8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  January 5, 2011

Echo Therapeutics, Inc.

 (Exact name of Company as specified in its charter)

Delaware	000-23017	41-1649949
(State or other jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
10 Forge Parkway Franklin, Massachusetts		02038
(Address of principal executive offices)		(Zip Code)

Company’s telephone number, including area code: (508) 553-8850

  (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 the Company 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.

On January 5, 2011, Echo Therapeutics, Inc. (the “Company”) entered into a strategic short term financing arrangement with Platinum Montaur Life Sciences, LLC, one of the Company’s largest institutional investors (“Montaur”). In connection with the strategic financing arrangement, the Company issued to Montaur an 8% Senior Promissory Note (the “Note”) in the principal amount of $1,000,000.  The outstanding principal amount of the Note will accrete in value at an annual rate of 8%, compounded monthly, and is due on February 1, 2011.  The Company has the right to repay the principal amount of the Note in cash, in whole or in part, prior to maturity upon two business days’ notice without premium or penalty.  The Note contains standard terms and conditions for t his type of agreement.  The Company plans to use the net proceeds of the Note primarily for working capital and general corporate purposes.

On January 5, 2011, the Company and Montaur also entered into a binding Term Sheet (the “Term Sheet”) containing the material terms of a stock purchase transaction (the “Financing”) pursuant to which Montaur and any new investors in the Financing (together with Montaur, the “Investors”) will invest at least $3,000,000 in the Company through the purchase of shares of a newly-created class of Series D Convertible Preferred Stock (“Series D Stock”) and common stock purchase warrants.  The parties intend to exchange the Note for Series D Stock no later than February 1, 2011, at which time Montaur will purchase an additional $500,000 of Series D Stock.  Montaur subsequently shall purchase $1,500,000 of Series D Stock in monthly installments from March through May 2011, for a total investment of at least $3,000,000.

For every $100,000 face value of Series D Stock purchased (including by way of conversion of the Note) in the Financing, the Investor shall be issued (i) Series 1 warrants to purchase 50,000 shares of the Company’s common stock, $0.01 par value (the “Common Stock”) with an exercise price of $1.50 per share (the “Series 1 Warrants”), and (ii) Series 2 warrants to purchase 50,000 shares of Common Stock with an exercise price of $2.50 per share (the “Series 2 Warrants” and, together with the Series-1 Warrants, the “Warrants”). The Warrants shall have a term of two (2) years; provided, that if the Warrants are not exercised in full at the expiration of the term by virtue of the application of a beneficial ownership blocker, then the term of the Warrants shall be extended until such tim e as the beneficial ownership blocker is no longer applicable.

Pursuant to the Term Sheet, the shares of Series D Stock shall be convertible into shares of the Company’s Common Stock at a price per share equal to $1.00.  Each Series D Stock share shall be convertible into one share of Common Stock and shall have a liquidation preference equal to its stated value.  The Series D Stock shall rank (i) senior to all outstanding shares of Common Stock and Series C Preferred Stock and (ii) pari passu to all outstanding shares of Series B Perpetual Preferred Stock in respect of, among other things, liquidation preference.  In addition, so long as any shares of the Series D Stock are outstanding, the Company may not take the following actions without the consent of the holders of at least 67% of the outstanding sh ares of Series D Stock: (i) alter or change the rights, preferences or privileges of the Series D Stock, (ii) increase the authorized number of shares of Series D Stock; (iii)  create or incur any debt in excess of $250,000 (other than trade payables incurred in the ordinary course of business in an amount not to exceed $2,500,000 and purchase money indebtedness secured only by the equipment so financed) or any class of preferred stock that is senior to the Series D Stock; or (iv) enter into any agreement, commitment, understanding or other arrangement to take any of the foregoing actions.

The foregoing description of the Note and the Term Sheet do not purport to be complete and is qualified in its entirety by reference to the complete text of the Note and the Term Sheet, which are included as Exhibits 10.1 and 10.2, respectively, to this current report on Form 8-K and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Company.

                The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 10, 2011, Walter W. Witoshkin., a member of the Company’s Board of Directors, resigned from his position as a Director due to family obligations.  Mr. Witoshkin’s resignation was not due to a disagreement with the Company or Company management.

Item 9.01. Financial Statements and Exhibits.

The Exhibits listed in the Exhibit Index immediately preceding such Exhibits are filed with or incorporated by reference in this report. 

SIGNATURES

              Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                                                                                         ECHO THERAPEUTICS, INC.

Dated:  January 11, 2011

                                                                                                         By: /s/ Harry G. Mitchell                

                                                                                                               Harry G. Mitchell

                                                                                                               Chief Operating Officer,

               Chief Financial Officer and

               Treasurer

EXHIBIT INDEX

Exhibit No.	Description
10.1	8% Senior Promissory Note issued by the Company to Montaur on January 5, 2011.
10.2	Term Sheet for Series D Convertible Preferred Stock and Warrants by and between the Company and Montaur dated as of January 5, 2011.

EX-10.1

Exhibit 10.1

ECHO THERAPEUTICS, INC.

8% Senior Promissory Note

Issuance Date:                                 January 5, 2011 Principal Amount: $1,000,000

For value received, ECHO THERAPEUTICS, INC., a Delaware corporation (the “Maker”), hereby promises to pay to the order of Platinum Montaur Life Sciences, LLC, a Delaware limited liability company with an address of 152 West 57th Street, 54th Floor, New York, NY 10019 (together with its successors, representatives, and permitted assigns, the “Holder”), in accordance with the terms hereinafter provided, the principal amount of ONE MILLION DOLLARS ($1,000,000), together with i nterest thereon.

All payments under or pursuant to this Note shall be made in United States Dollars in immediately available funds to the Holder at the address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account, as requested by the Holder.  The outstanding principal balance of this Note, together with all accrued and unpaid interest, shall be due and payable in full on February 1, 2011 (the “Maturity Date”) or at such earlier time as provided herein.

ARTICLE I

PAYMENT

Section 1.1­Interest.  Beginning on the date of this Note (the “Issuance Date”), the outstanding principal balance of this Note shall bear interest, in arrears, at a rate per annum equal to eight percent (8%), payable on the Maturity Date.  Interest shall be computed on the basis of a 360-day year of twelve (12) 30-day months, shall compound monthly and shall accrue commencing on the Issuance Date.  Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.1 hereof), the Maker will pay interest to the Holder, payabl e on demand, on the outstanding principal balance of and unpaid interest on the Note from the date of the Event of Default until such Event of Default is cured at the rate of the lesser of eighteen percent (18%) and the maximum applicable legal rate per annum.To the extent permitted by law, if amounts outstanding hereunder are not paid in full on the Maturity Date hereof, the Maker shall be obligated to pay to the Holder a late payment fee equal to 10% of the principal amount then outstanding.

Section 1.2Payment of Principal; Prepayment.   The Principal Amount hereof shall be paid in full on the earliest of (i) the Maturity Date, (ii) the due date of any mandatory prepayment as set forth herein, or (iii) any acceleration of this Note in accordance with the terms hereof. Any amount of principal repaid hereunder may not be reborrowed.  The Maker may prepay all or any portion of the principal amount of this Note upon not less than two (2) business days’ prior written notice to the Holder without premium or penalty.

Section 1.3Covenants.

(a)The Maker will maintain, keep and preserve its business assets in good working order and condition, ordinary wear and tear excepted.  The Maker agrees to maximize collections

- 1 -

on all accounts receivable and contract rights and to diligently pursue the collection of all sums due the Maker under any purchase orders placed with Maker and all account obligors.  The Maker shall not sell or license any of its assets, other than in the ordinary course of business and consistent with past practices.

(b)The Maker will not create, incur, assume, or suffer to exist any lien, mortgage, pledge, encumbrance, security interest, attachment or charge of any kind upon the any of its assets, except:

(i)liens for taxes or assessments or other government charges or levies not yet due and payable or, if due and payable, that are being contested in good faith by appropriate proceedings diligently prosecuted and for which appropriate reserves are maintained; and

(ii)liens imposed by law, such as mechanics,’ materialmen’s and similar liens securing obligations incurred in the ordinary course of business which are not past due for more than thirty (30) days or which are being contested in good faith by appropriate proceedings diligently prosecuted and for which appropriate reserves have been established.

(c)The Maker will not create, incur, assume, or suffer to exist any debt (as defined below), except:

(i)debt of the Maker under this Note; and

(ii)debt described in Exhibit A attached hereto, but no renewals, extensions, or refinancings thereof;

(iii)trade debt incurred in the ordinary course of business;

(iv)debt for the acquisition of capital assets related to manufacturing and production; and

(v)ordinary accounts payable and accrued expenses.

As used in this Section 1.3(c), the term “debt” shall include all obligations, contingent and otherwise, that in accordance with generally accepted accounting principles should be classified upon the obligor’s balance sheet as liabilities, or to which reference should be made by footnotes thereto, including without limitation all debt and similar monetary obligations, whether direct or indirect, all liabilities secured by any mortgage, pledge, security interest, lien, charge or other encumbrance, and all guarantees, endorsements and other contingent obligations whether direct or indirect in respect of indebtedness of others.

Section 1.4Payment on Non-Business Days.  Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

Section 1.5Use of Proceeds.  The Maker shall use the proceeds of this Note only for general working capital.

- 2 -

Section 1.6Term Sheet and Definitive Documentation.  The Maker agrees to work, in good faith, with the Holder to consummate the transactions described in the Term Sheet, dated the date hereof, between the Holder and the Maker, which the parties acknowledge is a binding agreement.  The Maker acknowledges that the Holder’s agreement to extend credit pursuant to this Note is made in connection with the Holder’s investment in the Maker as described in the Term Sheet, and a failure of the Maker to act in good faith to negotiate the consummation of the transactions described in the Term Sheet shall, in addition to remedies available under the Term Sheet, be deemed an Event of Default hereunder.

ARTICLE II

EVENTS OF DEFAULT;  REMEDIES

Section 2.1­Events of Default.  The occurrence of any of the following events shall be an “Event of Default” under this Note:

(a)any default in the payment of (1) the principal amount hereunder when due, or (2) interest on, or liquidated damages in respect of, this Note, in each case within three (3) business days after the same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise); or

(b)the Maker shall fail to observe or perform any other covenant or agreement contained in this Note, which failure is not cured, if possible to cure, within 3 business days after notice of such default sent by the Holder; or

(c)[Reserved]; or

(d)any material representation or warranty made by the Maker herein or otherwise to Holder shall prove to have been false or incorrect or breached in a material respect on the date as of which made; or

(e)the Maker shall (A) default in any payment of any amount or amounts of principal of or interest on any indebtedness (other than the indebtedness hereunder) the aggregate principal amount of which indebtedness is in excess of $20,000or (B) default in the observance or performance of any other agreement or condition relating to any indebtedness (except ordinary accounts payable and accrued expenses), that, in the aggregate, exceeds $20,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or h olders or beneficiary or beneficiaries of such indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated maturity; or

(f)the Maker shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium,

- 3 -

reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

(g)a proceeding or case shall be commenced in respect of the Maker, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Maker or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) days or any order for relief shal l be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Maker or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Maker and shall continue undismissed, or unstayed and in effect for a period of thirty (30) days.

Section 2.2­Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may, at any time, at its option, declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, wit hout limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Maker to comply with the terms of this Note.

ARTICLE III

­MISCELLANEOUS

Section 3.1­Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, telecopy or facsimile at the address or number set forth on the signature page hereto (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such a ddress, or upon actual receipt of such mailing, whichever shall first occur.

- 4 -

Section 3.2Governing Law.  This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.  This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

Section 3.3­Headings.  Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

Section 3.4Binding Effect; Amendments.  The obligations of the Maker set forth herein shall be binding upon the successors and assigns of the Maker.  No amendments of or waivers or consents with respect to this Note shall be effective unless such amendment, waiver or consent is in writing executed by each of the Maker and the Holder.   The Maker may not assign its obligations hereunder without the Holder’s prior written consent.

Section 3.5­Consent to Jurisdiction.  Each of the Maker and the Holder, by its acceptance of this Note, (i) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Each of the Maker and the Holder, by its acceptance of this Note, consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices hereunder and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

Section 3.6­Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

Section 3.7­Maker Waivers; Dispute Resolution.  Except as otherwise specifically provided herein, the Maker and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’ and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(a)No delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or

- 5 -

any other right of the Holder, nor shall any waiver by the Holder of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

(b)THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

Section 3.8Fees and Expenses.  The Maker will pay on demand all costs of collection and attorneys’ fees paid or incurred by the Holder in enforcing the obligations of the Maker.  The Maker represents and warrants that this Note is the legal, valid and binding obligation of the Maker, enforceable in accordance with its terms.

[Signature Page Follows]

- 6 -

IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed by its duly authorized officer as of the date first above indicated.

ECHO THERAPEUTICS, INC.

By:           /s/ Harry G. Mitchell

Name:           Harry G. Mitchell

Title:             COO and CFO

- 7 -

Exhibit A

The Company leases 12,999 square feet of office, laboratory and manufacturing space in Franklin, Massachusetts under a lease expiring March 31, 2014. Future minimum rental payments under this operating lease are approximately as follows:

	Amount
For the years ended December 31,
2011		$	143,000
2012			143,000
2013			143,000
2014			36,000
Total		$	465,000

Promissory Note dated September 24, 2010 in the principal amount of $100,000, as amended by a letter agreement dated December 23, 2010.

EX-10.2

Exhibit 10.2

Term Sheet

Series D Convertible Preferred Stock and Warrants

Issuer: Echo Therapeutics, Inc. (the “Company”)

(OTCBB: ECTE)

Purchasers: Platinum Montaur Life Sciences, LLC (“Platinum”) and other select accredited and institutional investors (together with Platinum, the “Purchasers”)

Closing Date: On the date hereof, Platinum has loaned the amount of $1,000,000 to be evidenced by a bridge note, which bridge note shall convert into Series D Stock on the First Closing.  The First Closing shall occur on or before February 1, 2011.  At the First Closing, Platinum shall acquire an additional $500,000 of Preferred Stock.   Subsequent Closings (each in the amount of $500,000) shall occur on or about the first business day of March, April and May, 2011, subject to standard closing conditions, including the absence of any default  (each a “Closing”).

Type of Securities: Shares of the Company’s Series D Convertible Preferred Stock (the “Series D Stock”) and common stock purchase warrants (the “Warrants”)

Amount: At least $3,000,000 stated value of Series D Stock (the “Financing”) from Platinum and additional funds from other Purchasers as agreed upon by Platinum and the Company in good faith.  The reasonable legal fees of Platinum shall be reimbursed by the Company in an amount not to exceed $7,500.

Conversion Price: The shares of Series D Stock shall be convertible into shares of the Company’s common stock, $0.01 par value (the “Common Stock”), at a price per share equal to $1.00 (the “Conversion Price”).  Each Series D Stock share shall be convertible into one (1) share of Common Stock.

Maturity: Perpetual Preferred

Equity Treatment: The Series D Stock shall be structured as equity on the Company’s balance sheet.

Dividends: The Series D Stock shall not pay a dividend.

Seniority: The Series D Stock shall rank (i) senior to all outstanding shares of Common Stock and Series C Preferred Stock and (ii) pari passu to all outstanding shares of Series B Perpetual Preferred Stock in respect of, among other things, liquidation preference.  So long as any shares of the Series D Preferred Stock are outstanding, the Company shall not, without the consent of the holders of at least 67% of the outstanding shares of Series D Stock: (i) alter or change the rights, preferences or privileges of the Series D Stock, (ii) increase the authorized number of shares of Series

D Stock; (iii)  create or incur any debt in excess of $250,000 (other than trade payables incurred in the ordinary course of business in an amount not to exceed $2,500,000 and purchase money indebtedness secured only by the equipment so financed) or any class of preferred stock that is senior to the Series D Stock; or (iv) enter into any agreement, commitment, understanding or other arrangement to take any of the foregoing actions.

Liquidation Preference: The Series D Stock shall have a liquidation preference equal to its stated value (the “Liquidation Preference Amount”).

Warrants: For every $100,000 face value of Series D Stock purchased (including by way of conversion of the bridge note) in the Financing, the Purchaser shall be issued (i) Series 1 warrants to purchase 50,000 shares of Common Stock with an exercise price of $1.50 per share (the “Series 1 Warrants”), and (ii) Series 2 warrants to purchase 50,000 shares of Common Stock with an exercise price of $2.50 per share (the “Series 2 Warrants” and, together with the Series-1 Warrants, the “Warrants”). The Warrants shall have a term of two (2) years; provided, that if the Warrants are not exercised in full at the expiration of the term by virtue of the application of a beneficial ownership blocker, then the term of the Warrants shall be extended until such time as the beneficial ownership blocker is no longer applicable.

Ownership Blocker: The conversion of the Series D Stock is prohibited to the extent that the number of shares of Common Stock issued after the conversion of such Series D Stock would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, in excess of 4.99% or 9.99% of the then issued and outstanding shares of the Common Stock.

The exercise of the Warrants is prohibited to the extent that the number of shares of Common Stock issued after the exercise of such warrants would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, in excess of 4.99% or 9.99% of the then issued and outstanding shares of the Company’s Common Stock.  The Warrant Redemption right will not apply to those holders prohibited from exercising such warrant due to the Ownership Blocker.

Waiver of Series B Redemption: Platinum and the Company agree that the proceeds of the Financing shall not be used to redeem outstanding shares of Series B Perpetual Preferred Stock.  Platinum shall cause Platinum Long Term Growth VII to waive any and all redemptions of Series B Stock triggered by the Financing.

Governing Law: This Term Sheet shall be governed by and construed in accordance with the laws of the State of Delaware.

Confidentiality: This Term Sheet is confidential.  None of its provisions shall be disclosed to anyone who is not a party to the transactions and events contemplated

herein, an officer or director of the Company or their agent, advisor or legal counsel, except as expressly required by law.

Entire Agreement: The provisions of this Term Sheet shall supersede any previous understandings, agreements, discussions or memorandums of understanding made, executed or reached by the Company and Platinum in connection within the subject of this Term Sheet. No modification, amendment or supplement to this Term Sheet shall be effective for any purpose unless in writing and signed by both parties.

Execution: This Term Sheet is executed in two parts, each of which is deemed to be an original made on the date indicated below.

IN WITNESS WHEREOF, the parties have entered into this Term Sheet as of January 5, 2011.

ECHO THERAPEUTICS, INC.       By: /s/ Harry G. Mitchell   Name:  Harry G. Mitchell   Title:  Chief Operating Officer and Chief Financial Officer       PLATINUM MONTAUR LIFE SCIENCES, LLC     By: /s/ Joan Janczewski   Name:  Joan Janczewski   Title: COO