Exhibit 10.39
 
Platinum Partners Value Arbitrage Fund L.P.
 
c/o Platinum Partners
 
250 West 55th Street, 14th Floor
 
New York, NY 10019
 
December 18, 2014
 
Echo Therapeutics, Inc.
8 Penn Center
1628 JFK Boulevard
Suite 300
Philadelphia, PA 19103
 
Re:           Investment in Echo Therapeutics, Inc.
 
Gentlemen:
 
This Letter of Agreement, including the Exhibits attached hereto (collectively,
this “Agreement”), sets forth the terms and conditions of the investment by
certain investors (collectively, the “Investors”) in Echo Therapeutics, Inc.
(the “Company”). In consideration of the good and valuable consideration,
including the mutual covenants, agreements and promises set forth in this
Agreement and elsewhere, the receipt and sufficiency of which are hereby
acknowledged, each of the Investors and the Company hereto agree as follows.
 
Term and Commencement. The term of this Agreement shall commence on the date
hereof.
 
Investment.
 
(a) The Investors agree to purchase together or with other entities identified
by the investors, and the Company agrees to sell, shares of Series F Convertible
Preferred Stock of the Company (the “Preferred Stock”) for an aggregate purchase
price of $4,000,000.00 (the “Investment”).   The closing with respect to One
Million Dollars ($1,000,000.00) of the Investment (the “Upfront Investment”)
shall occur upon the execution of the Agreement (“Closing”), and the remaining
portion of the Investment shall be made, at the Company’s election, in three (3)
consecutive monthly installments of $1,000,000.00 per month (the “Installments”)
commencing on the date the Company obtains the D&O Policy (as defined
below).  In connection with the Investment, the Investors and the Company shall
execute a Securities Purchase Agreement substantially in the form set forth in
Exhibit A hereto (the “SPA”).  The purchase price of the Preferred Stock shall
be equal to the dollar amount of each investment divided by the lesser of (i)
the closing bid price of the Company’s Common Stock immediately preceding the
execution of the respective SPA or (ii) $1.50, provided that the Preferred Stock
will not be convertible if the conversion would result in the holder
beneficially owning more than 19.9% of the then outstanding shares of the
Company, unless stockholder approval has been obtained for the issuance of the
shares of Common Stock issuable upon conversion of the Preferred Stock in
accordance with Nasdaq rules.  The Preferred Stock shall also contain customary
provisions as well as an additional restriction on conversion such that the
Preferred Stock will not be convertible if the conversion would result in the
holder beneficially owning more than 9.9% of the then outstanding shares of the
Company.  The form of certificate of designation for the Preferred Stock is
attached as Exhibit B hereto.
 
(b) Affiliates of Platinum agree to exchange the number of shares of Common
Stock owned by them for shares of Preferred Stock, such that the number of
shares of Common Stock owned by each Investor following the exchange shall be
less than 9.9% of the then outstanding shares of Common Stock.
 
(c) In connection with the Upfront Investment and each Installment, the Company
shall issue to Investors one warrant for every share of Preferred Stock (the
“Warrants”) acquired in the Upfront Investment or Installment,
respectively.  The Warrants, the form of which is attached as Exhibit C hereto,
shall expire in five years from the date of issuance and with a $3.00 per share
exercise price.  The Warrants will not be exercisable if the exercise would
result in the holder beneficially owning more than 19.9% of the then outstanding
shares of the Company, unless stockholder approval has been obtained for the
issuance of the shares of Common Stock issuable upon exercise of the
Warrants.  The Warrants shall also contain customary provisions as well an
additional restriction on their exercise such that Investors shall be able to
exercise the Warrants only to the extent such exercise would not result in each
Investor owning more than 9.9% of the then outstanding shares of Common Stock of
the Company.
 
 
 

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Resignations of Vincent D. Enright, William F. Grieco and James F.
Smith.  Concurrently with the execution of this Agreement, the Company and each
of Vincent D. Enright, William F. Grieco and James F. Smith (collectively, the
“Resigning Directors”) agree that each of the Resigning Directors shall execute
and deliver to the Board an irrevocable resignation letter in the form attached
as Exhibit D hereto pursuant to which each of the Resigning Directors shall
resign from the Board of Directors by the earlier of (i) the Company obtaining
an extended reporting (i.e., tail) directors and officers insurance policy (the
“D&O Policy”) covering all actions taken by the Company’s past and present
officers and directors while they served in such capacities on behalf  of the
Company, which policy will be similar in all material respects to the Company’s
current D&O Policy and (ii) January 15, 2015.  The cost of the D&O Policy will
not exceed the amount approved by the Board of Directors.  This tail policy is
separate and distinct from the new directors and officers insurance policy
covering the period from January 1, 2015 and beyond.
 
Cost of the D&O Policy.  The Company and each of the Company’s directors agree
that any accrued and unpaid directors fees earned by the Company’s directors
prior to their resignations, but not paid to the Company’s directors, shall not
be paid to the Company's directors but shall be applied toward the cost of the
D&O Policy.
 
Section 203 of the Delaware General Corporation Law.  Effective as of the date
of this Agreement, the Company and each of the Resigning Directors agree that
the Board of Directors of the Company (the “Board”), has taken all actions
necessary to ensure the Investment will be approved for purposes of Section 203
of the Delaware General Corporation Law.
 
Committees of the Board.  Effective as of the date of this Agreement, the
Company and each of the Resigning Directors agree that (i) each of the Resigning
Directors has resigned from each of the Executive Committee and the Legal
Compliance Committee of the Board of Directors and (ii) no additional committees
of the Board shall be formed without the approval of at least four of the five
members of the Board of Directors.
 
Withdrawal of Litigation.  Upon execution of this Agreement, the parties hereto
will immediately withdraw any and all pending litigation against any other party
hereto, including the matter pending in the Court of Chancery of the State of
Delaware captioned Platinum Partners Value Arbitrage Fund L.P. v. Echo
Therapeutics, Inc.
 
Mutual Non-Disparagement.  Each of the parties hereto, severally and not
jointly, agree that, for a period lasting three (3) years from the date of this
Agreement, he or it will not, and he or it will cause each of his or its
respective affiliates, directors, officers, managers, members and employees not
to, directly or indirectly, cause, express or cause to be expressed, orally or
in writing, any publicly disparaging statement with regard to any other party
hereto, any affiliate thereof, its business, or any of its current, future or
former directors, officers, executives, management and employees.
 
Mutual Releases.
 
(a) Releases by Platinum.  Platinum, on behalf of itself and its respective
affiliates, officers, directors, members, managers, partners, trustees,
beneficiaries, successors, predecessors, subsidiaries, principals, agents,
representatives, attorneys and any other advisors or consultants (the “Platinum
Releasors”), hereby does fully, unconditionally and irrevocably release and
forever discharge, and covenant not to assert, sue or take any steps to further,
any claim, action or proceeding against the Company, its subsidiaries and all of
their past and present affiliates, officers, directors,  members, partners,
managers, employees, and their heirs, successors, predecessors, and assigns (the
“Company Releasees”), provided, with respect to such officers and directors,
such individuals shall become Company Releasees effective only upon the delivery
of an executed release to Platinum in the form attached hereto as Exhibit E
hereto, and each of them, from and in respect of any and all claims, demands,
rights, actions, potential actions, causes of action, liabilities, damages,
losses, obligations, judgments, duties, suits, agreements, costs, expenses,
debts, interest, penalties, sanctions, fees, attorneys’ fees, judgments,
decrees, matters, issues, and controversies of any kind, nature or description
whatsoever, whether known or unknown, contingent or absolute, suspected or
unsuspected, foreseen or unforeseen, disclosed or undisclosed, liquidated or
unliquidated, matured or unmatured, fixed or contingent, accrued or unaccrued,
apparent or unapparent, including Unknown Claims (defined herein), that are,
have been, could have been, or could now be, asserted in any court, tribunal or
proceeding (including, but not limited to, any stockholder derivative claims
for, based upon or arising out of any actual or alleged breach of fiduciary or
other duty, negligence, fraud or misrepresentation, or any other claims based
upon or arising under any federal, state, local, foreign, statutory, regulatory,
common, or other law or rule, which shall be deemed to include but is not
limited to any federal or state securities, antitrust, or consumer protection
laws, whether or not within the exclusive jurisdiction of the federal courts),
whether legal, equitable, or any other type, direct, indirect or representative
in nature, foreseen or unforeseen, matured or unmatured, known or unknown, which
all or any of the Platinum Releasors have, had or may have against the Company
Releasees, or any of them, of any kind, nature or type whatsoever, up to the
date of this Agreement, except that the foregoing release does not release any
rights and duties under this Agreement or any claims the Platinum Releasors may
have for the breach of any provisions of this Agreement.
 

 
 

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(b) Releases by the Company.  The Company, on behalf of itself and its
affiliates, officers, directors, members, managers, partners, trustees,
beneficiaries, predecessors, subsidiaries and principals (the “Company
Releasors”), hereby do fully, unconditionally and irrevocably release and
forever discharge, and covenants not to assert, sue or take any steps to further
any claim, action or proceeding against, Platinum and its affiliates, officers,
directors, members, managers, partners, trustees, beneficiaries, predecessors,
subsidiaries and principals (the “Platinum Releasees”), and each of them, from
and in respect of any and all claims, demands, rights, actions, potential
actions, causes of action, liabilities, damages, losses, obligations, judgments,
duties, suits, agreements, costs, expenses, debts, interest, penalties,
sanctions, fees, attorneys’ fees, judgments, decrees, matters, issues, and
controversies of any kind, nature or description whatsoever, whether known or
unknown, contingent or absolute, suspected or unsuspected, foreseen or
unforeseen, disclosed or undisclosed, liquidated or unliquidated, matured or
unmatured, fixed or contingent, accrued or unaccrued, apparent or unapparent,
including Unknown Claims (defined herein), that are, have been, could have been,
or could now be, asserted in any court, tribunal or proceeding (including, but
not limited to, any claims based upon or arising under any federal, state,
local, foreign, statutory, regulatory, common, or other law or rule, which shall
be deemed to include but is not limited to any federal or state securities,
antitrust, or consumer protection laws, whether or not within the exclusive
jurisdiction of the federal courts), whether legal, equitable, and whether
direct, indirect or representative in nature, foreseen or unforeseen, matured or
unmatured, known or unknown, which all or any of the Company Releasors have, had
or may have against the Platinum Releasees, or any of them, of any kind, nature
or type whatsoever, up to the date of this Agreement, except that the foregoing
release does not release any rights and duties under this Agreement or any
claims the Company Releasors may have for the breach of any provisions of this
Agreement.
 
(c) Releases by Directors.  Each of the Company’s directors (the “Director
Releasors”), hereby does fully, unconditionally and irrevocably release and
forever discharge, and covenant not to assert, sue or take any steps to further,
any claim, action or proceeding against the Company Releasees, and each of them,
from and in respect of any and all claims, demands, rights, actions, potential
actions, causes of action, liabilities, damages, losses, obligations, judgments,
duties, suits, agreements, costs, expenses, debts, interest, penalties,
sanctions, fees, attorneys’ fees, judgments, decrees, matters, issues, and
controversies of any kind, nature or description whatsoever, whether known or
unknown, contingent or absolute, suspected or unsuspected, foreseen or
unforeseen, disclosed or undisclosed, liquidated or unliquidated, matured or
unmatured, fixed or contingent, accrued or unaccrued, apparent or unapparent,
including Unknown Claims (defined herein), that are, have been, could have been,
or could now be, asserted in any court, tribunal or proceeding (including, but
not limited to, any stockholder derivative claims for, based upon or arising out
of any actual or alleged breach of fiduciary or other duty, negligence, fraud or
misrepresentation, or any other claims based upon or arising under any federal,
state, local, foreign, statutory, regulatory, common, or other law or rule,
which shall be deemed to include but is not limited to any federal or state
securities, antitrust, or consumer protection laws, whether or not within the
exclusive jurisdiction of the federal courts), whether legal, equitable, or any
other type, direct, indirect or representative in nature, foreseen or
unforeseen, matured or unmatured, known or unknown, which all or any of the
Director Releasors have, had or may have against the Company Releasees, or any
of them, of any kind, nature or type whatsoever, up to the date of this
Agreement, except that the foregoing release does not release any rights and
duties under this Agreement.
 
(d) Transfer and Assignment.  Each of the parties to this Agreement represents
and warrants that it has not heretofore transferred or assigned, or purported to
transfer or assign, to any person, firm, or corporation any claims, demands,
obligations, losses, causes of action, damages, penalties, costs, expenses,
attorneys’ fees, liabilities or indemnities herein released.  Each of the
parties represents and warrants that neither it nor any assignee has filed any
lawsuit against the other.
 
(e) No Limitations on Releases.  The parties to this Agreement waive any and all
rights (to the extent permitted by state law, federal law, principles of common
law or any other law) which may have the effect of limiting the releases as set
forth in this Agreement.  Without limiting the generality of the foregoing, the
parties acknowledge that there is a risk that the damages which they believe
they have suffered or will suffer may turn out to be other than or greater than
those now known, suspected, or believed to be true.  In addition, the cost and
damages they have incurred or have suffered may be greater than or other than
those now known.  Facts on which they have been relying in entering into this
Agreement may later turn out to be other than or different from those now known,
suspected or believed to be true.  The parties acknowledge that, in entering
into this Agreement, they have expressed that they agree to accept the risk of
any such possible unknown damages, claims, facts, demands, actions, and causes
of action.  Accordingly, the releases contemplated by this Agreement shall be
deemed to extend to claims that any of the releasing persons do not know or
suspect exist in his, her, or its favor at the time of the release of the
released claims, which if known might have affected the decision to enter into
this Agreement (the “Unknown Claims”).  In granting the releases herein, the
parties acknowledge that they have read and understand California Civil Code
Section 1542, which reads as follows:

 
 

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
 
The parties stipulate and agree that they are expressly waiving, relinquishing
and releasing all provisions, rights and benefits conferred by or under
California Civil Code Section 1542 and any law of the United States or any state
of the United States or territory of the United States, or principle of common
law, which is similar, comparable or equivalent to California Civil Code Section
1542.
 
(f) Releases Binding, Unconditional and Final.  The parties hereby acknowledge
and agree that the releases and covenants provided for in this Agreement are
binding, unconditional and final as of the date hereof.
 
Governing Law.  This Agreement shall be governed by, construed and enforced in
all respects, including validity, interpretation and effect, in accordance with
the internal laws of the State of Delaware applicable to contracts made and to
be performed entirely therein, without regard to applicable principles of
conflicts of law or choice of law thereof or of any other jurisdiction to the
extent that such principles would require or permit the application of the laws
of another jurisdiction.
 
Jurisdiction.  Each of the parties hereto irrevocably agrees that any action,
suit or other proceeding with respect to this Agreement or any dispute between
the parties shall be brought and determined exclusively in the Court of Chancery
of the State of Delaware (or, if such court declines to accept jurisdiction, any
state or federal court located in the State of Delaware), and each of the
parties hereto irrevocably submits with regard to any such action, suit or other
proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts.  Each of
the parties hereto irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action, suit or other
legal proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason,
(b) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable law, that (i) such action, suit or other legal
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such action, suit or other legal proceeding is improper or (iii) this
agreement, or the subject matter hereof, may not be enforced in or by such
court.
 
WAIVER OF JURY TRIAL.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.  EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER
IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
 

 
 

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Amendment.  This Agreement may be amended only by a written instrument duly
executed by the parties hereto.
 
Counterparts.  This Agreement and any amendments hereto may be executed and
delivered in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when counterparts have been signed by each
Party hereto and delivered to the other Parties hereto, it being understood that
all Parties need not sign the same counterpart.
 
Sincerely,
 
PLATINUM PARTNERS VALUE ARBITRAGE FUND L.P.
 
By:       Platinum Management (NY) LLC, as Investment Manager
 
By:       /s/ Mark
Nordlicht                                                                
Name:  Mark Nordlicht
Title:    Chief Investment Officer
 
PLATINUM LONG TERM GROWTH VII, LLC
 
By:       Platinum Management (NY) LLC, as Investment Management
 
By:       /s/ Mark
Nordlicht                                                                
Name:  Mark Nordlicht
Title:    Chief Investment Officer
 
PLATINUM PARTNERS LIQUID OPPORTUNITY MASTER FUND L.P.
 
By:       Platinum Liquid Opportunity Management (NY) LLC, as Investment Manager
 
By:       /s/ Mark
Nordlicht                                                                
Name:  Mark Nordlicht
Title:    Chief Investment Officer
 
PLATINUM-MONTAUR LIFE SCIENCES, LLC
 
By:       Platinum Management (NY) LLC, as Investment Manager
 
By:       /s/ Mark
Nordlicht                                                                
Name:  Mark Nordlicht
Title:    Chief Investment Officer

 
PLATINUM MANAGEMENT (NY) LLC
 
By:       /s/ Mark
Nordlicht                                                                           
Name:  Mark Nordlicht
Title:    Chief Investment Officer
 
PLATINUM LIQUID OPPORTUNITY MANAGEMENT (NY) LLC
 
By:       /s/ Mark
Nordlicht                                                                
Name:  Mark Nordlicht
Title:    Chief Investment Officer
 
/s/ Mark
Nordlicht                                                                                 
                                                                           Mark
Nordlicht
 
/s/ Uri
Landesman                                                                                 
                                                                           Uri
Landesman
 

 

 
 

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               ACKNOWLEDGED AND AGREED:
 
 
                  ECHO THERAPEUTICS, INC.
 
                                                                          
By:        /s/ Shepard M.
Goldberg                                                                
                                                                          
Name:   Shepard M. Goldberg
 
                                                                           /s/
Vincent D.
Enright                                                                         
                                                                          
Vincent D. Enright
 
                                                                           s/
William F.
Grieco                                                                           
                                                                           William
F. Grieco
 
                                                                           /s/
James F. Smith                                                                
                                                                           James
F. Smith
 
                                                                           /s/
Michael M. Goldberg                                                          
                                                                           Michael
M. Goldberg, M.D.
 
                                                                           /s/
Shepard M.
Goldberg                                                                
                                                                          
Shepard M. Goldberg

 
 

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SCHEDULE A
 
Platinum Partners Value Arbitrage Fund L.P.
Platinum Long Term Growth VII, LLC
Platinum Partners Liquid Opportunity Master Fund L.P.
Platinum-Montaur Life Sciences, LLC
Platinum Management (NY) LLC
Platinum Liquid Opportunity Management (NY) LLC
Mark Nordlicht
Uri Landesman