the statutory exemption provided by Section 4(2) of the
Act or Regulation D promulgated thereunder, or both, relating to transactions by
an issuer not involving any public offering, and that the Company's reliance
thereon is based in part upon the representations made by the original Holder in
the Subscription Agreement. The Holder acknowledges that he has been informed by
the Company of, or is otherwise familiar with, the nature of the limitations
imposed by the Act and the rules and regulations thereunder on the transfer of
securities. In particular, the Holder agrees that no sale, assignment or
transfer of this Warrant or the Warrant Shares issuable upon exercise hereof
shall be valid or effective, and the Company shall not be required to give any
effect to any such sale, assignment or transfer, unless (i) the sale, assignment
or transfer of this Warrant or such Warrant Shares is registered under the Act,
it being understood that neither this Warrant nor such Warrant Shares are
currently registered for sale and that the Company has no obligation or
intention to so register this Warrant or such Warrant Shares except as
specifically provided herein, or (ii) this Warrant or such Warrant Shares are
sold, assigned or transferred in accordance with all the requirements and
limitations of Rule 144 promulgated under the Act, it being understood that Rule
144 is not available at the time of the original issuance of this Warrant for
the sale of this Warrant or such Warrant Shares and that there can be no
assurance that Rule 144 sales will be available at any subsequent time, or (iii)
the Company receiving an opinion of counsel satisfactory to it that such sale,
assignment, or transfer is otherwise exempt from registration under the Act.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
the Warrants, such number of shares of Common Stock as shall, from time to time,
be sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
purchase price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.
5. (a) In case the Company shall at any time after the date the Warrants
were first issued (i) declare a dividend on the outstanding Common Stock payable
in shares of its capital stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of shares, or
(iv) issue any shares of its capital stock by reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then, in each case,
the Exercise Price, and the number of Warrant Shares issuable upon exercise of
this Warrant, in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination, or reclassification, shall
be proportionately adjusted so that the Holder after such time shall be entitled
to receive the aggregate number and kind of shares which, if such Warrant had
been exercised immediately prior to such time, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
No adjustment in the Exercise Price shall be required if such
adjustment is less than $.10 (which amount will be proportionately adjusted in
the event of stock splits or the like); provided, however, that any adjustments
which by reason of this Section 5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
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<PAGE>
calculations under this Section 5 shall be made to the nearest cent or to the
nearest one-thousandth of a share, as the case may be.
(b) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise
over and above the shares of Common Stock, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(c) Whenever there shall be an adjustment as provided in this Section
5, the Company shall promptly cause written notice thereof to be sent by
certified or registered mail, postage prepaid, to the Holder, at its address as
it shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the market price of
such share of Common Stock on the date of exercise of this Warrant, as
determined in good faith by the Company's Board of Directors.
6. (a) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise, of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance, and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5 above.
(b) Notwithstanding anything to the contrary herein contained, in the
event of a transaction contemplated by Section 6(a) in which the surviving,
continuing, successor, or purchasing corporation demands that all outstanding
convertible notes and warrants be extinguished prior to the closing date of the
contemplated transaction, the Company shall give
4
<PAGE>
prior notice (the "Merger Notice") thereof to the Holders advising them of such
transaction. The Holders shall have ten days after the date of the Merger Notice
to elect to (i) exercise the Warrants in the manner provided herein or (ii)
receive from the surviving, continuing, successor, or purchasing corporation the
same consideration receivable by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately prior to such
consolidation, merger, sale, or purchase reduced by such amount of the
consideration as has a market value equal to the Exercise Price, as determined
by the board of directors of the Company, whose determination shall be
conclusive absent manifest error. If any Holder fails to timely notify the
Company of its election, the Holder shall be deemed for all purposes to have
elected the option set forth in (ii) above. Any amounts receivable by a Holder
who has elected the option set forth in (ii) above shall be payable at the same
time as amounts payable to stockholders in connection with any such transaction.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of Common Stock
in shares of Common Stock or make any other distribution (other than regularly
scheduled cash dividends which are not in a greater amount per share than the
most recent such cash dividend) to all holders of Common Stock; or
(b) issue any rights, warrants, or other securities to all holders of
Common Stock entitling them to purchase any additional shares of Common Stock or
any other rights, warrants, or other securities; or
(c) effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6; or
(d) effect any liquidation, dissolution, or winding-up of the Company;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified or registered mail, postage prepaid, to the Holder
at the Holder's address as it shall appear in the Warrant Register, mailed at
least 10 days prior to (i) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such dividend, distribution,
rights, warrants, or other securities are to be determined, (ii) the date on
which any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.
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<PAGE>
8. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. The Warrant Shares issued upon exercise of the Warrants shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and neither such securities nor any
interest therein may be offered, sold, pledged, assigned or otherwise
transferred unless (1) a registration statement with respect thereto
is effective under the Act and any applicable state securities laws,
or (2) the Company receives an opinion of counsel to the holder of
such securities, which counsel and opinion are reasonably satisfactory
to the Company, that such securities may be offered, sold, pledged,
assigned or transferred in the manner contemplated without an
effective registration statement under the Act or applicable state
securities laws."
10. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses and indemnity reasonably satisfactory to the Company, the
Company shall execute and deliver to the Holder thereof a new Warrant of like
date, tenor, and denomination.
11. The Holder of any Warrant shall not have solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
12. This Warrant has been negotiated and consummated in the State of
New Jersey and shall be construed in accordance with the laws of the State of
New Jersey applicable to contracts made and performed within such State, without
regard to principles governing conflicts of law.
13. Each of the Company and the Holder of this Warrant, irrevocably
consents to the jurisdiction of the courts of the State of New Jersey and of any
federal court located in such State in connection with any action or proceeding
arising out of or relating to this Warrant, any document or instrument delivered
pursuant to, in connection with or simultaneously with this
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<PAGE>
Warrant, or a breach of this Warrant or any such document or instrument. In any
such action or proceeding, the Company waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 1 hereof.
14. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex or
similar telecommunications equipment) against receipt to the party to whom it is
to be given, (i) if to the Company, at 4326 US Route 1, Monmouth Junction, New
Jersey 08852, Attention: Mr. Frank DeBernardis, President, (ii) if to the
Holder, at its address set forth on the first page hereof, or (iii) in either
case, to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 1. Notice to the estate of any
party shall be sufficient if addressed to the party as provided in this Section
1. Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 1 shall be deemed given at
the time of receipt thereof.
15. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
16. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
Dated: As of _______, 1999
ECHOCATH, INC.
By: ________________________________
Frank DeBernardis
President
7
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ___________________ hereby sells, assigns, and
transfers unto _____________________________ ______________ Warrants, each
Warrant conveys the right to purchase one (1) share of Class A Common Stock, no
par value, of EchoCath, Inc. (the "Company"), together with all right, title,
and interest therein, and does hereby irrevocably constitute and appoint
_____________________________ attorney to transfer such Warrant on the books of
the Company, with full power of substitution.
Dated:______________________
Signature:_______________________________
NOTICE
The signature on the foregoing Assignment must correspond to
the name as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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<PAGE>
To: EchoCath, Inc.
4326 US Route 1
Monmouth Junction, New Jersey 08852
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase
______ Warrant Shares covered by the within Warrant certificate and tenders
payment herewith in the amount of $_____________ in accordance with the terms
thereof, and requests that certificates for such securities be issued in the
name of, and delivered to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print Name, Address and Social Security or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: ________________ Name:__________________________
(Print)
Address:________________________________________________________________________
_______________________________
(Signature)
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<PAGE>
[Warrant issued for conversion
of B to A Stock Shareholders]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED, EXCEPT IN ACCORDANCE WITH SECTION 3(B) HEREOF.
ECHOCATH, INC.
Warrants for the Purchase of Shares of Class A Common Stock,
no par value per share
Expiration Date: September 8, 2004
No. BA ._______ _______ Warrants
THIS CERTIFIES that, for value received, Shareholder, with an
address Shareholder's address (including any permitted transferee, the
"Holder"), is the registered holder of the number of warrants set forth above,
each of which represents the right to purchase one fully paid and nonassessable
share of the Class A common stock, no par value ("Common Stock"), of EchoCath,
Inc., a New Jersey corporation (the "Company"), at an initial exercise price
equal to $0.75 (Seventy-Five Cents) per share, subject to adjustment as provided
herein (the "Exercise Price"), upon the terms and conditions set forth herein,
at any time or from time to time before 5:00 P.M., Eastern Standard time on
September 8, 2004 (the "Exercise Period").
This warrant certificate is one of a series of warrant certificates
evidencing warrants by the (collectively, including any warrants issued upon the
exercise or transfer of any such warrants in whole or in part, the "Warrants")
issued in connection with the conversion of shares of Class B Common Stock into
Class A Common Stock by the original Holder hereof. The Class B Common Stock
conversion was a condition precedent to an offering (the "Offering") by the
Company of units each full unit consisting of (i) a 6 1/2% convertible
promissory note in the principal amount of $25,000 (collectively, with all notes
included in the units, the "Notes"), and (ii) a warrant to purchase 33,333
shares of Common Stock, pursuant to a Confidential Information Memorandum, dated
March 17, 1999, as it may be amended or supplemented (the "Memorandum"). As used
herein, the term "this Warrant" shall mean and include this Warrant and any
Warrant or Warrants hereafter issued as a consequence of the exercise or
transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of
these Warrants (the "Warrant Shares") and the Exercise Price may be adjusted
from time to time as hereinafter set forth.
The Holder is entitled to registration rights with respect to
the Warrant Shares consistent with the registration rights granted to investors
in the Offering as described in the subscription agreement between the Company
and Investors in the Offering.
<PAGE>
1. This Warrant may be exercised during the Exercise Period, as to the
full number of Warrant Shares underlying the Warrants evidenced by this warrant
certificate (or any lesser portion thereof in increments of 1000 Warrant Shares
or lesser number of Warrant Shares then remaining unexercised), by the surrender
of this Warrant (with the election at the end hereof duly executed) to the
Company, 4326 US Route 1, Monmouth Junction, New Jersey 08852, Attention: Mr.
Frank DeBernardis, or at such other place as is designated in writing by the
Company. Such executed election must be accompanied by payment in an amount
equal to the Exercise Price multiplied by the number of Warrant Shares for which
this Warrant is being exercised. Such payment may be made by certified or bank
cashier's check payable to the order of the Company.
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Warrant, the Company shall issue
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder of
any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with the
knowledge of such facts that its participation therein amounts to bad faith.
This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Act and the rules and regulations thereunder.
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<PAGE>
(b) The Holder acknowledges that the Holder has been advised by the
Company that neither this Warrant nor the Warrant Shares have been registered
under the Act, that this Warrant is being or has been issued and the Warrant
Shares may be issued on the basis of the statutory exemption provided by Section
4(2) of the Act or Regulation D promulgated thereunder, or both, relating to
transactions by an issuer not involving any public offering, and that the
Company's reliance thereon is based in part upon the representations made by the
original Holder in the Subscription Agreement. The Holder acknowledges that he
has been informed by the Company of, or is otherwise familiar with, the nature
of the limitations imposed by the Act and the rules and regulations thereunder
on the transfer of securities. In particular, the Holder agrees that no sale,
assignment or transfer of this Warrant or the Warrant Shares issuable upon
exercise hereof shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless (i)
the sale, assignment or transfer of this Warrant or such Warrant Shares is
registered under the Act, it being understood that neither this Warrant nor such
Warrant Shares are currently registered for sale and that the Company has no
obligation or intention to so register this Warrant or such Warrant Shares
except as specifically provided herein, or (ii) this Warrant or such Warrant
Shares are sold, assigned or transferred in accordance with all the requirements
and limitations of Rule 144 promulgated under the Act, it being understood that
Rule 144 is not available at the time of the original issuance of this Warrant
for the sale of this Warrant or such Warrant Shares and that there can be no
assurance that Rule 144 sales will be available at any subsequent time, or (iii)
the Company receiving an opinion of counsel satisfactory to it that such sale,
assignment, or transfer is otherwise exempt from registration under the Act.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
the Warrants, such number of shares of Common Stock as shall, from time to time,
be sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
purchase price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.
5. (a) In case the Company shall at any time after the date the
Warrants were first issued (i) declare a dividend on the outstanding Common
Stock payable in shares of its capital stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock by reclassification of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then, in each case, the Exercise Price, and the number of Warrant Shares
issuable upon exercise of this Warrant, in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that the Holder after
such time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) No adjustment in the Exercise Price shall be required if such
adjustment is less than $.10 (which amount will be proportionately adjusted in
the event of stock splits or the like); provided, however, that any adjustments
which by reason of this Section 5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
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<PAGE>
(c) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise
over and above the shares of Common Stock, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(d) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
certified or registered mail, postage prepaid, to the Holder, at its address as
it shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(e) The Company shall not be required to issue fractions of shares
of Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the market price of
such share of Common Stock on the date of exercise of this Warrant, as
determined in good faith by the Company's Board of Directors.
6. (a) In case of any consolidation with or merger of the Company with
or into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise, of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance, and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5 above.
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<PAGE>
(b) Notwithstanding anything to the contrary herein contained, in
the event of a transaction contemplated by Section 6(a) in which the surviving,
continuing, successor, or purchasing corporation demands that all outstanding
convertible notes and warrants be extinguished prior to the closing date of the
contemplated transaction, the Company shall give prior notice (the "Merger
Notice") thereof to the Holders advising them of such transaction. The Holders
shall have ten days after the date of the Merger Notice to elect to (i) exercise
the Warrants in the manner provided herein or (ii) receive from the surviving,
continuing, successor, or purchasing corporation the same consideration
receivable by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, or purchase reduced by such amount of the consideration as has a
market value equal to the Exercise Price, as determined by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error. If any Holder fails to timely notify the Company of its
election, the Holder shall be deemed for all purposes to have elected the option
set forth in (ii) above. Any amounts receivable by a Holder who has elected the
option set forth in (ii) above shall be payable at the same time as amounts
payable to stockholders in connection with any such transaction.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or
(b) issue any rights, warrants, or other securities to all holders
of Common Stock entitling them to purchase any additional shares of Common Stock
or any other rights, warrants, or other securities; or
(c) effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6; or
(d) effect any liquidation, dissolution, or winding-up of the
Company;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified or registered mail, postage prepaid, to the Holder
at the Holder's address as it shall appear in the Warrant Register, mailed at
least 10 days prior to (i) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such dividend, distribution,
rights, warrants, or other securities are to be determined, (ii) the date on
which any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.
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<PAGE>
8. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. The Warrant Shares issued upon exercise of the Warrants shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and neither such securities nor any interest
therein may be offered, sold, pledged, assigned or otherwise
transferred unless (1) a registration statement with respect thereto is
effective under the Act and any applicable state securities laws, or
(2) the Company receives an opinion of counsel to the holder of such
securities, which counsel and opinion are reasonably satisfactory to
the Company, that such securities may be offered, sold, pledged,
assigned or transferred in the manner contemplated without an effective
registration statement under the Act or applicable state securities
laws."
10. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses and indemnity reasonably satisfactory to the Company, the
Company shall execute and deliver to the Holder thereof a new Warrant of like
date, tenor, and denomination.
11. The Holder of any Warrant shall not have solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
12. This Warrant has been negotiated and consummated in the State of
New Jersey and shall be construed in accordance with the laws of the State of
New Jersey applicable to contracts made and performed within such State, without
regard to principles governing conflicts of law.
13. Each of the Company and the Holder of this Warrant, irrevocably
consents to the jurisdiction of the courts of the State of New Jersey and of any
federal court located in such State in connection with any action or proceeding
arising out of or relating to this Warrant, any document or instrument delivered
pursuant to, in connection with or simultaneously with this Warrant, or a breach
of this Warrant or any such document or instrument. In any such action or
proceeding, the Company waives personal service of any summons, complaint or
other process and agrees that service thereof may be made in accordance with
Section 1 hereof.
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<PAGE>
14. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex or
similar telecommunications equipment) against receipt to the party to whom it is
to be given, (i) if to the Company, at 4326 US Route 1, Monmouth Junction, New
Jersey 08852, Attention: Mr. Frank DeBernardis, President, (ii) if to the
Holder, at its address set forth on the first page hereof, or (iii) in either
case, to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 1. Notice to the estate of any
party shall be sufficient if addressed to the party as provided in this Section
1. Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 1 shall be deemed given at
the time of receipt thereof.
15. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
16. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
Dated: As of September 8, 1999
ECHOCATH, INC.
By: ________________________________
Frank DeBernardis
President
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<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ___________________ hereby sells, assigns,
and transfers unto _____________________________ ______________ Warrants, each
Warrant conveys the right to purchase one (1) share of Class A Common Stock, no
par value, of EchoCath, Inc. (the "Company"), together with all right, title,
and interest therein, and does hereby irrevocably constitute and appoint
_____________________________ attorney to transfer such Warrant on the books of
the Company, with full power of substitution.
Dated:___________________
Signature:_____________________
NOTICE
The signature on the foregoing Assignment must correspond to
the name as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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<PAGE>
To: EchoCath, Inc.
4326 US Route 1
Monmouth Junction, New Jersey 08852
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase
______ Warrant Shares covered by the within Warrant certificate and tenders
payment herewith in the amount of $_____________ in accordance with the terms
thereof, and requests that certificates for such securities be issued in the
name of, and delivered to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print Name, Address and Social Security or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: ________________ Name:__________________________
(Print)
Address:_____________________________________________________________________
__________________________
(Signature)
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