Echo Therapeutics Inc (ECTE) Separation Agreement With Scott Hollander – the author of this article has a short position in the comany
Late Friday afternoon, buried in an 8k and without a press release, Echo Therapeutics announced that it had entered into a Separation Agreement with Scott Hollander, the company’s President, CEO and Director. The company did not name a replacement for him. The company also disclosed that it had borrowed $250,000 at 18% interest rate. We do not believe either of these two facts is good for the company’s stock price nor is it good for Platinum Partners which is a major investor in the common and preferred stock of the company.
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Echo Therapeutics Inc (ECTE)
|Avenue South., Suite 302
|(Address of principal executive offices)||(Zip Code)|
Company’s telephone number, including area code: (732) 201-4189
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of Echo Therapeutics under any of the following provisions (see General Instruction A.2. below):
- Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
- Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
- Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
- Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
The information under Item 5.02 below regarding the Separation Agreement is incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off- Balance Sheet Arrangement of a Registrant.
On September 23, 2016, Echo Therapeutics, Inc. (the “Company”) issued a promissory note to Network Victory Limited (“Lender”) in the aggregate principal amount of $250,000 in respect of a bridge loan made by such party. The promissory note, which bears interest at 18% per annum, may, at Lender’s option, be exchanged for securities issued in a subsequent financing by the Company.
The description of the promissory note set forth herein does not purport to be complete and is qualified in its entirety by reference to the promissory note, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
On September 23, 2016, Scott W. Hollander, President and Chief Executive Officer and a director of Echo Therapeutics, Inc. (the “Company”), and the Company entered into a separation agreement (the “Separation Agreement”) pursuant to which the parties mutually agreed to Mr. Hollander’s separation from the Company, effective September 23, 2016 (the “Separation Date”). Mr. Hollander’s separation from the Company is not due to any disagreement with the Company or any matter relating to the Company’s operations, policies or practices.
Under the Separation Agreement, Mr. Hollander will receive: (i) severance pay equal to the gross amount of $420,000 (the “Severance Amount”), less applicable federal, state and local withholding and taxes, payable in monthly amounts of $17,500 commencing on October 15, 2016, subject to increase to $25,000.00 per month if Echo Therapeutics shall consummate a debt or equity financing as described in Section 3(a)(ii) of the Severance Agreement, until the Severance Amount is fully paid; (ii) 150,000 shares of restricted stock previously awarded in March 2016 pursuant to a restricted stock agreement shall vest in quarterly installments of 37,500 shares; (iii) accelerated vesting of all unvested stock options previously awarded to him in December 2014 and March 2016 with three (3) months from the Separation Date to exercise such options; and (iv) reimbursement of COBRA payments for up to eighteen (18) months.
In connection with the Separation Agreement, the parties executed mutual releases.
The description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the Separation Agreement which is attached hereto as Exhibit 10.2 and incorporated herein by reference.