10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

________________

FORM 10-Q

________________

R QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015.

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: 001-35218

ECHO THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

________________

Delaware	41-1649949
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

99 Wood Avenue South, Suite 302, Iselin, NJ	08830
(Address of principal executive offices)	(Zip Code)

732-549-0128

(Registrant’s telephone number, including area code)

________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes R  No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R  No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £         Accelerated filer £

Non-accelerated filer £(Do not check if a smaller reporting company) Smaller reporting company R

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £  No R

As of May 8, 2015, 11,128,275 shares of the registrant’s Common Stock, $0.01 par value, were issued and outstanding.

	ECHO THERAPEUTICS, INC.
	QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2015
	TABLE OF CONTENTS
	PART I - FINANCIAL INFORMATION
Item		Page
1.	Condensed Consolidated Financial Statements (Unaudited):	1
	Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2015	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	4
	Notes to Condensed Consolidated Financial Statements	5
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
3.	Quantitative and Qualitative Disclosures  about Market Risk	16
4.	Controls and Procedures	16
	PART II - OTHER INFORMATION
1.	Legal Proceedings	17
2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
5.	Other Information	17
6.	Exhibits	17
SIGNATURES		18
EXHIBIT INDEX		19

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PART I—FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

ECHO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	March 31,			December 31,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	469,493		$	1,278,941
Prepaid and other		447,386			490,824
Total current assets		916,879			1,769,765
Property and equipment, net		930,570			1,138,593
Other assets:
Intangibles, net		9,625,000			9,625,000
Other		129,705			62,478
Total other assets		9,754,705			9,687,478
Total assets	$	11,602,154		$	12,595,836
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,368,775		$	1,801,469
Accrued and other		365,282			968,392
Premium financing payable		212,829			—
Derivative liabilities		3,309,000			208,155
Total current liabilities		5,255,886			2,978,016
Deferred revenue, net		95,535			95,535
Total liabilities		5,351,421			3,073,551
Commitments and contingencies
Stockholders’ equity:
Preferred Stock, $0.01 par value; 40,000,000 shares authorized:
Convertible Series
C - 10,000 shares authorized; issued and outstanding 1,000 shares		10			10
D - 3,600,000 shares authorized; issued and outstanding 1,000,000 shares		10,000			10,000
E - 1,748,613 shares authorized, issued and outstanding		17,486			17,486
F - 5,000,000 shares authorized; issued and outstanding   3,555,180 and 840,336 shares, respectively		35,552			8,403
Common stock, $0.01 par value, 150,000,000 shares authorized; issued and     outstanding 11,128,275 and 12,629,695 shares, respectively		111,281			126,295
Additional paid-in capital		142,312,182			137,292,157
Accumulated deficit		(136,235,778	)		(127,932,066	)
Total stockholders’ equity		6,250,733			9,522,285
Total liabilities and stockholders’ equity	$	11,602,154		$	12,595,836

See accompanying notes to the condensed consolidated financial statements.

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ECHO THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	For the Three Months Ended March 31,
	2015			2014
Licensing revenue	$	—		$	19,107
Total revenues		—			19,107
Operating Expenses:
Research and development		831,333			1,266,202
Selling, general and administrative		1,482,265			1,323,162
Loss on disposal of property and equipment		108,840			—
Depreciation and amortization		86,704			99,900
Total operating expenses		2,509,142			2,689,264
Loss from operations		(2,509,142	)		(2,670,157	)
Other Income (Expense):
Gain (loss) on revaluation of derivative warrant liability		(257,845	)		140,000
Financing expense		(5,534,000	)		—
Interest expense		(2,725	)		(242,884	)
Other expense, net		(5,794,570	)		(102,884	)
Net loss	$	(8,303,712	)	$	(2,773,041	)
Net loss per common share, basic and diluted	$	(0.72	)	$	(0.23	)
Basic and diluted weighted average common shares outstanding		11,548,590			11,858,894

See accompanying notes to the condensed consolidated financial statements.

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ECHO THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2015  (Unaudited)
	Preferred Stock				Common Stock						Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount
Balance at December 31, 2014		3,589,949	$	35,899		12,629,695		$	126,295		$	137,292,157	$	(127,932,066	)	$	9,522,285
Exchange - Common Stock for Series F		1,500,000		15,000		(1,500,000	)		(15,000	)		—		—			—
Proceeds from issuance of Series F and warrants		666,667		6,667		—			—			2,760,333		—			2,767,000
Capital contribution		—		—		—			—			59,325		—			59,325
Issuance of Series F pursuant to Reimbursement Agreement		548,177		5,482		—			—			1,796,518		—			1,802,000
Share-based compensation, net of restricted stock cancellations		—		—		(1,420	)		(14	)		403,849		—			403,835
Net loss		—		—		—			—			—		(8,303,712	)		(8,303,712	)
Balance at March 31, 2015		6,304,793	$	63,048		11,128,275		$	111,281		$	142,312,182	$	(136,235,778	)	$	6,250,733

See accompanying notes to the condensed consolidated financial statements.

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ECHO THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	For the Three Months Ended March 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(8,303,712	)	$	(2,773,041	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		86,704			99,900
Share-based compensation, net		403,835			345,637
Fair value of common stock issued for services		—			8,404
(Gain) loss on revaluation of derivative warrant liability		257,845			(140,000	)
Warrant repricing charged to legal expense		328,000			—
Loss on disposal of assets		108,840			—
Financing expense		5,534,000			—
Amortization of deferred financing costs		—			242,001
Changes in assets and liabilities:
Prepaid and other		43,860			(68,981	)
Accounts payable		(150,754	)		(332,080	)
Deferred revenue from licensing arrangements		—			(19,107	)
Accrued and other		(53,110	)		(586,395	)
Net cash used in operating activities		(1,744,492	)		(3,223,662	)
Cash flows from investing activities:
Purchase of property and equipment		(5,171	)		—
Proceeds from sales of property and equipment		17,651			—
Decrease (increase) in restricted cash		(76,968	)		250,000
Net cash (used in) provided by investing activities		(64,488	)		250,000
Cash flows from financing activities:
Proceeds from equity issuances		1,000,000			500,000
Proceeds from common stock subscription		—			1,500,000
Capital contribution		59,325			—
Principal payments on capitalized lease obligations		—			(672	)
Principal payments on premium financing		(59,793	)		—
Net cash provided by financing activities		999,532			1,999,328
Net decrease in cash and cash equivalents		(809,448	)		(974,334	)
Cash and cash equivalents:
Beginning of period		1,278,941			8,055,385
End of period	$	469,493		$	7,081,051
Supplemental disclosure of  cash flow information:
Cash paid during the year:
Interest	$	2,725		$	1,239
Income taxes	$	456		$	—
Supplemental disclosure of non-cash financing transactions:
Prepaid insurance financed	$	272,623		$	—
Director’s fees payable offset against prepaid insurance	$	272,200		$	—
Accrued legal fees settled with stock	$	550,000		$	—
Security deposit offset against accounts payable	$	9,740		$	—
Conversion of convertible preferred stock into Common Stock at par value	$	15,000		$	—

See accompanying notes to the condensed consolidated financial statements.

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Echo Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

Quarter Ended March 31, 2015 (Unaudited)

(1) ORGANIZATION AND BASIS OF PRESENTATION

Echo Therapeutics, Inc. (the "Company") is a medical device company with expertise in advanced skin permeation technology. The Company is developing its non-invasive, wireless continuous glucose monitoring (CGM) system with potential use in the wearable-health consumer market and the diabetes outpatient market. A significant longer-term opportunity may also exist in the hospital setting. Echo has also developed its needle-free skin preparation device as a platform technology that allows for enhanced skin permeation enabling extraction of analytes, such as glucose, enhanced delivery of topical pharmaceuticals and other applications.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical, Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation.  These financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on April 15, 2015. Certain amounts in prior periods have been reclassified to conform to the current presentation.  These financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of March 31, 2015 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year.  These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements as allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading.

(2)  LIQUIDITY AND MANAGEMENT’S PLANS

The accompanying financial statements have been prepared on a basis that assumes that the Company will continue as a going concern and that contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  As of March 31, 2015, the Company had cash of approximately $469,000, working capital deficit of approximately $4,339,000, and an accumulated deficit of approximately $136,000,000. The Company continues to incur recurring losses from operations.  The Company will need to obtain proceeds under its current financing arrangement and secure additional capital to fund its product development, research, manufacturing and clinical programs in accordance with its current planned operations.  The Company has funded its operations in the past primarily through debt and equity issuances.  Management intends to utilize its current financing arrangement and will continue to pursue additional financing to fund its operations.  Management believes that it will be successful in obtaining proceeds from their current financing arrangement and raising additional capital.  No assurances can be given that additional capital will be available on terms acceptable to the Company.  The accompanying financial statements do not include any adjustments that might result from the outcome of the uncertainty.

Subsequent to March 31, 2015, the Company received cash proceeds of $500,000 from a $4,000,000 Equity financing it arranged in December 2014 ($2,000,000 was previously received).

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(3)  PROPERTY AND EQUIPMENT

The principal categories and estimated useful lives of property and equipment were:

	2015		2014		Estimated Useful Lives
Computer equipment	$	336,258	$	334,865		3
Office and laboratory equipment		740,177		740,177		3-5
Furniture and fixtures		596,936		755,444		7
Manufacturing equipment		111,980		111,980		5
Leasehold improvements		769,147		825,589		3 - 7
Total property and equipment		2,554,498		2,768,055
Less accumulated depreciation and amortization		1,623,928		1,629,462
Property and equipment, net	$	930,570	$	1,138,593

The Company recorded a loss on disposal of $108,840 in connection with its relocation from its Philadelphia office to Iselin, New Jersey in the first quarter. See Note 4.

(4)  OPERATING LEASE COMMITMENTS

The Company leased approximately 7,900 square feet of corporate office space in a multi-story building located in Philadelphia, Pennsylvania under a lease expiring May 31, 2017. The company terminated this lease early and moved to Iselin, New Jersey on January 15, 2015 where the Company has leased 2,800 square feet of office space for 38 months at a monthly rental of approximately $7,700. The Company posted a $77,000 Letter of Credit to secure the lease which is reduced to $38,500 after nineteen months of occupancy, assuming no defaults, as defined.

The Company leases approximately 37,000 square feet of manufacturing, laboratory and office space in a single-story building located in Franklin, Massachusetts under a lease expiring October 31, 2017. On May 5, 2015, the Company signed a lease for approximately 10,000 square feet for a research and development facility in Littleton, Massachusetts.  The lease is for 65 months. Effective base monthly rent over the lease term will be $11,470. The Company secured the property with a Letter of Credit for $150,000. The Letter of Credit is expected to be reduced to $50,000 after 24 months of timely lease payments. The Company expects to move to the new facility from its Franklin, Massachusetts research and development facility on or about July 1, 2015. The Company agreed to post a $50,000 Letter of Credit until July 1, 2015 while the Littleton facility was being improved. The Company will terminate its Franklin lease about 28 months early and may be expected to incur certain undetermined termination fees as a result.

(5)  DERIVATIVE LIABILITIES

Derivative warrant liability:

As a result of having warrants which are outstanding, issued in connection with a 2012 Credit Facility (which was terminated in October 2014), we are required to record the changes in the value of these derivative warrants through their expirations in November 2017. The table below presents the changes in the derivative warrant liability, which is measured at fair value on a recurring basis and classified as Level 3 in fair value hierarchy:

	2015			2014
Derivative warrant liability as of January 1	$	208,155		$	1,119,155
Gain (loss) on revaluation		(257,845	)		911,000
Derivative warrant liability as of March 31	$	466,000		$	208,155

None of the derivative warrants were exercised in 2015 or 2014 pursuant to cashless exercise provisions.

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Derivative financing liability:

In December 2014, the Company reached agreement with investors to provide $4,000,000 of installment financing in exchange for Series F Preferred Stock and warrants. The deal was priced at $1.50 per share, or the stock price in effect, if lower. At March 31, 2015, installments totaling $2,000,000 still remained to be paid by investors, potentially representing 1,333,333 shares of Series F Preferred to be issued in the future with warrants to purchase the same number of common shares at the agreed exercise price of $3.00. Our closing market price at March 31, 2015 of $2.13 per share, was $0.63 above the deal price of $1.50. As a result of the market price being higher than the stated deal price, the Company was required to record a charge to financing expense and a corresponding credit to derivative liability representing the potential value to be provided in excess of the potential cash proceeds calculated as follows:

Excess of Market share price over deal share price ($2.13 vs. $1.50)	$	0.63
Potential future share issuance		1,333,333
	$	840,000
Fair value of warrants utilizing Black-Scholes model		2,003,000
	$	2,843,000

As the Company receives subsequent cash installments, the derivative liability will increase or decrease depending on the fair value of the shares and warrants on the date the installments are made. Prior installments were issued at the fair market of Common Stock which was below the contractual price of $1.50 and therefore such liability had a nominal value. Subsequent to March 31, 2015 we collected $500,000 of the remaining $2,000,000 when our stock price was $2.18. This will result in an additional financing charge in the second quarter for that installment since it was above the value of $2.13 per share of our Common Stock at March 31, 2015.

(6)  EQUITY TRANSACTIONS

Restart of Operations and related option grants

On January 2, 2015, in conjunction with restarting the operations of the Company, stock option grants to purchase 400,000 shares of Common Stock at an exercise price of $1.35 were issued to various employees primarily at our Franklin, Massachusetts research and development facility. On January 5, 2015, an additional stock option grant was made to purchase 50,000 shares of our Common stock at an exercise price of $1.48 to our new Manager of Business Development in Iselin, New Jersey. On March 2, 2015, we issued another stock option grant to purchase 20,000 shares of our Common Stock at $2.34 to a senior technician hired for our Franklin facility. All grants vest over a three years with 1/3 vesting immediately and the balance vesting equally at each of the two respective anniversary periods. All grants were made pursuant to the 2008 Plan.

Board Matters

On January 7, 2015, the Board realigned annual compensation at $30,000 per annum per director. Each director, other than our CEO whose employment agreement precluded him from receiving director compensation the first year, received a stock option to purchase 150,000 shares of our Common Stock at an exercise price of $1.62 vesting 25% immediately and then 25% at the beginning of each quarter thereafter. These options contain a condition where they are only exercisable after the average closing price of the Company’s common stock for the ten (10) days prior to exercise, equals or exceeds $7.50 per share. Such amount was valued using a binomial lattice model and included in share-based compensation expense.

Exchange of Common Stock for Series F Preferred Stock

On January 9, 2015 and again on March 31, 2015, Platinum Partners Value Arbitrage Fund, L.P. and Platinum Partners Liquid Opportunity Fund, L.P. exchanged 843,526 and 208,884 and 356,474 and 91,116, respectively of their common shares held for Series F Preferred Stock. Based on the terms of the Series F (e.g. conversion ratio of 1:1 and no liquidation preference) the Company determined that the value of the Series F is equivalent to the common shares.

Capital Contribution

Late in the third quarter of 2014 the research and development operations of the Company were suspended and key personnel were laid off. In October 2014, two of our directors received a non-recourse loan for $500,000 from PPVA. The purpose of this contribution was to provide the directors monies to advance their plan for the Company and attempt to maintain its viability during the suspension of operations. $440,675 was expended in the fourth quarter of 2014 by these directors primarily for salaries of key employees and targeted technology efforts focused on the wearable technology sector. The Company considered this expenditure by two of its directors a capital contribution since the funds were spent on matters specifically related to the operations of the Company. In February 2015, the $440,675 capital contribution together with the balance of monies received in 2015 of $59,325, equivalent to the original $500,000 the two directors had received, was settled in Series F Shares by the Company to PPVA. See discussion below.

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Settlement of Amounts Owed for Series F Preferred Stock and Warrants

On September 23, 2014, the Company announced that, as it believed that its current liquidity was insufficient to fund its needs beyond September 30, 2014, it was suspending its product development, research, manufacturing and clinical programs and operations to conserve its liquidity and capital resources. The workforce reduction due to the suspension of operations comprised approximately 70% of Echo’s workforce, leaving only administrative personnel.  Affected employees were notified on September 23, 2014. The employees whose employment was terminated as part of the workforce reduction were not offered severance pay. The Company indicated that they could possibly incur additional costs not currently contemplated due to events that may occur as a result of, or that were associated with, the workforce reduction.

At the time of the work force reduction announcement, Platinum Management (NY) LLC, together with its affiliates, a significant stockholder of the Company (“Platinum”), was in the process of engaging in a proxy contest with the Company pursuant to which it sought to ultimately remove three of the then-current directors of the Company. In conjunction therewith, Platinum provided $500,000 on a non-recourse basis to two of the Company’s directors whose removal Platinum was not seeking, namely Michael Goldberg and Shepard Goldberg, which was recorded as a capital contribution (“Contribution”) in 2014. Proceeds of the Contribution were utilized for retaining certain key employees and for research and technology initiatives, all for the benefit of the Company. A small portion of the monies was not disbursed, which was transferred to the Company. At the time of the Contribution, Shepard Goldberg and Michael Goldberg agreed that, should the Contribution ultimately benefit the Company, they would use their best efforts to cause the Company to issue equity to Platinum as consideration for making the Contribution.

In December 2014, as part of a negotiated settlement agreement, the three directors, whom Platinum sought to remove, resigned as directors and Platinum agreed to make a direct investment in the Company.  In connection with the proxy contest, Platinum expended $550,000 on legal representation and related expenses (the “Expenses”). In its proxy statement, Platinum advised stockholders that it would pay all the costs associated with the solicitation of proxies, but would seek reimbursement from the Company, and not submit such reimbursement to a vote of stockholders.

On February 12, 2015, the Company agreed to reimburse Platinum for its Contribution and the Expenses it incurred in the proxy fight. In this regard, the Board of Directors of the Company determined that both the Contribution and Expenses together resulted in the Company being able to continue operations and put into place a strong management team.  Pursuant to a Reimbursement Agreement, dated February 12, 2015 (the “Reimbursement Agreement”), Platinum received 548,177 shares of Series F Convertible Preferred Stock (consisting of 333,333 shares of Series F for the $500,000 capital contribution and 214,844 shares of Series F for the $550,000 of legal expenses they incurred, for a Series F share total of 548,177) and Warrants to purchase 333,333 shares of common stock of the Company.  These Warrants expire in five years and have a $3.00 per share exercise price. Additionally, the Company agreed to re-price 700,000 warrants, originally disbursed to Platinum in connection with its August 31, 2012 Loan Agreement, and referred to as the Derivative Warrants, currently priced in the $20.00 to $22.70 range per share, to $7.50 per share. The Company recorded a charge to legal expense for $328,000 representing the cost of re-pricing the Derivative Warrants. The Company also recorded a non-cash charge of $257,845 related to the change in the value of the derivative liability.  Additionally, the Company recorded a charge to financing expense of $924,000 representing the additional value given to the investors as a result of the closing market price of $2.56 being above the deal price of $1.50 used for the reimbursement of the $500,000 capital contribution. The shares issued for the legal expenses were done at the market close of the Company’s Common Stock on the date of the Reimbursement Agreement.

Equity Raise

In the first quarter of 2015, the Company received the second installment, or $1,000,000, of its $4,000,000 December 2014 financing and issued 666,667 shares of Series F Preferred Stock and warrants to purchase the same number of shares of Common Stock at an exercise price of $3.00 were issued to investors. The Company recorded financing expense of $1,767,000 with a corresponding credit to additional paid in capital since the average market price on the dates the financing was received of $2.49 was above the deal price of $1.50, representing the excess value provided to the investors.

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(7)  EQUITY COMPENSATION PLANS

In March 2003, the Company’s shareholders approved its 2003 Stock Option and Incentive Plan (the “2003 Plan”). Pursuant to the 2003 Plan, the Company’s Board of Directors (or its committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors.  As of March 31, 2015, there were 5,000 restricted shares of Common Stock issued and options to purchase an aggregate of 26,500 shares of Common Stock outstanding under the 2003 Plan and no shares are available for future grants due to the 2003 Plan’s expiration.

In May 2008, the Company’s shareholders approved the 2008 Equity Compensation Plan, as amended (the “2008 Plan”). The 2008 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted stock to employees, consultants and non-employee directors of the Company.  The maximum number of shares available under the 2008 Plan is 10,000,000 shares.  As of March 31, 2015, there were 27,391 restricted shares of Common Stock issued and options to purchase 1,516,233 shares of Common Stock outstanding under the 2008 Plan and 8,443,376 shares available for future grants.

The following table shows the remaining shares available for future grants for each plan and outstanding shares:

	Equity Compensation Plans						Not Pursuant to a Plan
	2003 Plan			2008 Plan
Shares Available For Issuance
Total reserved for stock options and restricted stock		160,000			10,000,000
Net restricted stock issued net of cancellations		(5,000	)		(27,391	)
Stock options granted		(154,449	)		(2,945,883	)
Add back options cancelled before exercise		92,349			1,416,650
Less shares no longer available due to Plan expiration		(92,900	)		—
Remaining shares available for future grants at March 31, 2015		—			8,443,376
Stock options granted		154,449			2,945,883			310,000
Less:  Stock options cancelled		(92,349	)		(1,416,650	)		(193,333	)
Stock options exercised		(35,600	)		(13,000	)		(66,667	)
Net shares outstanding before restricted stock		26,500			1,516,233			50,000
Net restricted stock issued net of cancellations		5,000			27,391			6,485
Outstanding shares at March 31, 2015		31,500			1,543,624			56,485

 (8)  STOCK OPTIONS

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model with certain assumptions noted below. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the options. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercise and employee termination and forfeitures within the valuation model. The expected term of stock options granted under the Company’s stock plans is based on the average of the contractual term (generally 10 years) and the vesting period (generally 24 to 42 months).  The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.

For options issued and outstanding during the three month periods ended March 31, 2015, and 2014, the Company recorded additional paid-in capital and non-cash compensation expense of $383,000 and $158,000, respectively, each net of estimated forfeitures.

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The assumptions used principally for stock options granted to employees and members of the Company’s Board of Directors in the three months ended March 31, 2015 and 2014 were as follows:

	2015		2014
Risk-free interest rate		1.52% – 1.61%		1.99% – 2.71%
Expected dividend yield		—		—
Expected term	5 years		6.5 years
Forfeiture rate (excluding fully vested stock options)		15%		15%
Expected volatility		90%		141%

A summary of stock option activity as of and for the three months ended March 31, 2015 is as follows:

Stock Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding options at January 1, 2015		1,039,900		$	3.00
Granted		770,000		$	1.49
Exercised		—		$	—
Forfeited or expired		(217,167	)	$	3.69
Outstanding options at March 31, 2015		1,592,733		$	2.18	9.23 years	$	—
Exercisable options at March 31, 2015		531,000		$	3.06	8.52 years	$	—

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2015 was $1.49 per share. As of March 31, 2015, there was approximately $1,068,000 of total unrecognized compensation expense related to non-vested share-based option compensation arrangements. With the exception of the unrecognized share-based compensation related to certain restricted stock grants to officers and employees that contain performance conditions related to FDA approval for Symphony or the sale of substantially all of the stock or assets of the Company, unrecognized compensation is expected to be recognized over the next four years.

(9)  RESTRICTED STOCK

For restricted stock issued and outstanding during the three month period ended March 31, 2015 and 2014, the Company incurred non-cash compensation expense of approximately $21,000 and $161,000, respectively, each net of estimated forfeitures.

During the three months ended March 31, 2015, the Company did not grant restricted shares of Common Stock to certain officers, employees, directors and consultants of the Company.

A summary of non-vested restricted stock activity as of and for the three months ended March 31, 2015 is as follows:

Restricted Stock	Shares			Weighted- Average Grant-Date Fair Value
Non-vested shares at January 1, 2015		47,958		$	9.74
Granted		—		$	—
Vested		(8,000	)	$	3.56
Forfeited		(1,082	)	$	6.83
Non-vested shares at March 31, 2015		38,876		$	11.09

Among the 38,876 shares of non-vested restricted stock, the various vesting criteria include the following:

●    14,185 shares of restricted stock vest upon the FDA approval of our CGM system or the sale of the Company;

●    21,066 shares of restricted stock vest over 4 years, at each of the anniversary dates of the grants; and

●    3,625 shares of restricted stock vest over 1 year, at each of the anniversary dates of the grants.

As of March 31, 2015, there was approximately $97,000 of total unrecognized compensation expense related to non-vested share-based restricted stock arrangements granted pursuant to the Company’s equity compensation plans that vest over time in the foreseeable future. As of March 31, 2015, the Company cannot estimate the timing of completion of performance vesting requirements required by certain of these restricted stock grant arrangements.  Compensation expense related to these restricted share grants will be recognized when the Company concludes that achievement of the performance vesting conditions is probable.

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(10)  WARRANTS

In the three months ended March 31, 2015, the Company issued warrants to purchase 666,667 shares of our common stock connection with a partial closing related to the private placement of the Company’s Common Stock as well as the 333,333 shares of our common stock in connection with a Reimbursement Agreement. See Notes 5 and 6.

The Derivative Warrants to purchase 700,000 shares of our Common Stock, at exercise prices ranging from $20.00 to $22.70 and expiring in 2017, are included in the outstanding warrants at December 31, 2014 and 2013. On February 12, 2015, these warrants were re-priced to $7.50 to compensate PPVA in connection with the Reimbursement Agreement reached between the Company and PPVA. See Notes 5 and 6.

A summary of warrant activity for the three months ended March 31, 2015 is as follows:

Warrants	Shares			Weighted- Average Exercise Price
Outstanding warrants at January 1, 2015		1,847,066		$	10.04
Granted		1,000,000		$	3.00
Forfeited		(37,638	)	$	22.50
Outstanding warrants at March 31, 2015		2,809,428		$	4.10

At March 31, 2015, the Company had the following outstanding warrants:

Type of Warrant/ Range of Exercise Prices		Expirations	Number Outstanding		Weighted- Average Remaining Contractual Life (years)		Weighted- Average Exercise Price		Number Exercisable
Derivative:
$	7.50	8/31/17 to 11/6/17		700,000		2.48	$	7.50		700,000
Equity:
$	2.75 - $3.00	12/10/18 to 03/09/20		2,109,428		4.70	$	2.97		2,109,428
Total outstanding				2,809,428						2,809,428

The Company uses valuation methods and assumptions that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments.  The following assumptions were utilized by the Company:

Risk-free interest rate		.70%
Expected dividend yield		—
Expected term (contractual term)	2.5 years
Forfeiture rate		—
Expected volatility		102%

Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the warrant.

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(11)  LITIGATION & OTHER SIGNIFICANT MATTERS

From time to time, in addition to those identified below, we are subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business. In accordance with generally accepted accounting principles, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. We believe that we have valid defenses with respect to the legal matters pending against us and are vigorously defending these matters. Given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome in the above noted matters and our inability to reasonably estimate the amount of loss or range of loss, it is possible that the resolution of one or more of these matters could have a material adverse effect on our consolidated financial position, cash flows or results of operations.  At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

In February 2014, Patrick T. Mooney, M.D., our former President and Chief Executive Officer, and his wife, Elizabeth Mooney, filed a complaint against the Company and certain of its directors and officers in the Court of Common Pleas in Philadelphia County.  The complaint, which alleges (i) that Dr. Mooney’s termination was without cause so that he is entitled to certain severance benefits under his employment agreement and associated statutory remedies; (ii) that certain legally required disclosures by us and our General Counsel defamed Dr. Mooney; and (iii) that Dr. Mooney’s wife is entitled to damages under a theory of loss of consortium, seeks in excess of $20 million in damages. The Company has denied the allegations of the complaint and asserted counterclaims against Dr. Mooney based upon the same conduct which provided the cause for his termination.  Thereafter, the Company restructured the counterclaims and affirmative defenses.  The Company believes that it has strong defenses to the claims asserted and intends to defend them vigorously. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

In July 2014, Dr. and Mrs. Mooney filed another complaint in the Court of Common Pleas in Philadelphia County against the Company, certain of its directors and Officers and a former Director and officer alleging (i) wrongful use of civil proceedings and (ii) abuse of process in the original filing of the counterclaims withdrawn in the earlier action.  Mrs. Mooney also asserted another claim for loss of consortium.  This complaint seeks in excess of $30 million in damages.  The Company has denied the allegations.  The Company believes that this action is without merit, that it acted lawfully and in good faith, and that it has strong defenses to the claims asserted.  Accordingly, the Company intends to vigorously defend against this lawsuit. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

In August 2014, Dr. Mooney filed a complaint in Delaware Chancery Court against the Company for advancement of defense costs related to his February 2014 complaint, many of which the Company had paid to date and the remainder of which were subject to a good faith dispute that counsel for the Company and Dr. Mooney had been attempting to amicably resolve.  Dr. Mooney also demanded that the Company pay for his attorneys fees related to his July 2014 complaint against the Company, amongst other matters.  The Company filed a Motion to Dismiss. A hearing on the merits was held on January 15, 2015 and the Company is awaiting the Courts ruling. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

NASDAQ Compliance

On January 30, 2015, the Company received a letter from NASDAQ, indicating that the Company no longer complies with NASDAQ’s audit committee requirements set forth in NASDAQ Listing Rule 5605.  Such rule requires that the Audit Committee of the Company have a minimum of three members and be composed only of independent directors.  On December 31, 2014, Vincent P. Enright, William F. Grieco and James F. Smith resigned from the Board of Directors of the Company, as well as its Audit Committee. As a result, the Audit Committee had no members as of Decembers 31, 2014.  On January 5, 2015, the Board of Directors appointed Shepard Goldberg and Michael Goldberg to the Audit Committee, both of whom are independent directors.  

NASDAQ provided to the Company a cure period in order to regain compliance as follows:

● until the earlier of the Company’s next annual shareholders’ meeting or December 31, 2015; or

● if the next annual shareholders’ meeting is held before June 29, 2015, then the Company must evidence compliance no later than June 29, 2015.

The Company intends to add at least one additional independent member to the Audit Committee by the date required by Nasdaq Listing Rule 5605.

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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and elsewhere in this report. The matters discussed herein contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, which involve risks and uncertainties. This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, which involve risks and uncertainties. All statements other than statements of historical information provided herein may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, those discussed elsewhere in this report and the risks discussed in our other filings with the Securities and Exchange Commission (the “SEC”). Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. Except as required by law, we undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Business

We are a medical device company with expertise in advanced skin permeation technology. We are developing a non-invasive, wireless continuous glucose monitoring (CGM) system for initial use in the wearable-health consumer market and the diabetes outpatient market. The transdermal skin preparation component of our CGM System allows for enhanced skin permeation that will enable extraction of analytes such as glucose, enhanced delivery of topical pharmaceuticals and other applications.

Research and Development

We believe that ongoing research and development efforts are essential to our success.  A major portion of our operating expenses to date is related to our research and development activities. R&D expenses generally consist of internal salaries and related costs, and third-party vendor expenses for product design and development, product engineering and contract manufacturing. In addition, R&D costs include regulatory consulting, feasibility product testing (internal and external) and conducting nonclinical and clinical studies. R&D expenses were approximately $831,000 for the three months ended March 31, 2015 and $4,962,000 for the year ended December 31, 2014. We intend to maintain our strong commitment to R&D as an essential component of our product development efforts. Licensed or acquired technology developed by third parties may be an additional source of potential products; however, our ability to raise sufficient financing may impact our level of R&D spending.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, we evaluate our estimates and judgments for all assets and liabilities, including those related to intangible asset impairment, long lived asset impairment, stock-based compensation expense and the fair value of stock purchase warrants classified as derivative liabilities. We base our estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances. This forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes in our critical accounting policies and estimates subsequent to those disclosed in our Annual Report on Form 10-K as filed with the SEC on April 15, 2015.

We believe that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements accurately reflect our best estimate of the results of operations, financial position and cash flows for the periods presented.

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Results of Operations

Comparison of the Three Months ended March 31, 2015 and 2014

Licensing Revenue — We signed two licensing agreements during fiscal year 2009, each with a minimum term of ten years, that required non-refundable license payments by the licensees.  The non-refundable license payments received in cash totaled $1,250,000 across both transactions. Approximately $95,000 remained unrecognized at March 31, 2015. We have been recognizing the non-refundable payments as revenue on a straight-line basis over our contractual or estimated performance period. Periodically, we have adjusted our amortization period for revenue recognition for each of our license arrangements to reflect a revision in the estimated timing of regulatory approval. We determined that $0 and approximately $19,000 of licensing revenue was recognizable in the three months ended March 31, 2015 and 2014, respectively.

Research and Development Expenses — R&D expenses decreased by approximately $435,000, or 34%, to approximately $831,000 for the three months ended March 31, 2015 from approximately $1,266,000 for the same period in 2014. R&D expenses decreased primarily as a result of the need to rehire key employees in January 2015 and customary start-up time.

R&D expenses for our CGM amounted to approximately 33% and 47% of total operating expenses during the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015, we concentrated our limited funding on transforming our existing ICU product line for use in the wearable and diabetic marketplaces. Specifically, we are developing a new generation of flexible, wearable, non-invasive technology with mobile applicability. Additionally, we devoted resources to assisting our partner in China, Medical Technologies Innovation Asia (MTIA), in meeting the stringent requirements set forth by the China Food and Drug Administration (CFDA). For the three months ended March 31, 2014, expenses consisted of primarily development, clinical and manufacturing of $881,000, $168,000 and $217,000, respectively. All of our 2015 costs were for development initiatives.

Selling, General and Administrative Expenses — SG&A expenses increased by approximately $159,000, or 12%, to approximately $1,482,000 for the three months ended March 31, 2015 from approximately $1,323,000 for the same period in 2014.  A $328,000 charge for the re-pricing of warrants was charged to legal expense as it related to the reimbursement of Platinum’s legal expenditures from last year’s proxy battle with the former directors. Otherwise, we have experienced decreases in personnel costs, investor relations, director fees, travel and other expenses offset partially by increases in legal (due to the aforementioned $328,000 charge), website redesign, and insurance costs. Insurance costs have increased due to mandated directors and officers policies which came of out of the Letter of Agreement reached in December 2014 between the Company, its board and its former board members, and Platinum.

SG&A expenses represented 59% (or 46%, excluding the $328,000 non-cash legal charge described above) and 49% of total operating expenses during the three months ended March 31, 2015 and 2014, respectively. We are not engaged in selling activities and, accordingly, general and administrative expenses relate principally to salaries and benefits for our executive, financial and administrative staff, public company costs, insurance, investor relations, legal, accounting, public relations, capital-raising and facilities.

Loss on disposal of property and equipment — The Company recorded a  $109,000 loss for the three months ended March 31, 2015 primarily representing furniture and fixtures that were sold and the write-off of leasehold improvements in our Philadelphia office when we relocated to our Iselin, New Jersey office in January 2015.

Interest Income — Interest income was approximately $400 and $1,000 for each of the three months ended March 31, 2015 and 2014, respectively.

Interest Expense — Interest expense was approximately $2,700 and $243,000 for the three months ended March 31, 2015 and 2014, respectively.  The decrease in interest expense in 2015 over 2014 was related to noncash deferred financing costs in 2014 incurred in conjunction with our Credit Facility with Montaur. Such facility was terminated in October 2014.

Gain (loss) on Revaluation of Derivative Warrant Liability — Changes in the fair value of derivative financial instruments are recognized in the Condensed Consolidated Statement of Operations as a derivative gain or loss. The primary underlying risk exposure pertaining to the warrants is the change in fair value of the underlying common stock. The gain (loss) on revaluation of the derivative warrant liability for the three months ended March 31, 2015 and 2014 was approximately $(258,000) and $140,000, respectively.

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Financing Expense — This is a non-cash charge with two components representing: (i.) $2,691,000 of excess value given to investors in the three months ended March 31, 2015, who received 1,000,000 shares of Series F Stock and warrants to purchase the same number of shares of our common stock, when the closing market price of our Common Stock was above the $1.50 purchase price they paid for their shares and warrants, and (ii.) $2,843,000 of potential excess value represented by the future potential issuance of 1,333,333 shares and warrants to purchase the same number of shares for the remaining $2,000,000 of installments to be received under our December 2014 financing, based on our closing market price at March 31, 2015 of $2.13.

As we receive subsequent cash installments, we will incur additional expense or record income depending on whether the fair value of the shares and warrants on the date the installments are made are above the $2.13 per share fair value that our Common Stock was at March 31, 2015. Subsequent to March 31, 2015 we collected $500,000 of the remaining $2,000,000 when our stock price was $2.18. This will result in an additional financing charge in the second quarter.

Net Loss — As a result of the factors described above, we had a net loss of approximately $8,304,000 for the three months ended March 31, 2015 compared to approximately $2,773,000 for the same period in 2014.

Liquidity and Capital Resources

We have financed our operations since inception primarily through sales of our equity, the issuance of convertible promissory notes, draws from a non-revolving credit facility, unsecured and secured promissory notes, non-refundable payments received under license agreements and cash received in connection with exercises of Common Stock options and warrants. As of March 31, 2015, we had approximately $469,000 of cash and cash equivalents, with no other short term investments.

Net cash used in operating activities was approximately $1,744,000 for the three months ended March 31, 2015. The use of cash in operating activities was primarily attributable to the net loss of approximately $8,304,000 offset by non-cash expenses of approximately $87,000 for depreciation and amortization, $404,000 for share-based compensation expense, a $328,000 charge for a warrant re-pricing related to reimbursement for legal expenses of the 2014 proxy battle,  a loss on revaluation of $258,000 related to derivative credit facility warrants, $5,534,000 non-cash charges to financing expense in connection with continuing installments from our December 2014 financing as well as the capital contribution repaid on the same terms, and a $109,000 loss on the sale and disposal of property and equipment resulting from the closing of our Philadelphia office and write-off of various leasehold improvements. Increases in prepaid and other resulted in a net increase in cash available for operations of approximately $44,000, while decreases in accounts payable and accrued expenses decreased cash available for operations by approximately $204,000.

Net cash used in investing activities was approximately $65,000 for the three months ended March 31, 2015.  Cash of approximately $18,000 was provided by the sales of certain property and equipment in connection with our move from Philadelphia to Iselin, NJ.  Also, cash of approximately $5,000 was used to purchase property and equipment during the same 2015 period.

Net cash provided by financing activities was approximately $1,000,000 for the three months ended March 31, 2015. We received $1,000,000 in net proceeds from the sale of our equity and a capital contribution of approximately $59,000. Principal payments on premium financing used approximately $60,000 during the same 2015 period.

At March 31, 2015, $2,000,000 was due under our $4,000,000 December 2014 financing arrangement. As of May 12, 2015, $1, 500,000 remained outstanding.

At March 31, 2015, we updated our review of our intangible assets. Our intangibles represent a significant portion of our asset base and new management has been seeking licensing and other opportunities related to monetizing these intangibles. Nonetheless, the amounts remain at risk for impairment and such impairment could occur in the future. If this does happen, it could potentially affect our listing standard as well as our ability to raise capital in the future.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We have a large number of warrants and stock options outstanding but we do not expect to receive sufficient proceeds from the exercise of these instruments unless and until the trading price of our Common Stock is significantly greater than the applicable exercise prices of the options and warrants for a sustained period of time.

Effect of Inflation and Changes in Prices

We do not believe that inflation and changes in prices will have a material effect on our operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4.  CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation and the material weaknesses described below, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as a result of the material weaknesses.

Our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2015 the following material weaknesses existed:

(1)   We lacked a sufficient complement of personnel with an appropriate level of knowledge and experience in the application of U.S. generally accepted accounting principles, or GAAP, commensurate with our financial reporting requirements. The monitoring of our accounting and reporting functions were either not designed and in place or not operating effectively, and

(2)   We lacked the quantity of resources to implement an appropriate level of review controls to properly evaluate the completeness and accuracy of transactions entered into by our Company.

Our management believes that these weaknesses are due in part to the small size of our staff and limited funding which makes it challenging to maintain adequate disclosure controls. To remediate the material weaknesses in disclosure controls and procedures, we will attempt to seek assistance with complex filing matters and to take additional steps to improve our financial reporting systems and implement new policies, procedures and controls.

Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

There have been no material changes to the legal proceedings disclosure described in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2.  UNREGISTERED SALES OF AND USE OF PROCEEDS.

On January 9, 2015 and again on March 31, 2015, Platinum Partners Value Arbitrage Fund, L.P. and Platinum Partners Liquid Opportunity Fund, L.P. exchanged 843,526 and 208,884 and 356,474 and 91,116, respectively, shares  of  common stock held by them for Series F Preferred Stock.  On December 18, 2014, we entered into a Stock Purchase Agreement, pursuant to which, on February 26, 2014, we issued and sold to an accredited investor an aggregate of 666,667 shares of Series F Preferred Stock at a purchase price of $1.50 per share with five year warrants to purchase 666,667 shares of our Common Stock at $3.00 per share, for aggregate consideration of $1,000,000 in cash.  Pursuant to a Reimbursement Agreement, dated February 12, 2015 (the “Reimbursement Agreement”), Platinum Partners Value Arbitrage Fund L.P. received 548,177 shares of Series F Convertible Preferred Stock (consisting of 333,333 shares of Series F for the $500,000 capital contribution and 214,844 shares of Series F for the $550,000 of legal expenses they incurred, for a Series F share total of 548,177) and Warrants to purchase 333,333 shares of our common stock.  These Warrants expire in five years and have a $3.00 per share exercise price. Additionally, we agreed to re-price 700,000 warrants, originally disbursed to Platinum-Montaur Life Sciences, LLC in connection with its August 31, 2012 Loan Agreement, and referred to as the derivative warrants, currently priced in the $20.00 to $22.70 range per share, to $7.50 per share. We deemed the offer, sale and issuance of these securities to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, including Regulation D and Rule 506 promulgated thereunder, relative to transactions by an issuer not involving a public offering. The purchaser of the securities represented to us that it was an accredited investor and was acquiring the shares for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that it could bear the risks of the investment and could hold the securities for an indefinite period of time. The purchaser received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration statement or an available exemption from such registration.

ITEM 5.  OTHER INFORMATION

We leased approximately 7,900 square feet of corporate office space in a multi-story building located in Philadelphia, Pennsylvania under a lease expiring May 31, 2017. We terminated this lease early and moved to Iselin, New Jersey on January 15, 2015 where we lease 2,800 square feet of office space for 38 months at a monthly rental of approximately $7,700. We posted a $77,000 Letter of Credit to secure the lease which is reduced to $38,500 after nineteen months of occupancy, assuming no defaults, as defined.

We lease approximately 37,000 square feet of manufacturing, laboratory and office space in a single-story building located in Franklin, Massachusetts under a lease expiring October 31, 2017. On May 5, 2015, we signed a lease for approximately 10,000 square feet for a research and development facility in Littleton, Massachusetts. The lease is for 65 months. Effective base monthly rent over the lease term will be $11,470. We secured the property with a Letter of Credit for $150,000. The Letter of Credit is expected to be reduced to $50,000 after 24 months of timely lease payments. We expect to move to the new facility from our Franklin, Massachusetts research and development facility on or about July 1, 2015. We agreed to post a $50,000 Letter of Credit until July 1, 2015 while the Littleton facility was being improved. We will terminate our Franklin lease about 28 months early and may be expected to incur certain undetermined termination fees as a result.

ITEM 6.  EXHIBITS.

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

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SIGNATURES

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

                                   ECHO THERAPEUTICS, INC.

Date: May 15, 2015

By:	/s/ Scott W. Hollander
	Scott W. Hollander President and Chief Executive Officer (Principal Executive Officer)

By:	/s/ Alan W. Schoenbart
	Alan W. Schoenbart Chief Financial Officer (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Lease between the Company and The Realty Associates Fund X, L.P. dated January 20, 2015.
10.2	Reimbursement Agreement, dated as of February 12, 2015, is incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8K filed February 18, 2015.
10.3	Lease between the Company and Ferris Development 352 Turnpike Rd, LLC dated May 5, 2015.
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language), (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements.

EX-10.1

Exhibit 10.1

METRO CORPORATE CAMPUS I

99 WOOD AVENUE SOUTH

ISELIN, NEW JERSEY 08837

STANDARD OFFICE LEASE

1.           Basic Lease Provisions.

1.1. Parties:  This Lease (this “Lease” or the “Lease”), dated for reference purposes only January 20, 2015, is made by and between THE REALTY ASSOCIATES FUND X, L.P., a Delaware limited partnership ("Landlord") and ECHO THERAPEUTICS, INC., a Delaware corporation ("Tenant").  The Tenant’s Employer Identification Number is 41-1649949.  The “Effective Date” shall be the date on which this Lease has been fully executed by Landlord and Tenant, whichever signs last.

1.2 Premises: A portion of the third (3rd) floor known as Suite 302 as shown on Exhibit “A” attached hereto (the "Premises").

1.3. Rentable Area of Premises: Approximately 2,806 rentable square feet.

1.4. Building Address:  99 Wood Avenue South, Iselin, New Jersey 08837.

1.5. Use: General and administrative office use, subject to the requirements and limitations contained in Section 7.

1.6. Term:  Three (3) years and two (2) months.

1.7. Commencement Date:    April 15, 2015, subject to adjustment in accordance with Section 3. below.

1.8. Base Rent: The Base Rent shall be adjusted annually on each anniversary of the Commencement Date (unless the Commencement Date is other than the first day of a month, in which event the Base Rent shall be adjusted annually commencing on the first anniversary of the first day of the calendar month following the Commencement Date) during the Term of the Lease as follows:

Lease Period (in full calendar months)	Annual Base Rent per rentable square foot	Annual Base Rent (annualized amount)	Monthly Base Rent
01 - 12*	$32.50	$91,194.96	$7,599.58
13 – 24	$33.00	$92,598.00	$7,716.50
25 – 36	$33.50	$94,001.04	$7,833.42
37 – 38	$34.00	$95,403.96	$7,950.33

*Subject to the Base Rent Abatement (defined in Paragraph 1 of the Addendum)

1.9. Base Rent Paid Upon Execution:  $7,599.58 for the first full month of the Term of the Lease for which Base Rent is due hereunder.

1.10. Security Deposit:  $76,968.00 in the form of an unconditional, irrevocable letter of credit as more fully provided in Paragraph 2 of the Addendum

1.11. Tenant's Share (i.e. proportionate share for purposes of Operating Expenses Increases and Real Property Taxes Increases): 1.03%

1.12. Base Year:  The calendar year 2015.

1.13. Number of Parking Spaces: Unreserved and in common with other tenants of the Project.

1.14. Intentionally Omitted

1.15. Real Estate Broker(s):

Landlord:                  Cushman & Wakefield of New Jersey, Inc.

Tenant:                      Cushman & Wakefield of New Jersey, Inc.

1.16. Attachments to Lease: Addendum; Exhibit A - "Premises", Exhibit A-1 – “Temporary Space”, Exhibit B - "Verification Letter", Exhibit C - "Rules and Regulations", Exhibit D - "Janitorial and Maintenance Services”, Exhibit E – “Form of Letter of Credit”, Schedule 1 – “Plans”.

1.17. Address for Notices:

Landlord:  The Realty Associates Fund X, L.P.

c/o Avison Young – New York, LLC

1120 Headquarters Plaza

North Tower, 8th Floor

Morristown, New Jersey 07960

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                             With Copy To:         TA Associates Realty

28 State Street

Boston, Massachusetts 02109

Attention:  Asset Manager – New Jersey

         Tenant:          Echo Therapeutics, Inc.

       (Prior to           8 Penn Center, 1628 John F Kennedy Boulevard, Suite 300

Occupancy):          Philadelphia, Pennsylvania 19103

    Attention:          Alan W. Schoenbart, CFO

                    (After Occupancy): Echo Therapeutics, Inc.

99 Wood Avenue South, Suite 302

Iselin, New Jersey 08837

Attention:  Alan W. Schoenbart, CFO

1.18. Agent for Service of Process: The name and address of Tenant's registered agent for service of process is:

Corporation Service Bureau

2711 Centerville Road, Suite 400

Wilmington, Delaware 19808

1.19. Tenant’s Standard Industrial Classification (herein "SIC") Number: 3841, as determined by reference to the SIC Manual and its operations shall consist of the Use described in Section 1.5.  Tenant’s North American Industrial Classification System (herein “NAICS”) number is 541711.

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2.           Premises.

2.1           Lease of Premises. The "Project" consists of one (1) building (the "Building"), the Common Areas (as defined below), the land upon which the same are located, along with all other buildings and improvements thereon or thereunder, including all parking facilities.  Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, upon all of the conditions set forth herein the Premises, together with the non-exclusive right to use the Common Areas as hereinafter specified.  The Premises shall not include an easement for light, air or view.

2.2           Calculation of Size of Building and Premises.  All provisions included in this Lease relating to the number of rentable square feet in the Premises, including, but not limited to, Base Rent and Tenant's Share, shall reflect the number of rentable square feet in the Premises and in the Building.  The calculation of the number of rentable square feet in the Premises is specified in Section 1.3 hereinabove.  As of the date of the Lease, the rentable square feet of the Building is approximately 271,988 square feet.

2.3           Common Areas-Defined.  The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project that are designated by Landlord from time to time for the general non-exclusive use of Landlord, Tenant and the other tenants of the Project and their respective employees, suppliers, customers and invitees, including, but not limited to, common entrances, lobbies, corridors, stairwells, public restrooms, elevators, parking areas, loading and unloading areas, roadways and sidewalks.  Landlord may also designate other land and improvements outside the boundaries of the Project to be a part of the Common Areas, provided that such other land and improvements have a reasonable and functional relationship to the Project.

3.           Term.

3.1            Term and Commencement Date.   The Term and Commencement Date of this Lease are as specified in Sections 1.6 and 1.7. The Commencement Date set forth in Section 1.7 is an estimated Commencement Date.  Subject to the limitations contained in Section 3.3 below, the actual Commencement Date shall be the date possession of the Premises is tendered to Tenant in accordance with Section 3.4 below; provided, however, that if the Commencement Date is other than the first day of a month, then the Term of this Lease shall be computed from the first day of the calendar month following the Commencement Date.  When the actual Commencement Date is established by Landlord, Tenant shall, within five (5) days after Landlord's request, complete and execute the letter attached hereto as Exhibit "B" and deliver it to Landlord.  Tenant's failure to execute the letter attached hereto as Exhibit "B" within said five (5) day period shall be a material default hereunder and shall constitute Tenant's acknowledgment of the truth of the facts contained in the letter delivered by Landlord to Tenant.

3.2           Delay in Possession.  Notwithstanding the estimated Commencement Date specified in Section 1.7, if for any reason Landlord cannot deliver possession of the Premises to Tenant on said date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder or extend the Term hereof; provided, however, in such a case, Tenant shall not be obligated to pay rent or perform any other obligation of Tenant under this Lease, except as may be otherwise provided in this Lease, until possession of the Premises is tendered to Tenant, as defined in Section 3.4.

3.3           Delays Caused by Tenant.  There shall be no abatement of rent to the extent of any delays caused by acts or omissions of Tenant, Tenant's agents, employees and contractors, or for Tenant delays as defined in the work letter agreement attached to this Lease, if any (hereinafter "Tenant Delays").  Tenant shall pay to Landlord an amount equal to one thirtieth (1/30th) of the Base Rent due for the first full calendar month of the Term for each day of Tenant Delay.  For purposes of the foregoing calculation, the Base Rent payable for the first full calendar month of the Term shall not be reduced by any abated rent, conditionally waived rent, free rent or similar rental concessions, if any.  Landlord and Tenant agree that the foregoing payment constitutes a fair and reasonable estimate of the damages Landlord will incur as the result of a Tenant Delay.  Within thirty (30) days after Landlord tenders possession of the Premises to Tenant, Landlord shall notify Tenant of Landlord's reasonable estimate of the date Landlord could have delivered possession of the Premises to Tenant but for the Tenant Delays.  After delivery of said notice, Tenant shall immediately pay to Landlord the amount described above for the period of Tenant Delay.

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3.4           Tender of Possession.  Possession of the Premises shall be deemed tendered to Tenant when Landlord's architect or agent has determined that (a) the improvements to be provided by Landlord pursuant to a work letter agreement, if any, are substantially completed and, if necessary have been approved by the appropriate governmental entity, (b) the Project utilities are ready for use in the Premises, (c) Tenant has reasonable access to the Premises, and (d) three (3) days shall have expired following advance written notice to Tenant of the occurrence of the matters described in (a), (b) and (c) above of this Section 3.4.  If improvements to the Premises are constructed by Landlord, the improvements shall be deemed "substantially" completed when the improvements have been completed except for minor items or defects which can be completed or remedied after Tenant occupies the Premises without causing substantial interference with Tenant's use of the Premises. As used herein, the term “substantially complete” shall specifically exclude Tenant's installation of its furniture, fixtures and cabling which shall be Tenant's obligation and shall not impact the determination of the Commencement Date or substantial completion.

3.5           Early Possession.  Provided that Tenant does not interfere with or delay the completion by Landlord or its agents or contractors of the construction of any tenant improvements, Tenant shall have the right to enter the Premises up to fifteen (15) days prior to the anticipated Commence­ment Date only for the purpose of installing furniture, trade fixtures, equipment, and similar items; provided, however, Tenant shall not be permitted to install any furniture, fixtures and equipment until the floor coverings have been installed and the wall coverings or painting have been completed.  Tenant shall be liable for any damages or delays caused by Tenant's activities at the Premises. Such occupancy shall be subject to all provisions of this Lease, provided, however; that so long as Tenant has not begun operating its business from the Premises, the foregoing activity shall not constitute the delivery of possession of the Premises to Tenant and neither the Term of the Lease nor Tenant’s obligation to pay Base Rent hereunder shall commence as a result of said activities.  Prior to entering the Premises, Tenant shall obtain all insurance it is required to obtain by the Lease and shall provide certificates of said insurance to Landlord.  Tenant shall coordinate such entry with Landlord's building manager, and such entry shall be made in compliance with all terms and conditions of this Lease and the Rules and Regulations attached hereto.  In the event Tenant occupies the Premises prior to the Commencement Date for any other purpose, other than as expressly provided herein, such occupancy shall not change the termination date, but Tenant shall pay Base Rent and all other charges provided for in this Lease during the period of such occupancy.

4.           Base Rent.  Tenant shall pay to Landlord the Base Rent for the Premises set forth in Section 1.8, without offset or deduction on the first day of each calendar month.  At the time Tenant executes this Lease it shall pay to Landlord the advance Base Rent described in Section 1.9.  Base Rent for any period during the Term hereof which is for less than one month shall be prorated based upon the actual number of days of the calendar month involved.  Base Rent and all other amounts payable to Landlord hereunder shall be payable to Landlord in lawful money of the United States at the address stated herein or to such other persons or at such other places as Landlord may designate in writing.

See Addendum Paragraph 1

5.           Adjustments in Rent.

5.1           Operating Expense Increases.  Tenant shall pay to Landlord during the Term hereof, in addition to the Base Rent, Tenant's Share of the amount by which all Operating Expenses for each Comparison Year exceeds the amount of all Operating Expenses for the Base Year.  If less than 95% of the rentable square feet in the Project is occupied by tenants or Landlord is not supplying services to 95% of the rentable square feet of the Project at any time during any calendar year (including the Base Year), Operating Expenses for such calendar year shall be an amount equal to the Operating Expenses which would normally be expected to be incurred had 95% of the Project's rentable square feet been occupied and had Landlord been supplying services to 95% of the Project's rentable square feet throughout such calendar year.  Tenant's Share of Operating Expense increases shall be determined in accordance with the following provisions:

(a)  "Base Year" as used in this Section 5, shall mean the calendar year (January through December) set forth in Section 1.12. Notwithstanding anything to the contrary contained in the Lease, for purposes of calculating the Base Year snow removal costs, Landlord shall average the actual snow removal costs incurred by Landlord for the Base Year as well as the two (2) calendar years immediately preceding such Base Year, and the average of the snow removal costs for such three (3) year period shall be deemed to be the snow removal costs for the Base Year which are to be included in the Base Year costs.

(b)  "Tenant's Share" is defined as the percentage set forth in Section 1.11, which percentage has been determined by dividing the number of rentable square feet attributed to the Premises by the total number of rentable square feet in the Buildingand multiplying the resulting quotient by one hundred (100).  In the event that the number of rentable square feet in the Building or the Premises changes, Tenant's Share shall be adjusted in the year the change occurs, and Tenant's Share for such year shall be determined on the basis of the days during such year that each Tenant's Share was in effect.

(c)  "Comparison Year" is defined as each calendar year during the Term of this Lease subsequent to the Base Year.  Tenant's Share of the Operating Expense increases for the last Comparison Year of the Term shall be prorated according to that portion of such Comparison Year as to which Tenant is responsible for a share of such increase.

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(d)  "Operating Expenses" shall include all costs, expenses and fees incurred by Landlord in connection with or attributable to the Project, including but not limited to, the following items: (i) all costs, expenses and fees associated with or attributable to the ownership, management, operation, repair, maintenance, improvement, alteration and replacement of the Project, or any part thereof, including but not limited to, the following: (A) all surfaces, coverings, decorative items, carpets, drapes, window coverings, parking areas, loading and unloading areas, trash areas, roadways, sidewalks, stairways, landscaped areas, striping, bumpers, irrigation systems, lighting facilities, building exteriors and roofs, fences and gates; (B) all heating, ventilating and air conditioning equipment ("HVAC") (including, but not limited to, the cost of replacing or retrofitting HVAC equipment to comply with laws regulating or prohibiting the use or release of chlorofluorocarbons or hydrochlorofluorocarbons), plumbing, mechanical, electrical systems, life safety systems and equipment, telecommunication equipment, elevators, escalators, tenant directories, fire detection systems including sprinkler system maintenance and repair; (ii) the cost of trash disposal, janitorial services and security services and systems; (iii) the cost of all insurance purchased by Landlord and enumerated in Section 9 of this Lease, including any deductibles; (iv) Real Property Taxes (defined in Section 5.2(b) below); (v) the cost of water, sewer, gas, electricity, and other utilities available at the Project and paid by Landlord; (vi) the cost of labor, salaries and applicable fringe benefits incurred by Landlord; (vii) the cost of materials, supplies and tools used in managing, maintaining and/or cleaning the Project; (viii) the cost of accounting fees, management fees, legal fees and consulting fees attributable to the ownership, operation, management, maintenance and repair of the Project plus the cost of any space occupied by the property manager and leasing agent (if Landlord is the property manager, Landlord shall be entitled to receive a fair market management fee); (ix) the cost of operating, replacing, modifying and/or adding improvements or equipment mandated by any law, statute, regulation or directive of any governmental agency and any repairs or removals necessitated thereby (including, but not limited to, the cost of complying with the Americans With Disabilities Act and regulations of the Occupational Safety and Health Administration); (x) personal property taxes imposed upon the fixtures, machinery, equipment, furniture and personal property used in connection with the operation of the Project; (xi) payments made by Landlord under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the payment or sharing of costs among property owners; (xi) any business property taxes or personal property taxes imposed upon the fixtures, machinery, equipment, furniture and personal property used in connection with the operation of the Project; (xiii) the cost of all business licenses, including Business Professional and Occupational License Taxes and Business Improvements Districts Taxes, any gross receipt taxes based on rental income or other payments received by Landlord, commercial rental taxes or any similar taxes or fees; (xiv) transportation taxes, fees or assessments, including but not limited to, mass transportation fees, metrorail fees, trip fees, regional and transportation district fees; (xv) all costs and expenses associated with or related to the implementation by Landlord of any transportation demand management program or similar program; (xvi) fees assessed by any air quality management district or other governmental or quasi-governmental entity regulating pollution; (xvii) the cost of installing intra-building network cabling (“INC") and maintaining, repairing, securing and replacing existing INC; and (xviii) the cost of any other service provided by Landlord or any cost that is elsewhere stated in this Lease to be an "Operating Expense."  Landlord shall have the right but not the obligation, from time to time, to equitably allocate some or all of the Operating Expenses among different tenants of the Project (the "Cost Pools").  Such Cost Pools may include, but shall not be limited to, the office space tenants of the Project and the retail space tenants of the Project.

(e)  Operating Expenses shall not include: (i)  any expenses paid by any tenant directly to third parties, or as to which Landlord is otherwise reimbursed by any third party or by insurance proceeds; (ii)  electricity paid for by any tenant of the Project as described in Section 11.6 of the Lease; (iii) salaries for Landlord’s executives above the grade of building manager and/or any employee of Landlord not directly involved with the Project; (iv) costs associated with Landlord’s performance of work or services solely for the benefit of other tenant(s) and not for the benefit of the Tenant; (v) leasing commissions; and (vi)  interest and amortization payments on any mortgage or mortgages.

(f) If the cost incurred in making an improvement or replacing any equipment is not fully deductible as an expense in the year incurred in accordance with generally accepted accounting principles, the cost shall be amortized over the useful life of the improvement or equipment, as reasonably determined by Landlord, together with an interest factor of twelve percent (12%) per annum on the unamortized cost of such item.

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(g) Tenant's Share of Operating Expense increases shall be payable by Tenant within ten (10) days after a reasonably detailed statement of actual expenses is presented to Tenant by Landlord.  At Landlord's option, however, Landlord may, from time to time, estimate what Tenant's Share of Operating Expense increases will be, and the same shall be payable by Tenant monthly during each Comparison Year of the Term of the Lease, on the same day as the Base Rent is due hereunder.  In the event that Tenant pays Landlord's estimate of Tenant's Share of Operating Expense increases, Landlord shall use its best efforts to deliver to Tenant within one hundred eighty (180) days after the expiration of each Comparison Year a reasonably detailed statement (the "Statement") showing Tenant's Share of the actual Operating Expense increases incurred during such year. Landlord's failure to deliver the Statement to Tenant within said period shall not constitute Landlord's waiver of its right to collect said amounts or otherwise prejudice Landlord's rights hereunder.  If Tenant's payments under this Section 5.1(g) during said Comparison Year exceed Tenant's Share as indicated on the Statement, Tenant shall be entitled to credit the amount of such overpayment against Tenant's Share of Operating Expense increases next falling due.  If Tenant's payments under this Section 5.1(g) during said Comparison Year were less than Tenant's Share as indicated on the Statement, Tenant shall pay to Landlord the amount of the deficiency within thirty (30) days after delivery by Landlord to Tenant of the Statement.  Landlord and Tenant shall forthwith adjust between them by cash payment any balance determined to exist with respect to that portion of the last Comparison Year for which Tenant is responsible for Operating Expense increases, notwithstanding that the Term of the Lease may have terminated before the end of such Comparison Year; and this provision shall survive the expiration or earlier termination of the Lease.

(h)  The computation of Tenant's Share of Operating Expense increases is intended to provide a formula for the sharing of costs by Landlord and Tenant and will not necessarily result in the reimbursement to Landlord of the exact costs it has incurred.

(i)  If Tenant disputes the amount set forth in the Statement, Tenant shall have the right, at Tenant's sole expense, not later than sixty (60) days following receipt of such Statement, to cause Landlord's books and records in respect to the calendar year which is the subject of the Statement to be audited by a certified public accountant mutually acceptable to Landlord and Tenant. The audit shall take place at the offices of Landlord where its books and records are located at a mutually convenient time during Landlord's regular business hours.  Before conducting any audit, Tenant must pay the full amount of Operating Expenses billed.  Tenant shall have no right to conduct an audit or to give Landlord notice that it desires to conduct an audit at any time Tenant is in default under the Lease.  The accountant conducting the audit shall be compensated on an hourly basis and shall not be compensated based upon a percentage of overcharges it discovers.  No subtenant shall have any right to conduct an audit, and no assignee shall conduct an audit for any period during which such assignee was not in possession of the Premises.  Tenant's right to undertake an audit with respect to any calendar year shall expire sixty (60) days after Tenant's receipt of the Statement for such calendar year, and such Statement shall be final and binding upon Tenant and shall, as between the parties, be conclusively deemed correct, at the end of such sixty (60) day period, unless prior thereto Tenant shall have given Landlord written notice of its intention to audit Operating Expenses for the calendar year which is the subject of the Statement.  If Tenant gives Landlord notice of its intention to audit Operating Expenses, it must commence such audit within sixty (60) days after such notice is delivered to Landlord, and the audit must be completed within one hundred twenty (120) days after such notice is delivered to Landlord.  If Tenant does not commence and complete the audit within such periods, the Statement which Tenant elected to audit shall be deemed final and binding upon Tenant and shall, as between the parties, be conclusively deemed correct. If the parties agree to the results of such audit, Tenant's Share of Operating Expenses shall be appropriately adjusted based upon the results of such audit, and the results of such audit shall be final and binding upon Landlord and Tenant.  If the parties do not agree upon the inclusion or amount of any Operating Expense charged by Landlord, the sole remedy of Tenant shall be to conduct an audit within the time specified in this Lease and, if still in disagreement with Landlord, to submit the matter to arbitration within thirty (30) days after completion of the audit to request an adjustment to any disputed Operating Expense item.  In no event will this Lease be terminable nor shall Landlord be liable for damages based upon any disagreement regarding an adjustment of Operating Expenses.Tenant agrees that the results of any Operating Expenses audit shall be kept strictly confidential by Tenant and shall not be disclosed to any other person or entity.

5.2           Real Property Taxes.

(a)Landlord shall pay the Real Property Taxes, as defined in Section 5.2(b), applicable to the Project, subject to reimbursement by Tenant of Tenant's Share of increases in such Taxes in accordance with the provisions of Section 5.1; provided, however, the Real Property Taxes shall not be subject to the gross up described in said Section 5.1.

(b)"Real Property Taxes" shall include any form of Real Property Tax or assessment, general, special, or otherwise, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax levied upon or with respect to the Building, the Project, and the Land, imposed upon or with respect to the Building, the Project, and the Land, imposed by Federal, State and/or local governments, as well as school districts and/or other taxing authorities (but shall not include income, franchise, capital stock, estate or inheritance taxes or taxes based upon receipts of rentals, unless the same be in substitution for or in lieu of a Real Property Tax or assessment), and any personal property taxes imposed upon the fixtures, machinery, equipment. apparatus, systems and appurtenancesin, upon or used in connection with the Building and the Project for the operation thereof.  However, if, because of any change in the method of taxation of real property, any other or additional tax or assessment is imposed upon Landlord or upon or with respect to the Building, the Project, and/or the Land or the rents or income therefrom, in addition to or in substitution for, or in lieu of any tax or assessment which would otherwise be a Real Property Tax, or personal property tax of the type referred to above, such other tax or assessment shall also be deemed a Real Property Tax.  As used herein, the term "Real Property Tax" shall be deemed to include "real estate tax”.

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(c)           Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or related to Tenant's use of the Premises.  If any of Tenant's personal property shall be assessed with Landlord's real property, Tenant shall pay to Landlord the taxes attributable to Tenant within ten (10)days after receipt of a written statement from Landlord setting forth the taxes applicable to Tenant's property.

(d)          

From time to time Landlord may challenge the assessed value of the Project as determined by applicable taxing authorities and/or Landlord may attempt to cause the Real Property Taxes to be reduced on other grounds.  If Landlord is successful in causing the Real Property Taxes to be reduced or in obtaining a refund, rebate, credit or similar benefit (hereinafter collectively referred to as a "reduction"), Landlord shall, to the extent practicable, credit the reduction(s) to Real Property Taxes for the calendar year to which a reduction applies and recalculate the Expense Increases owed by Tenant for years after the year in which the reduction applies based on the reduced Real Property Taxes (if a reduction applies to Tenant's Base Year, the Base Year Expenses shall be reduced by the amount of the reduction and Tenant's Share of Expense Increases shall be recalculated for all Comparison Years following the year of the reduction based on the lower Base Year amount). All costs incurred by Landlord in obtaining the Real Property Taxes reductions shall be considered an Operating Expense and Landlord shall determine, in its sole discretion to which years any reductions will be applied.  In addition, all accounting and related costs incurred by Landlord in calculating new Base Years for tenants and in making all other adjustments shall be an Operating Expense.

6.           Security Deposit.  Tenant shall deliver to Landlord at the time it executes this Lease the security deposit set forth in Section 1.10 as security for Tenant's faithful performance of Tenant's obligations hereunder.  If Tenant fails to pay Base Rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use all or any portion of said deposit for the payment of any Base Rent or other charge due hereunder, to pay any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby.  If Landlord so uses or applies all or any portion of said deposit, Tenant shall within ten (10) days after written demand therefor deposit cash with Landlord in an amount sufficient to restore said deposit to its full amount.  Landlord shall not be required to keep said security deposit separate from its general accounts.  If Tenant performs all of Tenant's obligations hereunder, said deposit, or so much thereof as has not heretofore been applied by Landlord, shall be returned, without payment of interest or other amount for its use, to Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's interest hereunder) at the expiration of the Term hereof, and after Tenant has vacated the Premises.  No trust relationship is created herein between Landlord and Tenant with respect to said security deposit.  Tenant acknowledges that the security deposit is not an advance payment of any kind or a measure of Landlord's damages in the event of Tenant's default.

See Addendum Paragraph 2

7.           Use.

7.1           Use.  The Premises shall be used and occupied only for the purpose set forth in Section 1.5 and for no other purpose.  If Section 1.5 gives Tenant the right to use the Premises for general office use, by way of example and not limitation, general office use shall not include medical office use or any similar use, laboratory use, classroom use, any use not characterized by applicable zoning and land use restrictions as general office use, or any use which would require Landlord or Tenant to obtain a conditional use permit or variance from any federal, state or local authority, or any use not compatible, in Landlord's sole judgment, with a first class office building. No exclusive use has been granted to Tenant hereunder.

7.2           Compliance with Law.  Notwithstanding any permitted use inserted in Section 1.5, Tenant shall not use the Premises for any purpose which would violate the Project's certificate of occupancy, any conditional use permit or variance applicable to the Project or violate any covenants, conditions or other restrictions applicable to the Project.  Tenant shall, at Tenant's sole expense, promptly comply with all applicable laws (including without limitation, the requirements of the Americans With Disabilities Act that relate to the Premises, and all federal, state and local laws and regulations governing occupational safety and health), ordinances, rules, regulations, orders, certificates of occupancy, conditional use or other permits, variances, covenants and restrictions of record (collectively “Laws”), and the reasonable recommendations of Landlord's engineers or other consultants, and requirements of any fire insurance underwriters, rating bureaus or government agencies, now in effect or which may hereafter come into effect, whether or not they reflect a change in policy from that now existing, during the Term or any part of the Term hereof, relating in any manner to the Premises or the occupation and use by Tenant of the Premises.  Tenant shall conduct its business and use the Premises in a lawful manner and shall not use or permit the use of the Premises or the Common Areas in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Project. Tenant shall obtain, at its sole expense, any permit or other governmental authorization required to operate its business from the Premises.  Landlord shall not be liable for the failure of any other tenant or person to abide by the requirements of this Section or to otherwise comply with applicable laws and regulations, and Tenant shall not be excused from the performance of its obligations under this Lease due to such a failure.

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7.3           Condition of Premises.  Except as otherwise provided in this Lease, Tenant hereby accepts the Premises and the Project in their condition existing as of the date this Lease is executed by Landlord and Tenant, subject to all applicable federal, state and local laws, ordinances, regulations and permits governing the use of the Premises, the Project's certificate of occupancy, any applicable conditional use permits or variances, and any easements, covenants or restrictions of record affecting the use of the Premises or the Project.  Tenant shall comply with all federal, state and local laws and regulations governing occupational safety and health at Tenant's sole cost and expense.  Tenant acknowledges that it has satisfied itself by its own independent investigation that the Premises and the Project are suitable for its intended use, and that neither Landlord nor Landlord's agents has made any representation or warranty as to the present or future suitability of the Premises, or the Project for the conduct of Tenant's business.

8.           Maintenance, Repairs and Alterations.

8.1           Landlord's Obligations.  Landlord shall keep the Project (excluding the interior of the Premises and space leased to other occupants of the Project) in good condition and repair.  If plumbing pipes, electrical wiring, HVAC ducts or vents within the Premises are in need of repair, Tenant shall immediately notify Landlord, and Landlord shall cause the repairs to be completed within a reasonable time, the cost of which shall be considered an Operating Expense and reimbursed in accordance with Section 5.1, unless the need for such repairs is due to the negligence or willful misconduct of Tenant, in which case Tenant shall immediately pay the entire cost of the repairs to Landlord.  Except as provided in Section 10.3, there shall be no abatement of rent or liability to Tenant on account of any injury or interference with Tenant's business with respect to any improvements, alterations or repairs made by Landlord to the Project or any part thereof.  Tenant expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford Tenant the right to make repairs at Landlord's expense or to terminate this Lease because of Landlord's failure to keep the Project in good order, condition and repair.

8.2           Tenant's Obligations.

(a)  Subject to the requirements of Section 8.3, Tenant shall be responsible for keeping the Premises in good condition and repair, at Tenant's sole expense, ordinary wear and tear excepted.  By way of example, and not limitation, Tenant shall be responsible, at Tenant's sole expense, for repairing and/or replacing, carpet, marble, tile or other flooring, paint, wall coverings, corridor and interior doors and door hardware, any supplemental or dedicated HVAC systems serving the Premises, telephone and computer equipment, interior glass, window treatments, ceiling tiles, shelving, cabinets, millwork and other tenant improvements.  In addition, Tenant shall be responsible for the installation, maintenance and repair of all telephone, computer and related cabling from the telephone terminal room on the floor on which the Premises is located to and throughout the Premises, and Tenant shall be responsible for any loss, cost, damage, liability and expense (including attorneys' fees) arising out of or related to the installation, maintenance, repair and replacement of such cabling.  If Tenant fails to keep the Premises in good condition and repair, Landlord may, but shall not be obligated to, make any necessary repairs.  If Landlord makes such repairs, Landlord shall bill Tenant for the cost of the repairs as Additional Rent, and said Additional Rent shall be payable by Tenant within ten (10) days.

(b)  Tenant is responsible for the maintenance of the lighting fixtures in the Premises.  At the option of Tenant, Landlord agrees to sell to Tenant, replacement parts for the lighting fixtures, including lamps, ballasts, starters, lenses and grills used in the Premises.  In addition, if Landlord provides replacement part installation and/or repair work, then in said event, Tenant shall pay Landlord the cost of installation thereof. The foregoing notwithstanding, Landlord shall deliver the lighting fixtures in the Premises in good working order as of the Commencement Date.

(c)  On the last day of the Term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in the same condition as received, ordinary wear and tear excepted, clean and free of debris and Tenant's personal property.  Tenant shall repair any damage to the Premises occasioned by the installation or removal of Tenant's trade fixtures, furnishings and equipment.  Except as otherwise stated in this Lease, Tenant shall leave the power panels, electrical distribution systems, lighting fixtures, HVAC, window coverings, wall coverings, carpets, wall paneling, ceilings and plumbing at the Premises and in good operating condition. Notwithstanding any other provision of this Lease to the contrary, Tenant shall remove, at or prior to the expiration or termination of this Lease, at its expense, all wiring and cabling installed at the Premises which shall have been installed by Tenant or which Landlord shall have installed pursuant to this Lease or at the request of Tenant.  Such wiring and cabling shall include but not be limited to (i) wiring and cabling above the ceiling panels, behind or within walls, and under or within floors, (ii) wiring and cabling for voice, data, security or other purposes, (iii) wiring and cabling installed pursuant to Section 8.3 below, pursuant to any work letter agreement attached to this Lease, or otherwise, and (iv) all related installations, equipment and items whatsoever.

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8.3           Alterations and Additions.

(a)  Tenant shall not, without Landlord's prior written consent, which may be given or withheld in Landlord's sole discretion, make any alterations, improvements, additions, utility installations or repairs (hereinafter collectively referred to as "Alteration(s)") in, on or about the Premises or the Project.  Alterations shall include, but shall not be limited to, the installation or alteration of security or fire protection systems, communication systems, millwork, shelving, file retrieval or storage systems, carpeting or other floor covering, window and wall coverings, electrical distribution systems, lighting fixtures, telephone or computer system wiring, HVAC and plumbing.  At the expiration of the Term, Landlord may require the removal of any Alterations installed by Tenant and the restoration of the Premises and the Project to their prior condition, at Tenant's expense.  If a work letter agreement is entered into by Landlord and Tenant, Tenant shall not be obligated to remove the tenant improvements constructed in accordance with the work letter agreement.  If, as a result of any Alteration made by Tenant, Landlord is obligated to comply with the Americans With Disabilities Act or any other law or regulation and such compliance requires Landlord to make any improvement or Alteration to any portion of the Project, as a condition to Landlord's consent, Landlord shall have the right to require Tenant to pay to Landlord prior to the construction of any Alteration by Tenant, the entire cost of any improvement or Alteration Landlord is obligated to complete by such law or regulation.  Should Landlord permit Tenant to make its own Alterations, Tenant shall use only such contractor as has been expressly approved by Landlord, and Landlord may require Tenant to provide to Landlord, at Tenant's sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alterations, to insure Landlord against any liability for mechanic's and materialmen's liens and to insure completion of the work.  In addition, Tenant shall pay to Landlord a fee equal to six percent (6%) of the cost of the Alterations to compensate Landlord for the overhead and other costs it incurs in reviewing the plans for the Alterations and in monitoring the construction of the Alterations.  Should Tenant make any Alterations without the prior approval of Landlord, or use a contractor not expressly approved by Landlord, Landlord may, at any time during the Term of this Lease, require that Tenant remove all or part of the Alterations and return the Premises to the condition it was in prior to the making of the Alterations.  In the event Tenant makes any Alterations, Tenant agrees to obtain or cause its contractor to obtain, prior to the commencement of any work, "builders all risk" insurance in an amount approved by Landlord and workers compensation insurance.

(b)  Any Alterations in or about the Premises that Tenant shall desire to make shall be presented to Landlord in written form, with plans and specifications which are sufficiently detailed to obtain a building permit.  If Landlord consents to an Alteration, the consent shall be deemed conditioned upon Tenant acquiring a building permit from the applicable governmental agencies, furnishing a copy thereof to Landlord prior to the commencement of the work, and compliance by Tenant with all conditions of said permit in a prompt and expeditious manner.  Tenant shall provide Landlord with as-built plans and specifications for any Alterations made to the Premises.

(c)  Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use in the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or the Project, or any interest therein.  If Tenant shall, in good faith, contest the validity of any such lien, Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an amount equal to such contested lien claim or demand indemnifying Landlord against liability arising out of such lien or claim. Such bond shall be sufficient in form and amount to free the Project from the effect of such lien. In addition, Landlord may require Tenant to pay Landlord's reasonable attorneys' fees and costs in participating in such action.

(d)  Tenant shall give Landlord not less than ten (10) days' advance written notice prior to the commencement of any work in the Premises by Tenant, and Landlord shall have the right to post notices of non-responsibility in or on the Premises or the Project as provided by law.

(e)  All Alterations (whether or not such Alterations constitute trade fixtures of Tenant) which may be made to the Premises by Tenant shall be made and done in a good and workmanlike manner and with new materials satisfactory to Landlord and shall be the property of Landlord and remain upon and be surrendered with the Premises at the expiration of the Lease Term, unless Landlord requires their removal pursuant to Section 8.3(a).  Provided Tenant is not in default, notwithstanding the provisions of this Section 8.3(e), Tenant's personal property and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises or the Project, shall remain the property of Tenant and may be removed by Tenant subject to the provisions of Section 8.2(b).

8.4           Failure of Tenant to Remove Property.  If this Lease is terminated due to the expiration of its Term or otherwise, and Tenant fails to remove its property as required by Section 8.2(c), in addition to any other remedies available to Landlord under this Lease, and subject to any other right or remedy Landlord may have under applicable law, Landlord may remove any property of Tenant from the Premises and store the same elsewhere at the expense and risk of Tenant and at any time (before or after Landlord stores said property), Landlord may sell any or all such property at public or private sale, in such a manner and at such times and places as Landlord, in its sole discretion, may deem proper, without notice to or demand upon Tenant.  Landlord shall apply the proceeds of such sale: first, to the cost and expenses of the sale, including reasonable attorneys' fees actually incurred; second, to the payment of the cost of or charges for storing any such property; third, to the payment of any other sums of money which may then or thereafter be due to Landlord from Tenant under this Lease; and fourth, the balance, if any, to Tenant.

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9.           Insurance.

9.1           Insurance-Tenant.

(a)  Tenant shall obtain and keep in force during the Term of this Lease a commercial general liability policy of insurance with coverages reasonably acceptable to Landlord, which by way of example and not limitation, protects Tenant and Landlord (as an additional insured) against claims for bodily injury, personal injury and property damage based upon, involving or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto.  Such insurance shall be on an occurrence basis providing single limit coverage in an amount of not less than Three Million Dollars ($3,000,000) combined single limit with an "Additional Insured-Managers and Landlords of Premises Endorsement".  A combination of a general liability policy and an umbrella policy or excess liability policy may be used to satisfy this limit.  The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Tenant's indemnity obligations under this Lease.

(b)  Tenant will also maintain "all risk" extended coverage property insurance with coverages reasonably acceptable to Landlord.  Said insurance shall be written on a one hundred percent (100%) replacement cost basis on Tenant's personal property, all tenant improvements installed at the Premises by Landlord or Tenant, Tenant's trade fixtures and other property.  Such policies shall provide protection against any peril included within the classification "fire and extended coverage," against vandalism and malicious mischief, theft, sprinkler leakage and flood damage.  If this Lease is terminated as the result of a casualty in accordance with Section 10, the proceeds of said insurance attributable to the replacement of all tenant improvements at the Premises shall be paid to Landlord. If insurance proceeds are available to repair the tenant improvements, Landlord shall be named as a loss-payee with respect to all tenant improvements, alterations or betterments covered by Tenant’s casualty insurance policies, and, at Landlord's option, all insurance proceeds Tenant is entitled to receive to repair the tenant improvements shall be paid by the insurance company directly to Landlord.  Landlord shall select the contractor to repair and/or replace the tenant improvements, and Landlord shall cause the tenant improvements to be repaired and/or replaced to the extent insurance proceeds are available.

(c)  Tenant shall, at all times during the Term hereof, maintain in effect workers' compensation insurance as required by applicable law (with employer’s liability insurance of not less than $1,000,000) and business interruption and extra expense insurance satisfactory to Landlord.In addition, Tenant shall maintain in effect during the Term hereof a policy of automobile liability insurance with bodily injury limits of $500,000 per person, $1,000,000 per accident, and $100,000 per accident for property damage.

9.2           Insurance-Landlord.

(a)  Landlord shall obtain and keep in force a policy of comprehensive general liability insurance with coverage against such risks and in such amounts as Landlord deems advisable insuring Landlord against liability arising out of the ownership, operation and management of the Project.

(b)  Landlord shall also obtain and keep in force during the Term of this Lease a policy or policies of "all risk" insurance covering loss or damage to the Project in the amount of not less than eighty percent (80%) of the full replacement cost thereof, as determined by Landlord from time to time.  The terms and conditions of said policies and the perils and risks covered thereby shall be determined by Landlord, from time to time, in Landlord's sole discretion.  In addition, at Landlord's option, Landlord shall obtain and keep in force, during the Term of this Lease, a policy of rental interruption insurance, with loss payable to Landlord, which insurance shall, at Landlord's option, also cover all Operating Expenses.  Tenant will not be named as an additional insured in any insurance policies carried by Landlord and shall have no right to any proceeds therefrom.  At Landlord's option, Landlord may obtain insurance coverages and/or bonds related to the operation of the parking areas.  At Landlord's option, Landlord may obtain coverage for flood and earthquake damages.  In addition, Landlord shall have the right to obtain such additional insurance as is customarily carried by owners or operators of other comparable office buildings in the geographical area of the Project.  The policies purchased by Landlord shall contain such deductibles as Landlord may determine.  In addition to amounts payable by Tenant in accordance with Section 5, Tenant shall pay any increase in the property insurance premiums for the Project over what was payable immediately prior to the Commencement Date to the extent the increase is specified by Landlord's insurance carrier as being caused by the nature of Tenant's occupancy or any act or omission of Tenant.

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9.3           Insurance Policies.   

Tenant shall deliver to Landlord a certificate of insurance evidencing the insurance policies required under Section 9.1 within fifteen (15) days prior to the Commencement Date of this Lease, and Landlord shall have the right to approve the terms and conditions of said policies. Tenant shall use commercially reasonable efforts to obtain in all insurance policies required of Tenant hereunder an endorsement which provides that the insurer shall endeavor to provide Landlord with thirty (30) days prior written notice of any cancellation, reduction of coverage or other adverse modification to Tenant’s insurance (but it shall not be in default of this Lease by Tenant if Tenant is unable to do so) but in all instances, Tenant shall also be required to provide Landlord with prompt written notice of any of the foregoing occurrences upon Tenant’s receipt of notice of the same from Tenant’s insurer.  Tenant shall, at least thirty (30) days prior to the expiration of such policies, furnish Landlord with renewals thereof.  If Tenant provides certificates of insurance to evidence the insurance required under this Lease, all such certificates shall be in form and substance reasonably satisfactory to Landlord, shall affirmatively demonstrate all coverage and requirements set forth in this Lease, shall contain no disclaimers of coverage, and shall include a firm and unconditional obligation to give to Landlord at least thirty (30) days’ prior written notice prior to cancellation or change in any coverage.  Tenant's insurance policies shall be issued by insurance companies authorized to do business in the state in which the Project is located, and said companies shall maintain during the policy term a "General Policyholders’ Rating" of at least "A" and a financial rating of at least "Class X" (or such other rating as may be required by any lender having a lien on the Project), as set forth in the most recent edition of "Best Insurance Reports."  All insurance obtained by Tenant shall be primary to and not contributory with any similar insurance carried by Landlord, whose insurance shall be considered excess insurance only.  Landlord, and at Landlord's option, the holder of any mortgage or deed of trust encumbering the Project and any person or entity managing the Project on behalf of Landlord, shall be named as an additional insured on all insurance policies Tenant is obligated to obtain by Section 9.1 above.  Tenant's insurance policies shall not include deductibles in excess of Twenty-Five Thousand Dollars ($25,000). If any of the insurance coverage which Tenant is obligated to carry pursuant to this Lease is under a blanket insurance policy, then such blanket insurance policy shall expressly afford coverage for the Premises and Landlord as required hereunder.  Any umbrella liability policy or excess liability policy shall provide that, if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance.

9.4           Waiver of Subrogation.  Tenant and Landlord each hereby release and relieve the other, and waive their entire right of recovery against the other, for direct or consequential loss or damage arising out of or incident to the perils covered by insurance carried by such party (or required to be carried by such party by this Lease) to the extent of the insurance proceeds actually received, whether due to the negligence of Landlord or Tenant or their agents, employees, contractors and/or invitees.  Landlord and Tenant shall each cause the insurance policies they obtain in accordance with this Section 9 to provide that the insurance company waives all right of recovery by subrogation against either party in connection with any damage covered by any policy.

9.5           Coverage.  Landlord makes no representation to Tenant that the limits or forms of coverage specified above or approved by Landlord are adequate to insure Tenant's property or Tenant's obligations under this Lease, and the limits of any insurance carried by Tenant shall not limit its obligations under this Lease.

10.           Damage or Destruction.

10.1           Effect of Damage or Destruction.  If all or part of the Project is materially damaged (as defined in Section 10.2 below) by fire, earthquake, flood, explosion, the elements, riot or any other casualty, Landlord shall have the right in its sole and complete discretion to repair or to rebuild the Project or to terminate this Lease.  Landlord shall within one hundred twenty (120) days after the occurrence of such damage notify Tenant in writing of Landlord's intention to repair or to rebuild or to terminate this Lease.  Tenant shall in no event be entitled to compensation or damages on account of annoyance or inconvenience in making any repairs, or on account of construction, or on account of Landlord's election to terminate this Lease. Notwithstanding the foregoing, if Landlord shall elect to rebuild or repair the Project, but in good faith determines that the Project cannot be rebuilt or repaired within three hundred sixty (360) days after the date of the occurrence of the damage, without payment of overtime or other premiums, and the damage to the Project has rendered the Premises unusable, Landlord shall notify Tenant thereof in writing at the time of Landlord's election to rebuild or repair, and Tenant shall thereafter have a period of fifteen (15) days within which Tenant may elect to terminate this Lease, upon written notice to Landlord.  Tenant's termination right described in the preceding sentence shall not apply if the damage was caused by Tenant's negligence or willful misconduct. Failure of Tenant to exercise said election within said fifteen (15) day period shall constitute Tenant's agreement to accept delivery of the Premises under this Lease whenever tendered by Landlord, provided Landlord thereafter pursues reconstruction or restoration diligently to completion, subject to delays caused by Force Majeure Events, as hereinafter defined.  If Landlord is unable to repair the Damage to the Premises or the Project during such three hundred sixty (360) day period due to Force Majeure Events, the three hundred sixty (360) day period shall be extended by the period of delay caused by the Force Majeure Events.  Subject to Section 10.3 below, if Landlord or Tenant terminates this Lease in accordance with this Section 10.1, Tenant shall continue to pay all Base Rent and Operating Expense increases and other amounts due hereunder which arise prior to the date of termination. For purposes of this Lease, a Force Majeure Event shall mean fire, earthquake, weather delays or other acts of God, strikes, boycotts, war, riot, insurrection, embargoes, shortages of equipment, labor or materials, delays in issuance of governmental permits or approvals, or any other cause beyond the reasonable control of Landlord.

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10.2           Definition of Material Damage.  The damage shall be deemed material if, in Landlord's reasonable judgment, the uninsured cost of repairing the damage will exceed Twenty-Five Thousand Dollars ($25,000).  If insurance proceeds are available to Landlord in an amount which is sufficient to pay the entire cost of repairing all of the damage to the Project, the damage shall be deemed material if the cost of repairing the damage exceeds One Hundred Thousand Dollars ($100,000).  Damage to the Project shall also be deemed material if (a) the Project cannot be repaired to substantially the same condition it was in prior to the damage due to laws or regulations in effect at the time the repairs will be made, (b) the holder of any mortgage or deed of trust encumbering the Project requires that insurance proceeds available to repair the damage in excess of Twenty-Five Thousand Dollars ($25,000) be applied to the repayment of the indebtedness secured by the mortgage or the deed of trust, or (c) the damage occurs during the last twelve (12) months of the Lease Term.

10.3            Abatement of Rent.  If Landlord elects to repair damage to the Project and all or part of the Premises will be unusable or inaccessible to Tenant in the ordinary conduct of its business until the damage is repaired, and the damage was not caused by the negligence or willful misconduct of Tenant or its employees, agents, contractors or invitees, Tenant's Base Rent, and Tenant's Share of Operating Expense increases shall be abated in proportion to the amount of the Premises which is unusable or inaccessible to Tenant in the ordinary conduct of its business until the repairs are completed. Notwithstanding the foregoing, there shall be no abatement of Base Rent, Tenant’s Share of Operating Expense increases and Tenant’s Share of Real Property Taxes by reason of any portion of the Premises being unusable or inaccessible for a period equal to five (5) consecutive business days or less.

10.4           Tenant's Negligence.  If such damage or destruction occurs as a result of the negligence or willful misconduct of Tenant or Tenant's employees, agents, contractors or invitees, and the proceeds of insurance which are actually received by Landlord are not sufficient to repair all of the damage, Tenant shall pay, at Tenant's sole cost and expense, to Landlord upon demand, the difference between the cost of repairing the damage and the insurance proceeds received by Landlord.

10.5           Tenant's Property.  Landlord shall not be required to repair any injury or damage to, or to make any repairs or replacements of, any fixtures, furniture, equipment or tenant improvements installed in the Premises, and Tenant shall repair and restore all such property at Tenant's sole expense.

10.6            Waiver.  Landlord and Tenant hereby waive the provisions of any statutes which relate to the termination of leases when leased property is damaged or destroyed and agree that such event shall be governed by the terms of this Lease.

11.           Utilities.

11.1           Services Provided by Landlord.   Subject to all governmental rules, regulations and guidelines applicable thereto, Landlord shall use its best efforts to provide HVAC to the Premises for normal office use during the times described in Section 11.4, subject to Section 11.2 below, reasonable amounts of electricity for normal office lighting and fractional horsepower office machines, at Tenant’s expense (and not included in Base Rent), water in the Premises or in the Common Areas for reasonable and normal drinking and lavatory use, and building standard janitorial services in accordance with Exhibit D attached hereto. In addition, Tenant shall be responsible for all costs (including the cost to insure) associated with Tenant’s use and operation of any dedicated or supplemental HVAC units and computer rooms, including the cost to install separate metering devices, which such amounts shall be in addition to the Electric Energy Charge paid by Tenant pursuant to Section 11.2 below. Subject to the other terms and conditions of the Lease, Landlord shall provide Tenant with reasonable access to the Common Areas of the Building and to the Premises twenty-four (24) hours a day, three hundred sixty-five (365) days per year.  Notwithstanding the foregoing, Tenant acknowledges and agrees that repairs, hazardous conditions and other circumstances beyond Landlord's control may prevent access to the Common Areas of the Building and to the Premises from time to time.

11.2           Electricity.

(a)           Landlord shall provide electric current to the Premises, with the understanding, however, that the Base Rent does not include the cost of electricity consumed by Tenant in the Premises; and Tenant shall, in addition to the Base Rent, be required to pay an additional charge (the “Electric Energy Charge”) for the cost of supplying electricity to the Premises as a condition for Landlord to provide electric current to the Premises.  The Electric Energy Charge shall be paid, as Additional Rent, commencing on the Commencement Date and throughout the Term and any renewals or extensions thereof.  As of the Commencement Date, the Electric Energy Charge shall be measured by a check meter and Tenant shall reimburse Landlord, as Additional Rent, based on Tenant’s actual usage of electricity for the Premises.

(b)           (i)  Landlord shall have the right to estimate the annual cost of providing electric current for the operation of the lighting fixtures and electrical outlets initially installed in the Premises and Tenant shall pay to one-twelfth (1/12th) of such estimated Electric Energy Charge in advance in the same manner as Base Rent is paid hereunder.  Such Electric Energy Charge is subject to adjustment, from time to time, based upon the actual checkmeter reading.  In the event the estimated Electric Energy Charge paid by Tenant is less than the actual cost of electricity for the Premises as measured by the checkmeter readings, Tenant shall pay the amount of such underpayment to Landlord within five (5) business days following Landlord’s invoice therefor.  In the event the estimated Electric Energy Charge paid by Tenant is greater than the actual cost of electricity for the Premises as measured by the checkmeter readings, Landlord shall credit the amount of such overpayment to Tenant’s next installment of Electric Energy Charge coming due under the Lease.

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(ii)  For the purposes hereof, energy adjustment charges, fuel adjustment charges, and any other charge of, or factor upon which, the public utility company supplying electricity fixes or determines charges or rates, shall be deemed included in determining and computing the "rate" or charges for such electric current.  If any tax or other charge is imposed upon Landlord’s receipt from the sale or resale of electric energy to Tenant by any federal, state or municipal authority, Tenant covenants and agrees that, where permitted by law, Tenant’s pro rata share of such taxes or other charges shall be passed on to and paid by Tenant to Landlord.

(e)  It is understood and agreed by Tenant that Landlord’s estimation of the Electric Energy Charge shall be based on the use of electric current in the Premises during business hours on business days.

(f)   Landlord shall not in any way be responsible or liable to Tenant at any time for any loss, damage or expense resulting from any change in the quantity or character of the electric service or for its being no longer suitable for Tenant’s requirements or from any cessation or interruption of the supply or current; nor shall  any such loss, damage or expense, or non-supply of electric service or current in any way affect the tenancy or in any way relieve Tenant of any obligation under the terms of this Lease.

(g)   Tenant covenants and agrees that at all times its use of electric current shall never exceed the maximum capacity for the Premises.  Tenant shall make no changes, alterations, additions, substitutions ("Changes") to any risers, conduits, meters, panel boxes, switch gear, wiring, or any other part of the electric service without the express prior written consent of Landlord.  Any Changes requested by Tenant shall be sent in writing to Landlord; and if, in the reasonable judgment of Landlord, such Changes will not cause or create a dangerous or hazardous condition or damage or injury to the Building, or entail excessive or unreasonable alterations or repairs, or interfere with or disturb other tenants or occupants and/or the electrical service then or thereafter to be supplied to tenants or occupants, Landlord will, at the sole cost and expense of Tenant, make such Changes.  Tenant covenants and agrees to pay Landlord for such costs and expenses as additional rent, upon the rendition of a bill indicating the amount due therefor.

(h)           (i)  Landlord reserves the right to terminate the furnishing of electricity to the Premises at any time, upon no less than ninety (90) days’ written notice to the Tenant, in which event, Tenant shall make immediate application directly to the utility company servicing the Building for the Tenant’s entire separate supply of electric current; and Landlord shall permit its risers, wires, conduits and other electrical equipment, to the extent available and safely capable, to be used for such purpose.  Any meters, and additional risers, wires, conduits and equipment or connections necessary to enable Tenant to obtain electric current directly from such utility company shall be installed at Tenant’s sole cost and expense if the termination of Landlord’s service is legally required; otherwise, they shall be installed at Landlord’s sole cost and expense, and in compliance with all applicable laws, ordinances and regulations and requirements of insurance companies and fire underwriters.

(ii)  No alterations, modifications or changes shall be made by the Tenant to any meters, risers, conduits or other equipment or connections in the Building in a manner which would cause damage to the Building or interfere with the use, enjoyment, occupancy or possession of the Building by Landlord and its other tenants.  Rigid conduit only, or such other type as may be specified by Landlord, will be allowed.

(iii)  Tenant’s liability for the Electric Energy Charge provided for in this Lease shall terminate as of the date of discontinuance by Landlord of the supplying of electric current, but this Lease shall otherwise remain in full force and effect.  Unless required by law, however, Landlord shall not discontinue furnishing electricity to the Premises until after Tenant shall have commenced receiving its electricity directly from the utility company unless Tenant shall have failed to make such arrangements with due diligence.

11.3           Building Services on Non-Business Days or Non-Business Hours.

(a)   Tenant acknowledges that Landlord is only required to provide the Building Services specified in Section 11.1 hereinabove only during Business Hours on Business Days and in addition, access to electricity, and water during Non-Business Hours on Non-Business Days as well.

(b)   Landlord shall use its best efforts to provide HVAC to Tenant at times other than those set forth above subject to (i) the payment by Tenant of Landlord's standard charge, as determined by Landlord from time to time, in Landlord's sole discretion, for after-hours HVAC and (ii) Tenant providing to Landlord at least one (1) Business Day's advance written notice of Tenant's need for Non-Business Hours and/or Non-Business Day HVAC service.  As of the date of this Lease, and subject to future increases, the standard charge for after-hours HVAC is Ninety-Five Dollars ($95.00) per hour with a four (4) hour minimumif Tenant’s after-hours use of the HVAC is not continuous in any one (1) day.  For purposes hereof “continuous in any one (1) day” shall mean uninterrupted weekday service (not including weekends and holidays).  For example, if Tenant requests after-hours use of the HVAC between 6:00 p.m. and 8:00 p.m. on a non-holiday Tuesday, then the four (4) hour minimum shall not apply and Tenant shall be charged for two (2) hours of after-hours use of the HVAC.  Alternatively, if Tenant requests after-hours use of the HVAC between 10:00 a.m. and 12:00 p.m. on a Sunday, Tenant shall be charged for the minimum amount of four (4) hours of after-hours use of the HVAC.  Tenant shall pay all after-hours HVAC charges to Landlord within three (3) days after Landlord bills Tenant for said charges.

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11.4           Definition of Business Days and Business Hours of Building Services.   "Business Days" as defined herein, shall be Monday through Friday from 8:00 A.M. to 6:00 PM and, upon Tenant’s request, Saturdays from 9:00 A.M. to 1:00 P.M., excluding all days observed as non-working (vacation) holidays by the State and/or Federal government ("Holidays").  "Business Hours" as defined herein, shall mean 8:00 A.M. to 6:00 P.M. on Monday through Friday, excluding Holidays, and, upon Tenant’s request, Saturday, from 8:00 A.M. to 1:00 P.M., excluding Holidays.

11.5           Excess Usage by Tenant.  Notwithstanding the use set forth in Section 1.5 and/or Section 11 and its sub-sections, Tenant shall not use Building utilities or services in excess of those used by the average office building tenant using its premises for ordinary office use.  Tenant shall not install at the Premises office machines, lighting fixtures or other equipment which will generate above average heat, noise or vibration at the Premises or which will adversely affect the temperature maintained by the HVAC system.  If Tenant does use Building utilities  (i.e. electricity) or services in excess of those used by the average office building tenant, Landlord shall have the right, in addition to any other rights or remedies it may have under this Lease, to (a) at Tenant's expense, install separate metering devices at the Premises, and to charge Tenant for its usage, (b) require Tenant to pay to Landlord all costs, expenses and damages incurred by Landlord as a result of such usage, and (c) require Tenant to stop using excess utilities or services.

11.6           Interruptions.  Tenant agrees that Landlord shall not be liable to Tenant for its failure to furnish utilities or other Building Services when such failure is occasioned, in whole or in part, by repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Project after reasonable effort to do so, by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord's reasonable control, and such failures shall never be deemed to constitute an eviction or disturbance of Tenant's use and possession of the Premises or relieve Tenant from paying rent or performing any of its obligations under this Lease.  Furthermore, Landlord shall not be liable under any circumstances for loss of property or for injury to, or interference with, Tenant's business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the Building Services or utilities as set forth in this Section 11 and its sub-sections.  Landlord may comply with voluntary controls or guidelines promulgated by any governmental entity relating to the use or conservation of energy, water, gas, light or electricity or the reduction of automobile or other emissions without creating any liability of Landlord to Tenant under this Lease.

11.7           Services Exclusive to Tenant. Subject to the other provisions of this Section 11,Tenant shall pay for all water, gas, heat, electricity, telephone and other utilities and services supplied and/or metered or submetered exclusively to the Premises or to Tenant, together with any taxes thereon.  If electricity, natural gas or similar energy is separately metered for Tenant’s use at the Premises and Tenant contracts directly for service from an Energy Provider (defined hereinafter), then  Landlord shall have the right to require Tenant to provide Landlord with copies of bills from electricity, natural gas or similar energy providers (collectively, “Energy Providers”) Tenant receives directly from Energy Providers relating to Tenant’s energy use at the Premises (“Energy Bills”) within ten (10) days after Landlord’s written request.  In addition, Tenant hereby authorizes Landlord to obtain copies of the Energy Bills directly from the Energy Provider(s), and Tenant hereby authorizes each Energy Provider to provide Energy Bills and related usage information directly to Landlord without Tenant’s consent. From time to time within ten (10) days after Landlord’s request, Tenant shall execute and deliver to Landlord an agreement provided by Landlord authorizing the Energy Provider(s) to provide to Landlord Energy Bills and other information relating to Tenant’s energy usage at the Premises. The information provided by the Energy Providers shall be used by Landlord in connection with Landlord’s on-going energy and environmental conservation initiatives and/or as required by laws or regulations, if any, requiring landlords to report energy benchmark information for the Building or otherwise pertaining to any such energy or conservation initiatives or programs.

11.8           Access by Tenant.  Subject to the other terms and conditions of the Lease, Landlord shall provide Tenant with reasonable access to the Common Areas of the Building and to the Premises twenty-four (24) hours a day, three hundred sixty-five (365) days per year.  However, Tenant acknowledges and agrees that repairs, hazardous conditions and other circumstances beyond Landlord's control may prevent access to the Common Areas of the Building and to the Premises from time to time.

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12.           Assignment and Subletting.

12.1           Landlord's Consent Required.  Tenant shall not voluntarily or by operation of law assign, transfer, hypothecate, mortgage, sublet, or otherwise transfer or encumber all or any part of Tenant's interest in this Lease or in the Premises (hereinafter collectively a "Transfer"), without Landlord's prior written consent, which shall not be unreasonably withheld.  Landlord shall respond to Tenant's written request for consent hereunder within thirty (30) days after Landlord's receipt of the written request from Tenant.  Any attempted Transfer without such consent shall be void and shall constitute a material default and breach of this Lease.  Tenant's written request for Landlord's consent shall include, and Landlord's thirty (30) day response period referred to above shall not commence, unless and until Landlord has received from Tenant, all of the following information: (a) financial statements for the proposed assignee or subtenant for the past three (3) years prepared in accordance with generally accepted accounting principles, (b) federal tax returns for the proposed assignee or subtenant for the past three (3) years, (c) a TRW credit report or similar report on the proposed assignee or subtenant, (d) a detailed description of the business the assignee or subtenant intends to operate at the Premises, (e) the proposed effective date of the assignment or sublease, (f) a copy of the proposed sublease or assignment agreement which includes all of the terms and conditions of the proposed assignment or sublease, and (g) a detailed description of any ownership or commercial relationship between Tenant and the proposed assignee or subtenant.  If the obligations of the proposed assignee or subtenant will be guaranteed by any person or entity, Tenant's written request shall not be considered complete until the information described in (a), (b) and (c) of the previous sentence has been provided with respect to each proposed guarantor. "Transfer" shall also include the transfer (a) if Tenant is a corporation, and Tenant's stock is not publicly traded over a recognized securities exchange, of more than twenty five percent (25%) of the voting stock of such corporation during the Term of this Lease (whether or not in one or more transfers) or the dissolution or merger of the corporation, or (b) if Tenant is a partnership or other entity, of more than twenty five percent (25%) of the profit and loss participation in such partnership or entity  during the term of this Lease (whether or not in one or more transfers) or the dissolution or liquidation of the partnership.  If Tenant is a limited or general partnership (or is comprised of two or more persons, individually or as co-partners), Tenant shall not be entitled to change or convert to (i) a limited liability company, (ii) a limited liability partnership or (iii) any other entity which possesses the characteristics of limited liability without the prior written consent of Landlord, which consent may be given or withheld in Landlord’s sole discretion.  The involvement by Tenant or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, refinancing, transfer, leveraged buy-out or otherwise) whether or not a formal assignment or hypothecation of this Lease or Tenant's assets occurs, shall be considered to be an assignment of this Lease by Tenant to which Landlord may reasonably withhold its consent unless after such transaction or series of transactions the surviving entity will have a net worth at least equal to the net worth of the Tenant immediately preceding the date of this Lease.Tenant's sole remedy in the event that Landlord shall wrongfully withhold consent to or disapprove any assignment or sublease shall be to obtain an order by a court of competent jurisdiction that Landlord grant such consent; in no event shall Landlord be liable for damages with respect to its granting or withholding consent to any proposed assignment or sublease.  If Landlord shall exercise any option to recapture the Premises, or shall deny a request for consent to a proposed assignment or sublease, Tenant shall indemnify, defend and hold Landlord harmless from and against any and all losses, liabilities, damages, costs and claims that may be made against Landlord by the proposed assignee or subtenant, or by any brokers or other persons claiming a commission or similar compensation in connection with the proposed assignment or sublease.

12.2           Standard For Approval.  Landlord shall not unreasonably withhold its consent to a Transfer provided that Tenant has complied with each and every requirement, term and condition of this Section 12.  Tenant acknowledges and agrees that each requirement, term and condition in this Section 12 is a reasonable requirement, term or condition.  It shall be deemed reasonable for Landlord to withhold its consent to a Transfer if any requirement, term or condition of this Section 12 is not complied with or: (a) the Transfer would cause Landlord to be in violation of its obligations under another lease or agreement to which Landlord is a party; (b) in Landlord's reasonable judgment, a proposed assignee or subtenant has a smaller net worth than Tenant had on the date this Lease was entered into with Tenant or is less able financially to pay the rents due under this Lease as and when they are due and payable; (c) a proposed assignee's or subtenant's business will impose a burden on the Project's parking facilities, elevators, Common Areas or utilities that is greater than the burden imposed by Tenant, in Landlord's reasonable judgment; (d) the terms of a proposed assignment or subletting will allow the proposed assignee or subtenant to exercise a right of renewal, right of expansion, right of first offer, right of first refusal or similar right held by Tenant; (e) a proposed assignee or subtenant does not, in Landlord's reasonable judgment, have a good credit rating; (f) a subletting shall be for less than the entirety of the Premises or for less than the entire unexpired Term of the Lease; (g) a proposed assignee or subtenant refuses to enter into a written assignment agreement or sublease, reasonably satisfactory to Landlord, which provides that it will abide by and assume all of the terms and conditions of this Lease for the term of any assignment or sublease and containing such other terms and conditions as Landlord reasonably deems necessary; (h) the use of the Premises by the proposed assignee or subtenant will not be identical to the use permitted by this Lease; (i) Landlord has ever evicted or been involved in litigation with the proposed assignee or subtenant; (j) any guarantor of this Lease refuses to consent to the Transfer or to execute a written agreement reaffirming the guaranty; (k) Tenant is in default as defined in Section 13.1 at the time of the request; (l) if requested by Landlord, the assignee or sublessee refuses to sign a non-disturbance and attornment agreement in favor of Landlord's lender; (m) the proposed assignee or subtenant is an existing tenant of the Project or otherwise occupies or utilizes any portion of space in the Project for the conduct of its business, or is a person or entity then negotiating with Landlord for the lease of space in the Project, or is a successor, assignee, or purchaser of any tenant of the Project or otherwise arising from a tenant's bankruptcy proceedings; (n) the assignee or subtenant is a governmental or quasi-governmental entity or an agency, department or instrumentality of a governmental or quasi-governmental agency; or (o) the terms of a proposed assignment or subletting will allow the proposed assignee or subtenant to pay a base rent less than the prevailing rental rate in the Building at the time of Tenant’s request to such Transfer.

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12.3           Additional Terms and Conditions.  The following terms and conditions shall be applicable to any Transfer:

(a)  Regardless of Landlord's consent, no Transfer shall release Tenant from Tenant's obligations hereunder or alter the primary liability of Tenant to pay the rent and other sums due Landlord hereunder and to perform all other obligations to be performed by Tenant hereunder or release any guarantor from its obligations under its guaranty.

(b)  Landlord may accept rent from any person other than Tenant pending approval or disapproval of an assignment or subletting.

(c)  Neither a delay in the approval or disapproval of a Transfer, nor the acceptance of rent, shall constitute a waiver or estoppel of Landlord's right to exercise its rights and remedies for the breach of any of the terms or conditions of this Section 12.

(d)  The consent by Landlord to any Transfer shall not constitute a consent to any subsequent Transfer by Tenant or to any subsequent or successive Transfer by an assignee or subtenant.  However, Landlord may consent to subsequent Transfers or any amendments or modifications thereto without notifying Tenant or anyone else liable on the Lease and without obtaining their consent, and such action shall not relieve such persons from liability under this Lease.

(e)  In the event of any default under this Lease, Landlord may proceed directly against Tenant, any guarantors or anyone else responsible for the performance of this Lease, including any subtenant or assignee, without first exhausting Landlord's remedies against any other person or entity responsible therefor to Landlord, or any security held by Landlord.

(f)  Landlord's written consent to any Transfer by Tenant shall not constitute an acknowledgment that no default then exists under this Lease nor shall such consent be deemed a waiver of any then existing default.

(g)  The discovery of the fact that any financial statement relied upon by Landlord in giving its consent to an assignment or subletting was materially false shall, at Landlord's election, render Landlord's consent null and void.

(h)  Landlord shall not be liable to any subtenant under this Lease or under any sublease.

(i)  No assignment or sublease may be modified or amended without Landlord's prior written consent.

(j)  Tenant or its agent shall not advertise the Premises for lease, sublet or assignment for less Rent than the then current asking rent for space in the Project.

12.4           Additional Terms and Conditions Applicable to Subletting.  The following terms and conditions shall apply to any subletting by Tenant of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

(a)  Tenant hereby absolutely and unconditionally assigns and transfers to Landlord all of Tenant's interest in all rentals and income arising from any sublease entered into by Tenant, and Landlord may collect such rent and income and apply same toward Tenant's obligations under this Lease; provided, however, that until a default shall occur in the performance of Tenant's obligations under this Lease, Tenant may receive, collect and enjoy the rents accruing under such sublease.  Landlord shall not, by reason of this or any other assignment of such rents to Landlord nor by reason of the collection of the rents from a subtenant, be deemed to have assumed or recognized any sublease or to be liable to the subtenant for any failure of Tenant to perform and comply with any of Tenant's obligations to such subtenant under such sublease, including, but not limited to, Tenant's obligation to return any security deposit.  Tenant hereby irrevocably authorizes and directs any such subtenant, upon receipt of a written notice from Landlord stating that a default exists in the performance of Tenant's obligations under this Lease, to pay to Landlord the rents due as they become due under the sublease.  Tenant agrees that such subtenant shall have the right to rely upon any such statement and request from Landlord, and that such subtenant shall pay such rents to Landlord without any obligation or right to inquire as to whether such default exists and notwithstanding any notice from or claim from Tenant to the contrary.

(b)  In the event Tenant shall default in the performance of its obligations under this Lease, Landlord at its option and without any obligation to do so, may require any subtenant to attorn to Landlord, in which event Landlord shall undertake the obligations of Tenant under such sublease from the time of the exercise of said option to the termination of such sublease; provided, however, Landlord shall not be liable for any prepaid rents or security deposit paid by such subtenant to Tenant or for any other prior defaults of Tenant under such sublease.

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12.5           Transfer Premium from Assignment or Subletting.  Landlord shall be entitled to receive from Tenant (as and when received by Tenant) as an item of additional rent fifty percent (50%) of all amounts received by Tenant from such assignee or subtenant in excess of the amounts payable by Tenant to Landlord hereunder (the "Transfer Premium").  The Transfer Premium shall be reduced by the reasonable brokerage commissions and legal fees actually paid by Tenant in order to assign the Lease or to sublet a portion of the Premises.  "Transfer Premium" shall mean all Base Rent, additional rent or other consideration of any type whatsoever payable by the assignee or subtenant in excess of the Base Rent and additional rent payable by Tenant under this Lease.  If less than all of the Premises is transferred, the Base Rent and the additional rent shall be determined on a per rentable square foot basis.  "Transfer Premium" shall also include, but not be limited to, key money and bonus money paid by the assignee or subtenant to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to the assignee or subtenant or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to the assignee or subtenant in connection with such Transfer.  For purposes of calculating the Transfer Premium, expenses will be amortized over the life of the sublease.

12.6           Landlord's Option to Recapture Space.  Notwithstanding anything to the contrary contained in this Section 12, if Tenant shall request to assign this Lease or sublease space in the Premises, then Landlord shall have the option, by giving written notice to Tenant within thirty (30) days after Tenants request, to terminate this Lease with respect to said space as of the date thirty (30) days after Landlord's election.  In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire Premises, the Base Rent, Tenant's Share of Operating Expense increases and the number of parking spaces Tenant may use shall be adjusted on the basis of the number of rentable square feet retained by Tenant in proportion to the number of rentable square feet contained in the original Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon request of either party, the parties shall execute written confirmation of same.  If Landlord recaptures only a portion of the Premises, it shall construct and erect at its sole cost such partitions as may be required to sever the space to be retained by Tenant from the space recaptured by Landlord.  Landlord may, at its option, lease any recaptured portion of the Premises to the proposed subtenant or assignee or to any other person or entity without liability to Tenant.  Tenant shall not be entitled to any portion of the profit, if any, Landlord may realize on account of such termination and reletting.  Tenant acknowledges that the purpose of this Section 12.6 is to enable Landlord to receive profit in the form of higher rent or other consideration to be received from an assignee or sublessee, to give Landlord the ability to meet additional space requirements of other tenants of the Project and to permit Landlord to control the leasing of space in the Project.  Tenant acknowledges and agrees that the requirements of this Section 12.6 are commercially reasonable and are consistent with the intentions of Landlord and Tenant.  The provisions of this Section 12.6 shall not apply in connection with a Permitted Transfer (defined in Section 12.8 below).

12.7           Permitted Transfers.  Notwithstanding anything to the contrary contained in this Section 12 of the Lease, provided Tenant is not in default after expiration of all applicable notice and cure periods, Tenant shall have the right, without Landlord's consent, upon thirty (30) days advance written notice to Landlord, to assign the Lease or sublet the whole or any part of the Premises (a) to any entity or entities which are owned by Tenant, or which owns Tenant or which is under common control with Tenant, (b) in connection with the sale or transfer of substantially all of the assets of the Tenant or the sale or transfer of substantially all of the outstanding ownership interests in Tenant, or (c) in connection with a merger, consolidation or other corporate reorganization of Tenant (each of the transactions referenced in the above subparagraphs (a), (b), and (c) are hereinafter referred to as a "Permitted Transfer," and each surviving entity shall hereinafter be referred to as a "Permitted Transferee"); provided, that such assignment or sublease is subject to the following conditions:

(i)            Tenant shall remain fully liable under the terms of the Lease;

(ii)           such Permitted Transfer shall be subject to all of the terms, covenants and conditions of the Lease;

(iii)          such Permitted Transferee has a net worth at least equal to the net worth of Tenant as of the date of this Lease, and

     (iv)          such Permitted Transferee shall expressly assume the obligations of Tenant under the Lease by a document reasonably satisfactory to Landlord.

Nothing in this Section 12.7 is intended to nor shall permit Tenant to transfer its interest under this Lease as part of a fraud or subterfuge to intentionally avoid its obligations under this Lease (for example, transferring its interest to a shell corporation that subsequently files a bankruptcy), and any such transfer shall constitute a default hereunder.  Any change in control of Tenant resulting from a merger, consolidation, or a transfer of partnership or membership interests, a stock transfer, or any sale of substantially all of the assets of Tenant that do not meet the requirements of this Section 12.7 shall be deemed an assignment or transfer that requires Landlord's prior written consent pursuant to Section 12.1 above.

12.8           Landlord's Expenses.  In the event Tenant shall assign this Lease or sublet the Premises or request the consent of Landlord to any Transfer, then Tenant shall pay Landlord's reasonable costs and expenses incurred in connection therewith, including, but not limited to, attorneys', architects', accountants', engineers' or other consultants' fees.

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13.           Default; Remedies.

13.1           Default by Tenant.  Landlord and Tenant hereby agree that the occurrence of any one or more of the following events is a material default by Tenant under this Lease and that said default shall give Landlord the rights described in Section 13.2.  Landlord or Landlord's authorized agent shall have the right to serve any notice of default, notice to pay rent or quit or similar notice.

(a)  Tenant's failure to make any payment of Base Rent, Electric Energy Charge, Tenant's Share of Operating Expense increases, parking charges, charges for after-hours HVAC, late charges, or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of three (3) days after written notice thereof from Landlord to Tenant.  In the event that Landlord serves Tenant with a notice to pay rent or quit pursuant to applicable unlawful detainer statutes, such notice shall also constitute the notice required by this Section 13.1(a).

(b)  The abandonment of the Premises by Tenant in which event Landlord shall not be obligated to give any notice of default to Tenant, unless expressly required by law.

(c)  The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant (other than those referenced in Sections 13.1(a) and (b), above), where such failure shall continue for a period of ten (10) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's non-performance is such that more than ten (10) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said ten (10) day period and thereafter diligently pursues such cure to completion; provided, however, in no event shall such extension exceed forty-five (45) days after Landlord’s initial notice of such default.  The foregoing cure period shall in no event apply to any of the following: Tenant’s (i) failure to provide an estoppel certificate when and as required under Section 18 of this Lease; (ii) failure to maintain insurance required under Section 10 of the Lease within ten (10) days from written notice Landlord; (iii) the abandonment of the Premises by Tenant; (iv) failure to vacate the Premises upon the expiration or earlier termination of the Lease; (v) failure to provide the verification letter as and when required under Section 3 of the Lease; or (vi) failure to comply with any obligation under the Lease pertaining to Hazardous Materials within ten (10) days from written notice from Landlord.  In the event that Landlord serves Tenant with a notice to quit pursuant to applicable unlawful detainer statutes, said notice shall also constitute the notice required by this Section 13.1(c).

(d)   (i)  The making by Tenant or any guarantor of any general arrangement or general assignment for the benefit of creditors; (ii) Tenant or any guarantor becoming a "debtor" as defined in 11 U.S.C.  101 or any successor statute thereto (unless, in the case of a petition filed against Tenant or guarantor, the same is dismissed within sixty (60) days); (iii) the institution of proceedings seeking the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days or the institution of a foreclosure proceeding against Tenant's real or personal property; or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days.  In the event that any provision of this Section 13.1(d) is contrary to any applicable law, such provision shall be of no force or effect.

(e)  The discovery by Landlord that any financial statement, representation or warranty given to Landlord by Tenant, or by any guarantor of Tenant's obligations hereunder, is or was materially false.

(f)  If Tenant is a corporation, limited liability company or a partnership, the dissolution or liquidation of Tenant.

(g) If Tenant’s obligations under this Lease are guaranteed; (i) the death of a guarantor, (ii) the termination of a guarantor’s liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a guarantor becoming insolvent or the subject of a bankruptcy filing, (iv)a guarantor’s refusal to honor the guaranty, or (v) a guarantor’s breach of its guaranty obligation on an anticipatory breach basis

13.2           Remedies.

(a)  In the event of any material default or breach of this Lease by Tenant, Landlord may, at any time thereafter, with or without notice or demand, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default:

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(i)  Terminate Tenant’s right to possession of the Premises.  Upon any such termination, Tenant shall immediately surrender possession of the Premises to Landlord.  Landlord reserves all rights and remedies available to it pursuant to the terms and conditions of this Lease as well as under applicable law.  Tenant hereby grants Landlord the full and free right to enter the Premises with or without process of law.  Tenant releases Landlord of any liability for any damage resulting therefrom and waives any right to claim damage for such re-entry.  Tenant also agrees that Landlord’s right to re-lease or any other right given to Landlord as a consequence of Tenant’s default hereunder or by operation of law is not relinquished.  On termination of Tenant’s right of possession, Landlord shall be entitled to recover from Tenant: (i) the unpaid rent which had been earned at the time of the termination; (ii) the amount by which the unpaid rent which would have been earned after termination until the time of the award exceeds the amount of any rental, if any, received for the Premises during such time period; (iii) the amount by which the unpaid rent for the balance of the Term of the Lease after the time of award exceeds the amount of any rent to be received (net of re-letting expenses as described below) from any replacement tenant occupying the Premises at the time of the award, or, if the Premises are not occupied at the time of the award by a rent-paying replacement tenant, the full amount of the rent to be earned hereunder for the balance of the Term of the Lease discounted to net present value assuming a discount rate of one percent (1%) above the discount rate of the Federal Reserve Bank of New York in effect at the time of the award; and provided further, however, that Landlord shall repay to Tenant the excess of the foregoing amount over any rent received for the Premises during the balance of the Term of the Lease (net of reletting expenses as described below) similarly discounted; and (iv) at the time of the award any other amount necessary to compensate Landlord for all the damage proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of events would likely result therefrom, including but not limited to, all costs and expenses attributable to recovering possession of the Premises, re-letting expenses (including the costs and expenses of any necessary repairs, renovations and alterations to the Premises), costs of carrying the Premises (including but not limited to, Landlord’s payment of real property taxes and insurance premiums), actual legal fees and associated costs and expenses, the unamortized portion of all brokerage commissions paid in connection with this Lease and all costs of tenant improvements (amortized without interest on a straight line basis over the initial Term of the Lease), and reimbursement of any deferred or abated rent or other Lease execution inducement.

(ii)  maintain Tenant's right of possession in which event Landlord shall have the remedy which permits Landlord to continue this Lease in effect after Tenant's breach and abandonment and recover rent as it becomes due. Acts of maintenance or preservation, efforts to relet the Premises, or removal or storage of Tenant’s personal property, shall not constitute a termination of Tenant’s right to possession or act as an acceptance of any surrender of the Premises.  Landlord shall not be required to relet any or all of the Premises prior to leasing other vacant space at the Project, nor shall Landlord be required to accept a tenant:  (i) that does not otherwise meet Landlord’s financial and other criteria, nor (ii) a tenant who intends to make a use other than the use permitted by the Lease.

(iii)  collect sublease rents (or appoint a receiver to collect such rent) and otherwise perform Tenant's obligations at the Premises, it being agreed, however, that the appointment of a receiver for Tenant shall not constitute an election by Landlord to terminate this Lease.

(iv)  pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Premises are located.

(b)  No remedy or election hereunder shall be deemed exclusive, but shall, wherever possible, be cumulative with all other remedies at law or in equity.  The expiration or termination of this Lease and/or the termination of Tenant’s right to possession of the Premises shall not relieve Tenant of liability under any indemnity provisions of this Lease as to matters occurring or accruing during the Term hereof or by reason of Tenant’s occupancy of the Premises.

(c)  If Tenant abandons or vacates the Premises, Landlord may re-enter the Premises and such re-entry shall not be deemed to constitute Landlord's election to accept a surrender of the Premises or to otherwise relieve Tenant from liability for its breach of this Lease.  No surrender of the Premises shall be effective against Landlord unless Landlord has entered into a written agreement with Tenant in which Landlord expressly agrees to (i) accept a surrender of the Premises and (ii) relieve Tenant of liability under the Lease.  The delivery by Tenant to Landlord of possession of the Premises shall not constitute the termination of the Lease or the surrender of the Premises.

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13.3           Default by Landlord.  Landlord shall not be in default under this Lease unless Landlord fails to perform obligations required of Landlord within thirty (30) days after written notice by Tenant to Landlord and to the holder of any mortgage or deed of trust encumbering the Project whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for its cure, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently pursues the same to completion.  In no event shall Tenant have the right to terminate this Lease as a result of Landlord’s default, and Tenant’s remedies shall be limited to damages and/or an injunction. Tenant hereby waives its right to recover consequential damages (including, but not limited to, lost profits) or punitive damages arising out of a Landlord default.   This Lease and the obligations of Tenant hereunder shall not be affected or impaired because Landlord is unable to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of strike or other labor problems, acts of God, riot, insurrection, governmental actions or requirements, or any other cause beyond the reasonable control of Landlord, and the time for Landlord's performance shall be extended for the period of any such delay.  Any claim, demand, right or defense by Tenant that arises out of this Lease or the negotiations which preceded this Lease shall be barred unless Tenant commences an action thereon, or interposes a defense by reason thereof, within six (6) months after the date of the inaction, omission, event or action that gave rise to such claim, demand, right or defense.

13.4           Late Charges.  Tenant hereby acknowledges that late payment by Tenant to Landlord of Base Rent, Tenant's Share of Operating Expense increases, parking charges, after-hours HVAC charges,  or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain.  Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed encumbering the Project.  Accordingly, if any installment of Base Rent, Tenant's Share of Operating Expense increases, parking charges, after-hours HVAC charges or any other sum due from Tenant shall not be received by Landlord when such amount shall be due, then, without any requirement for notice or demand to Tenant, Tenant shall pay to Landlord a late charge equal to six percent (6%) of such overdue amount.  The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant.  Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder including the assessment of interest under Section 13.5.

13.5           Interest on Past-due Obligations.  Except as expressly herein provided, any amount due to Landlord that is not paid when due shall bear interest at the lesser of ten percent (10%) per annum, or the maximum rate permitted by applicable law.  Payment of such interest shall not excuse or cure any default by Tenant under this Lease; provided, however, that interest shall not be payable on late charges incurred by Tenant nor on any amounts upon which late charges are paid by Tenant.

13.6           Payment of Rent after Default.  If Tenant fails to pay Base Rent, Tenant's Share of Operating Expense increases or any other monetary obligation due hereunder on the date it is due, after Tenant's third failure to pay any monetary obligation on the date it is due, at Landlord's option, all monetary obligations of Tenant hereunder shall thereafter be paid by cashier’s check, and Tenant shall, upon demand, provide Landlord with an additional Security Deposit equal to three (3) months’ Base Rent.  If Landlord has required Tenant to make said payments by cashier’s check or to provide an additional Security Deposit, Tenant's failure to make a payment by cashier’s check or to provide an additional Security Deposit, shall be a material default hereunder.

14.           Landlord's Right to Cure Default; Payments by Tenant.  All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost and expense and without any reduction of rent.  If Tenant shall fail to perform any of its obligations under this Lease, within a reasonable time after such performance is required by the terms of this Lease, Landlord may, but shall not be obligated to, after three (3) days' prior written notice to Tenant, make any such payment or perform any such act on Tenant's behalf without waiving its rights based upon any default of Tenant and without releasing Tenant from any obligations hereunder.  Tenant shall pay to Landlord, within ten (10) days after delivery by Landlord to Tenant of statements therefor, an amount equal to the expenditures reasonably made by Landlord in connection with the remedying by Landlord of Tenant's defaults pursuant to the provisions of this Section 14.

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15.           Condemnation. If any portion of the Premises or the Project are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs; provided that if so much of the Premises or Project are taken by such condemnation as would substantially and adversely affect the operation and profitability of Tenant's business conducted from the Premises, and said taking lasts for ninety (90) days or more, Tenant shall have the option, to be exercised only in writing within thirty (30) days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within thirty (30) days after the condemning authority shall have taken possession), to terminate this Lease as of the date the condemning authority takes such possession.  If a taking lasts for less than ninety (90) days, Tenant's rent shall be abated during said period but Tenant shall not have the right to terminate this Lease.  If Tenant does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent and Tenant's Share of Operating Expenses shall be reduced in the proportion that the usable floor area of the Premises taken bears to the total usable floor area of the Premises.  Common Areas taken shall be excluded from the Common Areas usable by Tenant and no reduction of rent shall occur with respect thereto or by reason thereof.  Landlord shall have the option in its sole discretion to terminate this Lease as of the taking of possession by the condemning authority, by giving written notice to Tenant of such election within thirty (30) days after receipt of notice of a taking by condemnation of any part of the Premises or the Project.  Any award for the taking of all or any part of the Premises or the Project under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, as severance damages, or as damages for tenant improvements; provided, however, that Tenant shall be entitled to any separate award for loss of or damage to Tenant's trade fixtures and removable personal property and any award available for the relocation of Tenant's business.  In the event that this Lease is not terminated by reason of such condemnation, and subject to the requirements of any lender that has made a loan to Landlord encumbering the Project, Landlord shall to the extent of severance damages received by Landlord in connection with such condemnation, repair any damage to the Project caused by such condemnation except to the extent that Tenant has been reimbursed therefor by the condemning authority.  Tenant shall pay any amount in excess of such severance damages required to complete such repair.  Except as set forth in this Section 15, Landlord shall have no liability to Tenant for interruption of Tenant's business upon the Premises, diminution of Tenant's ability to use the Premises, or other injury or damage sustained by Tenant as a result of such condemnation.  Tenant shall pay any amount in excess of such severance damages required to complete such repair.  This Section, not general principles of law or the State of New Jersey Code of Civil Procedure shall govern the rights and obligations of Landlord and Tenant with respect to the condemnation of all or any portion of the Project.

16.           Vehicle Parking.

16.1           Use of Parking Facilities.  During the Term and subject to the rules and regulations attached hereto as Exhibit "C" as modified by Landlord from time to time (the "Rules"), Tenant shall be entitled to use the number of parking spaces set forth in Section 1.13 in the parking facility of the Project at no charge.  Landlord may, in its sole discretion, assign and designate the location of any reserved parking spaces.  Landlord reserves the right at any time to relocate Tenant's reserved and unreserved parking spaces.  If Tenant commits or allows in the parking facility any of the activities prohibited by the Lease or the Rules, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be immediately payable by Tenant upon demand by Landlord.  Tenant's parking rights are the personal rights of Tenant and Tenant shall not transfer, assign, or otherwise convey its parking rights separate and apart from this Lease.

16.2           Parking Charges.  [Intentionally omitted].

17.           Broker's Fee.  Tenant and Landlord each represent and warrant to the other that neither has had any dealings or entered into any agreements with any person, entity, broker or finder other than the persons, if any, listed in Section 1.15, in connection with the negotiation of this Lease, and no other broker, person, or entity is entitled to any commission or finder's fee in connection with the negotiation of this Lease, and Tenant and Landlord each agree to indemnify, defend and hold the other harmless from and against any claims, damages, costs, expenses, attorneys' fees or liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings, actions or agreements of the indemnifying party.

18.           Estoppel Certificate.

18.1           Delivery of Certificate.  Tenant shall at any time upon not less than ten (10) days' prior written notice from Landlord execute, acknowledge and deliver to Landlord a statement in writing certifying such information as Landlord may reasonably request including, but not limited to, the following: (a) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) (b) the date to which the Base Rent and other charges are paid in advance and the amounts so payable, (c) that there are not, to Tenant's knowledge, any uncured defaults or unfulfilled obligations on the part of Landlord, or specifying such defaults or unfulfilled obligations, if any are claimed, and (d) that all tenant improvements to be constructed by Landlord, if any, have been completed in accordance with Landlord's obligations and Tenant has taken possession of the Premises.  Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Project.

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18.2           Failure to Deliver Certificate.  At Landlord's option, the failure of Tenant to deliver such statement within such time shall constitute a material default of Tenant hereunder, or it shall be conclusive upon Tenant that (a) this Lease is in full force and effect, without modification except as may be represented by Landlord, (b) there are no uncured defaults in Landlord's performance, (c) not more than one month's Base Rent has been paid in advance, and (d) all tenant improvements to be constructed by Landlord, if any, have been completed in accordance with Landlord's obligations and Tenant has taken possession of the Premises.

19.           Landlord's Liability.  Tenant acknowledges that Landlord shall have the right to transfer all or any portion of its interest in the Project and to assign this Lease to the transferee.  Tenant agrees that in the event of such a transfer Landlord shall automatically be released from all liability under this Lease; and Tenant hereby agrees to look solely to Landlord's transferee for the performance of Landlord's obligations hereunder after the date of the transfer.  Upon such a transfer, Landlord shall, at its option, return Tenant's security deposit to Tenant or transfer Tenant's security deposit to Landlord's transferee and, in either event, Landlord shall have no further liability to Tenant for the return of its security deposit.  Subject to the rights of any lender holding a mortgage or deed of trust encumbering all or part of the Project, Tenant agrees to look solely to Landlord's equity interest in the Project for the collection of any judgment requiring the payment of money by Landlord arising out of (a) Landlord's failure to perform its obligations under this Lease or (b) the negligence or willful misconduct of Landlord, its partners, employees and agents.  No partner, employee or agent of Landlord shall be personally liable for the performance of Landlord's obligations hereunder or be named as a party in any lawsuit arising out of or related to, directly or indirectly, this Lease and the obligations of Landlord hereunder.  The obligations under this Lease do not constitute personal obligations of the individual partners of Landlord and Tenant shall not seek recourse against the individual partners of Landlord or their assets.

20.           Indemnity.  Tenant shall indemnify, defend and hold harmless Landlord, its agents, partners, and employees from and against any and all claims for damage to the person or property of any person or entity arising from Tenant's use of the Project, or from the conduct of Tenant's business or from any activity, work or things done, permitted or suffered by Tenant in or about the Project and shall further indemnify, defend and hold harmless Landlord, its agents, partners and employees from and against any and all claims, costs and expenses arising from any breach or default in the performance of any obligation of Tenant to be performed under the terms of this Lease, or arising from any act or omission of Tenant, or any of Tenant's agents, contractors, employees, or invitees, and from and against all costs, attorneys' fees, expenses and liabilities incurred by Landlord, its agents, partners and employees as the result of any such use, conduct, activity, default or negligence.  In case any action or proceeding is brought against Landlord, its agents, partners and employees, Tenant shall defend Landlord, and its agents, partners and employees at Tenant's expense by counsel reasonably satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense.  Landlord need not have first paid any claim in order to be so indemnified.  This indemnity shall survive the expiration or sooner termination of this Lease.

21.           Exemption of Landlord from Liability.  Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom or for loss of or damage to the merchandise, tenant improvements, fixtures, furniture, equipment, computers, files, automobiles, or other property of Tenant, Tenant's employees, agents, contractors or invitees, or any other person in or about the Project, nor shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents, contractors or invitees, whether such damage or injury is caused by or results from any cause whatsoever including, but not limited to, theft, criminal activity at the Project, negligent security measures, bombings or bomb scares, hazardous materials or medical waste, fire, steam, electricity, gas, water or rain, flooding, breakage of pipes, sprinklers, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises or upon other portions of the Project, or from other sources or places, or from new construction or the repair, alteration or improvement of any part of the Project, and regardless of whether the cause of the damage or injury arises out of Landlord's or its employees, agents or contractors negligent or intentional acts.  Landlord shall not be liable for any damages arising from any act or neglect of any employees, agents, contractors or invitees of any other tenant, occupant or user of the Project, nor from the failure of Landlord to enforce the provisions of the lease of any other tenant of the Project.  Tenant, as a material part of the consideration to Landlord hereunder, hereby assumes all risk of damage to Tenant's property or business or injury to persons, in, upon or about the Project arising from any cause, including Landlord's negligence or the negligence of its employees, agents or contractors, and Tenant hereby waives all claims in respect thereof against Landlord, its employees, agents and contractors.

22.           Environmental Provisions.

(a)  For purposes of this lease, the following additional definitions shall apply:

(i)           "Hazardous Substances" shall include any pollutants, petroleum products, dangerous substances, toxic substances, hazardous wastes, hazardous materials, or hazardous substances as defined in or pursuant to the Industrial Site Recovery Act and all rules, regulations, orders, directives and opinions promulgated thereunder ("ISRA") N.J.S.A. 13:1K-6 et seq.; the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. and all rules, regulations, orders, directives and opinions promulgated thereunder ("Spill Act"); the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.; the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §9601 et seq. and all rules, regulations, orders, directives and opinions promulgated thereunder ("CERCLA"); or any other Federal, State or Local environmental law or ordinance; and all rules, regulations, orders, directives and opinions promulgated under the foregoing, any amendments to any of the foregoing and any successor legislation to any of the foregoing (collectively "Environmental Laws");

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(ii)           "Release" means releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping;

(iii)           "Notice" means any summons, citation, directive, order, claim, litigation, investigation, proceeding, judgment, letter, submission or other communication, written or oral, actual or threatened, from the New Jersey Department of Environmental Protection ("DEP"), the United States Environmental Protection Agency ("EPA"), any other Federal, State or Local agency or authority or any other entity or any individual, concerning any act or omission resulting or which may result in the Release of Hazardous Substances into the waters or onto the lands of the State of New Jersey or into waters outside the jurisdiction of the State of New Jersey or into the "environment" as such terms are defined in CERCLA, or otherwise related to any Environmental Law or Tenant's obligations pursuant to this Section 22.  "Notice" shall include the imposition of any liens of any real or personal property or revenues of Tenant including, but not limited to, Tenant's interest in the Premises or any of Tenant's property located thereon, pursuant to or resulting from the violation of any Environmental Law, or any other governmental actions, orders or permits or any knowledge after due inquiry and investigation of any facts which could give rise to any of the above.

(b)           To the extent that Tenant may be permitted under applicable law to use the Premises and/or the Project for the generating, manufacturing, refining, transporting, treating, storing, handling, disposing, transferring or processing of Hazardous Substances, Tenant shall ensure that said use shall be conducted at all times strictly in accordance with applicable Environmental Law.  Tenant shall not cause nor permit as a result of any intentional or unintentional act or omission, a Release of Hazardous Substances.  If any intentional or unintentional act or omission results in any actual or alleged Release of Hazardous Substances, Tenant promptly shall conduct necessary sampling and cleanup and remediate such Release in accordance with applicable Environmental Laws.

(c)           Tenant shall not operate any business at the Premises which shall be subject to ISRA.  Tenant hereby represents that its Standard Industrial Classification (herein "SIC") Number is the SIC Number set forth in Section 1.19 above as determined by reference to the SIC Manual and its operations shall consist of the Use described in Section 1.5.  Notwithstanding any provision of ISRA to the contrary, if the Tenant's operations become subject to ISRA, Tenant, at Tenant's own expense, shall do whatever is necessary to comply with ISRA whenever an obligation to do so arises.  If requested to do so by Landlord, but no more often than once per year, Tenant shall obtain a report from a qualified environmental consulting firm confirming that ISRA does not apply to Tenant's operations.  At no expense to Landlord, Tenant promptly shall provide all information requested by Landlord regarding or in furtherance of ISRA compliance.  Tenant shall sign any affidavit concerning compliance with Environmental Laws submitted by Landlord which is true, accurate and complete; if an affidavit is not true, accurate and complete, Tenant shall provide the necessary information to make it true, accurate or complete and then shall sign same.

(d)           Tenant promptly shall furnish Landlord with true copies of any Notices of any nature made by Tenant to, or received by Tenant from DEP, EPA, or any local, state or federal authority.

(e)           Notwithstanding anything in this Lease to the contrary, and without limiting any other provisions of this Section 22, Tenant, at its sole cost and expense, shall observe, comply and fulfill all of the terms and provisions of all applicable Environmental Laws, as the same may be amended from time to time, as they relate to Tenant's use and occupancy of the Premises during the term of this Lease.

Without limiting the foregoing, Tenant agrees:

(i)           That it shall not do or omit to do nor suffer the commission or omission of any act, the commission or omission of which is prohibited by or may result in liability pursuant to any Environmental Law, including without limitation, the Release of Hazardous Substances;

                                                (ii)           Whenever the provisions of any Environmental Law requires the "owner or operator" of the Premises to do any act, Tenant on behalf of Tenant and/or Landlord, as the case may be, shall do such act at its sole cost and expense, including the making of all submissions and the providing of all information, it being the intention of the parties hereto that Landlord shall be free of all expenses and obligations arising from or in connection with compliance with Environmental Laws relating to the Premises and that Tenant shall fulfill all such obligations and pay all such expenses.

(f)           In the event there shall be filed a lien against the Premises and/or the Project arising out of a claim(s) by DEP pursuant to the provisions of the Spill Act or by EPA pursuant to the provisions of CERCLA, Tenant immediately either shall: 1) pay the claim and remove the lien from the Premises and/or the Project; or, ii) furnish a bond, cash receipt or other security satisfactory to Landlord sufficient to discharge the claim out of which the lien arises.

(g)           (i)           Tenant promptly shall provide Landlord with all documentation and correspondence provided to DEP pursuant to the Worker and Community Right to Know Act, N.J.S.A. 34:5A-1 et seq., and all rules, regulations, orders, directives and opinions promulgated thereunder.

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(ii)           Tenant promptly shall supply Landlord all reports and notices made by Tenant pursuant to the Hazardous Substance Discharge Reports and Notices Act, N.J.S.A. 13:1K-15, et seq. and all rules, regulations, orders, directives and opinions promulgated thereunder.

(iii)           Tenant promptly shall provide Landlord with a copy of all permits obtained pursuant to any Environmental Law.

(h)           Tenant acknowledges that for Landlord to comply with the requirements of Environmental Laws, Landlord from time to time, may have to enter the Premises.  Landlord and/or its agents shall have an irrevocable license and right to enter the Premises for such purposes.  All such entry by Landlord and/or its agents shall be upon reasonable notice to Tenant.

(i)           Tenant agrees to cooperate with Landlord to provide any information necessary to Landlord in order to effect compliance with any Environmental Law and to execute any documents requested by Landlord in connection with compliance with any Environmental Law.

(j)           Tenant shall cooperate fully in allowing, from time to time, such examinations, tests, inspections and reviews of the Premises as Landlord, in its sole and absolute discretion, shall determine to be advisable in order to evaluate any potential environmental problems or Tenant's compliance with Environmental Laws. Landlord and Landlord's employees, agent, contractors and lenders shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Tenant with this Section 22.  Landlord shall have the right to employ experts and/or consultants in connection with its examination of the Premises and with respect to the installation, operation, use, monitoring, maintenance, or removal of any Hazardous Materials on or from the Premises.  The costs and expenses of any such inspections shall be paid by the party requesting same, unless a contamination, caused or materially contributed to by Tenant, is found to exist or be imminent, or unless the inspection is requested or ordered by governmental authority as the result of any such existing or imminent violation or contamination, in which case, Tenant shall upon request reimburse Landlord for the cost and expenses of such inspection.

(k)           Tenant shall indemnify, defend and hold Landlord harmless from any and all fines, suits, procedures, claims, liabilities, costs and actions of any kind, including counsel fees (including those incurred to enforce this indemnity or for any other purpose) arising out of or in any way related to (1) any spills or discharges of Hazardous Substances at the Premises and/or Project for which Tenant is responsible pursuant to this Lease or (2) Tenant's failure to comply with the provisions of this Lease.  Tenant's obligations and liabilities pursuant to this Lease shall continue for so long as Landlord remains responsible or liable under Environmental Laws or otherwise for any spills or discharges of Hazardous Substances and/or for any violations of Environmental Laws which occur during Tenant's possession of the Premises.  Tenant's failure to abide by the terms of this Section shall be enforceable by injunction.

(l)           Notwithstanding anything to the contrary contained in this Lease, Tenant shall not be responsible for complying with any Environmental Law in connection with any spill or Release of Hazardous Substances which shall have occurred prior to the Commencement Date of this Lease.

(m)           In the event Tenant shall fail to comply in full with this Section, Landlord, at its option, may perform any and all of Tenant's obligations as aforesaid, and all costs and expenses so incurred by Landlord shall be deemed a claim against Tenant as Additional Rent payable on demand.

(n)           In no event shall Landlord be liable or responsible to Tenant or anyone claiming through or under Tenant for the failure of any other tenant or other person to comply with any Environmental Law and Tenant shall not be excused from the performance of any obligation hereunder due to such failure.

(o)           The provisions of this Section 22 shall survive the expiration or earlier termination of this Lease, regardless of the reason for such termination and compliance with the provisions of this Section 22 may require Tenant to expend funds or perform acts after the expiration or termination of this Lease.  Tenant agrees to expend such funds and/or perform such acts and shall not be excused therefrom notwithstanding any expiration or termination of this Lease, it being agreed and acknowledged that Landlord would not have entered into this Lease but for the provisions of this Section 22.

23.           Medical Waste Disposal.   IfTenant produces medical waste, Landlord may, at its option, provide medical waste disposal services to Tenant. If Landlord elects to provide such services, Landlord may require Tenant to use said services.  Landlord, at its option, may bill Tenant directly for such services, which amounts shall then constitute additional rent hereunder, or Landlord may include the cost of providing such services in Operating Expenses.  Tenant waives its right to the fullest extent allowed by law to assert any claim against Landlord in connection with the negligent provision of medical waste disposal services by Landlord.  In the event Landlord is unable or chooses not to provide such disposal services to Tenant, Tenant shall arrange for the disposal of its medical waste and such disposal shall be done in compliance with all applicable laws.  Tenant hereby agrees to indemnify, defend and hold harmless Landlord against any cost, loss, liability, action, suit or expense (including attorneys' fees) arising out of or relating to the existence of or the disposal of medical waste produced by Tenant at the Premises.

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24.           Tenant Improvements.  Tenant acknowledges and agrees that Landlord shall not be obligated to construct any tenant improvements on behalf of Tenant unless a work letter agreement (the "Work Letter") is attached to this Lease as Schedule 1.  If a space plan is attached to the Work Letter, the space plan shall not be effective unless separately initialed by Landlord.  Except as set forth in a Work Letter, it is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, the Project, or any part thereof, or to provide any allowance for such purposes, and that no representations respecting the condition of the Premises or the Project have been made by Landlord to Tenant.

See Addendum Paragraph 3

25.           Subordination.

25.1           Effect of Subordination.  This Lease, and any Option (as defined in Section 26 below) granted hereby shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Project and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof.  Notwithstanding such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms.  In the event of a foreclosure of any such mortgage or the termination of this Lease, Tenant will, upon request of any person or party succeeding to the interest of Landlord as a result of such foreclosure or termination, automatically become the Tenant of such successor in interest without change in the terms or other provisions of this Lease.  Upon request by Landlord's mortgagee or such successor in interest, Tenant shall execute and deliver, on terms and conditions reasonably acceptable to the parties, an instrument or instruments confirming the attornment herein provided for.  If any mortgagee, trustee or ground lessor shall elect to have this Lease and any Options granted hereby prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease and such Options shall be deemed prior to such mortgage, deed of trust or ground lease, whether this Lease or such Options are dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof.  In the event of the foreclosure of a security device, the new owner shall not (a) be liable for any act or omission of any prior landlord or with respect to events occurring prior to its acquisition of title, (b) be liable for the breach of this Lease by any prior landlord, (c) be subject to any offsets or defenses which Tenant may have against the prior landlord or (d) be liable to Tenant for the return of its Security Deposit.

25.2           Execution of Documents.  Tenant agrees to execute and acknowledge any documents required to effectuate an attornment, a subordination, or to make this Lease or any Option granted herein prior to the lien of any mortgage, deed of trust or ground lease, as the case may be.  Tenant's failure to execute such documents within ten (10) days after written demand shall constitute a material default by Tenant hereunder or, at Landlord's option, Landlord shall have the right to execute such documents on behalf of Tenant as Tenant's attorney-in-fact.  Tenant does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead, to execute such documents in accordance with this Section 25.2, said appointment to be a power during the Term of this Lease coupled with an interest and irrevocable.

26.           Options.

26.1           Definition.  As used in this Lease, the word "Option" has the following meaning: (1) the right or option to extend the Term of this Lease or to renew this Lease, and (2) the option or right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other space within the Project or the right of first offer to lease other space within the Project.  Any Option granted to Tenant by Landlord must be evidenced by a written option agreement attached to this Lease as a rider or addendum or said option shall be of no force or effect.

26.2           Options Personal.  Each Option granted to Tenant in this Lease, if any, is personal to the original Tenant and may be exercised only by the original Tenant while occupying the entire Premises and may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity other than Tenant, including, without limitation, any permitted transferee as defined in Section 12.  The Options, if any, herein granted to Tenant are not assignable separate and apart from this Lease, nor may any Option be separated from this Lease in any manner, either by reservation or otherwise.  If at any time an Option is exercisable by Tenant, the Lease has been assigned, or a sublease exists as to any portion of the Premises, the Option shall be deemed null and void and neither Tenant nor any assignee or subtenant shall have the right to exercise the Option.

26.3           Multiple Options.

In the event that Tenant has multiple Options to extend or renew this Lease a later Option cannot be exercised unless the prior Option to extend or renew this Lease has been so exercised.

26.4           Effect of Default on Options.

Tenant shall have no right to exercise an Option (i) during the time commencing from the date Landlord gives to Tenant a notice of default pursuant to Section 13.1 and continuing until the noncompliance alleged in said notice of default is cured, or (ii) if Tenant is in default of any of the terms, covenants or conditions of this Lease.  The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Tenant's inability to exercise an Option because of the provisions of this Section 26.4.

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26.5           Limitations on Options.

Notwithstanding anything to the contrary contained in any rider or addendum to this Lease, any options, rights of first refusal or rights of first offer granted hereunder shall be subject and secondary to Landlord's right to first offer and lease any such space to any tenant who is then occupying or leasing such space at the time the space becomes available for leasing and shall be subject and subordinated to any other options, rights of first refusal or rights of first offer previously given to any other person or entity.

26.6           Notice of Exercise of Option.  Notwithstanding anything to the contrary contained in Section 40, Tenant may only exercise an option by delivering its written notice of exercise to Landlord by certified mail, return receipt and date of delivery requested.  It shall be Tenant’s obligation to prove that such notice was so sent in a timely manner and was delivered to Landlord by the U.S. Postal Service.

See Addendum Paragraph 4

27.           Landlord Reservations.  Landlord shall have the right: (a) to change the name and address of the Project or Building upon not less than ninety (90) days prior written notice; (b) to, at Tenant's expense, provide and install Building standard graphics on or near the door of the Premises and such portions of the Common Areas as Landlord shall determine, in Landlord's sole discretion; (c) to permit any tenant the exclusive right to conduct any business as long as such exclusive right does not conflict with any rights expressly given herein; and (d) to place signs, notices or displays upon the roof, interior, exterior or Common Areas of the Project.  Tenant shall not use a representation (photographic or otherwise) of the Building or the Project or their name(s) in connection with Tenant's business or suffer or permit anyone, except in an emergency, to go upon the roof of the Building.  Landlord reserves the right to use the exterior walls of the Premises, and the area beneath, adjacent to and above the Premises together with the right to install, use, maintain and replace equipment, machinery, pipes, conduits and wiring through the Premises, which serve other parts of the Project provided that Landlord's use does not unreasonably interfere with Tenant's use of the Premises.

28.           Changes to Project.  Landlord shall have the right, in Landlord's sole discretion, from time to time, to make changes to the size, shape, location, number and extent of the improvements comprising the Project (hereinafter referred to as "Changes") including, but not limited to, the Project interior and exterior, the Common Areas, elevators, escalators, restrooms, HVAC, electrical systems, communication systems, fire protection and detection systems, plumbing systems, security systems, parking control systems, driveways, entrances, parking spaces, parking areas and landscaped areas.  In connection with the Changes, Landlord may, among other things, erect scaffolding or other necessary structures at the Project, limit or eliminate access to portions of the Project, including portions of the Common Areas, or perform work in the Building, which work may create noise, dust or leave debris in the Building.  Tenant hereby agrees that such Changes and Landlord's actions in connection with such Changes shall in no way constitute a constructive eviction of Tenant or entitle Tenant to any abatement of rent.  Landlord shall have no responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant's business arising from the Changes, nor shall Tenant be entitled to any compensation or damages from Landlord for any inconvenience or annoyance occasioned by such Changes or Landlord's actions in connection with such Changes.

29.           Substitution of Other Premises.  Landlord shall have the right at any time to move Tenant to any other leasable space in the Project provided that said space shall be approximately the same size as the Premises and that Landlord shall pay the cost of moving Tenant's furniture and equipment to the new space.  The new space shall include tenant improvements that are substantially equivalent to the tenant improvements contained in the Premises, and the cost of any required tenant improvements shall be paid by Landlord.  If Landlord elects to relocate Tenant, Landlord shall give Tenant written notice of its election and Tenant shall have thirty (30) days thereafter to agree to be relocated in accordance with the terms and conditions of this Section 29 or to elect to terminate this Lease; provided, however, Tenant shall have no right to terminate this Lease pursuant to this Section 29 (and Tenant shall be deemed to have accepted such new space) unless the new space is ninety-four percent (94%) or less than the original Premises.  If Tenant elects to terminate this Lease within said thirty (30) day period or fails to respond to Landlord's notice within said thirty (30) day period, this Lease shall then terminate on the date which is sixty (60) days after the date Landlord gave Tenant its written notice electing to relocate Tenant.  Landlord shall have no liability to Tenant as a result of Tenant's election to terminate this Lease.  Prior to said termination, Landlord and Tenant shall perform all of their obligations under this Lease.  If Tenant elects to be relocated, Landlord shall deliver substitute space to Tenant not more than one hundred eighty (180) days after (a) Tenant agrees to be relocated and (b) approves plans for the construction of required tenant improvements at the new space, if any.  Tenant shall not unreasonably withhold or delay its approval of any plans for the construction of tenant improvements.  Landlord shall give Tenant thirty (30) days' advance notice of the estimated move in date.  Prior to the date that Tenant is moved to the new space, Tenant shall remain in the Premises and shall continue to perform all of its obligations under this Lease.  After Tenant moves into the new space, this Lease shall remain in full force and effect and be deemed applicable to such new space, except as to Base Rent, Tenant's Share of Operating Expense increases, Tenant’s Share of Real Property Tax increases and the number of parking spaces Tenant shall be entitled to use, all of which shall be adjusted based on the relationship between the number of rentable square feet in the original Premises and the number of rentable square feet in the substituted space.  Upon Tenant's election to be relocated, Landlord and Tenant shall amend this Lease to provide for the relocation of the Premises.

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30.           Holding Over.  If Tenant remains in possession of the Premises or any part thereof after the expiration or earlier termination of the term hereof with Landlord's consent, such occupancy shall be a tenancy from month to month upon all the terms and conditions of this Lease pertaining to the obligations of Tenant, except that the Base Rent payable shall be the greater of (a) two hundred percent (200%) of the Base Rent and Additional Rent payable immediately preceding the termination date of this Lease or (b) one hundred twenty-five percent (125%) of the fair market base rent for the Premises as of the date Tenant holds over, and all Options, if any, shall be deemed terminated and be of no further effect.  If Tenant remains in possession of the Premises or any part thereof after the expiration of the Term hereof without Landlord's consent, Tenant shall, at Landlord's option, be treated as a tenant at sufferance or a trespasser.  Nothing contained herein shall be construed to constitute Landlord's consent to Tenant holding over at the expiration or earlier termination of the Lease Term.  Tenant hereby agrees to indemnify, hold harmless and defend Landlord from any cost, loss, claim or liability (including attorneys' fees) Landlord may incur as a result of Tenant's failure to surrender possession of the Premises to Landlord upon the termination of this Lease.

31.           Landlord's Access.

31.1           Access.  Landlord and Landlord's agents and employees shall have the right to enter the Premises at reasonable times for the purpose of inspecting the Premises, performing any services required of Landlord, showing the Premises to prospective purchasers, lenders, or tenants, undertaking safety measures and making alterations, repairs, improvements or additions to the Premises or to the Project.  In the event of an emergency, Landlord may gain access to the Premises by any reasonable means, and Landlord shall not be liable to Tenant for damage to the Premises or to Tenant's property resulting from such access.  Landlord may at any time place on or about the Building for sale or for lease signs and Landlord may at any time during the last one hundred twenty (120) days of the Term hereof place on or about the Premises for lease signs.

31.2           Keys.  Landlord shall have the right to retain keys to the Premises and to unlock all doors at the Premises, and in the case of emergency to enter the Premises by any reasonably appropriate means, and any such entry shall not be deemed a forcible or unlawful entry or detainer of the Premises or an eviction.  Tenant waives any claims for damages or injuries or interference with Tenant's property or business in connection therewith.  Tenant shall provide Landlord with one key for each lock in the Premises.

32.           Security Measures.  Tenant hereby acknowledges that Landlord shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or the Project, and Landlord shall have no liability to Tenant due to its failure to provide such services.  Tenant assumes all responsibility for the protection of Tenant, its agents, employees, contractors and invitees and the property of Tenant and of Tenant's agents, employees, contractors and invitees from acts of third parties.  Nothing herein contained shall prevent Landlord, at Landlord's sole option, from implementing security measures for the Project or any part thereof, in which event Tenant shall participate in such security measures and the cost thereof shall be included within the definition of Operating Expenses, and Landlord shall have no liability to Tenant and its agents, employees, contractors and invitees arising out of Landlord’s negligent provision of security measures.  Landlord shall have the right, but not the obligation, to require all persons entering or leaving the Project to identify themselves to a security guard and to reasonably establish that such person should be permitted access to the Project.

33.           Easements.  Landlord reserves to itself the right, from time to time, to grant such easements, rights and dedications that Landlord deems necessary or desirable, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Tenant.  Tenant shall sign any of the aforementioned documents within ten (10) days after Landlord's request and Tenant's failure to do so shall constitute a material default by Tenant.  The obstruction of Tenant's view, air, or light by any structure erected in the vicinity of the Project, whether by Landlord or third parties, shall in no way affect this Lease or impose any liability upon Landlord.

34.           Transportation Management.  Tenant shall fully comply with all present or future programs implemented or required by any governmental or quasi-governmental entity or Landlord to manage parking, transportation, air pollution, or traffic in and around the Project or the metropolitan area in which the Project is located.

35.           Severability.  The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision hereof.

36.           Time of Essence.  Time is of the essence with respect to each of the obligations to be performed by Tenant under this Lease.

37.           Definition of Rent.  All monetary obligations of Tenant to Landlord under the terms of this Lease, including, but not limited to, Base Rent, Tenant's Share of Operating Expenses, parking charges and charges for after-hours HVAC shall be deemed to be rent.

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38.           Incorporation of Prior Agreements.  This Lease and the attachments listed in Section 1.16 contain all agreements of the parties with respect to the lease of the Premises and any other matter mentioned herein.  No prior or contemporaneous agreement or understanding pertaining to any such matter shall be effective.  Except as otherwise stated in this Lease, Tenant hereby acknowledges that no real estate broker nor Landlord or any employee or agents of any of said persons has made any oral or written warranties or representations to Tenant concerning the condition or use by Tenant of the Premises or the Project or concerning any other matter addressed by this Lease.

39.            Amendments.  This Lease may be modified in writing only, signed by the parties in interest at the time of the modification.

40.           Notices.  Subject to the requirements of Section 26.6 of this Lease, all notices required or permitted by this Lease shall be in writing and may be delivered (a) in person (by hand, by messenger or by courier service), (b) by U.S. Postal Service regular mail, (c) by U.S. Postal Service certified mail, return receipt requested, (d) by U.S. Postal Service Express Mail, Federal Express or other overnight courier, or (e) by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Section 40.  Any notice permitted or required hereunder, and any notice to pay rent or quit or similar notice, shall be deemed personally delivered to Tenant on the date the notice is personally delivered to any employee of Tenant at the Premises.  The addresses set forth in Section 1.17 of this Lease shall be the address of each party for notice purposes.  Landlord or Tenant may by written notice to the other specify a different address for notices purposes, except that upon Tenant's taking possession of the Premises, the Premises shall constitute Tenant's address for the purpose of mailing or delivering notices to Tenant.  A copy of all notices required or permitted to be given to Landlord hereunder shall be concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereinafter designate by written notice to Tenant.  Any notice sent by regular mail or by certified mail, return receipt requested, shall be deemed given three (3) days after deposited with the U.S. Postal Service.  Notices delivered by U.S. Express Mail, Federal Express or other courier shall be deemed given on the date delivered by the carrier to the appropriate party's address for notice purposes.  If any notice is transmitted by facsimile transmission, the notice shall be deemed delivered upon telephone confirmation of receipt of the transmission thereof at the appropriate party's address for notice purposes.  A copy of all notices delivered to a party by facsimile transmission shall also be mailed to the party on the date the facsimile transmission is completed.  If notice is received on Saturday, Sunday or a legal holiday, it shall be deemed received on the next business day.  Nothing contained herein shall be construed to limit Landlord's right to serve any notice to pay rent or quit or similar notice by any method permitted by applicable law, and any such notice shall be effective if served in accordance with any method permitted by applicable law whether or not the requirements of this Section have been met.

41.           Waivers.  No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision.  Landlord's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant.  The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.  No acceptance by Landlord of partial payment of any sum due from Tenant shall be deemed a waiver by Landlord of its right to receive the full amount due, nor shall any endorsement or statement on any check or accompanying letter from Tenant be deemed an accord and satisfaction.  Tenant hereby waives for Tenant and all those claiming under Tenant all rights now or hereafter existing to redeem by order or judgment of any court or by legal process or writ, Tenant's right of occupancy of the Premises after any termination of this Lease.

42.           Covenants.  This Lease shall be construed as though the covenants contained herein are independent and not dependent and Tenant hereby waives the benefit of any statute to the contrary.  All provisions of this Lease to be observed or performed by Tenant are both covenants and conditions.

43.           Binding Effect; Choice of Law.  Subject to any provision hereof restricting assignment or subletting by Tenant, this Lease shall bind the parties, their heirs, personal representatives, successors and assigns.  This Lease shall be governed by the laws of the state in which the Project is located and any litigation concerning this Lease between the parties hereto shall be initiated in the county in which the Project is located.

44.            Attorneys' Fees.  If Landlord or Tenant brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, or appeal thereon, shall be entitled to its reasonable attorneys' fees and court costs to be paid by the losing party as fixed by the court in the same or separate suit, and whether or not such action is pursued to decision or judgment.  The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees and court costs reasonably incurred in good faith. Landlord shall be entitled to reasonable attorneys' fees and all other costs and expenses incurred in the preparation and service of notices of default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such default. Landlord and Tenant agree that attorneys’ fees incurred with respect to defaults and bankruptcy are actual pecuniary losses within the meaning of Section 365(b)(1)(B) of the Bankruptcy Code or any successor statute.

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45.           Auctions.  Tenant shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises or the Common Areas.  The holding of any auction on the Premises or Common Areas in violation of this Section 45 shall constitute a material default hereunder.

46.           Signs.  Tenant shall not place any sign upon the Premises (including on the inside or the outside of the doors or windows of the Premises) or the Project without Landlord's prior written consent, which may be given or withheld in Landlord's sole discretion.  Landlord shall have the right to place any sign it deems appropriate on any portion of the Project except the interior of the Premises.  Any sign Landlord permits Tenant to place upon the Premises shall be maintained by Tenant, at Tenant's sole expense.  If Landlord permits Tenant to include its name in the Building's directory, the cost of placing Tenant's name in the directory and the cost of any subsequent modifications thereto shall be paid by Tenant, at Tenant's sole expense.

See Addendum Paragraph 5

47.           Merger.  The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall not result in the merger of Landlord's and Tenant's estates, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies.

48.           Quiet Possession.  Provided Tenant is not in default hereunder, Tenant shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease and the rights of any lender.

49.           Authority.  If Tenant is a corporation, trust, or general or limited partnership, Tenant, and each individual executing this Lease on behalf of such entity, represents and warrants that such individual is duly authorized to execute and deliver this Lease on behalf of said entity, that said entity is duly authorized to enter into this Lease, and that this Lease is enforceable against said entity in accordance with its terms.  If Tenant is a corporation, trust or partnership, Tenant shall deliver to Landlord upon demand evidence of such authority satisfactory to Landlord.

50.           Conflict.  Except as otherwise provided herein to the contrary, any conflict between the printed provisions, Exhibits, Addenda or Riders of this Lease and the typewritten or handwritten provisions, if any, shall be controlled by the typewritten or handwritten provisions.

51.           Multiple Parties.  If more than one person or entity is named as Tenant herein, the obligations of Tenant shall be the joint and several responsibility of all persons or entities named herein as Tenant.  Service of a notice in accordance with Section 40 on one Tenant shall be deemed service of notice on all Tenants.

52.           Interpretation.  This Lease shall be interpreted as if it was prepared by both parties and ambiguities shall not be resolved in favor of Tenant because all or a portion of this Lease was prepared by Landlord.  The captions contained in this Lease are for convenience only and shall not be deemed to limit or alter the meaning of this Lease.  As used in this Lease the words tenant and landlord include the plural as well as the singular. Words used in the neuter gender include the masculine and feminine gender.

53.           Prohibition Against Recording.  Neither this Lease, nor any memorandum, affidavit or other writing with

respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant.  Landlord shall have the right to record a memorandum of this Lease, and Tenant shall execute, acknowledge and deliver to Landlord for recording any memorandum prepared by Landlord.

54.           Relationship of Parties.  Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint -venture or any association between Landlord and Tenant.

55.           Rules and Regulations.  Tenant agrees to abide by and conform to the Rules and to cause its employees, suppliers, customers and invitees to so abide and conform.  Landlord shall have the right, from time to time, to modify, amend and enforce the Rules.  Landlord shall not be responsible to Tenant for the failure of other persons including, but not limited to, other tenants, their agents, employees and invitees to comply with the Rules.

56.           Right to Lease.  Landlord reserves the absolute right to effect such other tenancies in the Project as Landlord in its sole discretion shall determine, and Tenant is not relying on any representation that any specific tenant or number of tenants will occupy the Project.

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57.           Security Interest.  In consideration of the covenants and agreements contained herein, and as a material consideration to Landlord for entering into this Lease, Tenant hereby unconditionally grants to Landlord a continuing security interest in and to all money and property of any kind or description, including, without limitation, any personal property left by Tenant at the Premises, the security deposit, if any, and any advance rent payment or other deposit, now in or hereafter delivered to or coming into the possession, custody or control of Landlord, by or for the account of Tenant, in any manner and for any purpose, together with any increase in profits or proceeds from such property.  The security interest granted to Landlord hereunder secures payment and performance of all obligations of Tenant under this Lease now or hereafter arising or existing, whether direct or indirect, absolute or contingent, or due or to become due.  In the event of a default under this Lease which is not cured within the applicable grace period, if any, Landlord is and shall be entitled to all the rights, powers and remedies granted a secured party under the State of New Jersey Commercial Code and otherwise available at law or in equity, including, but not limited to, the right to retain as damages the personal property, security deposit and other funds held by Landlord, without additional notice or demand regarding this security interest.  Tenant agrees that it will execute such other documents or instruments as may be reasonably necessary to carry out and effectuate the purpose and terms of this Section, or as otherwise reasonably requested by Landlord, including without limitation, execution of a UCC-1 financing statement.  Landlord's rights under this Section are in addition to Landlord's rights under Sections 5 and 13.

58.           Security for Performance of Tenant's Obligations.  Notwithstanding any security deposit held by Landlord pursuant to Section 5 and any security interest held by Landlord pursuant to Section 57, Tenant hereby agrees that in the event of a default by Tenant, Landlord shall be entitled to seek and obtain a writ of attachment and/or a temporary protective order and Tenant hereby waives any rights or defenses to contest such a writ of attachment and/or temporary protective order on the basis of the State of New Jersey Code of Civil Procedure or any other related statute or rule.

59.           Financial Statements.  From time to time, at Landlord's request, Tenant shall cause the following financial information to be delivered to Landlord, at Tenant's sole cost and expense, upon not less than ten (10) days' advance written notice from Landlord:  (a) a current financial statement for Tenant and Tenant's financial statements for the previous two accounting years, (b) a current financial statement for any guarantor(s) of this Lease and the guarantor's financial statements for the previous two accounting years and (c) such other financial information pertaining to Tenant or any guarantor as Landlord or any lender or purchaser of Landlord may reasonably request.  All financial statements shall be prepared in accordance with generally accepted accounting principles consistently applied and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant.

60.           Confidentiality. Tenant acknowledges and agrees that the terms of this Lease are confidential and constitute propriety information of Landlord.  Disclosure of the terms hereof could adversely affect the ability of Landlord to negotiate other leases with respect to the Project and may impair Landlord's relationship with other tenants of the Project.  Tenant agrees that it and its partners, officers, directors, employees, brokers, and attorneys, if any, shall not disclose the terms and conditions of this Lease to any other person or entity without the prior written consent of Landlord which may be given or withheld by Landlord, in Landlord's sole discretion.

61.           Rule Against Perpetuities.  Notwithstanding anything to the contrary contained in this Lease, if the Term of the Lease has not commenced within twenty-one (21) years after the date of this Lease, this Lease shall automatically terminate on the twenty-first (21st) anniversary of such date.  The sole purpose of this provision is to avoid any interpretation of this Lease as a violation of the Rule Against Perpetuities, or any other rule of law or equity concerning restraints on alienation.

62.           Attachments.  The items listed in Section 1.16 are a part of this Lease and are incorporated herein by this reference.

See Addendum Paragraph 6

63. OFAC Certification.

63.1.           Tenant certifies that:  (i) It is not acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Assets Control; and (ii) It is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity, or nation.

63.2.           Tenant hereby agrees to defend, indemnify, and hold harmless Landlord from and against any and all claims, damages, losses, risks, liabilities, and expenses (including attorney’s fees and costs) arising from or related to any breach of the foregoing certification.

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64.           WAIVER OF JURY TRIAL.  LANDLORD AND TENANT HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER LANDLORD AGAINST TENANT OR TENANT AGAINST LANDLORD ON ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT.

65.           Counterpart Copies; Electronic Signatures.  This Lease may be executed in two or more counterpart copies, each of which shall be deemed to be an original and all of which counterparts shall have the same force and effect as if the parties hereto had executed a single copy of this Lease. The parties acknowledge and agree that notwithstanding any law or presumption to the contrary, an electronic or telefaxed signature of either party, whether upon this Lease or any related document shall be deemed valid and binding and admissible by either party against the other as if same were an original ink signature. Landlord and Tenant (i) intend to be bound by the signatures on any document sent by facsimile or electronic mail, (ii) are aware that the other party will rely on such signatures, and (iii) hereby waive any defenses to the enforcement of the terms of this Lease based on the foregoing forms of signature.

SIGNATURES ON FOLLOWING PAGE

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LANDLORD AND TENANT ACKNOWLEDGE THAT THEY HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO.  THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE PREMISES.  TENANT ACKNOWLEDGES THAT IT HAS BEEN GIVEN THE OPPORTUNITY TO HAVE THIS LEASE REVIEWED BY ITS LEGAL COUNSEL PRIOR TO ITS EXECUTION.  PREPARATION OF THIS LEASE BY LANDLORD OR LANDLORD'S AGENT AND SUBMISSION OF SAME TO TENANT SHALL NOT BE DEEMED AN OFFER BY LANDLORD TO LEASE THE PREMISES TO TENANT OR THE GRANT OF AN OPTION TO TENANT TO LEASE THE PREMISES.  THIS LEASE SHALL BECOME BINDING UPON LANDLORD AND TENANT ONLY WHEN FULLY EXECUTED BY BOTH PARTIES AND WHEN LANDLORD HAS DELIVERED THIS LEASE TO TENANT IN THE MANNER SET FORTH IN THIS LEASE.

LANDLORD	TENANT
THE REALTY ASSOCIATES FUND X, L.P., a Delaware limited partnership	ECHO THERAPEUTICS, INC., a Delaware corporation
By:  Realty Associates Fund X LLC, a Delaware limited liability company, general partner By:  TA Realty LLC, a Massachusetts limited liability company, manager By:  /s/ James Knowles                          Regional Director 1/29/15                     Its:___________________	By:/s/ Alan W. Schoenbart          Alan W. Schoenbart Its: Chief Financial Officer Date of Tenant’s Execution:  1-20-15

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ADDENDUM

THIS ADDENDUM (the "Addendum") is attached to the Lease dated as of January 20, 2015, by and between THE REALTY ASSOCIATES FUND X, L.P., a Delaware limited partnership ("Landlord") and ECHO THERAPEUTICS, INC., a Delaware corporation ("Tenant") and incorporated herein by reference thereto. To the extent that there are any conflicts between the provisions of the Lease and the provisions of this Addendum, the provisions of this Addendum shall supersede the conflicting provisions of the Lease.

1.           Base Rent Abatement. Notwithstanding anything to the contrary contained in this Lease, Landlord hereby agrees to conditionally waive Base Rent due with respect to the Premises for the first two (2) full consecutive calendar months of the Term of the Lease in the amount of Seven Thousand Five Hundred Ninety Nine and 58/100 Dollars ($7,599.58) per month (the “Base Rent Abatement”).  No amounts due to Landlord under the Lease other than the Base Rent Abatement referred to herein shall be conditionally waived, except as may be expressly provided in another provision of the Lease. Tenant shall be responsible to pay a prorated portion of the Base Rent due for the period between the Commencement Date through and including the last day of the calendar month in which the Commencement Date occurred in the event the Commencement Date is not the first day of a calendar month.  Nothing contained in this Paragraph shall be construed to relieve Tenant of the obligation set forth in Section 4 of the Lease to pay to Landlord the first month's Base Rent concurrently with Tenant's execution of the Lease, which such amount shall be applied to the Base Rent due for the third (3rd) full calendar month of the Term.   In the event Tenant commits a default as defined in Section 13.1 of the Lease, Base Rent coming due thereafter shall not be waived.  Furthermore more, in the event Landlord is exercising its right to terminate the Lease as a result of Tenant’s default beyond the expiration of any applicable notice and cure period, all Base Rent that Landlord conditionally waived in the past shall be immediately due and payable by Tenant to Landlord without notice or demand from Landlord.  If the Lease expires in accordance with its terms, and does not terminate as a result of a default by Tenant, Landlord agrees to permanently waive the Base Rent it has conditionally waived.

2.   Security Deposit Letter of Credit.  Section 6 of the Lease is hereby amended by adding the following at the end of Section 6:

a.           The Security Deposit shall be in the form of an irrevocable, unconditional letter of credit (the "Security Deposit L/C") in the amount set forth in Section 1.10, as security for Tenant’s full and faithful performance of Tenant’s obligations hereunder.  The Security Deposit L/C shall be delivered to Landlord and maintained at Tenant's sole cost and expense.  The Security Deposit L/C shall be issued by and drawn on a bank reasonably acceptable to Landlord, in Landlord's sole discretion, and shall name Landlord as Beneficiary. The Security Deposit L/C shall be substantially in the form attached hereto as Exhibit E. If the maturity date of the Security Deposit L/C is prior to the one hundred twentieth (120th) day following the end of the Term of the Lease, Tenant shall renew the Security Deposit L/C as often as is necessary with the same bank or financial institution (or a similar bank or financial institution reasonably acceptable to Landlord) and upon the same terms and conditions, not less than thirty (30) days prior to the purported expiration date of the Security Deposit L/C in order that the Security Deposit L/C shall not expire prior to that day which is one hundred twenty (120) days following the expiration of the Term.  In the event that Tenant fails to timely renew the Security Deposit L/C as aforesaid, Landlord shall be entitled to draw against the entire amount of the Security Deposit L/C. The Security Deposit L/C shall be assignable by Landlord and upon such assignment to any party assuming in writing the lessor interest in this Lease, Landlord shall be relieved from all liability to Tenant therefor.

b.           Upon the occurrence of any default by Tenant in the payment of Base Rent or upon the occurrence of the events described in Section 13.1 of the Lease or in the event that Landlord terminates this Lease in accordance with the terms hereof following a default by Tenant, Landlord shall have the right to draw the entire amount of the Security Deposit L/C.  Landlord agrees to copy Tenant on any notice to the issuing bank requesting a draw against the Security Deposit L/C.  In the event that Tenant defaults in making any money payment required to be made by Tenant under the terms of this Lease other than the payment of Base Rent, then Landlord shall be entitled to draw upon so much of the Security Deposit L/C as equals the defaulted payment(s), plus any interest or other charges due thereon in accordance with this Lease, plus an additional twenty-five percent (25%) of such total. If Landlord elects to make a partial draw upon the Security Deposit L/C, Tenant shall promptly restore the Security Deposit L/C to its original amount within ten (10) days after written demand therefor. Landlord's election to make a partial draw upon the Security Deposit L/C shall in no event prejudice or waive Landlord's right to terminate this Lease if permitted under applicable provisions of this Lease, nor shall such election prejudice or waive any other remedy of Landlord reserved under the terms of this Lease, including the right to draw the entire amount of the Security Deposit L/C, if applicable.  The Security Deposit L/C shall be available for payment against the presentation of a sight draft by the Landlord together with a certificate from Landlord that Tenant is in default of its obligations hereunder beyond expiration of any applicable notice and cure periods and that Landlord is entitled, by the terms of this Lease, to draw upon the Security Deposit L/C.  The proceeds of the Security Deposit L/C, if drawn by Landlord pursuant to the terms hereof, shall be held by Landlord in accordance with the provisions of Section 6 of the Lease and applied to reduce any amount owed by Tenant to Landlord.  No interest shall be payable for any Security Deposit L/C proceeds held on account.

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c.           In the event that (1) Landlord draws the full amount of the Security Deposit L/C as a result of a default by Tenant, (2) this Lease is not terminated by Landlord as a result of such default, (3) such default is fully cured by Tenant, and (4) there is no outstanding uncured default by Tenant, then the balance of the sums drawn (after the payment of any sums related to the curing of any defaults) shall be applied first to obtain a replacement letter of credit as security for Tenant's performance hereunder, and the remaining balance, if any, will be refunded to Tenant. Upon the termination of this Lease and the payment in full to Landlord of all damages, costs and expenses to which Landlord is entitled, the balance of any funds drawn from the Security Deposit L/C after satisfying such obligations in full shall be refunded to Tenant.

d.           To the extent that the Security Deposit L/C is either lost or the issuing bank will not honor the Security Deposit L/C, Tenant personally guarantees the proceeds of the Security Deposit L/C and will immediately remit to Landlord the amount of the Security Deposit in cash to be held in accordance with this Section 6 of the Lease.

e.           Notwithstanding anything to the contrary contained in Section 6 of the Lease or herein, provided Tenant has not been in default under the Lease beyond the expiration of any applicable notice and cure period at any time during the Term of the Lease, Landlord shall permit the Security Deposit L/C to be amended (at Tenant's sole cost and expense) to reduce the face amount of the Security Deposit L/C according to the following schedule:

Date of Reduction	Reduction Amount	New Face Amount
1st day of the 20th month of the Term of the Lease	$38,484.00	$38,484.00

In no event shall a reduction to the amount of the Security Deposit L/C be deemed to have occurred absent a written amendment to the Security Deposit L/C by the issuing bank.  It shall be Tenant's sole obligation to obtain such written amendment from the issuing bank at Tenant’s sole cost and expense.  The remaining Thirty Eight Thousand Four Hundred Eighty Four and No/100 Dollars ($38,484.00) shall be held as the Security Deposit during the Term of the Lease, including any renewals or extensions thereof.  If Tenant is in default beyond the expiration of any applicable notice and cure period under the Lease at any time during the Term of this Lease, then Tenant's right thereafter to reduce the amount of the Security Deposit L/C set forth in this subparagraph (e) shall no longer apply and this subparagraph (e) shall become null and void and of no further force and effect.

3.           Tenant Improvements.

a.           Tenant hereby agrees to accept the Premises in its "as-is" condition existing on the Commencement Date, subject to the completion by Landlord of the Improvements described below.

b.           Landlord shall, at its sole cost and expense, using Building standard materials, methods and finishes, and as more fully shown on the plans attached hereto as Schedule 1 (the “Plans”) (i) remove the existing galley kitchen currently located in the center of the Premises; (ii) install double glass doors at the entry to the Premises off the elevator lobby; (iii) re-paint the Premises and re-carpet the carpeted portions of the Premises, and (iv) if reasonably possible, remove the secondary single wood door in what is currently the smaller unit and seal the wall (it being understood that if required by any governmental agencies to remain, such wood door shall not be removed)  (collectively, the "Improvements").  Any improvements other than the Improvements shall be subject to Landlord's prior written approval and shall be at Tenant's sole expense.  Tenant's initial occupancy of the Premises shall be deemed an acknowledgment that the Premises are in good and tenantable order and that Landlord has provided or constructed all Improvements to be provided or constructed.

4. Option to Renew.

a.           Subject to the provisions of Section 26 of the Lease, and provided that Tenant is not then in default beyond any applicable cure period at the time of Tenant’s exercise of the Option to renew or at the commencement of the Option term, Tenant shall have one (1) three (3) year Option to renew this Lease.  Tenant shall provide to Landlord on a date which is prior to the date that the Option period would commence (if exercised) by at least two hundred seventy (270) days and not more than three hundred sixty five (365) days, a written notice of the exercise of the Option to extend the Lease for the applicable additional Option term, time being of the essence.  Such notice shall be given in accordance with Section 40 of the Lease, and subject to Section 26.6.  If notification of the exercise of the Option is not so given and received, the Option granted hereunder shall automatically expire. Base Rent applicable to the Premises for the Option term (the “Option Rent”) shall be equal to the greater of (i) the then escalated Base Rent payable under the Lease during the period immediately preceding the expiration of the initial Term (which amount shall escalate annually during the Option period at the same rate as Base Rent is escalated during the initial Term), and (ii) the Fair Market Rental (as hereinafter defined). All other terms and conditions of the Lease shall remain the same, except that after the exercise of the renewal Option, Tenant shall have no further Options to renew this Lease and Landlord shall have no obligation to provide any improvements for the Premises or to provide the Base Rent Abatement during the Option term.

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b.           If Tenant exercises the Option, Landlord shall determine the Option Rent by using its good faith judgment.  Landlord shall provide Tenant with written notice of such amount within fifteen (15) days after Tenant exercises its Option.  Tenant shall have fifteen (15) days ("Tenant's Review Period") after receipt of Landlord's notice of the new base rent within which to accept such rental.  In the event Tenant fails to accept in writing such rental proposal by Landlord, then such proposal shall be deemed rejected and Landlord and Tenant shall attempt to agree upon such fair market rental, using their best good faith efforts.  If Landlord and Tenant fail to reach agreement within fifteen (15) days following Tenant's Review Period ("Outside Agreement Date") then the parties shall each within ten (10) days following the Outside Agreement Date appoint a real estate broker who shall be licensed in the State of New Jersey and who specializes in the field of commercial office space leasing in the Iselin, New Jersey market, has at least five (5) years of experience and is recognized within the field as being reputable and ethical.  If one party does not timely appoint a broker, then the broker appointed by the other party shall promptly appoint a broker for such party. Such two individuals shall each determine within ten (10) days after their appointment such Fair Market Rental.  If such individuals do not agree on Fair Market Rental, then the two individuals shall, within five (5) days, render separate written reports of their determinations and together appoint a third similarly qualified individual having the qualifications described above.  If the two brokers are unable to agree upon a third broker, the third broker shall be appointed by the President of the Board of Realtors for Middlesex County, New Jersey.  In the event the Board of Realtors for Middlesex County, New Jersey is no longer in existence, the third broker shall be appointed by the President of its successor organization. If no successor organization is in existence, the third broker shall be appointed by the Chief Judge of the Circuit Court of Middlesex County, New Jersey.  The third individual shall within ten (10) days after his or her appointment make a determination of such Fair Market Rental. The third individual shall determine which of the determinations of the first two individuals is closest to his own and the determination that is closest shall be final and binding upon the parties, and such determination may be enforced in any court of competent jurisdiction.  Landlord and Tenant shall each bear the cost of its broker and shall share equally the cost of the third broker.  Upon determination of the base rent payable pursuant to this Section, the parties shall promptly execute an amendment to this Lease stating the rent so determined.

c.           The term "Fair Market Rental" shall mean the annual amount per rentable square foot that a willing, comparable renewal tenant would pay and a willing, comparable landlord of a similar office building would accept at arm's length for similar space, giving appropriate consideration to the following matters: (i) annual rental rates per rentable square foot; (ii) the type of escalation clauses (including, without limitation, operating expenses, real estate taxes, and CPI) and the extent of liability under the escalation clauses (i.e., whether determined on a "net lease" basis or by increases over a particular base year or base dollar amount); (iii) rent abatement provisions reflecting free rent and/or no rent during the lease term; (iv) length of lease term; (v) size and location of premises being leased; and (vi) other generally applicable terms and conditions of tenancy for similar space; provided, however, Tenant shall not be entitled to any tenant improvement or refurbishment allowance recognizing that the absence of such tenant improvement or refurbishment allowance or other concessions paid for similar space shall be considered in determining the Fair Market Rental.  The Fair Market Rental may also designate periodic rental increases, a new Base Year and similar economic adjustments.  The Fair Market Rental shall be the Fair Market Rental in effect as of the beginning of the applicable Option period, even though the determination may be made in advance of that date, and the parties may use recent trends in rental rates in determining the proper Fair Market Rental as of the beginning of the applicable Option period.

5.           Signs.  Notwithstanding anything to the contrary contained in Section 46 of the Lease, Landlord, at Landlord’s expense, shall list Tenant’s name in the Building main lobby directory. Any changes in the lobby directory signage following the initial installation by Landlord shall be subject to Landlord’s prior written approval and at Tenant's sole cost and expense.  Tenant shall be permitted to install building standard signage on (or adjacent to) the entrance door to the Premises, at Tenant’s sole expense.  Such suite entry signage shall be subject to Landlord’s prior written approval.

6.           Temporary Space.  Commencing on the Effective Date (the “Temporary Space Commencement Date”) until such time as the Improvements are substantially complete and Landlord has tendered possession of the Premises to Tenant in accordance with Section 3.4 of the Lease (the “Temporary Space Occupancy Period”), Tenant shall have the right to occupy that certain space located on the second floor of the Building and containing approximately Two Thousand Five Hundred Fifty-Five (2,555) rentable square feet as shown on Exhibit A-1 attached hereto (the “Temporary Space”). Prior to entering the Temporary Space, Tenant shall obtain all insurance Tenant is required to obtain by the Lease and shall provide certificates evidencing said insurance to Landlord.  Tenant's occupancy of the Temporary Space shall be subject to all of the terms and conditions of this Lease, except provided, however, that Tenant shall have no obligation to pay Base Rent or Tenant’s Share of Operating Expense increases or Tenant’s Share of Real Property Tax increases for the Temporary Space during the Temporary Space Occupancy Period. Tenant shall, however, be responsible to pay the Electric Energy Charge in connection with Tenant’s use and occupancy of the Temporary Space pursuant to Section 11.2 of the Lease as well as any charge for after-hours HVAC pursuant to Section 11.3 of the Lease. In addition, Tenant shall reimburse Landlord for Landlord’s costs to provide janitorial services to the Temporary Space. Tenant shall reimburse Landlord for the Electric Energy Charge and after-hours HVAC, as applicable, within ten (10) days of receipt of an invoice form Landlord.  Tenant hereby acknowledges that Tenant's occupancy of the Temporary Space is on an "as is" basis and in its "as is, where-is" condition with all faults. Within five (5) business days after Landlord's delivery of the Premises to Tenant pursuant to terms and conditions of the Lease, Tenant shall surrender the Temporary Space to Landlord in accordance with the terms of this Lease.  If Tenant fails to so surrender the Temporary Space to Landlord, in addition to all sums due for the Premises and until such time as Tenant surrenders the Temporary Space to Landlord, Tenant shall pay Base Rent and the Electric Energy Charge at the same rate per rentable square foot in effect for the Premises for the first full calendar month of the Term (which such amount shall not be reduced by any abated rent, conditionally waived rent, free rent or similar rental concessions, if any), in addition to any Additional Rent provided for in the Lease. In addition, Landlord shall have the right to consider Tenant to be in hold over at the Temporary Space under the terms of this Lease.

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exhibit a

premises

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exhibit a-1

temporary space

floor plan

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exhibit b

verification letter

ECHO THERAPEUTICS, INC., a Delaware corporation ("Tenant") hereby certifies that it has entered into a lease with THE REALTY ASSOCIATES FUND X, L.P., a Delaware limited partnership ("Landlord") and verifies the following information as of the _____ day of ___________________20__:

Number of Rentable Square Feet in Premises:    

                                                                Commencement Date:    ____________________________________________

                                                                Lease Termination Date:    __________________________________________

                                                                Tenant's Share:    _________________________________________________

                                                                Initial Base Rent:    ________________________________________________

                                                                Billing Address for Tenant:    ________________________________________

                                                                _______________________________________________________________

                                                                _______________________________________________________________

                                                                Attention:    _____________________________________________________

                                                                Telephone Number:    ______________________________________________

                                                                Federal Tax I.D. No.:    ______________________________________________

_

Tenant acknowledges and agrees that all tenant improvements Landlord is obligated to make to the Premises, if any, have been completed and that Tenant has accepted possession of the Premises and that as of the date hereof, there exist no offsets or defenses to the obligations of Tenant under the Lease.  Tenant acknowledges that it has inspected the Premises and found them suitable for Tenant's intended commercial purposes.

TENANT

                                                                                                                      ECHO THERAPEUTICS, INC.,

                                                                                                                      a Delaware corporation

                                                                                                                      By:  ____________________________________________

                                                                                                                      Its:  ____________________________________________

ACKNOWLEDGED AND AGREED TO:

LANDLORD

THE REALTY ASSOCIATES FUND X, L.P.,

a Delaware limited partnership

By:  Realty Associates Fund X LLC, a Delaware limited liability company, general partner

By:  TA Realty LLC, a Massachusetts limited liability company, manager

                       By:  _____________________________                                            

                       Its:  _____________________________

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exhibit c

rules and regulations

GENERAL RULES

Tenant shall faithfully observe and comply with the following Rules and Regulations.

1.   Tenant shall not alter any locks or install any new or additional locks or bolts on any doors or windows of the Premises without obtaining Landlord's prior written consent.  Tenant shall bear the cost of any lock changes or repairs required by Tenant.  Keys required by Tenant must be obtained from Landlord at a reasonable cost to be established by Landlord.

2.   All doors opening to public corridors shall be kept closed at all times except for normal ingress and egress to the Premises.  Tenant shall assume any and all responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.

3.   Landlord reserves the right to close and keep locked all entrance and exit doors of the Project except during the Project's normal hours of business as defined in Section 11.3 of the Lease.  Tenant, its employees and agents must be sure that the doors to the Project are securely closed and locked when leaving the Premises if it is after the normal hours of business of the Project.  Tenant, its employees, agents or any other persons entering or leaving the Project at any time when it is so locked, or any time when it is considered to be after normal business hours for the Project, may be required to sign the Project register.  Access to the Project may be refused unless the person seeking access has proper identification or has a previously received authorization for access to the Project.  Landlord and its agents shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Project of any person.  In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Project during the continuance thereof by any means it deems appropriate for the safety and protection of life and property.

4.   No furniture, freight or equipment of any kind shall be brought into the Project without Landlord's prior authorization.  All moving activity into or out of the Project shall be scheduled with Landlord and done only at such time and in such manner as Landlord designates.  Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy property brought into the Project and also the times and manner of moving the same in and out of the Project.  Safes and other heavy objects shall, if considered necessary by Landlord, stand on supports of such thickness as is necessary to properly distribute the weight, and Tenant shall be solely responsible for the cost of installing all supports.  Landlord will not be responsible for loss of or damage to any such safe or property in any case.  Any damage to any part of the Project, its contents, occupants or visitors by moving or maintaining any such safe or other property shall be the sole responsibility and expense of Tenant.

5.   The requirements of Tenant will be attended to only upon application at the management office for the Project or at such office location designated by Landlord.  Tenant shall not ask employees of Landlord to do anything outside their regular duties without special authorization from Landlord.

6.   Tenant shall not disturb, solicit, or canvass any occupant of the Project and shall cooperate with Landlord and its agents to prevent the same.  Tenant, its employees and agents shall not loiter in or on the entrances, corridors, sidewalks, lobbies, halls, stairways, elevators, or any Common Areas for the purpose of smoking tobacco products or for any other purpose, nor in any way obstruct such areas, and shall use them only as a means of ingress and egress for the Premises.  Smoking shall not be permitted in the Common Areas.

7.   The toilet rooms, urinals and wash bowls shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein.  The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose employees or agents, shall have caused it.

8.   Except for vending machines intended for the sole use of Tenant's employees and invitees, no vending machine or machines other than fractional horsepower office machines shall be installed, maintained or operated upon the Premises without the written consent of Landlord.

9.   Tenant shall not use or keep in or on the Premises or the Project any kerosene, gasoline or other inflammable or combustible fluid or material.  Tenant shall not bring into or keep within the Premises or the Project any animals, birds, bicycles or other vehicles.

10.   Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas or substance in or on the Premises, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Project by reason of noise, odors, or vibrations, or to otherwise interfere in any way with the use of the Project by other tenants.

11.   No cooking shall be done or permitted on the Premises, nor shall the Premises be used for the storage of merchandise, for loading or for any improper, objectionable or immoral purposes.  Notwithstanding the foregoing, Underwriters' Laboratory approved equipment and microwave ovens may be used in the Premises for heating food and brewing coffee, tea, hot chocolate and similar beverages for employees and visitors of Tenant, provided that such use is in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations; and provided further that such cooking does not result in odors escaping from the Premises.

12.   Landlord shall have the right to approve where and how telephone wires are to be introduced to the Premises.  No boring or cutting for wires shall be allowed without the consent of Landlord.  The location of telephone call boxes and other office equipment affixed to the Premises shall be subject to the approval of Landlord.  Tenant shall not mark, drive nails or screws, or drill into the partitions, woodwork or plaster contained in the Premises or in any way deface the Premises or any part thereof without Landlord's prior written consent.  Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or other device on the roof or exterior walls of the Project.  Tenant shall not interfere with broadcasting or reception from or in the Project or elsewhere.

13.   Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules and Regulations.

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14.   Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to ensure the most effective operation of the Project's heating and air conditioning system, and shall refrain from attempting to adjust any controls.  Tenant shall not without the prior written consent of Landlord use any method of heating or air conditioning other than that supplied by Landlord.

15.   Tenant shall store all its trash and garbage within the interior of the Premises.  No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash in the vicinity of the Project without violation of any law or ordinance governing such disposal.  All trash, garbage and refuse disposal shall be made only through entry-ways and elevators provided for such purposes at such times as Landlord shall designate.

16.   Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

17.   No awnings or other projection shall be attached to the outside walls or windows of the Project by Tenant.  No curtains, blinds, shades or screens shall be attached to or hung in any window or door of the Premises without the prior written consent of Landlord.  All electrical ceiling fixtures hung in the Premises must be fluorescent and/or of a quality, type, design and bulb color approved by Landlord.  Tenant shall abide by Landlord's regulations concerning the opening and closing of window coverings which are attached to the windows in the Premises.  The skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Project shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or other articles be placed on the windowsills.

18.   Tenant shall not employ any person or persons other than the janitor of Landlord for the purpose of cleaning the Premises unless otherwise agreed to in writing by Landlord.  Except with the prior written consent of Landlord, no person or persons other than those approved by Landlord shall be permitted to enter the Project for the purpose of cleaning same.  Landlord shall in no way be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant or any of its employees or other persons by the janitor of Landlord.  Janitor service shall include ordinary dusting and cleaning by the janitor assigned to such work and shall not include cleaning of carpets or rugs, except normal vacuuming, or moving of furniture and other special services.  Window cleaning shall be done only by Landlord at reasonable intervals and as Landlord deems necessary.

PARKING RULES

1.   Parking areas shall be used only for parking by vehicles no longer than full size, passenger automobiles herein called "Permitted Size Vehicles".

2.   Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities.  Users of the parking area will obey all posted signs and park only in the areas designated for vehicle parking.

3.   Parking stickers or identification devices shall be the property of Landlord and shall be returned to Landlord by the holder thereof upon termination of the holder's parking privileges.  Tenant will pay such replacement charges as is reasonably established by Landlord for the loss of such devices.  Loss or theft of parking identification stickers or devices from automobiles must be reported to the parking operator immediately.  Any parking identification stickers or devices reported lost or stolen found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution.

4.   Landlord reserves the right to relocate all or a part of parking spaces from floor to floor, within one floor, and/or to reasonably adjacent off site locations(s), and to allocate them between compact and standard size and tandem spaces, as long as the same complies with applicable laws, ordinances and regulations.

5.   Unless otherwise instructed, every person using the parking area is required to park and lock his own vehicle.  Landlord will not be responsible for any damage to vehicles, injury to persons or loss of property, all of which risks are assumed by the party using the parking area.

6.   Validation of visitor parking, if established, will be permissible only by such method or methods as Landlord may establish at rates determined by Landlord, in Landlord's sole discretion.

7.   The maintenance, washing, waxing or cleaning of vehicles in the parking structure or Common Areas is prohibited.

8.   Tenant shall be responsible for seeing that all of its employees, agents and invitees comply with the applicable parking rules, regulations, laws and agreements.  Garage managers or attendants are not authorized to make or allow any exceptions to these Parking Rules and Regulations. Landlord reserves the right to terminate parking rights for any person or entity that willfully refuses to comply with these rules and regulations.

9.   Every driver is required to park his own car.  Where there are tandem spaces, the first car shall pull all the way to the front of the space leaving room for a second car to park behind the first car.  The driver parking behind the first car must leave his key with the parking attendant. Failure to do so shall subject the driver of the second car to a Fifty Dollar ($50.00) fine.  Refusal of the driver to leave his key when parking in a tandem space shall be cause for termination of the right to park in the parking facilities.  The parking operator, or his employees or agents, shall be authorized to move cars that are parked in tandem should it be necessary for the operation of the garage.  Tenant agrees that all responsibility for damage to cars or the theft of or from cars is assumed by the driver, and further agrees that Tenant will hold Landlord harmless for any such damages or theft.

10.   No vehicles shall be parked in the parking garage overnight.  The parking garage shall only be used for daily parking and no vehicle or other property shall be stored in a parking space.

Landlord reserves the right at any time to change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable Rules and Regulations as in Landlord's judgment may from time to time be necessary for the management, safety, care and cleanliness of the Project, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Project.  Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition of its occupancy of the Premises.

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exhibit d

janitorial and maintenance services

INTERIOR

A.           Tenant Premises - Nightly Services - Monday through Friday:

1.           Empty waste baskets

2.           Remove trash to areas designated

3.           Wipe drinking fountains

4.           Vacuum carpets

5.           Sweep, damp mop non-carpeted floors

6.           Dust office furniture (i.e. desks, tables, file cabinets, chairs)

7.           Dust  window sills

B.           Occasional Service:

1.           Dust paneling, picture frames, diffusers, as needed

2.           High dust door tops, tops of partitions and high ledges, as needed

3.           Damp mop non carpeted floors (at least weekly)

C.           Common  Restrooms - Nightly Service -  Monday through Friday:

1.           Sweep, mop and sanitize floors

2.           Sanitize plumbing fixtures (i.e. commodes, toilet seats, urinals, sinks)

3.           Clean mirrors

4.           Empty waste receptacles

D.           Common Restrooms - Occasional Services:

1.           High dust walls, partitions, ceilings

2.           Completely clean ceramic tile

3.           Replenish soap, toilet tissue, paper towels (as needed)

E.           Common Areas:

1.           Sweep and damp mop non-carpeted floors (i.e. stairways, corridors, elevators), as needed

2.           Vacuum carpeted areas, as needed

3.           Wipe down wall surfaces and doors (i.e. elevators, stairways, corridors with water or approved cleanser, as needed)

4.           Dust electric fixtures and fittings, picture frames and diffusers as needed

5.           High dust door tops and high ledges, as needed

6.           Polish metallic surfaces, fixtures and trim, as needed

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7.           Interior glass surfaces (Tenant entrance doors and hallway partition glass) shall be cleaned on both sides as needed, but not more than two (2) times per year

8.           Exterior glass windows to building shall be cleaned on both sides as needed, but not more than two (2) times per year

9.           Exterior glass entrance doors to building shall be spot cleaned, as needed, and fully cleaned on both sides as needed, but not more than two (2) times per year

EXTERIOR OF BUILDING

F.           Outside Services, as required:

1.           Sweep driveways - curbs

2.           Sweep and clean sidewalks

3.           Snow removal from driveways, sidewalks, steps and parking areas

MISCELLANEOUS

The janitorial and maintenance services described in this Exhibit shall be deemed all-inclusive and although Landlord, at its sole discretion, reserves the right to provide, from time to time, additional services, it shall not be required to provide any such additional services in the Tenant’s Demised Premises.

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exhibit e

FORM OF LETTER OF CREDIT

IRREVOCABLE STANDBY LETTER OF CREDIT

NUMBER ________

LETTER OF CREDIT AMOUNT	ISSUE DATE	EXPIRY DATE
US [AMOUNT]	[DATE]	[DATE]

BENEFICIARY:	APPLICANT:
[LANDLORD] C/O TA ASSOCIATES REALTY 28 STATE STREET BOSTON, MASSACHUSETTS 02109 ATTENTION:  LEASE ADMINISTRATOR	[TENANT] [ADDRESS OF PROPERTY]
WITH COPY TO: [PROPERTY MANAGER] [ADDRESS]

GENTLEMEN:

WE HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR FOR THE ACCOUNT OF THE ABOVE REFERENCED APPLICANT IN THE AGGREGATE AMOUNT OF US [AMOUNT] WHICH IS AVAILABLE BY PAYMENT OF YOUR DRAFT(S), AT SIGHT, DRAWN ON OURSELVES, WHEN ACCOMPANIED BY THE FOLLOWING DOCUMENTS:

1.   A STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF [LANDLORD] (HEREIN CALLED “THE LANDLORD”) STATING THAT: “THIS CERTIFIES THAT A DEFAULT EXISTS PURSUANT TO  THAT CERTAIN DEED OF LEASE BETWEEN [LANDLORD], LANDLORD AND [TENANT] OR ITS SUCCESSOR, TENANT, AS AMENDED FROM TIME TO TIME.”

-OR-

“[TENANT] OR ITS SUCCESSOR (THE “TENANT”) HAS FAILED TO RENEW OR REPLACE THIS LETTER OF CREDIT THIRTY (30) DAYS BEFORE ITS CURRENT EXPIRATION DATE AND LANDLORD IS ACCORDINGLY ENTITLED TO DRAW UPON THIS LETTER OF CREDIT.”

2.   THE ORIGINAL OF THIS LETTER OF CREDIT.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT WRITTEN AMENDMENT FOR ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRY DATE UNLESS AT LEAST FORTY-FIVE (45) DAYS PRIOR TO SUCH EXPIRATION DATE, WE NOTIFY YOU IN WRITING AT THE ABOVE ADDRESS BY EXPRESS COURIER THAT WE ELECT NOT TO RENEW THIS LETTER OF CREDIT FOR ANY SUCH ADDITIONAL PERIODS(S).  UPON RECEIPT BY YOU OF SUCH NOTICE, YOU MAY DRAW HEREUNDER BY PRESENTATION OF YOUR DRAFT AT SIGHT ON US.

PARTIAL DRAWINGS ARE PERMITTED.

THIS LETTER OF CREDIT IS TRANSFERABLE BY BENEFICIARY.

THIS IRREVOCABLE LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING.  THIS UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED, AMPLIFIED OR INCORPORATED BY REFERENCE TO ANY DOCUMENT OR CONTRACT REFERRED TO HEREIN.

WE HEREBY AGREE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS CREDIT SHALL BE DULY HONORED IF PRESENTED TOGETHER WITH DOCUMENT(S) AS SPECIFIED ABOVE AND THE ORIGINAL OF THIS CREDIT, AT OUR OFFICE LOCATED AT [MUST BE ADDRESS LOCAL TO THE ISELIN, NEW JERSEY AREA] ON OR BEFORE THE ABOVE STATED EXPIRY DATE.  DRAFT(S) DRAWN UNDER THIS CREDIT MUST SPECIFICALLY REFERENCE OUR CREDIT NUMBER.  DRAFTS DRAWN IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT SHALL BE HONORED BY US WITHOUT INQUIRY AS OF THE TRUTH OF THE STATEMENTS SET FORTH IN THE DRAW REQUEST AND REGARDLESS OF WHETHER APPLICANT DISPUTES THE CONTENT OR ACCURACY OF SUCH STATEMENTS. FACSIMILE DRAWINGS ARE PERMITTED.  IF A DRAFT IS PRESENTED TO US BY FACSIMILE TO OUR FAX NUMBER _______________, THE ORIGINAL LETTER  OF CREDIT IS NOT REQUIRED.

WE HEREBY ENGAGE WITH YOU THAT DRAWINGS PRESENTED UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED WITHIN TWO (2) BUSINESS DAYS AFTER OUR RECEIPT OF YOUR PRESENTATION OF THE CERTIFICATE AND ANY SUCH DOCUMENTS SPECIFIED HEREIN AT THE ABOVE ADDRESS.

EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, ESTABLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE, AS IN EFFECT ON THE DATE OF ISSUANCE OF THIS CREDIT.

SINCERELY,

____________________________

AUTHORIZED REPRESENTATIVE

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Schedule 1

PLANS

EX-10.3

Exhibit 10.3

OFFICELEASEAGREEMENT

BETWEEN

FERRIS DEVELOPMENT 352 TURNPIKE RD, LLC,

a Massachusetts limited liability company doing business as 295 Foster Street ("LANDLORD")

AND

ECHO THERAPEUTICS, INC.,

a Delaware corporation ('TENANT")

For Premises Located at

295 Foster Street, Littleton, Massachusetts

TABLE OF CONTENTS

1.	Basic Lease Information
2.	Lease Grant.
3.	Possession
4.	Rent.
5.	Compliance with Laws; Use
6.	Security Deposit.
7.	Building Services
8.	Alterations
9.	Repairs and Maintenance
10.	Entry by Landlord
11.	Assignment and Subletting
12.	Liens
13.	Indemnity and Waiver of Claims
14.	Insurance
15.	Subrogation
16.	Casualty Damage
17.	Condemnation
18.	Events of Default.
19.	Remedies
20.	Limitation of Liability
21.	Holding Over
23.	Notice
24.	Surrender of Premises
25.	Miscellaneous
26.	Parking
28.	Hazardous Materials
29.	Right of First Offer

OFFICE LEASE AGREEMENT

This OFFICELEASEAGREEMENT(the "Lease")is made and entered into as of April _, 2015, by and between FERRISDEVELOPMENT352TURNPIKEROAD,LLC,a Massachusetts limited liability company doing business as 295FosterStreet("Landlord") and ECHOTHERAPEUTICS,Inc.,a Delaware corporation doing business at 99 Wood Ave South, lselin, NJ, 08830 ("Tenant").The following exhibits and attachments are incorporated into and made a part of the Lease: ExhibitA(Outline and Location of Premises), ExhibitB(Expenses and Taxes), ExhibitC(Work Letter), ExhibitD(Building Rules and Regulations), ExhibitE(Additional Provisions), and ExhibitF(Hazardous Chemicals).

1. Basic Lease Information.

 1.1 "Building"shall mean the building located at 295 Foster Street, Littleton, Massachusetts. "RentableSquareFootageoftheBuilding"is deemed to be 96,935 square feet, using Modified BOMA.

 1.2 "Premises"shall mean the area shown on ExhibitAto this Lease. The Premises is located on the second (2nd) floor of the Building. If the Premises include one or more floors in their entirety, all corridors and restroom facilities located on such full floor(s) shall be considered part of the Premises. The "RentableSquareFootageofthePremises"is deemed to be ten thousand one hundred thirty-two (10,132) square feet. Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises are correct.

 1.3 "BaseRent":

Month 1 through Month 6	$ 7.25, net of electric	$ 6,121.42
Month 7 through Month 12	13.50, net of electric	$11,398.50
Month 13 through Month 16	$ 7.25, net of electric	$ 6,121.42
Month 17 through Month 24	$ 14.00, net of electric	$11,820.67
Month 25 through Month 36	$14.50, net of electric	$12,242.83
Month 37 through Month 36	$15.00, net of electric	$12,665.00
Month 49 through Month 36	$15.50, net of electric	$13,087.17

*As reflected in the middle column, Tenant's obligation to pay its Monthly Base Rent shall abate partially during the following periods: 1)commencing on July 1, 2015, and ending on December 31, 2015, and 2)commencing on July 1, 2016, and ending on October 31, 2016.

1.4 "Tenant'sProRataShare":10.45%.Tenant's Pro Rata Share shall be adjusted for changes in the Rentable Square Footage of the Premises and/or the Rentable Square Footage of the Building, including, without limitation, changes which may result from any condemnation or other taking of a portion of the Building.

 1.5 "BaseYear"for Taxes: Fiscal Year (defined below) 2016 (i.e.,July 1, 2015, to June 30, 2016); "BaseYear"for Expenses (defined in ExhibitB):calendar year 2015. Any increase over the Base Year for Taxes or the Base Year for Expenses will be billed on a proportionate share basis over the term of the Lease, based on 95% occupancy, provided however that if the Building is 100% leased the proportionate share shall be adjusted to reflect the denominator at 100% of the rentable square footage.

For purposes hereof, "FiscalYear"shall mean the Base Year for Taxes and each period of July 1 to June 30 thereafter.

 1.6 "Term":Aperiodoffive(5)yearsandfive(5)months.TheTermshallcommenceonJuly1,2015(the"CommencementDate")and,unlessterminatedearlyorextendedinaccordancewiththisLease,endonNovember30,2020(the"TerminationDate").

 1.7 "SecurityDeposit": $150,000 initially, as more fully described in Section 6.

 1.8 "Broker(s)":Transwestern IRBJ, as broker for the Landlord, and New England Industries Properties, as broker for the Tenant.

 1.9 "PermittedUse":General Office Use, Research & Development and limited manufacturing.

 1.10 "NoticeAddress(es)": Landlord:

For all Notices:

Ferris Development 352 Turnpike Road, LLC d/b/a 295 Foster Street c/o Ferris Development Group, LLC, as managing agent

Att'n: Jennifer Wren

One Research Drive, Suite 105B Westborough, MA 01581

With a copy to: General Counsel

Ferris Development Group, LLC

325 Donald Lynch Blvd., Ste. 200

Marlborough, MA 01752 Tenant:

Prior to the Commencement Date:

10 Forge Pkwy.

Franklin, MA 02038

After the Commencement Date:

Echo Therapeutics, Inc. 295 Foster St.

Littleton, MA 01460

Attention: Tom Bishop, VP Operations & Product Development With a copy to:

Echo Therapeutics, Inc. 99 Wood Ave. South lselin, NJ 08830

Attention: Alan Schoenbart, Chief Financial Officer

 1.11 "BusinessDay(s)"are Monday through Friday of each week, exclusive of New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day ("Holidays").Landlord may designate additional Holidays that are commonly recognized by other office buildings in the area in which the Building is located. "BuildingServiceHours"are 8:00 A.M.to 5:30 P.M.on Business Days.

 1.12 "LandlordWork"means the work, if any, that Landlord is obligated to perform in the Premises pursuant to a separate agreement (the "WorkLetter'')attached to this Lease as ExhibitC.

 1.13 "Property"means the Building and the parcel(s) of land on which it is located and, at Landlord's discretion, the parking facilities and other improvements, if any, serving the Building and the parcel(s) of land on which they are located.

2. Lease Grant.

The Premises are hereby leased to Tenant from Landlord, together with the right to use any portions of the Property that are from time to time designated by Landlord for the common use of tenants and others (the "CommonAreas").Nothing contained herein shall affect Landlord's right to add to, subtract from, or alter the Common Areas, so long as the same does not materially and adversely affect Tenant's access to the Premises.

3. Possession.

Subject to Landlord's obligation to perform the Landlord Work (as defined in ExhibitCattached hereto) the Premises are accepted by Tenant in "AS IS, WHERE IS" condition and configuration without any representations or warranties by Landlord. By taking possession of the Premises, Tenant agrees that the Premises are in good order and satisfactory condition. Landlord shall not be liable for a failure to deliver possession of the Premises or any other space due to the holdover or unlawful possession of such space by another party; provided, however, that Landlord shall use reasonable efforts to obtain possession of the space. If Landlord permits Tenant to take possession of the Premises before the Commencement Date, such possession shall be subject to the terms and conditions of this Lease, however, except for the cost of services utilized by Tenant (e.g. freight elevator usage and utility costs), Tenant shall not be required to pay Rent for any days of possession before the Commencement Date during which Tenant, with the approval of Landlord, is deemed to be in possession of the Premises.

4. Rent.

4.1 Tenant shall pay Landlord, without any setoff or deduction, unless expressly set forth in this Lease, all Base Rent and Additional Rent due for the Term (collectively referred to as "Rent")."AdditionalRent"means all sums (exclusive of Base Rent) that Tenant is required to pay Landlord under this Lease, including electricity as discussed hereinbelow. Base Rent and recurring monthly charges of Additional Rent shall be due and payable in advance on the first day of each calendar month without notice or demand, provided that the installment of Base Rent for the first full calendar month of the Term for which a payment is due, shall be payable upon the execution of this Lease by Tenant. All other items of Rent shall be due and payable by Tenant on or before thirty (30) days after billing by Landlord. Rent shall be made payable to the entity, and sent to the address, Landlord designates and shall be made by good and sufficient check or by other means acceptable to Landlord. Tenant shall pay Landlord an administration fee equal to five percent (5%) of all Rent past due by greater than Ten (10) ten days. In addition, past due Rent shall accrue interest at twelve percent (12%) per annum from the date that is Ten (10) days after the due date until actually paid. Landlord's acceptance of less than the correct amount of Rent shall be considered a payment on account of the earliest Rent due. Rent for any partial month during the Term shall be prorated. No endorsement or statement on a check or letter accompanying payment shall be considered an accord and satisfaction. Tenant's covenant to pay Rent is independent of every other covenant in this Lease.

4.2 Tenant shall pay Tenant's Pro Rata Share of Taxes and Expenses in accordance with ExhibitBto this Lease.

5. Compliance with Laws; Use.

The Premises shall be used for the Permitted Use and for no other use whatsoever. Tenant shall comply with all statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity whether in effect now or later, including, without limitation, the Americans with Disabilities Act of 1990 ("Law(s)"),regarding the operation of Tenant's business and the use, condition, configuration and occupancy of the Premises, provided however that the Landlord shall be responsible at its sole cost and expense for complying with the Laws as they apply to the Base Building and the Common Area. In addition, Tenant shall, at its sole cost and expense, promptly comply with any Laws that relate to the Base Building (defined below) and the reasonable cost therefor, but only to the extent such obligations are triggered by Tenant's particular use of the Premises. "BaseBuilding"shall include the Building Structure, the public restrooms and the Building Systems. "BuildingStructure"shall mean the roof, exterior and load bearing walls, foundation, structural floor slabs and other structural elements of the Building. "BuildingSystems"shall mean the mechanical (including HVAC), electrical, plumbing, fire/life safety systems and equipment serving the Building in general. Tenant shall promptly provide Landlord with copies of any notices it receives regarding an alleged violation of Law. Tenant shall comply with the rules and regulations of the Building attached as ExhibitDand such other reasonable rules and regulations adopted by Landlord from time to time, including rules and regulations for the performance of Alterations (as defined herein).

6. Security Deposit.

An initial Security Deposit of One Hundred Fifty Thousand Dollars and No Cents ($150,000.00) shall be delivered by Tenant or its agent or representative to Landlord upon the execution of this Lease by Tenant. Such initial Security Deposit shall be in the form of an irrevocable letter of credit made for the benefit of the Landlord, its successors and assigns, and held by Landlord without liability for interest (unless required by Law) as security for the performance of Tenant's obligations herein and hereunder. The Security Deposit is not an advance payment of Rent or a measure of damages. Landlord may use all or a portion of the Security Deposit to satisfy past-due Rent or to cure any Default (defined herein) by Tenant. If Landlord uses any portion of the Security Deposit, Tenant shall, within five (5) days after demand, restore the Security Deposit to its original amount. Landlord shall return any unapplied portion of the Security Deposit to Tenant within sixty (60) days after the later to occur of: (a) determination of the final Rent due from Tenant; or (b) the later to occur of the Termination Date or the date Tenant surrenders the Premises to Landlord in compliance with Section 25. Landlord may assign the Security Deposit to a successor or transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts.

Furthermore, the Landlord covenants and agrees that the letter of credit required of Tenant need only be in the amount of Fifty Thousand Dollars and No Cents ($50,000.00) at any time after the last day of the twenty-fourth (24th) month of the Term of this Lease, so long as there is no event of Default and Tenant's creditworthiness is as good or better than it was on the date of execution of this Lease.

7. Building Services.

7.1 Landlord shall furnish Tenant with the following services: (a) water for use in the Base Building lavatories; (b) customary heat and air conditioning in season during Building Service Hours; provided that Tenant shall have the right to receive HVAC service during hours other than Building Service Hours by paying Landlord's then-standard charge for additional HVAC service (currently $75 per hour) so long as Tenant requests same by written notice to Landlord not later than 12:00 noon on the Business Day preceding the day of such overtime usage; (c) elevator service; (d) electricity in accordance with the terms and conditions in Section 7.02; and (e) such other services as Landlord reasonably determines are necessary or appropriate for the Property. Access to the Building for Tenant and its employees 24 hours per day I7 days per week, subject to the terms of this Lease and such security or monitoring systems as Landlord may reasonably impose, including, without limitation, sign-in procedures and/or presentation of identification cards. Landlord hereby agrees that it will, at its expense, provide a "punch code" or access card for access to the Building. Tenant hereby acknowledges and agrees that Landlord will have no obligation to provide janitorial services to the Premises and Tenant shall be solely responsible, at its sole cost and expense, to provide janitorial services to the Premises. Tenant shall be given shared access to the Building's common loading dock.

7.2 (a) Electricity shall be distributed to the Premises by the electric utility company selected by Landlord to provide electricity service for the Building or, at Landlord's option, by Landlord at a rate no greater than competitive rates at similarly situated buildings in the area surrounding the Building; and Landlord shall permit Landlord's wires, and conduits, to the extent available, suitable and safely capable, to be used for such distribution. If and so long as Landlord is distributing electricity to the Premises, Tenant shall obtain all of its electricity from Landlord and shall pay Landlord, in addition to Base Rent and Additional Rent, for such electricity service in monthly installments at a rate of $1.75 per annum per Rentable Square Footage of the Premises. (By way of example, based on the Rentable Square Footage of the Premises of 10,000 square feet, the monthly payment for electricity service shall be $1,458.33. Notwithstanding the foregoing, Landlord may elect, in its sole discretion and at its sole cost and expense, to install an electric meter or meters to measure electric use of the Premises, whereupon Landlord may elect to require Tenant to pay its direct use costs.

(b) Without the consent of Landlord, Tenant's use of electrical service shall not exceed, either in voltage, rated capacity, overall load, that which Landlord reasonably deems to be Building standard (5.0 watts per square foot). Landlord shall have the right to measure electrical usage by commonly accepted methods.

7.3 Landlord's failure to furnish, or any interruption, diminishment or termination of services due to the application of Laws, the failure of any equipment, the performance of repairs, improvements or alterations, utility interruptions due to the occurrence of an event of Force Majeure (defined in Section 26) shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement, provided that if the outage continues for more than five (5) business days then all rent and other charges shall abate during each day that the outage continues. Landlord, subject to the limits above, reserves the right to stop any services or utilities, when necessary by reason of accident, emergency or repair; provided, however, that in each instance of stoppage, Landlord shall exercise its best efforts to eliminate the cause thereof. Except in case of emergency repairs, Landlord will give Tenant reasonable advance notice of any contemplated stoppage and will use reasonable efforts to avoid unnecessary inconvenience to Tenant by reason thereof.

8. Alterations.

Tenant shall not make alterations, repairs, additions or improvements or install any Cable (collectively referred to as "Alterations")without first obtaining the written consent of Landlord in each instance, which consent shall not be unreasonably withheld or delayed; provided that Landlord may withhold such consent in its sole discretion in the event the proposed Alterations could impact the Building Structure or could have an adverse effect on Building Systems. Landlord's consent shall not be required for any Alteration that satisfies all of the following criteria (a "CosmeticAlteration"):(a) is of a cosmetic nature such as painting, wallpapering, hanging pictures and installing carpeting; (b) is not visible from the exterior of the Premises or Building; (c) will not affect the Base Building; and (d) does not require work to be performed inside the walls, below the floor, or above the ceiling of the Premises and (e) the cost of such work does not exceed $10,000. Cosmetic Alterations shall be subject to all the other provisions of this Section. Prior to starting work, Tenant shall furnish Landlord with plans and specifications; names of contractors reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Base Building); required permits and approvals; evidence of contractor's and subcontractor's insurance in amounts reasonably required by Landlord and naming Landlord as an additional insured; and any security for performance in amounts reasonably required by Landlord. Landlord may require Tenant to perform any Alterations outside Building Service Hours to the extent Landlord reasonably believes that the performance of such Alterations will interfere with the occupancy of other tenants of the Building. Changes to the plans and specifications must also be submitted to Landlord for its approval. Alterations shall be constructed in a good and workmanlike manner using first quality, new or like new materials. Tenant shall reimburse Landlord for any reasonable sums, not to exceed $1,000.00, paid by Landlord for third party examination of Tenant's plans for non-Cosmetic Alterations. In addition, Tenant shall pay Landlord a fee for Landlord's oversight and coordination of any Alterations other than the initial Alterations or Cosmetic Alterations equal to five five percent (5%) of the cost of the Alterations. Upon completion, Tenant shall furnish "as-built" plans for all Alterations other than Cosmetic Alterations, completion affidavits and full and final waivers of lien. Landlord's approval of an Alteration shall not be deemed a representation by Landlord that the Alteration complies with Law.

All Alterations shall remain upon the Premises at the end of the Term without compensation to Tenant. Landlord, however, by written notice to Tenant prior to the Termination Date, may require Tenant, at its expense, to remove (a) any Cable installed by or for the benefit of Tenant, and (b) any Alterations that, in Landlord's reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard office improvements (collectively referred to as "RequiredRemovables").Required Removables shall include, without limitation, internal stairways, raised floors, personal restrooms and showers, vaults, rolling file systems and structural alterations and modifications. The designated Required Removables shall be removed by Tenant before the Termination Date. Tenant shall repair damage caused by the· installation or removal of Required Removables. If Tenant fails to perform its obligations in a timely manner, Landlord may perform such work at Tenant's expense. Tenant, at the time it requests approval for a proposed Alteration, may request in writing that Landlord advise Tenant whether the Alteration or any portion of the Alteration is a Required Removable.

9. Repairs and Maintenance.

9.1 Tenant shall periodically inspect the Premises to identify any conditions that are dangerous or in need of maintenance or repair. Tenant shall promptly provide Landlord with notice of any such conditions. Tenant shall, at its sole cost and expense, perform all maintenance and repairs to the Premises that are not Landlord's express responsibility under this Lease, and keep the Premises in good, clean and neat condition and repair, reasonable wear and tear and damage by casualty (subject to the terms of Section 16) excepted, provided that, subject to the provisions of Section 15, Tenant shall not be responsible for repairs to the Premises to the extent that any damage is caused by the negligence of Landlord or Landlord's employees. Tenant's repair and maintenance obligations include, without limitation: (a) providing janitorial services to the Premises, (b) floor covering; (c) interior partitions; (d) doors;

(e) the interior side of demising walls; (f)electronic, phone and data cabling and related equipment that is installed by or for the exclusive benefit of Tenant (collectively, "Cable"),(unless such Cable was installed by the Landlord or the utility provider to bring the utility to the Premises); (g) supplemental air conditioning units, kitchens, including hot water heaters, plumbing, and similar facilities exclusively serving Tenant; and (h) Alterations. To the extent Landlord is not reimbursed by insurance proceeds, Tenant shall reimburse Landlord for the cost of repairing damage to the Building caused by the negligent or willful acts of Tenant, Tenant Related Parties and their respective contractors and vendors. If Tenant fails to make any repairs to the Premises for more than fifteen (15) days after notice from Landlord (although notice shall not be required in an emergency), Landlord may make the repairs, and Tenant shall pay the reasonable cost of the repairs, together with an administrative charge in an amount equal to 10% of the cost of the repairs.

9.2 Landlord shall keep and maintain in good repair and working order, and perform maintenance upon, the: (a) Building Structure; (b) Building Systems; (c) Common Areas, including but not limited to; the hallways, elevators, stairs, entrances, doors, restrooms, exits, parking areas, walkways, landscaping and such other areas that are available for use by other tenants and visitors to the Building; (d) exterior windows of the Building; and (e) remove and treat all snow and ice and (f)provide dumpsters for common use and remove or contract for the removal of all trash, refuse and the like from the Building and Property. Landlord shall promptly make repairs for which Landlord is responsible. To the extent the act or omission of Tenant causes the need for such repairs, Tenant shall promptly reimburse Landlord for the costs of such repair.

10. Entry by Landlord.

Upon reasonable notice and at reasonable times, Landlord may enter the Premises to inspect, show the Premises or to perform or facilitate the performance of repairs, alterations or additions to the Premises or any portion of the Building. Except in emergencies or to provide Building services, Landlord shall provide Tenant with reasonable prior verbal notice of entry and shall use reasonable efforts to minimize any interference with Tenant's use of the Premises. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises to perform repairs, alterations and additions. However, except in emergencies, Landlord will not close the Premises if the work can reasonably be completed on weekends and after Building Service Hours. Entry by Landlord shall not constitute a constructive eviction or entitle Tenant to an abatement or reduction of Rent.

11. Assignment and Subletting.

11.1 Except in connection with a Permitted Transfer (defined in Section 11.04), Tenant shall not assign, transfer or encumber any interest in this Lease or sublease, license, or allow any third party to use, all or any portion of the Premises (collectively or individually, a "Transfer")without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed if Landlord does not exercise its recapture rights under Section 11.02. If the person or entity which controls the voting shares/rights of Tenant changes at any time, such change of ownership or control shall constitute a Transfer unless Tenant is an entity whose outstanding stock is listed on a recognized securities exchange or if at least 80% of its voting stock is owned by another entity, the voting stock of which is so listed. Any attempted Transfer in violation of this Section is voidable by Landlord. In no event shall any Transfer, including a Permitted Transfer, release or relieve Tenant from any obligation under this Lease unless such transferee has a present net worth greater than that of the Tenant at the time of the transfer. When Tenant submits a request to Landlord pursuant to section 11.02, Tenant shall deliver to Landlord written documentation establishing the Tenant's net worth as well as the net worth of the transferee. Not later than the consent or rejection deadline prescribed in section 11.02, Landlord may reject the transfer if, in Landlord's reasonable opinion, the transferee does not have a demonstrated present net worth greater than Tenant's net worth at that time. The consent by Landlord to any Transfer, or the consummation of a Permitted Transfer, shall in no way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further Transfer.

 11.2 Tenant shall submit a request for consent to a Transfer in writing, together with (i) financial statements for the proposed transferee, (ii)a fully executed copy of the proposed assignment, sublease or other Transfer documentation, (iii) the Review Fee (as defined below) and (iv) such other information as Landlord may reasonably request. Within fifteen (15) Business Days after receipt of the required information and documentation, Landlord shall either: (a) consent to the Transfer by execution of a consent agreement in a form reasonably designated by Landlord; (b) reasonably refuse to consent to the Transfer in writing with the reasons therefor described in the Notice; or (c) recapture the portion of the Premises that Tenant is proposing to Transfer, provided however if the Landlord chooses to recapture the Premises the Tenant may nullify such recapture right by withdrawing its request to transfer, sublease or otherwise assign the Lease within Five (5) days of receiving notice of Landlord's election to recapture. If Landlord exercises its right to recapture, and the Tenant does not exerciseitsrighttonullifytherecapture,thisLeaseshall automaticallybeamended(orterminated,iftheentirePremisesisbeingassigned orsublet)todeletetheapplicableportionofthePremiseseffectiveontheproposedeffectivedateoftheTransfer.TenantshallpayLandlordareviewfeeof$500.00forLandlord'sreviewof anyPermittedTransferorrequestedTransfer(the"ReviewFee").

11.3 Tenant shall pay Landlord fifty percent (50%) of all rent and other consideration which is due to Tenant as a result of a Transfer that is in excess of the Rent then payable to Landlord for the portion of the Premises and Term covered by the Transfer (the "Excess").Tenant shall pay Landlord for Landlord's share of the Excess within thirty (30) days after Tenant's receipt of the excess. Tenant may deduct from the Excess, on a straight-line basis, all reasonable and customary expenses directly incurred by Tenant attributable to the Transfer. If Tenant is in Default, 100% of the Excess shall be due to Landlord, and Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in the amount of Tenant's share of payments received by Landlord exclusive of the Excess.

11.4 Tenant may assign this Lease to any parent, subsidiary, affiliate or working partner or surviving entity resulting from a merger, purchase, or sale of assets (an "OwnershipChange")or assign this Lease or sublet all or a portion of the Premises to an Affiliate without the consent of Landlord, provided that all of the following conditions are satisfied (a "PermittedTransfer"):(a) Tenant is not in Default; (b) in the event of an Ownership Change, Tenant's successor shall own substantially all of the assets of Tenant and have a net worth which is at least equal to Tenant's net worth as of the day prior to the proposed Ownership Change; (c) the proposed use is not for other than the Permitted Use; and (d) Tenant shall give Landlord written notice at least fifteen (15) Business Days prior to the effective date of the Permitted Transfer. Tenant's notice to Landlord shall include information and documentation evidencing the Permitted Transfer and showing that each of the above conditions has been satisfied. If requested by Landlord, Tenant's successor shall sign a commercially reasonable form of assignment and assumption agreement. "Affiliate"shall mean an entity controlled by, controlling or under common control with Tenant (for such period of time as such entity continues to be controlled by, controlling or under common control with Tenant, it being agreed that the subsequent sale or transfer of stock resulting in a change in voting control, or any other transaction(s) having the overall effect that such entity ceases to be controlled by, controlling or under common control with Tenant, shall be treated as if such sale or transfer or transaction(s) were, for all purposes, an assignment of this Lease governed by the provisions of this Article 11).

12. Liens.

Tenant shall not permit mechanics' or other liens to be placed upon the Property, Premises or Tenant's leasehold interest in connection with any work or service done or purportedly done by or for the benefit of Tenant or its transferees. Tenant shall give Landlord notice at least fifteen (15) days prior to the commencement of any work in the Premises to afford Landlord the opportunity, where applicable, to post and record notices of non-responsibility. Tenant, within ten (10) days of notice from Landlord, shall fully discharge any lien by settlement, by bonding or by insuring over the lien in the manner prescribed by the applicable lien Law. If Tenant fails to do so, Landlord may bond, insure over or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord, including, without limitation, reasonable attorneys' fees. Landlord shall have the right to require Tenant to post a performance or payment bond in connection with any work or service done or purportedly done by or for the benefit of Tenant. Tenant acknowledges and agrees that all such work or service is being performed for the sole benefit of Tenant and not for the benefit of Landlord.

13. Indemnity and Waiver of Claims.

Tenant hereby waives all claims against and releases Landlord and its trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagees and agents (the "LandlordRelatedParties")from all claims for any injury to or death of persons, damage to property or business loss in any manner related to (a) Force Majeure, (b) acts of third parties not under the control of the Landlord acting as sub-contractors, contractors or agents of the Landlord,

(c) the bursting or leaking of any tank, water closet, drain or other pipe, unless due to or arising out of the negligence or willful misconduct of the Landlord Related Parties, (d) the inadequacy or failure of any security services, personnel or equipment, unless due to or arising out of the negligence or willful misconduct of the Landlord Related Parties, or (e) any matter not within the reasonable control of Landlord. In addition to the foregoing and to the maximum extent permitted by applicable law, Tenant agrees that Landlord shall have no responsibility or liability whatsoever for any loss or damage, however caused, to furnishings, fixtures, equipment, or other personal property of Tenant or of any persons claiming by, through or under Tenant. Except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Related Parties, Tenant shall indemnify, defend and hold Landlord and Landlord Related Parties harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys' fees and other professional fees (if and to the extent permitted by Law), which may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties by any third party and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of Tenant, the Tenant Related Parties or any of Tenant's transferees, contractors or licensees. This Section shall survive the expiration or earlier termination of this Lease.

Landlord hereby waives all claims against and releases Tenant and its trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagees and agents (the "Tenant-RelatedParties")from all claims for any injury to or death of persons, damage to property or business loss in any manner related to (a) Force Majeure, (b) acts of third parties not under the control of the Tenant acting as sub-contractors, contractors or agents of the Tenant, (c) the bursting or leaking of any tank, water closet, drain or other pipe, unless due to or arising out of the negligence or willful misconduct of the Tenant or Tenant-Related Parties, (d) the inadequacy or failure of any security services, personnel or equipment, unless due to or arising out of the negligence or willful misconduct of the Tenant or Tenant-Related Parties, or (e) any matter not within the reasonable control of Tenant or Tenant-Related Parties. In addition to the foregoing and to the maximum extent permitted by applicable law, Landlord agrees that Tenant shall have no responsibility or liability whatsoever for any loss or damage, however caused, to furnishings, fixtures, equipment, or other personal property of Landlord or of any persons claiming by, through or under Landlord, unless due to or arising out of the negligence or willful misconduct of the Tenant or Tenant-Related Parties. Except to the extent caused by the negligence or willful misconduct of Tenant or any Tenant-Related Party, Landlord shall indemnify, defend and hold Tenant and Tenant-Related Parties harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys' fees and other professional fees (if and to the extent permitted by Law), which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant-Related Parties by any third party and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of Landlord, the Landlord-Related Parties or any of Landlord's transferees, contractors or licensees. This Section shall survive the expiration or earlier termination of this Lease.

14. Insurance.

14.01 Tenant'sInsurance. Tenant shall obtain, and shall keep in full force and effect, the following insurance, with insurers that are authorized to do business in the Commonwealth of Massachusetts and are rated at least A (Class X) in Best's Key Rating Guide:

a. Commercial General Liability Insurance, which shall include premises liability, contractual liability covering Tenant's indemnity obligations under this Lease (to the extent covered as an Insured Contract in a standard ISO GCL Policy), fire legal liability, personal & advertising injury and products/completed operations coverage. Tenant's policy shall insure against claims for bodily injury, personal injury, death or property damage occurring on, in or about the Premises with limits of not less than

$1,000,000.00 per occurrence and $2,000,000.00 in the aggregate. If the policy covers other locations owned or leased by Tenant, then such policy must include an aggregate limit per location endorsement.

b. Special Form ("AllRisk")Property, insuring all equipment, trade fixtures, inventory, fixtures and personal property ("Tenant'sProperty")and any Alterations or other Leasehold Improvements which are the responsibility of Tenant, located on or in the Premises with an agreed amount endorsement and equal to the full replacement cost value of such property.

c. Workers' Compensation Insurance as required by applicable laws of the State in which the Premises is located, including Employers' Liability Insurance with limits of not less than: (x) $100,000 per accident; (y) $500,000 disease, policy limit; and

(z) $100,000 disease, each employee.

d. Business Interruption Insurance with limits of not less than the amount necessary to cover continuing expenses including rents and extra expenses for at least one (1) year.

e. Excess or Umbrella Liability Insurance with limits of not less than Two Million Dollars ($2,000,000.00) per occurrence and in the aggregate providing coverage excess and follow-form of the primary general and employer's liability insurances required hereinto.

f. Such other insurance as Landlord deems necessary and prudent or as may be required by any Mortgagee (defined below).

g. In addition to the aforementioned required insurance types and coverage amounts, and during any such time as any alterations or work is being performed at the Premises (except that work being performed by the Landlord or on behalf of Landlord) Tenant, at its sole cost and expense, shall carry, or shall cause to be carried and shall deliver to Landlord at least ten (10) days prior to commencement of any such alteration or work, evidence of insurance with respects to (a) workers compensation insurance covering all persons employed in connection with the proposed alteration or work in statutory limits, (b) general/excess liability insurance, in an amount commensurate with the work to be performed but not less than Two Million Dollars ($2,000,000) per occurrence and in the aggregate, for ongoing and completed operations insuring against bodily injury and property damage and naming all additional insured parties as outlined below and required of Tenant and shall include a waiver of subrogation in favor of such parties, (c) builders risk insurance, to the extent such alterations or work may require, on a completed value form including permission to occupy, covering all physical loss or damages, in an amount and kind reasonable satisfactory to Landlord, and (d) such other insurance, in such amounts, as Landlord deems reasonably necessary to protect Landlord's interest in the Premises from any act or omission of Tenant's contactors or subcontractors.

14.2 Policy Requirements. The policies of insurance required to be maintained by Tenant pursuant to this Section must be reasonably satisfactory to Landlord and must be written as primary policy coverage and not contributing with, or in excess of, any coverage carried by Landlord. All policies must name Tenant as the named insured party and (except for worker's compensation and property insurance) all policies shall name as additional insureds for on­ going and completed operations, Landlord, Ferris Development Group, LLC, any management company appointed by Landlord to manage the Building, the mortgagees under any mortgage on the Property, and all of their respective affiliates, members, officers, employees, agents and representatives, managing agents, and other designees of Landlord and its successors as the interest of such designees shall appear. In addition, Tenant agrees and shall provide thirty (30) days' prior written notice of suspension, cancellation, termination, or non-renewal of coverage to Landlord. Tenant shall not self-insure for any insurance coverage required to be carried by Tenant under this Lease. The deductible for any insurance policy required hereunder must not exceed $10,000. Tenant shall have the right to provide the insurance coverage required under this Lease through a blanket policy, provided such blanket policy expressly affords coverage to the Premises and to Landlord as required by this Lease.

14.3 CertificatesofInsurance. Prior to the Commencement Date, Tenant shall deliver to Landlord certificates of insurance evidencing all insurance Tenant is obligated to carry under this Lease, together with a copy of the endorsement(s), specifically but not limited to Waiver of Rights to Recover From Others, Additional Insureds (on-going and completed operations) and Contractual Liability endorsements. Prior to the expiration of any such insurance, Tenant shall deliver to Landlord certificates of insurance evidencing the renewal of such insurance.

14.4 No Separate Insurance. Tenant shall not obtain or carry separate insurance concurrent in form or contributing in the event of loss with that required by Section 14.01 unless Landlord and Tenant are named as insureds therein.

14.5 Tenant'sFailuretoMaintainInsurance. If Tenant fails to maintain the insurance required by this Lease, Landlord may, but shall not be obligated to, obtain, and pay the premiums for, such insurance. Upon demand, Tenant shall pay to Landlord all amounts paid by Landlord pursuant to this Subsection.

14.6 Landlord'sInsurance. Landlord, shall at all times during the Term of this Lease procure and keep in force (i) commercial general liability insurance covering the Common Areas and Landlord's indemnity obligations (to the extent normally available in a commercial general liability policy) set forth within at limits no less than those required by Landlord's mortgagee and, (ii) Special Form "All Risk" property insurance covering the full replacement cost of the Building with no coinsurance limitation and including all coverages and perils as required by Landlord's mortgagee.

15. Subrogation.

Landlord and Tenant hereby waive, and shall cause their respective insurance carriers to waive, any and all rights of recovery, claims, actions or causes of action against the other for any loss or damage with respect to Tenant's Property, Alterations, the Building, the Premises, or any contents thereof, including rights, claims, actions and causes of action based on negligence, to the extent such loss or damage is (or would have been, had the insurance required by this Lease been carried) covered by insurance.

16. Casualty Damage.

16.1 If all or any portion of the Premises becomes untenantable by fire or other casualty to the Premises (collectively a "Casualty"),Landlord, with reasonable promptness, shall cause a general contractor selected by Landlord to provide Landlord and Tenant with a good faith written estimate of the amount of time required using standard working methods to Substantially Complete the repair and restoration of the Premises and any Common Areas necessary to provide access to the Premises ("CompletionEstimate").If the Completion Estimate indicates that the Premises or any Common Areas necessary to provide access to the Premises cannot be made tenantable within two hundred ten (210) days from the date the repair is started, then either party shall have the right to terminate this Lease upon written notice to the other within 10 days after receipt of the Completion Estimate. Tenant, however, shall not have the right to terminate this Lease if the Casualty was caused by the gross negligence or intentional misconduct of Tenant or any Tenant Related Parties. In addition, Landlord, by notice to Tenant within ninety (90) days after the date of the Casualty, shall have the right to terminate this Lease if: (1) the Premises have been materially damaged and there is less than two (2) years of the Term remaining on the date of the Casualty; (2) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt; or (3) a material uninsured loss to the Building occurs.

16.2 If this Lease is not terminated, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord's reasonable control, restore the Premises and Common Areas. Such restoration shall be to substantially the same condition that existed prior to the Casualty, except for modifications required by Law or any other modifications to the Common Areas deemed desirable by Landlord. Upon notice from Landlord, Tenant shall assign to Landlord (or to any party designated by Landlord) all property insurance proceeds payable to Tenant under Tenant's Insurance with respect to any Alterations performed by or for the benefit of Tenant; provided if the estimated cost to repair such Alterations exceeds the amount of insurance proceeds received by Landlord from Tenant's insurance carrier, the excess cost of such repairs shall be paid by Tenant to Landlord prior to Landlord's commencement of repairs. Within fifteen (15) days of demand, Tenant shall also pay Landlord for any additional excess costs that are determined during the performance of the repairs. Landlord shall not be liable for any inconvenience to Tenant, or injury to Tenant's business resulting in any way from the Casualty or the repair thereof. Provided that Tenant is not in Default, during any period of time that all or a material portion of the Premises is rendered untenantable as a result of a Casualty, the Rent shall abate for the portion of the Premises that is untenantable and not used by Tenant.

17. Condemnation.

Either Landlord or Tenant may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-public use under Law, by eminent domain or private purchase in lieu thereof (a "Taking"). Landlord shall also have the right to terminate this Lease if (i)there is a Taking of any portion of the Building or Property which would have a material adverse effect on Landlord's ability to profitably operate the remainder of the Building, or (ii)any Mortgagee requires that the Taking proceeds be applied to the payment of the mortgage debt. The terminating party shall provide written notice of termination to the other party within forty-five (45) days after it first receives notice of the Taking. The termination shall be effective on the date the physical taking occurs. If this Lease is not terminated, Base Rent and Tenant's Pro Rata Share shall be appropriately adjusted to account for any reduction in the square footage of the Building or Premises. All compensation awarded for a Taking shall be the property of Landlord. The right to receive compensation or proceeds is expressly waived by Tenant, however, Tenant may file a separate claim for Tenant's Property and Tenant's reasonable relocation expenses, provided the filing of the claim does not diminish the amount of Landlord's award. If only a part of the Premises is subject to a Taking and this Lease is not terminated, Landlord, with reasonable diligence, will restore the remaining portion of the Premises as nearly as practicable to the condition immediately prior to the Taking.

18. Events of Default.

Each of the following occurrences shall be a "Default":(a) Tenant's failure to pay any portion of Rent when due, if the failure continues for five (5) days after written notice to Tenant ("MonetaryDefault");(b) Tenant's failure (other than a Monetary Default) to comply with any term, provision, condition or covenant of this Lease, if the failure is not cured within thirty (30) days after written notice to Tenant provided, however, if Tenant's failure to comply cannot reasonably be cured within thirty (30) days, Tenant shall be allowed additional time (not to exceed 60 days) as is reasonably necessary to cure the failure so long as Tenant begins the cure within ten (10) days after such notice to Tenant and diligently pursues the cure to completion; (c) Tenant becomes insolvent, makes a transfer in fraud of creditors, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts when due or forfeits or loses its right to conduct business; (d) the leasehold estate is taken by process or operation of Law; (e) in the case of any ground floor or retail Tenant, Tenant does not take possession of or abandons or vacates all or any portion of the Premises; or (f)Tenant is in default beyond any notice and cure period under any other lease or agreement with Landlord at the Building or Property. If Landlord provides Tenant with notice of Tenant's failure to comply with any specific provision of this Lease on three (3) separate occasions during any twelve (12) month period, Tenant's subsequent violation of such provision shall, at Landlord's option, be an incurable Default by Tenant. All notices sent under this Section shall be in satisfaction of, and not in addition to, notice required by Law.

19. Remedies.

19.1 Upon Default, Landlord shall have the right to pursue any one or more of the following remedies:

(a) Terminate this Lease, in which case Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord, in compliance with Law, may enter upon and take possession of the Premises and remove Tenant, Tenant's Property and any party occupying the Premises. Tenant shall pay Landlord, on demand, all past due Rent and other losses and damages Landlord suffers as a result of Tenant's Default, including, without limitation, all Costs of Reletting (defined below) and any deficiency that may arise from reletting or the failure to relet the Premises. "Costs of Reletting" shall include all reasonable costs and expenses incurred by Landlord in reletting or attempting to relet the Premises, including, without limitation, legal fees, brokerage commissions, the cost of alterations and the value of other concessions or allowances granted to a new tenant.

(b) Terminate Tenant's right to possession of the Premises and, in compliance with Law, remove Tenant, Tenant's Property and any parties occupying the Premises. Unless prohibited by law, Landlord may (but, except as expressly provided below, shall not be obligated to) relet all or any part of the Premises, without notice to Tenant, for such period of time and on such terms and conditions (which may include concessions, free rent and work allowances) as Landlord in its absolute discretion shall determine. Landlord may collect and receive all rents and other income from the reletting. Tenant shall pay Landford on demand all past due Rent, all Costs of Refetting and any deficiency arising from the refetting or failure to relet the Premises. The re-entry or taking of possession of the Premises shall not be construed as an election by Landford to terminate this Lease. Landlord shall use reasonable efforts to refet the Premises on such terms as Landford in its sole discretion may determine (including a term different from the Term, rental concessions, and alterations to, and improvement of, the Premises). The marketing of the Premises in a manner similar to the manner in which Landlord markets other premises within the Building shall be deemed to have satisfied Landlord's obligation to use "reasonable efforts" hereunder. In no event shall Landlord be required to (i) solicit or entertain negotiations with any other prospective tenant for the Premises until Landlord obtains full and complete possession of the Premises (including, without limitation, the final and non-appeafable legal right to relet the Premises free of any claim of Tenant), (ii)relet the Premises before leasing other vacant space in the Building, or (iii)lease the Premises for a rental fess than the fair market rent for similar space in the Building. Landford shall not be liable for, nor shall Tenant's obligations hereunder be diminished because of, Landlord's failure to relet the Premises or to collect rent due for such reletting.

19.2 In lieu of calculating damages under Section 19.01, Landlord may elect to receive as damages the sum of (a) all Rent accrued through the date of termination of this Lease or Tenant's right to possession, and (b) an amount equal to (i) the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a rate of six and one half percent (6.5%), (ii) minus the then present fair rental value of the Premises for the remainder of the Term, similarly discounted, after deducting all anticipated Costs of Reletting.

19.3 In lieu of any other damages or indemnity and in lieu of the recovery by Landlord of all sums payable under all the foregoing provisions of this Section, Landford may elect to collect from Tenant, by notice to Tenant, at any time after this Lease or Tenant's right of possession is terminated under any of the provisions contained in this Section and before such full recovery, and Tenant shall thereupon pay, as liquidated damages, an amount equal to the sum of the Base Rent and all Additional Rent payable for the twelve (12) months ended next prior to the such termination pfus the amount of Base Rent and Additional Rent of any kind accrued and unpaid at the time of such election pfus any and all expenses which the Landlord may have incurred for and with respect to the collection of any of such rent.

19.04 If Tenant is in Default of any of its non-monetary obligations under the Lease, Landford shall have the right to perform such obligations and Tenant shall reimburse Landlord for the cost of such performance upon demand together with an administrative charge equal to 10% of the cost of the work performed by Landlord.

19.05 The repossession or re-entering of all or any part of the Premises shall not relieve Tenant of its liabilities and obligations under this Lease. No right or remedy of Landlord shall be exclusive of any other right or remedy. Each right and remedy shall be cumulative and in addition to any other right and remedy now or subsequently available to Landlord at Law or in equity.

20. Limitation of Liability.

NOlWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE LESSER OF (A) THE INTEREST OF LANDLORD IN THE PROPERTY, OR (B) THE EQUITY INTEREST LANDLORD WOULD HAVE IN THE PROPERTY IF THE PROPERTY WERE ENCUMBERED BY THIRD PARTY DEBT IN AN AMOUNT EQUAL TO SEVENTY-FIVE PERCENT (75%) OF THE VALUE OF THE PROPERTY. TENANT SHALL LOOK SOLELY TO LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES, NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. WITHOUT LIMITING THE FOREGOING, IN NO EVENT SHALL LANDLORD OR ANY MORTGAGEES OR LANDLORD RELATED PARTIES EVER BE LIABLE FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES OR ANY LOST PROFITS OF TENANT.

LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE, AND TENANT'S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TENANT HAVE NO RIGHT TO TERMINATE THIS LEASE AND TENANT SHALL CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT, SETOFF OR DEDUCTION, NOlWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.

21. Holding Over.

If Tenant fails to surrender all or any part of the Premises at the termination of this Lease in the condition required hereunder, occupancy of the Premises after termination shall be that of a tenancy at sufferance. Tenant's occupancy shall be subject to all the terms and provisions of this Lease, and Tenant shall pay an amount (on a per month basis without reduction for partial months during the holdover) equal to one hundred fifty percent (150%) of the sum of the Base Rent and Additional Rent due for the period immediately preceding the holdover, thereafter. No holdover by Tenant or payment by Tenant after the termination of this Lease shall be construed to extend the Term or prevent Landlord from immediate recovery of possession of the Premises by summary proceedings or otherwise. If Landlord is unable to deliver possession of the Premises to a new tenant or to perform improvements for a new tenant as a result of Tenant's holdover and Tenant fails to vacate the Premises within fifteen (15) days after notice from Landlord, Tenant shall be liable for all damages that Landlord suffers from the holdover.

22. Subordination to Mortgages; Estoppel Certificate.

Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the Property, and to renewals, modifications, refinancings and extensions thereof (collectively referred to as a "Mortgage").The party having the benefit of a Mortgage shall be referred to as a "Mortgagee".This clause shall be self-operative, but upon request from a Mortgagee, Tenant shall execute a commercially reasonable subordination agreement in favor of the Mortgagee. As an alternative, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. Upon request, Tenant, without charge, shall attorn to any successor to Landlord's interest in this Lease. Landlord and Tenant shall each, within ten (10) days after receipt of a written request from the other, execute and deliver a commercially reasonable estoppel certificate to those parties as are reasonably requested by the other (including a Mortgagee or prospective purchaser). Without limitation, such estoppel certificate may include a certification as to the status of this Lease, the existence of any defaults and the amount of Rent that is due and payable, and the addressee(s) of such certificate may rely on the content of the same.

23. Notice.

All demands, approvals, consents or notices (collectively referred to as a "notice")shall be in writing and delivered by hand or sent by registered or certified mail with return receipt requested or sent by overnight or same day courier service at the party's respective Notice Address(es) set forth hereinabove. Each notice shall be deemed to have been received on the earlier to occur of actual delivery or the date on which delivery is refused, or, if Tenant has vacated the Premises or any other Notice Address of Tenant without providing a new Notice Address, three (3) days after notice is deposited in the U.S. Mail or with a courier service in the manner described above. Either party may, at any time, change its Notice Address (other than to a post office box address) by giving the other party written notice of the new address.

24. Surrender of Premises.

At the termination of this Lease or Tenant's right of possession, Tenant shall remove all Alterations as designated to be removed by Landlord prior to the end of the Term, and Tenant's Property from the Premises, and quit and surrender the Premises to Landlord, broom clean, and in good order, condition and repair, ordinary wear and tear and damage which Landlord is obligated to repair hereunder excepted. If Tenant fails to remove any of Tenant's Property by the termination of this Lease or Tenant's right to possession, Landlord, at Tenant's sole cost and expense, shall be entitled (but not obligated) to remove and store Tenant's Property. Landlord shall not be responsible for the value, preservation or safekeeping of Tenant's Property. Tenant shall pay Landlord, upon demand, the expenses and storage charges incurred. If Tenant fails to remove Tenant's Property from the Premises or storage, within thirty (30) days after notice, Landlord may deem all or any part of Tenant's Property to be abandoned and title to Tenant's Property shall vest in Landlord.

25. Miscellaneous.

25.1. This Lease shall be interpreted and enforced in accordance with the Laws of the Commonwealth of Massachusetts and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper venue of such Commonwealth of Massachusetts. If any term or provision of this Lease shall to any extent be void or unenforceable, the remainder of this Lease shall not be affected. If there is more than one Tenant or if Tenant is comprised of more than one party or entity, the obligations imposed upon Tenant shall be joint and several obligations of all the parties and entities, and requests or demands from any one person.or entity comprising Tenant shall be deemed to have been made by all such persons or entities. Notices to any one person or entity shall be deemed to have been given to all persons and entities. Tenant represents and warrants to Landlord that each individual executing this Lease on behalf of Tenant is authorized to do so on behalf of Tenant and that Tenant is not, and the entities or individuals constituting Tenant or which may own or control Tenant or which may be owned or controlled by Tenant are not, among the individuals or entities identified on any list compiled pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists.

25.2. If either party institutes a suit against the other for violation of or to enforce any covenant, term or condition of this Lease, the prevailing party shall be entitled to all of its costs and expenses, including, without limitation, reasonable attorneys' fees. Landlord and Tenant hereby waive any right to trial by jury in any proceeding based upon a breach of this Lease. Either party's failure to declare a default immediately upon its occurrence, or delay in taking action for a default, shall not constitute a waiver of the default, nor shall it constitute an estoppel. Further, no waiver at any time of any of the provisions hereof by Landlord or Tenant shall be construed as a waiver of any of the other provisions hereof, and a waiver at any time of any of the provisions hereof shall not be construed as a waiver at any subsequent time of the same provisions.

25.3. Whenever a period of time is prescribed for the taking of an action by Landlord or Tenant (other than the payment of the Security Deposit or Rent), the period of time for the performance of such action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist acts, civil disturbances and other causes beyond the reasonable control of the performing party ("ForceMajeure").

25.4. Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations under this Lease and in the Building and Property. Upon transfer Landlord shall be released from any further obligations hereunder and Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations, provided that, any successor pursuant to a voluntary, third party transfer (but not as part of an involuntary transfer resulting from a foreclosure or deed in lieu thereof) shall have assumed Landlord's obligations under this Lease.

25.5. Landlord has delivered a copy of this Lease to Tenant for Tenant's review only and the delivery of it does not constitute an offer to Tenant or an option. Landlord and Tenant represent to the other that it has dealt directly with and only with the Brokers as a broker in connection with this Lease. Tenant shall indemnify and hold Landlord and the Landlord Related Parties harmless from all claims of any other brokers claiming to have represented Tenant in connection with this Lease. Landlord shall indemnify and hold Tenant and the Tenant Related Parties harmless from all claims of any other brokers claiming to have represented Landlord in connection with this Lease and Landlord hereby agrees that its shall be solely responsible for the payment of any brokerage commission to the Brokers with respect to this Lease pursuant to a separate agreement.

25.6. Time is of the essence with respect to Tenant's exercise of any expansion or extension rights granted to Tenant. The expiration of the Term, whether by lapse of time, termination or otherwise, shall not relieve either party of any obligations which accrued prior to or which may continue to accrue after the expiration or termination of this Lease.

25.7. Landlord shall not disturb Tenant's use of the Premises, subject to the terms of this Lease, provided Tenant pays the Rent and fully performs all of its covenants and agreements. This covenant shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Building.

25.8. This Lease does not grant any rights to light or air over or about the Building. Landlord excepts and reserves exclusively to itself any and all rights not specifically granted to Tenant under this Lease. This Lease constitutes the entire agreement between the parties and supersedes all prior agreements and understandings related to the Premises, including all lease proposals, letters of intent and other documents. Neither party is relying upon any warranty, statement or representation not contained in this Lease. This Lease may be modified only by a written agreement signed by an authorized representative of Landlord and Tenant.

25.9. Tenant shall not record this Lease or any memorandum or notice without Landlord's prior written consent; provided, however, Landlord agrees to consent to the recordation or registration of a memorandum or notice of this Lease, at Tenant's cost and expense (and in a form reasonably satisfactory to Landlord), if the initial term of this Lease or the initial term plus extension terms granted exceed, in the aggregate, seven (7) years; provided that Tenant concurrently executes and delivers a Notice of Termination of Lease which Landlord shall hold in escrow and may record upon expiration or earlier termination of this Lease. In addition, if this Lease is terminated before the Term expires, upon Landlord's request the parties shall execute, deliver and record an instrument acknowledging the above and the date of the termination of this Lease, and Tenant appoints Landlord its attorney-in-fact in its name and behalf to execute the instrument if Tenant shall fail to execute and deliver the instrument after Landlord's request therefor within ten (10) days.

25.10. Within fifteen (15) days after Landlord's request, Tenant will furnish Tenant's most recent audited financial statements (including any notes to them) to Landlord, or, if no such audited statements have been prepared, such other financial statements (and notes to them) as may have been prepared by an independent certified public accountant or, failing those, Tenant's internally prepared financial statements. Notwithstanding the foregoing, Tenant shall have no obligation to provide to Landlord financial statements as provided in the preceding sentence more often than once per year during the Term. Tenant will discuss its financial statements with Landlord and will give Landlord access to Tenant's books and records in order to enable Landlord to verify the financial statements. Landlord will not disclose any aspect of Tenant's financial statements that Tenant designates to Landlord as confidential except (1) to Landlord's lenders or prospective purchasers of the Building, (2) in litigation between Landlord and Tenant, and (3) if required by court order.

25.11. Whenever Tenant requests Landlord to take any action or give any consent required or permitted under this Lease, Tenant will reimburse Landlord for Landlord's reasonable costs incurred in reviewing the proposed action or consent, including, without limitation, reasonable attorneys', engineers' or architects' fees, within thirty (30) days after Landlord's delivery to Tenant of a statement of such costs. Tenant will be obligated to make such reimbursement without regard to whether Landlord consents to any such proposed action.

25.12. Tenant and its telecommunications companies, including but not limited to local exchange telecommunications companies and alternative access vendor services companies shall have no right of access to and within the Building, for the installation and operation of telecommunications systems including but not limited to voice, video, data, and any other telecommunications services provided over wire, fiber optic, microwave, wireless, and any other transmission systems, for part or all of Tenant's telecommunicati ons within the Building and from the Building to any other location without Landlord's prior written consent. Landlord shall not unreasonably withhold its consent to the installation and operation of such telecommunications systems, telecommunication services and/or transmission systems if located entirely within the Premises; otherwise, Landlord may withhold or delay its consent in its sole discretion.

25.13. Tenant acknowledges that the terms and conditions of this Lease are to remain confidential for Landlord's benefit, and may not be disclosed by Tenant to anyone, by any manner or means, directly or indirectly, without Landlord's prior written consent. The consent by Landlord to any disclosures shall not be deemed to be a waiver on the part of Landlord of any prohibition against any future disclosure.

26. Parking.

Subject to Tenant's compliance with the rules and regulations with respect to the parking areas serving the Building (the "ParkingArea")as Landlord may impose from time to time, Tenant shall have the non-exclusive right to use, at no additional cost to Tenant during the Term, a number of unreserved parking spaces in the Parking Area equal the ratio of 3.5 spaces per 1,000 square feet of Rentable Square Footage of the Premises.

27. Signage.

Landlord will provide standard tenant identification signage on the entry monument, in the Building lobby directory, and Building standard identity signage at the entry door to the Premises, at Landlord's expense.

28. Hazardous Materials

28.1. Tenant shall not, nor shall Tenant permit any Tenant Related Parties or any other party, to, keep, maintain, use or store of any Hazardous Materials in the Premises, Building or Property (other than with respect to normal and customary office cleaning products and office supplies and such chemicals necessary for Tenant to perform its business, as listed in Exhibit F or an update to Exhibit F). Tenant shall provide Landlord with an updated Exhibit F, containing a list of all hazardous materials used or to be used by Tenant on the premises, at least once every six (6) months during the Term. If the hazardous materials used or to be used by Tenant on the premises have not and are not expected to change in the ensuing six (6) months, then Tenant shall inform Landlord of same in writing in lieu of providing an updated Exhibit F. Further, (i) Tenant shall not, nor shall Tenant permit any Tenant Related Parties, to keep, maintain, store or dispose of (into sewage or waste disposal system or otherwise) in violation of applicable Hazardous Materials Laws (as hereinafter below) or engage in any activity in violation of applicable Hazardous Materials Laws which might produce or generate any substance (excepting those listed in Exhibit F) which is, or may hereafter be, classified as hazardous material, hazardous waste or hazardous substance ("HazardousMaterials"),under federal, state or local laws, rules and regulations, including, without limitation, 42 U.S.C. §6901 etseq.,42 U.S.C. §9601 etseq.,and Massachusetts General Laws, Chapter 21E, and the rules and regulations promulgated under any of the foregoing, as such laws, rules and regulations may be amended from time to time (the "HazardousMaterialsLaws"),(ii) Tenant shall immediately notify Landlord of any incident in, on or about the Premises that would violate Hazardous Materials Laws or require reporting to any governmental authority under any Hazardous Materials Laws, and (iii)Tenant shall comply, and shall cause each Tenant Related Party to comply, with each of the foregoing. Subject to the access provisions of this Lease, Landlord shall have the right to make such inspections as Landlord shall elect from time to time to determine that Tenant is complying with the foregoing (Landlord hereby agreeing to use reasonable efforts to minimize any unreasonable interference with Tenant's business operations at the Premises during the course of such inspections).

28.02. Tenant shall defend, indemnify, and hold harmless Landlord and the Landlord Related Parties from and against any and all losses, costs, claims, demands, penalties, fines, liabilities, causes of action, suits, judgments, damages and expenses (including attorneys' fees and cost of cleanup and remediation) arising out of, or in connection with, Tenant's failure to comply with the provisions of this Section (such provisions constitute "Tenant'sIndemnity").This indemnity provision shall survive termination or expiration of the Lease.

29. Right of First Offer

29.1. Provided that Tenant is not then in default beyond applicable notice and cure period under the terms, covenants and conditions of this Lease, subject to (a) the current rights of other tenants in the Building and (b) the right of Landlord to extend or renew any then-current lease based on the extension or renewal rights contained in the then-current lease (each a "PriorityTenant"),at any time up to and including the final day of the forty-eighth (481h)month of the Term of this Lease, Tenant shall have a one-time right (the "RightofFirstOffer")to lease any space on the second (2nd) floor of the Building contiguous with the Premises, as shown on ExhibitGattached hereto (any of such space from time to time being referred to hereunder as the "RightofFirstOfferSpace")at such time as such space becomes available due to termination of the lease or leases applicable to that space and at such time as Landlord desires to offer all or any portion of any such Right of First Offer Space to the public for lease; provided, however, that Landlord shall have no obligation to offer all or any portion of any such Right of First Offer Space any earlier than the day immediately following the expiration of any Priority Tenant's right to extend or renew its then-current lease based on the extension or renewal rights contained in such then-current lease, unless (i) such Priority Tenant has provided Landlord with valid and timely written notice exercising such extension or renewal right pursuant to the terms and provisions of such lease, or (ii) if Landlord and any such Priority Tenant have executed an amendment to such Priority Tenant's lease extending or renewing the term thereof. Notwithstanding anything herein to the contrary, Landlord shall not grant any additional expansion rights to any Priority Tenants during the Term of this Lease. In the event that any Right of First Offer Space becomes or may become available in a way that implicates Tenant's rights in this Section, Landlord shall give written notice to Tenant of the availability of such Right of First Offer Space and the terms and conditions on which it will be offered to Tenant as set forth hereinbelow ("RightofFirstOfferNotice")and Tenant shall have a period of ten (10) Business Days thereafter in which to exercise Tenant's right to lease such Right of First Offer Space as set forth in this Section. In the event that Tenant does not exercise its right to lease the Right of First Offer Space identified in any Right of First Offer Notice within such ten (10) Business Day period following the date upon which such Right of First Offer Notice has been delivered by Landlord, then Landlord may lease such Right of First Offer Space to anyone, and Tenant shall have no further rights with respect to such Right of First Offer Space.

29.2. If a Right of First Offer Notice is given by Landlord to Tenant, then the terms and conditions of such Right of First Offer Notice (including rent per square foot) shall be the same as those provided for the original Premises under this Lease, except that the Base Rent per rentable square foot for the Right of First Offer Space shall be the Prevailing Market rate (hereinafter defined), but in no event may such Base Rent be less than the Base Rent payable by Tenant immediately prior to the Expiration Date of the initial Term. Base Rent for the Right of First Offer Space shall increase, if at all, in accordance with the increases assumed in the determination of Prevailing Market rate. Base Rent attributable to the Right of First Offer Space shall be payable in monthly installments in accordance with the terms and conditions set forth elsewhere herein. Furthermore, Tenant shall pay Additional Rent (i.e.Taxes and Expenses) for the Right of First Offer Space in accordance with the terms of Section 4 of the Lease, however, Tenant's Base Year for Expenses and Base Year for Taxes shall be adjusted to the calendar year (or fiscal year, with respect to Taxes) in which the Tenant exercises its right to lease the respective Right of First Offer Space.

29.3. Procedurefor Determining Prevailing Market Rate. When providing the Right of First Offer Notice, Landlord shall advise Tenant of the applicable Base Rent for the Right of First Offer Space. Such Base Rent shall increase in accordance with the Greater Boston CPI rate over the last year of the Term. Tenant, within fifteen (15) days after the date on which Landlord advises Tenant of the applicable Base Rent rate for the Right of First Offer Space, shall either (i) give Landlord final binding written notice ("BindingNotice")of Tenant's exercise of its Right of First Offer, or (ii) if Tenant disagrees with Landlord's determination, provide Landlord with written notice of rejection ("RejectionNotice"). If Tenant fails to provide Landlord with either a Binding Notice or Rejection Notice within such 15-day period, Tenant's Right of First Offer shall be null and void and of no further force and effect, and the Lease shall terminate on the Termination Date. If Tenant provides Landlord with a Binding Notice, Landlord and Tenant shall amend the Lease to commemorate the terms and conditions set forth in the Right of First Offer Notice. If Tenant provides Landlord with a Rejection Notice, Landlord and Tenant shall work together in good faith to resolve their differences of opinion and, if they are able to resolve those differences, shall amend the Lease to commemorate the terms and conditions set forth in the Right of First Offer Notice, as modified by the Landlord and Tenant's negotiations. If Landlord and Tenant fail to agree upon the Prevailing Market rate within thirty (30) days after the date Tenant provides Landlord with a Rejection Notice, then Tenant's Right of First Offer shall be null and void and of no further force and effect, and the Lease shall terminate on the Termination Date.

29.4. If Tenant exercises a Right of First Offer hereunder, Landlord shall provide access to the Right of First Offer Space to Tenant immediately upon vacancy of such Right of First Offer Space by the prior tenant for the purpose of planning and measuring the tenant improvements for the Right of First Offer Space. Tenant shall use commercially reasonable efforts to deliver its preliminary plans for the initial tenant improvements for the Right of First Offer Space ("ROFOSpacePlans")to Landlord within sixty (60) days following the ROFO Space Access Date and Tenant's failure to so deliver the ROFO Space Plans within such sixty (60) day period shall be a Tenant Delay. Except as otherwise agreed to by the parties, Landlord shall perform the initial tenant improvements to the Right of First Offer Space consistent with the general terms, provisions and procedures set forth on Exhibit C attached hereto, as modified accordingly based on the nature and scope of any such proposed initial tenant improvements. Upon the earlier of the date (i) Landlord substantially completes the initial tenant improvements to the applicable Right of First Offer Space or (ii) Landlord would have substantially completed the initial tenant improvements but for a Tenant Delay, the Right of First Offer Space shall automatically be included within the Premises subject to all the terms and conditions of this Lease, except as otherwise set forth in this Section, and Tenant's Pro Rata Share shall be recalculated, using the then-total square footage of the then existing Premises, as increased by the applicable Right of First Offer Space. The parties shall work in good faith and use diligent efforts to negotiate and execute an amendment to this Lease incorporating the Right of First Offer Space into the existing Premises as set forth above within ninety (90) days following Tenant's exercise of such Right of First Offer; provided, however, the failure of either

 Landlord and Tenant have executed this Lease as of the day and year first above written.

LANDLORD:

FERRIS DEVELOPMENT 352TURNPIKE ROAD, LLC,

a Massachusetts limited liability company

By: /s/David Ferris

Name: David Ferris

Title: Manager

TENANT:

ECHO THERAPEUTI CS, INC.

a Delaware corpora ion

Tenant's Tax ID Number (SSN or FEIN)

EXHIBIT A

OUTLINEANDLOCATIONOFPREMISES

[Diagram to be attached]

EXHIBIT S

EXPENSESANDTAXES

This Exhibit is attached to and made a part of the Lease by and between FERRISDEVELOPMENT352TURNPIKEROAD,LLC,a Massachusetts limited liability company ("Landlord")and ECHOTHERAPEUTICS,INC.,a Delaware corporation ("Tenant")for space in the Building located at 295 Foster Street, Littleton, Massachusetts.

a. Payments.

a.1. Commencing on the first anniversary of the Commencement Date, Tenant shall pay Tenant's Pro Rata Share of the amount, if any, by which Expenses (defined below) for each calendar year during the Term exceed Expenses for the Base Year (the "ExpenseExcess")and also the amount, if any, by which Taxes (defined below) for each Fiscal Year during the Term exceed Taxes for the Base Year (the "TaxExcess").If Expenses or Taxes in any calendar year or Fiscal Year decrease below the amount of Expenses or Taxes for the Base Year, Tenant's Pro Rata Share of Expenses or Taxes, as the case may be, for that calendar year or Fiscal Year shall be $0. Landlord shall provide Tenant with a good faith estimate of the Expense Excess and of the Tax Excess for each calendar year or Fiscal Year during the Term. On or before the first day of each month, Tenant shall pay to Landlord a monthly installment equal to one­ twelfth of Tenant's Pro Rata Share of Landlord's estimate of both the Expense Excess and Tax Excess. After its receipt of the revised estimate, Tenant's monthly payments shall be based upon the revised estimate. If Landlord does not provide Tenant with an estimate of the Expense Excess or the Tax Excess by January 1 of a calendar year, Tenant shall continue to pay monthly installments based on the previous year's estimate(s) until Landlord provides Tenant with the new estimate.

a.2. As soon as is practical following the end of each calendar year or Fiscal Year, as the case may be, Landlord shall furnish Tenant with a statement of the actual Expenses and Expense Excess and the actual Taxes and Tax Excess for the prior calendar year or Fiscal Year, as the case may be. If the estimated Expense Excess or estimated Tax Excess for the prior calendar year or Fiscal Year, as the case may be, is more than the actual Expense Excess or actual Tax Excess for the prior calendar year or Fiscal Year, as the case may be, Landlord shall either provide Tenant with a refund or apply any overpayment by Tenant against Additional Rent due or next becoming due, provided if the Term expires before the determination of the overpayment, Landlord shall refund any overpayment to Tenant after first deducting the amount of Rent due. If the estimated Expense Excess or estimated Tax Excess for the prior calendar year or Fiscal Year, as the case may be, is less than the actual Expense Excess or actual Tax Excess, for such prior calendar year or Fiscal year, as the case may be, for such prior year, Tenant shall pay Landlord, within 30 days after its receipt of the statement of Expenses or Taxes, any underpayment for the prior calendar year. Tenant shall have the right to audit the Taxes and Expense amounts at the Landlord's local office provided however that such audit shall be no more often than one time per year. If the audit shows a differential from the Landlord's amount of greater than Ten percent (10%) than the Landlord shall reimburse Tenant for the cost of the audit.

b. Expenses.

b.1. "Expenses"means all costs and expenses incurred in each calendar year in connection with operating, maintaining, repairing, and managing the Building and the Property. Expenses include, without limitation: (a) all labor and labor related costs for work done and time spent at the Building and at Landlord's management officese such time at the management Offices is spent solely on work pertaining to this Building and such time shall be accounted for pursuant to generally accepted accounting principles (GAAP); (b) management fees, defined as the greater of five percent (5%) or the market rate percentage of gross cash receipts for the Building; (c) the cost of equipping, staffing and operating an on-site and/or off-site management office for the Building, provided if the management office services one or more other buildings or properties, the shared costs and expenses of equipping, staffing and operating such management office(s) shall be equitably prorated and apportioned between the Building and the other buildings or properties; (d) accounting costs relating to managing Expenses and not completing and filing tax returns; (e) the cost of services; (f)rental and purchase cost of parts, supplies, tools and equipment amortized over the useful life of the parts, supplies, tools and equipment; (g) insurance premiums (regardless of their amount) and deductibles up to $10,000.00; (h) electricity, gas and other utility costs; and (i) the amortized cost of capital improvements (as distinguished from replacement parts or components installed in the ordinary course of business) made subsequent to the Base Year which are: (1) performed primarily to reduce current or future operating expense costs, upgrade Building security or otherwise improve the operating efficiency of the Property and the Landlord provides the tenant with its cost benefit analysis showing payback expectations;. The cost of capital improvements shall be amortized by Landlord (using an annual rate of interest of ten percent (10%)) over the lesser of the Payback Period (defined below) or the useful life of the capital improvement as reasonably determined by Landlord. "PaybackPeriod"means the reasonably estimated period of time that it takes for the cost savings resulting from a capital improvement to equal the total cost of the capital improvement. Landlord, by itself or through an affiliate, shall have the right to directly perform, provide and be compensated for any services under this Lease in an amount as limited hereinabove. If Landlord incurs Expenses for the Building or Property together with one or more other buildings or properties, whether pursuant to a reciprocal easement agreement, common area agreement or otherwise, the shared costs and expenses shall be equitably prorated and apportioned between the Building and Property and the other buildings or properties.

b.2. Expenses shall not include:

 (a) the cost of capital improvements (except as set forth above);

 (b) depreciation;

 (c) principal payments of mortgage and other non-operating debts of Landlord;

 (d) the cost of repairs or other work to the extent Landlord is reimbursed by insurance or condemnation proceeds;

 (e) costs in connection with leasing space in the Building, including brokerage commissions and costs incurred for any specific tenant that is not for the benefit of all tenants;

 (f)lease concessions, rental abatements and construction allowances granted to specific tenants;

 (g) costs incurred in connection with the sale, financing or refinancing of the Building;

 (h) fines, interest and penalties incurred due to the late payment of Taxes or Expenses;

 (i) organizational expenses associated with the creation and operation of the entity which constitutes Landlord;

 (j)any penalties or damages that Landlord pays to Tenant under this Lease or to other tenants in the Building under their respective leases;

 (k) Sums (other than management fees, it being agreed that the management fees included in Expenses are as described and limited in Section 2.01 above) paid to subsidiaries or other affiliates of Landlord for services on or to the Property, Building and/or Premises, but only to the extent that the costs of such services exceed the competitive cost for such services rendered by persons or entities of similar skill, competence and experience;

 (l) Any fines, penalties or interest resulting from the negligence or willful misconduct of the Landlord or its agents, contractors, or employees;

 (m) Advertising and promotional expenditures;

 (n) Landlord's charitable and political contributions;

 (o) Ground lease rental;

 (p) Attorney's fees and other expenses incurred in connection with negotiations or disputes with prospective tenants or tenants or other occupants of the Building;

 (q) The cost or expense of any services or benefits provided generally to other tenants in the Building and not provided or available to Tenant;

 (r) All costs of purchasing or leasing major sculptures, paintings or other major works or objects of art (as opposed to decorations purchased or leased by Landlord for display in the Common Areas of the Building);

 (s) Any expenses for which Landlord has received actual reimbursement (other than through Expenses);

 (t) Costs incurred by Landlord in connection with the correction of defects in design and original construction of the Building or Property, including those expenses necessary to comply with any applicable building code or regulation;

 (u) Expenses for the replacement of any item covered under warranty, unless Landlord has not received payment under such warranty and it would not be fiscally prudent to pursue legal action to collect on such warranty; and Laws.

 (v) Fines or penalties incurred as a result of violation by Landlord of any applicable

b.3 If at any time during a calendar year the Building is not at least 95% occupied or Landlord is not supplying services to at least 95% of the total Rentable Square Footage of the Building, Expenses shall be determined as if the Building had been 95% occupied and Landlord had been supplying services to 95% of the Rentable Square Footage of the Building. If Expenses for a calendar year are determined as provided in the prior sentence, Expenses for the Base Year shall also be determined in such manner. Notwithstanding the foregoing, Landlord may calculate the extrapolation of Expenses under this Section based on one hundred percent (100%) occupancy and service so long as such percentage is used consistently for each year of the Term. The extrapolation of Expenses under this Section shall be performed in accordance with the methodology specified by the Building Owners and Managers Association.

b.4 Expenses, as described above, shall be the actual amounts spent to meet the Landlord's obligation to maintain, operate, manage and equip the Building. The Tenant's proportionate share of such expenses shall be found by dividing the total square footage of Tenant's premises by the total square footage of the Building.

3. "Taxes"shall mean: (a) all real property taxes and other assessments on the Building and/or Property, including, but not limited to, gross receipts taxes, assessments for special improvement districts and building improvement districts, governmental charges, fees and assessments for police, fire, traffic mitigation or other governmental service of purported benefit to the Property, taxes and assessments levied in substitution or supplementation in whole or in part of any such taxes and assessments and the Property's share of any real estate taxes and assessments under any reciprocal easement agreement, common area agreement or similar agreement as to the Property; (b) all personal property taxes allocated proportionately, for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Property; and (c) all reasonable costs and fees incurred in connection with seeking reductions in any tax liabilities described in (a) and (b), including, without limitation, any costs incurred by Landlord for compliance, review and appeal of tax liabilities. Taxes shall not include any offsite improvements or expenditures. Without limitation, Taxes shall not include any income, capital levy, transfer, capital stock, gift, estate or inheritance tax. If a change in Taxes is obtained for any year of the Term during which Tenant paid Tenant's Pro Rata Share of any Tax Excess, then Taxes for that year will be retroactively adjusted and Landlord shall provide Tenant with a credit, if any, based on the adjustment. Likewise, if a change is obtained for Taxes for the Base Year, Taxes for the Base Year shall be restated and the Tax Excess for all subsequent years shall be recomputed. Tenant shall pay Landlord the amount of Tenant's Pro Rata Share of any such increase in the Tax Excess within thirty (30) days after Tenant's receipt of a statement from Landlord.

EXHIBIT C

WORKLETTER

This Exhibit is attached to and made a part of the Lease by and between FERRIS DEVELOPMENT 352 TURNPIKE ROAD, LLC, a Massachusetts limited liability company doing business as 295 Foster Street ("Landlord") and ECHO THERAPEUTI CS, INC., a Delaware corporation ("Tenant") for space in the Building located at 295 Foster Street, Littleton, Massachusetts.

This Work Letter (herein so called) describes and specifies the rights and obligations of Landlord and Tenant under the Lease to which this Exhibit C is attached, with respect to the construction and completion of the Landlord Work within the Premises. Performance of the work shall occur after the Effective Date.

a. LandlordWork. Prior to the Commencement Date, the Landlord, at its sole cost and expense, shall perform the following work on the Premises (the "Landlord Work"):

• A turnkey build-out based on building standard turnkey items and materials per Schedule C-2 (TO BE FINALIZED IN ACCORDANCE WITH PLAN ONCE RECEIVED).

• Perform such work consistent with the mutually agreeable plan attached hereto as Schedule C-1. (FINAL PLAN TO BE CONFIRMED BY TENANT AND APPROVED BY LANDLORD)

b. TenantWork. The Tenant will be solely responsible for the cost, installation and maintenance of 1) laboratory equipment, facilities, and infrastructure, 2) Tenant-specific fixtures, equipment (including, but not limited to, plumbing and electricity requirements) (TO BE FINALIZED IN ACCORDANCE WITH PLAN ONCE RECEIVED) and 3) finishes, materials, furnishings and fixtures requested by Tenant which are in addition to or exceed in quality, volume, or condition those provided for in Schedule C-2.

c. Delayin Completion. Landlord will use commercially reasonable efforts to complete such Landlord Work by July 1, 2015. If Landlord is unable to complete such Landlord Work by July 1, 2015, this Lease remains in full force and effect and Landlord shall not be liable to Tenant for any resulting loss or damage; provided, however, that Landlord will appropriately adjust the Commencement Date and Termination Date. If the Landlord fails to complete the Landlord Work on or before July 1, 2015, due to causes within the Landlord's control (and not due to force majeure or Tenant's delay or a cause within Tenant's control) then the Tenant shall receive one (1) day of rent-free occupancy for each day of Landlord delay after July 1, 2015. If the Landlord Work is not completed on or before August 15, 2015 (the "Outside Delivery Date") due to any cause within the Landlord's control (and not due to force majeure or Tenant's delay or a cause within Tenant's control}, then the Landlord shall reimburse the Tenant for any amounts expended by the Tenant on substitute rental space and storage costs during the period the Landlord is delayed from completing the Landlord Work past July 1, 2015.

d. Tenant shall be permitted to store its equipment, materials and personal property within the premises or another location within the Building (which location is to be determined by Landlord in its sole discretion) provided that such storage shall not interfere with Landlord's Work. In addition, at any time on or after June 1, 2015, Tenant shall be permitted to enter the premises early for the purposes of installing IT cables and such other items as Tenant shall deem reasonably necessary to operate its business; provided however that such Tenant work shall not interfere with Landlord's Work.

SCHEDULE C-2

BuildingStandardTurnkeyBuildoutDocument BUILDING STANDARDS FOR TENANT FIT-UP

295 Foster Street, Littleton, MA

Echo Therapeutics

Ferris Development Group offers the following building standards for typical office fit-ups.

TENANTENTRY: Existing entry door, magnetic lock with motion release. Access card reader and system provided by tenant. Single 3'x7' glass door with 24" glass sidelight. Polished stainless steel trim.

SECONDARY DOORS:

Doors: 3'-0" x 7'-0" x 1 %", solid core white birch doors to match existing doors DoorFrame: Steel door frames

Sidelight: All offices will have sidelights 22x 80 inches.

DoorHardware:Brushed Stainless Lever Lockset (offices), Passage set (all other doors), Best IC cores

Hinges: 3 per door, Stanley FB179, 4 %" x 4 %'', match existing

Wall Door Stop: Concave Wall Door Stop, Heavy Duty, Satin Chrome

WALLS

NewInteriorTenantWalls: 3 5/8", 20 gauge metal studs 16" o.c., 9'-6" high; 1/2" GWB each side, 9'-6" high. Brace to deck every 4'-0". Ceilings will be at 9'-0".

Wallswithinsulation:3" batt insulation.

New Demising Walls Between Tenants: : 3 5/8", 25 gauge, metal studs, 16" o.c., to floor deck above; 5/8" GWB each side, to floor deck above, filled with 3" batt insulation. Flutes of deck above to be filled with fire safe insulation.

CEILINGS

CeilingGrid: 2'x4', 15/16", white, suspended T system, Prelude XL.

CeilingTile:Damaged or stained ceiling tiles will be replaced with new to match existing

EXTERIORWINDOW BLINDS

All exterior windows shall have window blinds to match existing.

SPRINKLERHEADS

Sprinkler Heads: Fully recessed pop-down w/ chrome escutcheon, centered in ceiling tile. Quantity shall be to meet code, based on Ordinary Hazard occupancy (typical office space).

HVAC DIFFUSERS, RETURNS & THERMOSTATS

InteriorDiffusers:Four way throw, 2'x2' white, metalaire model 5000-6 supply air diffuser with 9x9 neck and 8" collar.

PerimeterDiffusers: 4' linear white

Thermostats: Located appropriately based on space plan and room use. Honeywell TB7220 HVACReturnAirGrill: 2'x2', white, perforated metal, plenum return.

LIGHTFIXTURES:New 2x4 Cree LED Troffer fixtures

OCCUPANCYSENSORS FORLIGHTINGENERGYSAVINGS

One (1) occupancy sensor in each private office and ceiling sensor for all other areas. Lights will shut off when room is not occupied.

LIGHTSWITCHES

Light switches: White device and white cover plate, 48" above the floor. One (1) light switch per office and other rooms.

POWERRECEPTACLES

Duplex Power Receptacle: White device and white plate, 18" above the floor. Two (2) receptacles per office, additional at tenant expense.

BASEFEEDSORPOWERPOLEFEEDSFORCUBICLES

Allowance: One circuit for every four cubicles.

LIFESAFETYDEVICES

ExitSigns:White plastic with red letters, illuminated. Series Fully Recessed LED Exit Sign. NightLights/EmergencyLights: Wired to emergency lighting panel powered by emergency generator.

Fire Alarm Horn/Strobes (AudioNisual): Fully addressable EST speaker/strobes and pull stations.

FireExtinguishers: At egress, wall mounted on hook at 48" above floor every 1OOftto meet building code.

VOICE/DATA CABLING, DEVICES AND RECEPTACLES

Voice and Data receptacles are provided and installed by the tenant's own contractor.

Cover plates to be white. Typically to be mounted vertically, 18" above the floor. Floor coring and/or trenching for voice/data/electric to be at tenants expense.

MILLWORK

Kitchen cabinets (uppers and lowers) -8'of base cabinets with sink and faucet and 8' of upper cabinets. Dishwasher optional at Tenants expense.

PLUMBING

KitchenSink: Stainless steel, approx. 22x25, with single handle faucet and spray. Trenching and

Or gravity pumps if required to be at tenant expense.

FURNITURE:

Furniture is provided and installed by tenant. Power poles and base feed whips are provided and installed by tenant.

LOBBYSIGNAGE:

Tenant name on lobby signage.

FINISHES:

Carpet: (allowance: $20 per square yard, installed). 26 ounce level loop. ResilientTileFlooring: Armstrong, Vinyl tile, Standard Excelon

WallBase: 4" wall base (or equal).

WallPaint: Sherwin-Williams, ProMar® 400 Zero VOC Interior Latex, Eggshell, 2 coats finish over 1 coat primer.

TrimPaint: Sherwin-Williams, ProMar® 400 Zero VOC Interior Latex, semi-gloss, 2 coats finish over 1 coat primer.

PlasticLaminatesonMillwork: Standard colors.

EXHIBIT D

BUILDINGRULESANDREGULATIONS

The following rules and regulations shall apply, where applicable, to the Premises, the Building, the parking facilities (if any), the Property and the appurtenances. In the event of a conflict between the following rules and regulations and the remainder of the terms of the Lease, the remainder of the terms of the Lease shall control. Capitalized terms have the same meaning as defined in the Lease.

1. Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by Tenant or used by Tenant for any purpose other than ingress and egress to and from the Premises. No rubbish, litter, trash, or material shall be placed, emptied, or thrown in those areas. At no time shall Tenant permit Tenant's employees to loiter in Common Areas or elsewhere about the Building or Property.

2. Plumbing fixtures and appliances shall be used only for the purposes for which designed and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed in the fixtures or appliances. Damage resulting to fixtures or appliances by Tenant, its agents, employees or invitees shall be paid for by Tenant and Landlord shall not be responsible for the damage.

3. No signs, advertisements or notices shall be painted or affixed to windows, doors or other parts of the Building, except those of such color, size, style and in such places as are first approved in writing by Landlord. All tenant identification and suite numbers at the entrance to the Premises shall be installed by Landlord, at Tenant's cost and expense, using the standard graphics for the Building. Except in connection with the hanging of lightweight pictures and wall decorations, no nails, hooks or screws shall be inserted into any part of the Premises or Building except by the Building maintenance personnel without Landlord's prior approval, which approval shall not be unreasonably withheld.

4. Landlord may provide and maintain in the first floor (main lobby) of the Building an alphabetical directory board or other directory device listing tenants and no other directory shall be permitted unless previously consented to by Landlord in writing.

5. Tenant shall not place any lock(s) on any door in the Premises or Building without Landlord's prior written consent, which consent shall not be unreasonably withheld, and Landlord shall have the right at all times to retain and use keys or other access codes or devices to all locks within and into the Premises. A reasonable number of keys to the locks on the entry doors in the Premises shall be furnished by Landlord to Tenant at Tenant's cost and Tenant shall not make any duplicate keys. All keys shall be returned to Landlord at the expiration or early termination of the Lease.

6. All contractors, contractor's representatives and installation technicians performing work in the Building shall be subject to Landlord's prior approval, which approval shall not be unreasonably withheld, and shall be required to comply with Landlord's standard rules, regulations, policies and procedures, which may be revised from time to time. Landlord has no obligation to allow any particular telecommunication service provider to have access to the Buildings or to the Premises. If Landlord permits access, Landlord may condition the access upon the payment to Landlord by the service provider of fees assessed by Landlord in Landlord's sole discretion.

7. Movement in or out of the Building of furniture or office equipment, or dispatch or receipt by Tenant of merchandise or materials requiring the use of elevators, stairways, lobby areas or loading dock areas, shall be restricted to hours reasonably designated by Landlord. Tenant shall obtain Landlord's prior approval by providing a detailed listing of the activity, which approval shall not be unreasonably withheld. If approved by Landlord, the activity shall be under the supervision of Landlord and performed in the manner required by Landlord. Tenant shall assume all risk for damage to articles moved and injury to any persons resulting from the activity. If equipment, property, or personnel of Landlord or of any other party is damaged or injured as a result of or in connection with the activity, Tenant shall be solely liable for any resulting damage, loss or injury.

8. Landlord shall have the right to approve the weight, size, or location of heavy equipment or articles in and about the Premises, which approval shall not be unreasonably withheld. Damage to the Building by the installation, maintenance, operation, existence or removal of Tenant's Property shall be repaired at Tenant's sole expense.

9. Corridor doors, when not in use, shall be kept closed.

10. Tenant shall not (1) make or permit any improper, objectionable or unpleasant noises or odors in the Building, or otherwise interfere in any way with other tenants or persons having business with them; (2) solicit business or distribute or cause to be distributed, in any portion of the Building, handbills, promotional materials or other advertising; or (3) conduct or permit other activities in the Building that might, in Landlord's sole opinion, constitute a nuisance.

11. No animals, except those assisting handicapped persons, shall be brought into the Building or kept in or about the Premises.

12. No inflammable, explosive or dangerous fluids or substances shall be used or kept by Tenant in the Premises, Building or about the Property, except for those substances as are typically found in similar premises used for general office purposes and are being used by Tenant in a safe manner and in accordance with all applicable Laws. Tenant shall not, without Landlord's prior written consent, use, store, install, spill, remove, release or dispose of, within or about the Premises or any other portion of the Property, any asbestos-containing materials or any solid, liquid or gaseous material now or subsequentlyconsideredtoxicorhazardousundertheprovisionsof42U.S.C.§9601et seq.,M.G.L. c. 21C, M.G.L. c. 21E or any other applicable environmental Law which may now or later be in effect. Tenant shall comply with all Laws pertaining to and governing the use of these materials by Tenant and shall remain solely liable for the costs of abatement and removal.

13. Tenant shall not use or occupy the Premises in any manner or for any purpose which might injure the reputation or impair the present or future value of the Premises or the Building. Tenant shall not use, or permit any part of the Premises to be used for lodging, sleeping or for any illegal purpose.

14. Tenant shall not take any action which would violate Landlord's labor contracts or which would cause a work stoppage, picketing, labor disruption or dispute or interfere with Landlord's or any other tenant's or occupant's business or with the rights and privileges of any person lawfully in the Building ("LaborDisruption").Tenant shall take the actions necessary to resolve the Labor Disruption, and shall have pickets removed and, at the request of Landlord, immediately terminate any work in the Premises that gave rise to the Labor Disruption, until Landlord gives its written consent for the work to resume. Tenant shall not have any claim for damages against Landlord or any of the Landlord Related Parties nor shall the Commencement Date of the Term be extended as a result of the above actions. Tenant may use any contractor of its own choosing, subject to bonding and insurance requirements of Landlord and there shall be no requirement to use union contractors.

15. Tenant shall not install, operate or maintain in the Premises or in any other area of the Building, electrical equipment that would overload the electrical system beyond its capacity for proper, efficient and safe operation as determined solely by Landlord. Tenant shall not furnish cooling or heating to the Premises, including, without limitation, the use of electronic or gas heating devices, without Landlord's prior written consent. Tenant shall not use more than its proportionate share of telephone lines and other telecommunication facilities available to service the Building.

16. Tenant shall not operate or permit to be operated a coin or token operated vending machine or similar device (including, without limitation, telephones, lockers, toilets, scales, amusement devices and machines for sale of beverages, foods, candy, cigarettes and other goods), except for machines for the exclusive use of Tenant's employees and invitees.

17. Bicycles and other vehicles are not permitted inside the Building or on the walkways outside the Building, except in areas designated by Landlord.

18. Landlord may from time to time adopt systems and procedures for the security and safety of the Building, its occupants, entry, use and contents. Tenant, its agents, employees, contractors, guests and invitees shall comply with Landlord's systems and procedures.

19. Landlord shall have the right to prohibit the use of the name of the Building or any other publicity by Tenant that in Landlord's sole opinion may impair the reputation of the Building or its desirability. Upon written notice from Landlord, Tenant shall refrain from and discontinue such publicity immediately.

20. Neither Tenant nor its agents, employees, contractors, guests or invitees shall smoke or permit smoking in the Common Areas, unless a portion of the Common Areas have been declared a designated smoking area by Landlord, nor shall the above parties allow smoke from the Premises to emanate into the Common Areas or any other part of the Building. Landlord shall have the right to designate the Building (including the Premises) as a non-smoking building.

21. Landlord shall have the right to designate and approve standard window coverings for the Premises and to establish rules to assure that the Building presents a uniform exterior appearance. Tenant shall ensure, to the extent reasonably practicable, that window coverings are closed on windows in the Premises while they are exposed to the direct rays of the sun.

22. Deliveries to and from the Premises shall be made only at the times in the areas and through the entrances and exits reasonably designated by Landlord. Tenant shall not make deliveries to or from the Premises in a manner that might interfere with the use by any other tenant of its premises or of the Common Areas, any pedestrian use, or any use which is inconsistent with good business practice.

23. The work of cleaning personnel shall not be hindered by Tenant after 5:30 P.M.,and cleaning work may be done at any time when the offices are vacant. Windows, doors and fixtures may be cleaned at any time. Tenant shall provide adequate waste and rubbish receptacles to prevent unreasonable hardship to the cleaning service.

EXHIBIT E ADDITIONAL PROVISIONS

This Exhibit is attached to and made a part of the Lease by and between FERRISDEVELOPMENT352TURNPIKEROAD,LLC,a Massachusetts limited liability company ("Landlord")and ECHOTHERAPEUTICS,INC.("Tenant")for space in the Building located at 295 Foster Street, Littleton, Massachusetts.

1. EXTENSIONOPTION.

A. GrantofOption;Conditions. Tenant shall have the right to extend the Term (the "ExtensionOption")for two (2) additional periods of thirty-six (36) months each, commencing on the day following the Termination Date of the Term (the "ExtensionTerm"),if:

1. Landlord receives notice of exercise ("ExtensionNotice")not more than twelve (12) months and not less than nine (9) months prior to the expiration of the Term; and

2. Tenant is not in Default, beyond any applicable cure period, at the time that Tenant delivers its Extension Notice or at the time the Extension Term commences; and

3. No part of the Premises is sublet (other than pursuant to a Permitted Transfer, as defined in Section 11 of the Lease) at the time that Tenant delivers its Extension Notice or at the time the Extension Term commences; and

4. The Lease has not been assigned (other than pursuant to a Permitted Transfer, as defined in Section 11 of the Lease) prior to the date that Tenant delivers its Extension Notice or at the time the Extension Term commences.

B. TermsApplicabletoPremisesDuringExtensionTerm.

1. The initial Base Rent rate per rentable square foot for the Premises during the Extension Term shall be the Prevailing Market rate (hereinafter defined) per rentable square foot for the Premises but in no event less than the Base Rent payable by Tenant immediately prior to the Expiration Date of the initial Term. Base Rent during the Extension Term shall increase, if at all, in accordance with the increases assumed in the determination of Prevailing Market rate. Base Rent attributable to the Premises shall be payable in monthly installments in accordance with the terms and conditions of Article IV of the Lease.

2. Tenant shall pay Additional Rent (i.e.Taxes and Expenses) for the Premises during the Extension Term in accordance with the terms of Section 4 of the Lease, however, Tenant's Base Year for Expenses and Base Year for Taxes shall be adjusted to the calendar year (or fiscal year,

with respect to Taxes) in which the Extension Term commences.

C. InitialProcedureforDeterminingPrevailingMarket. Within thirty (30) days after receipt of Tenant's Extension Notice, Landlord shall advise Tenant of the applicable Base Rent rate for the Premises for the Extension Term. The renewal rate shall increase in accordance with the Greater Boston CPI rate over the last year of the Term. Tenant, within fifteen (15) days after the date on which Landlord advises Tenant of the applicable Base Rent rate for the Extension Term, shall either (i) give Landlord final binding written notice ("BindingNotice")of Tenant's exercise of its Extension Option, or (ii) if Tenant disagrees with Landlord's determination, provide Landlord with written notice of rejection (the "RejectionNotice"). If Tenant fails to provide Landlord with either a Binding Notice or Rejection Notice within such 15-day period, Tenant's Extension Option shall be null and void and of no further force and effect and the Lease shall terminate on the Termination Date. If Tenant provides Landlord with a Binding Notice, Landlord and Tenant shall enter into the Extension Amendment (as defined below) upon the terms and conditions set forth herein. If Tenant provides Landlord with a Rejection Notice, Landlord and Tenant shall work together in good faith to agree upon the Prevailing Market rate for the Premises during the Extension Term. Upon agreement, Landlord and Tenant shall enter into the Extension Amendment in accordance with the terms and conditions hereof. If Landlord and Tenant fail to agree upon the Prevailing Market rate within thirty (30) days after the date Tenant provides Landlord with the Rejection Notice, then Tenant may elect, in its sole discretion, by providing Landlord with written notice thereof no later than 2 Business Days after the expiration of such 30 day period, to (i) rescind its Extension Notice or (ii) have the Prevailing Market rate be determined in accordance with the arbitration procedures described in Section D below. If Tenant fails to provide such written notice within such two (2) Business Day period described in the immediately preceding sentence, Tenant shall be deemed to have rescinded its Extension Notice and the Lease shall terminate on the Termination Date.

D. Arbitration Procedure.

1. If Landlord and Tenant have failed to reach agreement as to the Prevailing Market rate within thirty (30) days after the date of the Rejection Notice and Tenant has provided Landlord with timely written notice of its election to have the Prevailing Market rate determined by the arbitration procedures described herein, then, within seven (7) days after the expiration of such 30-day period, Landlord and Tenant shall each simultaneously submit to the other, in a sealed envelope, its good faith estimate of the Prevailing Market rate for the Premises during the Extension Term (collectively referred to as the "Estimates"). If the higher of such Estimates is not more than 105% of the lower of such Estimates, then Prevailing Market rate shall be the average of the two Estimates. If the Prevailing Market rate is not resolved by the exchange of Estimates, then, within seven (7) days after the exchange of Estimates, Landlord and Tenant shall each select an appraiser to determine which of the two Estimates most closely reflects the Prevailing Market rate for the Premises during the Extension Term. Each appraiser so selected shall be certified as an MAI appraiser or as an ASA appraiser and shall have

had at least five (5) years' experience within the previous ten (10) years as a real estate appraiser working in Boston MetroWest market, with working knowledge of current rental rates and practices. For purposes hereof, an "MAI"appraiser means an individual who holds an MAI designation conferred by, and is an independent member of, the American Institute of Real Estate Appraisers (or its successor organization, or in the event there is no successor organization, the organization and designation most similar), and an "ASA"appraiser means an individual who holds the Senior Member designation conferred by, and is an independent member of, the American Society of Appraisers (or its successor organization, or, in the event there is no successor organization, the organization and designation most similar).

2. Upon selection, Landlord's and Tenant's appraisers shall work together in good faith to agree upon which of the two Estimates most closely reflects the Prevailing Market rate for the Premises. The Estimate chosen by such appraisers shall be binding on both Landlord and Tenant for the determination of the Base Rent rate for the Premises during the Extension Term. If either Landlord or Tenant fails to appoint an appraiser within the seven-day period referred to above, the appraiser appointed by the other party shall be the sole appraiser for the purposes hereof. If the two appraisers cannot agree upon which of the two Estimates most closely reflects the Prevailing Market within twenty (20) days after their appointment, then, within ten (10) days after the expiration of such 20-day period, the two appraisers shall select a third appraiser meeting the aforementioned criteria. Once the third appraiser (i.e.arbitrator) has been selected as provided for above, then, as soon thereafter as practicable but in any case within fourteen (14) days, the arbitrator shall make his determination of which of the two Estimates most closely reflects the Prevailing Market rate and such Estimate shall be binding on both Landlord and Tenant for the determination of the Base Rent for the Premises. If the arbitrator believes that expert advice would materially assist him, he may retain one or more qualified persons to provide such expert advice. The parties shall share equally in the costs of the arbitrator and of any experts retained by the arbitrator. Any fees of any appraiser, counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such appraiser, counsel or expert.

3. If the Prevailing Market rate has not been determined by the commencement date of the Extension Term, Tenant shall pay Base Rent upon the terms and conditions in effect during the last month of the Term for the Premises until such time as the Prevailing Market rate has been determined. Upon such determination, the Base Rent for the Premises shall be retroactively adjusted to the commencement of the Extension Term for the Premises. If such adjustment results in an underpayment of Base Rent by Tenant, Tenant shall pay Landlord the amount of such underpayment within thirty (30) days after the determination thereof. If such adjustment results in an overpayment of Base Rent by Tenant, Landlord shall credit such overpayment against the next installment of Base Rent due under the Lease and, to the extent necessary, any

subsequent installments, until the entire amount of such overpayment has been credited against Base Rent.

E. ExtensionAmendment. If Tenant is entitled to and properly exercises its Extension Option, Landlord shall prepare an amendment (the "ExtensionAmendment")to reflect changes in the Base Rent, Term, Termination Date and other appropriate terms. The Extension Amendment shall be sent to Tenant within a reasonable time after receipt of the Binding Notice and Tenant shall execute and return the Extension Amendment to Landlord within fifteen (15) days after Tenant's receipt of same, but, upon final determination of the Prevailing Market rate applicable during the Extension Term as described herein, an otherwise valid exercise of the Extension Option shall be fully effective whether or not the Extension Amendment is executed.

F. Prevailing Market. For purposes hereof, "Prevailing Market"shall mean the arm's length fair market annual rental rate per rentable square foot under extension leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Building and other Class A office buildings comparable to the Building in Littleton office market. The determination of Prevailing Market shall take into account any material economic differences between the terms of this Lease and any comparison lease or amendment, such as rent abatements, construction costs and other concessions and the manner, if any, in which the landlord under any such lease is reimbursed for operating expenses and taxes.

2. EARLY TERMINATION OPTION.

In the event that Landlord cannot accommodate within the Building the Tenant's increased demand for lease area, Tenant shall have the one-time right to terminate this Leaseatanypointaftertheconclusionoftheforty-first(4151 month of the Lease's Term, which termination shall be effective on the date that falls nine (9) months after the date on which notice of termination is given in writing by the Tenant to the Landlord (the "EarlyTerminationDate"),subject to and in accordance with the provisions of this Section 2. Any exercise of Tenant's right to terminate the Lease shall be applicable to the entire Premises and may not be exercised for less than all of the Premises. To exercise such early termination right, Tenant must (a) deliver written notice to Landlord nine (9) months prior to the Early Termination Date, stating that Tenant desires to terminate this Lease as of the Early Termination Date and (b) pay to Landlord, simultaneously with the delivery of such notice of termination, a payment equal to (i) the Landlord's then-unamortized costs with respect to the Lease (as described below). In the event any Default, beyond any applicable cure period, exists either when Tenant delivers the notice to Landlord or upon the Early Termination Date, or Tenant fails to timely give such notice of termination or pay the amounts as and when described above, Tenant's exercise of such early termination right shall automatically become null and void, whereupon the Lease shall continue in full force and effect as if Tenant had never exercised or attempted to exercise such early-termination right.

As used in this Section, Landlord's "then-unamortizedcosts"means the sum of:

(i) the unamortized balance of all costs incurred by Landlord with respect to the Landlord Work or other work performed by Landlord described in Exhibit C hereof, including such work with respect to any ROFO Space into which Tenant has chosen to expand;

(ii) the unamortized balance of all concessions and incentives granted to Tenant hereunder, including without limitation, the Moving Allowance (as described above) and all abatements of Base Rent during the Term;

(iii) the unamortized balance of real-estate commissions paid by Landlord to the Brokers with respect to this Lease; and

(iv) the unamortized balance of legal fees incurred by Landlord with respect to the preparation and negotiation of this Lease.

(collectively, "Landlord'sCosts").The calculation of Landlord's then-unamortized costs will be made by (a) taking the total of all such costs, (b) fully amortizing such amount at six percent (6%) interest per annum over Sixty-Five (65) months, and (c) calculating the remaining principal balance of such amortized amount as of the Early Termination Date. Such remaining principal balance is deemed to be Landlord's "then-unamortized costs". Provided, however, that in the event Landlord grants any additional tenant-improvement allowances, rent concessions and/or abatements or pays any additional real-estate commissions in connection with Tenant's exercise of any rights to lease additional space under the Lease, the Tenant acknowledges and agree that Landlord's Costs may increase and, therefore, the then-unamortized costs shall be appropriately adjusted.

Upon the exercise of Tenant's Early Termination Right as set forth herein, Tenant's remaining Extension Option (as set forth in Section 1 above}, if any, shall automatically terminate and have no further force or effect.

Tenant's rights under this Section 2 are personal to Tenant and, except in connection with a Permitted Transfer, shall not be transferrable or assignable to any other entity without the prior written consent of Landlord, which consent may be granted or withheld in its sole and absolute discretion.

EXHIBIT F

HAZARDOUS CHEMICALS

Tenant is permitted to use and store the following list of chemicals, provided such storage is done using industry standard practices. This list may be updated on an annual basis, by written notice from Tenant to Landlord.

Chemical Name	Approximate Quantity	Hazard Type
1-Phenylpiperazine	25g	Toxic, corrosive, flammable
1-Vinyl-2-pyrolidinone	25Sg	Toxic, carcinogen, corrosive
1,1-Dimethylbiguanide hydrochloride	Sg	Toxic, irritant
1,2 Propanediol l	l	Health hazard, flammable
1,3 Dihydroxyacetone dimer	lOOg	Irritant
10% Iodine	237ml	Toxic, irritant, dangerous to environment
2-Hydroxy-2-methylpropaphenone	250ml	Toxic, flammable
2-Phenoxy Ethanol l	OOg	Toxic, irritant, flammable
4-aceta midophenol	lOOg	Toxic, irritant, dangerous to environment
50% Methanol;50% Potassium phosphate dibasic	SL	Flammable
60% Methanol;40% Potassium Phosphate dibasic l	l	Flammable
Acetone	750ml	Toxic, irritant, highly flammable
Acetonitrile	8L	Toxic, irritant, highly flammable
Acrylate-polyethylene glycol-styrene vinyl acetate (Acr-PEG-SVA)	SOO mg	Toxic
Acrylate-polyethylene glycol-succinimide (Acr-PEG-NHS)	3 x G	Toxic
Acrylic Acid	80g	Toxic, corrosive, flammable, dangerous to environment
Ammonium Cerium Nitrate	SOg	Toxic, irritant, oxidizer
Anhydrous Calcium Sulfate l	Slbs	Toxic, carcinogen, dangerous to environment
Aspirin l	OOg	Toxic, irritant
Benzalkonium Chloride	400g	Toxic, corrosive, dangerous to environment
Benzoic Acid	250g	Toxic, irritant, corrosive
Benzyl Alcohol	1.SL	Toxic, irritant, flammable
Black Pearl (Carbon)		Irritant
Black Pearl 460		Irritant
Boric Acid	SOOg	Reproductive hazard
Brij 98	lOOg	Health, flammable
BRIJ35	SOOg	health, flammable
Bromocresol Purple	25g	Irritant
Buffer - pH 10.01	47Sml	Irritant
Buffer - pH 4.01	47Sml	Irritant
Buffer - pH 7.00	475ml	Irritant
Carbopol		Irritant

Cefazolin Sodium Salt	25G	Sensitizer
Cetylpyridinium Chloride	lOOg	Toxic, irritant, dangerous to environment
Chlorhexidine Gluconate	236ml	Toxic, dangerous to environment
Chloroform l	l	Toxic, carcinogen, reproductive hazard
Citric Acid Anhydride		Irritant
Clear Bath Algicide	236.Gg	Corrosive, flammable, dangerous to environment
Cocoa Butter	500g	Flammable
Creatine ,anhydrous	25g	Irritant
Cremophor EL	500g	Flammable, dangerous to environment
Crystal Violet	25g	Toxic, carcinogen, dangerous to environment
Cupric Sulfate	lOOg	Toxic, irritant, dangerous to environment
Di(ethylene glycol) l	OmL	Flammable
Dimethyl Sulfoxide (DMSO) l	kg	Toxic, flammable
DL-Menthol	150g	Flammable
Docusate	500g	Toxic, irritant
Dodecyltrimethyl ammonium bromide	lOOg	Toxic, irritant, dangerous to environment
Drierite w/ Indicator	2kg	Toxic, irritant
Drierite without Indicator	2kg	Toxic, irritant
Epinephrine Bitartrate	5g	Toxic, irritant
Ethanol (95%)	2L	Toxic, flammable
Ethylenediamenetetraacetic acid	lOOg	Irritant
Furosemide	5g	Reproductive Hazard
G-250 Stain l	l	Toxic
Glucose Oxidase	50g	Respitory sesnsitizer
Glycerin	3L	Flammable
Glycerol	500ml	Flammable
Glyoxal	lOOg	Toxic, irritant
Heptane l	l	Toxic, flammable
Hexadecyltrimethylammonium bromide	50g	Toxic, irritant, dangerous to environment
Hydrochloric Acid Solution	3L	Very corrosive, irritant
Hydrogen Peroxide, 30 % Solution	500ml	Toxic, oxidizer, dangerous to environment
Hydroxybutyric acid l	g	Irritant, flammable
Ibuprofen	25g	Toxic
Indigo Carnine	25g	Irritant
Iodine	25g	Toxic, irritant, dangerous to environment
lrgacure 184		Toxic
lrgacure 2959	500g	Toxic
lsopropyl Alchohol	400ml	Toxic, flammable
lsopropyl myristate l	l	Flammable
L-Ascorbic Acid	25g	Combustible dust
L-Epinephrine (Adrenaline) l	g	Very toxic
L-Methnol	125g	Toxic, flammable
L-Pyroglutamic acid	lOOg	Irritant

Lactate Oxidase	11.8 g	Respitory sesnsitizer
Lactic Acid	1.SL	Irritant
Lidocaine Hydrochloride	SOOg	Toxic
Lidocaine reference standard	7SOmg	Toxic
Light Mineral Oil	SOOml	Flammable
Linoleic Acid	SOg	Flammable
Litmus Powder	2Sg	Irritant
Methacrylic Acid	100g	Toxic, corrosive, flammable, dangerous to environment
Methanol (2S%}	300L	Toxic, flammable
Methanol (SO%}	17Sml	Toxic, flammable
Methanol (7S%}	700ml	Toxic, flammable
Methyl Alcohol	SL	Toxic, flammable
Methyl Paraben		Dangerous to environment
Methylene Blue	100g	Toxic, irritant
Methylene Chloride l	L	Toxic, carcinogen
N-Lauroyl Sarcosine		Very toxic, irritant
N,N-Ethylenebis(Stearamide} l	kg	Irritant
Nacor l	L	Toxic
Nation 10% by weight	2Sml	Toxic, flammable
Nation20%byweightinmixedalcohols& water	2Sml	Toxic, flammable
NationS% byweight inmixedalcohols& water	SOml	Toxic, flammable
Oxybutynin Base	60g	Toxic
p-Hydroxybenzoic acid methyl ester	100g	Dangerous to environment
pH Electrode Storage	47Sml	Toxic
Plurone Prill Poloxame	8oz	Toxic, combustible
Pluronic Sulfactant	16oz	Toxic, combustible
Poloxamer 188	SOOg	Irritant
Poly(2-acrylamino-2-methyl-1- propanesulfonic acid}	2SOg	Very corrosive
Poly(acrylic acid}	200g	Health hazard
Polyacrylamide gel	SOg	Irritant
Polyethylene glycol diacrylate (MW 1000} l	g	Toxic
Polyethylene glycol diacrylate (MW 3400}	100g	Toxic
Polyethylene glycol diacrylate (MW SOOO}	Sg	Toxic
Polyethylene glycol diacrylate (MW S7S}	lOOmL	Toxic
Polyethylenimine	100ml	Toxic, irritant, sensitizer, dangerous to environment
Polyoxyethylene 40 Stearate	2SOg	Irritant
Polyoxyethylene SO Stearate	2S0g	Irritant
Polyoxyethylene stearate	2S0g	Irritant
Polypropanesulfonic Acid	100g	Very corrosive
Potassium Chloride	2S0g	Health hazard

Potassium hexacyanoferrate trihydrate	100g	Dangerous to environment
Potassium Iodide	Sg	Toxic, irritant
Quinine Monohydrochloride	25g	Toxic, sensitizer
Salicylic Acid	100g	Toxic, corrosive
Sentry Polyox		Toxic
Silver Acetate	25g	Irritant, dangerous to environment
Sodium Acetate	250g	Health hazard
Sodium Azide	25g	Very toxic, dangerous to environment
Sodium Borate	SOOg	Reproductive Hazard
Sodium Bromate	SOOg	Toxic, irritant, oxidizer
Sodium Bromide	100g	Health hazard
Sodium Carbonate	SOOg	Irritant
Sodium dodecyl sulfate	250g	Toxic, irritant, flammable
SodiumHydroxideSolution (lN}	ll	Toxic, corrosive, dangerous to environment
Sodium iodate	SOOg	Toxic, oxidizer, sensitizer
Sodium Stearate	SOOg	Combustible dust
Tolbutamide	100g	Health hazard
Triisopropyl borate	SOOml	Flammable
Triton X-100	1.SL	Toxic, irritant, dangerous to environment
Vinyl Acetate	SOOml	Toxic, flammable, carcinogen, dangerous to environment
Viscosity Standard	100ml	Toxic

EXHIBIT G

RightofFirstOffer-SpaceDiagram (ROFO space identified by 111marks)

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott W. Hollander, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of Echo Therapeutics, Inc. (the “Company”) for the quarter ended March 31, 2015;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of and for the periods presented in this report;

4.     The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period on which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.     The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 15, 2015

/s/ Scott W. Hollander                                                                           

Scott W. Hollander

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan W. Schoenbart, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Echo Therapeutics, Inc. (the “Company”) for the quarter ended March 31, 2015;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of and for the periods presented in this report;

4.    The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period on which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.     The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 15, 2015

/s/ Alan W. Schoenbart                                                                           

Alan W. Schoenbart

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Echo Therapeutics, Inc. (the “Company”) for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott W. Hollander, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Scott W. Hollander                                                                           

Scott W. Hollander

President and Chief Executive Officer

(Principal Executive Officer)

Date: May 15, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Echo Therapeutics, Inc. (the “Company”) for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan W. Schoenbart, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Alan W. Schoenbart                                                                                

Alan W. Schoenbart

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: May 15, 2015

XML

WARRANTS (Details Narrative)	3 Months Ended
	Mar. 31, 2015
Warrants Details Narrative
Warrants issued in connection with private placement	666,667

XML

STOCK OPTIONS (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Stock Options Details Narrative
Additional paid-in capital	$ 383,000	$ 158,000
Weighted-average stock options granted	$ 1.49
Unrecognized compensation expense related to non	1,068,000

XML

PROPERTY AND EQUIPMENT (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Useful lives of property and equipment	$ 2,554,498	$ 2,768,055
Computer Equipment [Member]
Useful lives of property and equipment	336,258	334,865
Estimated Useful Lives	3 years
Office and laboratory equipment [Member]
Useful lives of property and equipment	740,177	740,177
Office and laboratory equipment [Member] | Minimum [Member]
Estimated Useful Lives	3 years
Office and laboratory equipment [Member] | Maximum [Member]
Estimated Useful Lives	5 years
Furniture and fixtures [Member]
Useful lives of property and equipment	596,936	755,444
Estimated Useful Lives	7 years
Manufacturing equipment [Member]
Useful lives of property and equipment	111,980	111,980
Estimated Useful Lives	5 years
Leasehold improvements [Member]
Useful lives of property and equipment	769,147	825,589
Leasehold improvements [Member] | Minimum [Member]
Estimated Useful Lives	3 years
Leasehold improvements [Member] | Maximum [Member]
Estimated Useful Lives	7 years
Less accumulated depreciation and amortization [Member]
Useful lives of property and equipment	1,623,928	1,629,462
Property and equipment, net [Member]
Useful lives of property and equipment	$ 930,570	$ 1,138,593

XML

WARRANTS (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2015
Warrants
Number Outstanding	2,809,428
Number Exercisable	2,809,428
Derivative: $7.50 [Member]
Warrants
Expirations	8/31/17 to 11/6/17
Weighted- Average Remaining Contractual Life (years)	2 years 5 months 23 days
Equity: $2.75 - $3.00 [Member]
Warrants
Expirations	12/10/18 to 03/09/20
Weighted- Average Remaining Contractual Life (years)	4 years 8 months 12 days
Derivative: $7.50 [Member]
Warrants
Number Outstanding	700,000
Weighted- Average Exercise Pric	7.50
Number Exercisable	700,000
Equity: $2.75 - $3.00 [Member]
Warrants
Number Outstanding	2,109,428
Weighted- Average Exercise Pric	2.97
Number Exercisable	2,109,428

XML

PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2015

Property And Equipment

Note 3. PROPERTY AND EQUIPMENT

The principal categories and estimated useful lives of property and equipment were:

	2015	2014	Estimated Useful Lives
Computer equipment	$ 336,258	$ 334,865	3
Office and laboratory equipment	740,177	740,177	3-5
Furniture and fixtures	596,936	755,444	7
Manufacturing equipment	111,980	111,980	5
Leasehold improvements	769,147	825,589	3 - 7
Total property and equipment	2,554,498	2,768,055
Less accumulated depreciation and amortization	1,623,928	1,629,462
Property and equipment, net	$ 930,570	$ 1,138,593

The Company recorded a loss on disposal of $108,840 in connection with its relocation from its Philadelphia office to Iselin, New Jersey in the first quarter. See Note 4.

XML

EQUITY COMPENSATION PLANS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Shares Available For Issuance
Add back options cancelled before exercise	(217,167)
Outstanding Options and Restricted Stock
Options exercised
Ending Balance	2,809,428
Plan2003Member
Shares Available For Issuance
Total reserved for stock options and restricted stock	160,000
Net restricted stock issued net of cancellations	(5,000)
Stock options granted	(154,449)
Add back options cancelled before exercise	92,349
Options cancelled by plan vote	(92,900)
Remaining shares available for future grants
Outstanding Options and Restricted Stock
Total granted	154,449
Options cancelled	(92,349)
Options exercised	(35,600)
Net shares outstanding before restricted stock	26,500
Net restricted stock issued net of cancellations	5,000
Ending Balance	31,500
Plan2008Member
Shares Available For Issuance
Total reserved for stock options and restricted stock	10,000,000
Net restricted stock issued net of cancellations	(27,391)
Stock options granted	(2,945,883)
Add back options cancelled before exercise	1,416,650
Options cancelled by plan vote
Remaining shares available for future grants	8,443,376
Outstanding Options and Restricted Stock
Total granted	2,945,883
Options cancelled	(1,416,650)
Options exercised	(13,000)
Net shares outstanding before restricted stock	1,516,233
Net restricted stock issued net of cancellations	27,391
Ending Balance	1,543,624
Not Pursuant to a Plan [Member]
Outstanding Options and Restricted Stock
Total granted	310,000
Options cancelled	(193,333)
Options exercised	(66,667)
Net shares outstanding before restricted stock	50,000
Net restricted stock issued net of cancellations	6,485
Ending Balance	56,485

XML

DERIVATIVE LIABILITIES (Details Narrative) (USD $)	Mar. 31, 2015
Derivative Liabilities Details Narrative
Investors paid	$ 2,000,000
Future share issuance	1,333,333
Common shares at the agreed exercise price	$ 3.00
Excess of Market share price over deal share price ($2.13 vs. $1.50)	$ 0.63
Subsequent collected	$ 500,000

XML

EQUITY COMPENSATION PLANS (Details Narrative)	Mar. 31, 2015
Plan2003Member
Restricted shares of Common Stock issued	5,000
Options to purchase an aggregate of shares	26,500
Plan2008Member
Restricted shares of Common Stock issued	27,391
Options to purchase an aggregate of shares	8,443,376

XML

STOCK OPTIONS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
STOCK OPTIONS AND RESTRICTED STOCK
Risk-free interest rate minimum	$ 1.52	$ 1.99
Risk-free interest rate maximum	$ 1.61	$ 2.71
Expected dividend yield
Expected term	5 years	6 years 6 months
Forfeiture rate (excluding fully vested stock options)	$ 15	$ 15
Expected volatility	$ 90	$ 141

XML

LIQUIDITY AND MANAGEMENT'S PLANS

3 Months Ended

Mar. 31, 2015

Liquidity And Managements Plans

Note 2. LIQUIDITY AND MANAGEMENT'S PLANS

The accompanying financial statements have been prepared on a basis that assumes that the Company will continue as a going concern and that contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of March 31, 2015, the Company had cash of approximately $469,000, working capital deficit of approximately $4,339,000, and an accumulated deficit of approximately $136,000,000. The Company continues to incur recurring losses from operations. The Company will need to obtain proceeds under its current financing arrangement and secure additional capital to fund its product development, research, manufacturing and clinical programs in accordance with its current planned operations. The Company has funded its operations in the past primarily through debt and equity issuances. Management intends to utilize its current financing arrangement and will continue to pursue additional financing to fund its operations. Management believes that it will be successful in obtaining proceeds from their current financing arrangement and raising additional capital. No assurances can be given that additional capital will be available on terms acceptable to the Company. The accompanying financial statements do not include any adjustments that might result from the outcome of the uncertainty.

Subsequent to March 31, 2015, the Company received cash proceeds of $500,000 from a $4,000,000 Equity financing it arranged in December 2014 ($2,000,000 was previously received).

XML

STOCK OPTIONS (Details1) (USD $)	3 Months Ended
	Mar. 31, 2015
Shares
Beginning Balance	1,039,900
Granted	770,000
Exercised
Forfeited or expired	(217,167)
Ending Balance	1,592,733
Exercisable at March 31, 2014	531,000
Weighted-Average Exercise Price
Beginning Balance	$ 3.00
Granted	$ 1.49
Exercised
Forfeited or expired	$ 3.69
Ending Balance	$ 2.18
Exercisable at March 31, 2014	$ 3.06
Weighted-Average Remaining Contractual Term
Beginning Balance	9 years 2 months 23 days
Ending Balance	8 years 6 months 7 days
Aggregate Intrinsic Value
Beginning Balance
Ending Balance

XML

Consolidated Balance Sheets (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 469,493	$ 1,278,941
Prepaid and other	447,386	490,824
Total current assets	916,879	1,769,765
Property and equipment, net	930,570	1,138,593
Other Assets:
Intangibles, net	9,625,000	9,625,000
Other	129,705	62,478
Total other assets	9,754,705	9,687,478
Total assets	11,602,154	12,595,836
Current Liabilities:
Accounts payable	1,368,775	1,801,469
Accrued and other	365,282	968,392
Premium financing payable	212,829
Derivative liabilities	3,309,000	208,155
Total current liabilities	5,255,886	2,978,016
Deferred revenue, net	95,535	95,535
Total liabilities	5,351,421	3,073,551
Convertible Preferred Stock: Preferred Stock, $0.01 par value; 40,000,000 shares authorized:
C - 10,000 shares authorized; issued and outstanding 1,000 shares	10	10
D - 3,600,000 shares authorized; issued and outstanding 1,000,000 shares	10,000	10,000
E - 1,748,613 shares authorized, issued and outstanding	17,486	17,486
F - 5,000,000 shares authorized; issued and outstanding 3,555,180 and 840,336 shares, respectively	35,552	8,403
Common Stock, $0.01 par value, authorized 150,000,000 shares, issued and outstanding 11,128,275 and 12,629,695 shares, respectively	111,281	126,295
Additional paid-in capital	142,312,182	137,292,157
Accumulated deficit	(136,235,778)	(127,932,066)
Total stockholders' equity	6,250,733	9,522,285
Total liabilities and stockholders' equity	$ 11,602,154	$ 12,595,836

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash Flows From Operating Activities:
Net loss	$ (8,303,712)	$ (2,773,041)
Depreciation and amortization	86,704	99,900
Share-based compensation, net	403,835	345,637
Fair value of common stock issued for services		8,404
(Gain) loss on revaluation of derivative warrant liability	257,845	(140,000)
Warrant repricing charged to legal expense	328,000
Loss on disposal of assets	108,840
Financing expense	5,534,000
Amortization of deferred financing costs		242,001
Prepaid and other	43,860	(68,981)
Accounts payable	(150,754)	(332,080)
Deferred revenue from licensing arrangements		(19,107)
Accrued and other	(53,110)	(586,395)
Net cash used in operating activities	(1,744,492)	(3,223,662)
Cash Flows from Investing Activities:
Purchase of property and equipment	(5,171)
Proceeds from sales of property and equipment	17,651
Decrease (increase) in restricted cash	(76,968)	250,000
Net cash (used in) provided by investing activities	(64,488)	250,000
Cash Flows From Financing Activities:
Proceeds from equity issuances	1,000,000	500,000
Proceeds from common stock subscription		1,500,000
Capital contribution	59,325
Principal payments on capitalized lease obligations		(672)
Principal payments on premium financing	(59,793)
Net cash provided by financing activities	999,532	1,999,328
Net decrease in cash and cash equivalents	(809,448)	(974,334)
Cash and cash equivalents, beginning of period	1,278,941	8,055,385
Cash and cash equivalents, end of period	469,493	7,081,051
Supplemental disclosure of cash flow information:
Cash paid for interest	2,725	1,239
Cash paid for Income taxes	456
Supplemental disclosure of non-cash financing transactions:
Prepaid insurance financed	272,623
Director's fees payable offset against prepaid insurance	272,200
Accrued legal fees settled with stock	550,000
Security deposit offset against accounts payable	9,740
Conversion of convertible preferred stock into Common Stock at par value	$ 15,000

XML

RESTRICTED STOCK (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Restricted Stock Details Narrative
Stock issued and outstanding compensation expense	21,000	161,000
Unrecognized compensation expense related	$ 97,000

XML

RESTRICTED STOCK (Tables)

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Nonvested restricted stock activity

Restricted Stock	Shares	Weighted- Average Grant-Date Fair Value
Non-vested shares at January 1, 2015	47,958	$ 9.74
Granted	—	$ —
Vested	(8,000)	$ 3.56
Forfeited	(1,082)	$ 6.83
Non-vested shares at March 31, 2015	38,876	$ 11.09

XML

WARRANTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Shares
Beginning Balance	1,847,066
Granted	1,000,000
Forfeited	(37,638)
Ending Balance	2,809,428
Weighted-Average Exercise Price
Beginning Balance	$ 10.04
Granted	$ 3.00
Forfeited	$ 22.50
Ending Balance	$ 4.10

XML

LIQUIDITY AND MANAGEMENT'S PLANS (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Liquidity And Managements Plans Details Narrative
Cash	$ 469,000
Working capital deficit	4,339,000
Accumulated deficit	(136,000,000)
Net cash proceeds from financing	500,000
First stage financing amount	$ 4,000,000	$ 2,000,000

XML

ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2015

Organization And Basis Of Presentation

Note 1. ORGANIZATION AND BASIS OF PRESENTATION

Echo Therapeutics, Inc. (the "Company") is a medical device company with expertise in advanced skin permeation technology. The Company is developing its non-invasive, wireless continuous glucose monitoring (CGM) system with potential use in the wearable-health consumer market and the diabetes outpatient market. A significant longer-term opportunity may also exist in the hospital setting. Echo has also developed its needle-free skin preparation device as a platform technology that allows for enhanced skin permeation enabling extraction of analytes, such as glucose, enhanced delivery of topical pharmaceuticals and other applications.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical, Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on April 15, 2015. Certain amounts in prior periods have been reclassified to conform to the current presentation. These financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of March 31, 2015 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements as allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Stockholders' Equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	150,000,000	150,000,000
Common stock, outstanding	11,128,275	12,629,695
Common stock, Share Issued	11,128,275	12,629,695
Series C Preferred Stock [Member]
Stockholders' Equity:
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	10,000	10,000
Convertible Preferred Stock, outstanding	1,000	1,000
Convertible Preferred Stock, Share Issued	1,000	1,000
Series D Preferred Stock [Member]
Stockholders' Equity:
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	3,600,000	3,600,000
Convertible Preferred Stock, outstanding	1,000,000	1,000,000
Convertible Preferred Stock, Share Issued	1,000,000	1,000,000
Series E Preferred Stock [Member]
Stockholders' Equity:
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	1,748,613	1,748,613
Convertible Preferred Stock, outstanding	1,748,613	1,748,613
Convertible Preferred Stock, Share Issued	1,748,613	1,748,613
Series F Preferred Stock [Member]
Stockholders' Equity:
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	5,000,000	5,000,000
Convertible Preferred Stock, outstanding	3,555,180	840,336
Convertible Preferred Stock, Share Issued	3,555,180	840,336

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LITIGATION & OTHER SIGNIFICANT MATTERS

3 Months Ended

Mar. 31, 2015

Litigation Other Significant Matters

NOTE 11. LITIGATION & OTHER SIGNIFICANT MATTERS

From time to time, in addition to those identified below, we are subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business. In accordance with generally accepted accounting principles, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. We believe that we have valid defenses with respect to the legal matters pending against us and are vigorously defending these matters. Given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome in the above noted matters and our inability to reasonably estimate the amount of loss or range of loss, it is possible that the resolution of one or more of these matters could have a material adverse effect on our consolidated financial position, cash flows or results of operations. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

In February 2014, Patrick T. Mooney, M.D., our former President and Chief Executive Officer, and his wife, Elizabeth Mooney, filed a complaint against the Company and certain of its directors and officers in the Court of Common Pleas in Philadelphia County.  The complaint, which alleges (i) that Dr. Mooney’s termination was without cause so that he is entitled to certain severance benefits under his employment agreement and associated statutory remedies; (ii) that certain legally required disclosures by us and our General Counsel defamed Dr. Mooney; and (iii) that Dr. Mooney’s wife is entitled to damages under a theory of loss of consortium, seeks in excess of $20 million in damages. The Company has denied the allegations of the complaint and asserted counterclaims against Dr. Mooney based upon the same conduct which provided the cause for his termination.  Thereafter, the Company restructured the counterclaims and affirmative defenses.  The Company believes that it has strong defenses to the claims asserted and intends to defend them vigorously. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

In July 2014, Dr. and Mrs. Mooney filed another complaint in the Court of Common Pleas in Philadelphia County against the Company, certain of its directors and Officers and a former Director and officer alleging (i) wrongful use of civil proceedings and (ii) abuse of process in the original filing of the counterclaims withdrawn in the earlier action.  Mrs. Mooney also asserted another claim for loss of consortium.  This complaint seeks in excess of $30 million in damages.  The Company has denied the allegations.  The Company believes that this action is without merit, that it acted lawfully and in good faith, and that it has strong defenses to the claims asserted.  Accordingly, the Company intends to vigorously defend against this lawsuit. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

In August 2014, Dr. Mooney filed a complaint in Delaware Chancery Court against the Company for advancement of defense costs related to his February 2014 complaint, many of which the Company had paid to date and the remainder of which were subject to a good faith dispute that counsel for the Company and Dr. Mooney had been attempting to amicably resolve.  Dr. Mooney also demanded that the Company pay for his attorneys fees related to his July 2014 complaint against the Company, amongst other matters.  The Company filed a Motion to Dismiss. A hearing on the merits was held on January 15, 2015 and the Company is awaiting the Courts ruling. At March 31, 2015, no litigation loss is deemed probable or reasonably estimated.

NASDAQ Compliance

On January 30, 2015, the Company received a letter from NASDAQ, indicating that the Company no longer complies with NASDAQ’s audit committee requirements set forth in NASDAQ Listing Rule 5605.  Such rule requires that the Audit Committee of the Company have a minimum of three members and be composed only of independent directors.  On December 31, 2014, Vincent P. Enright, William F. Grieco and James F. Smith resigned from the Board of Directors of the Company, as well as its Audit Committee. As a result, the Audit Committee had no members as of Decembers 31, 2014.  On January 5, 2015, the Board of Directors appointed Shepard Goldberg and Michael Goldberg to the Audit Committee, both of whom are independent directors.  

NASDAQ provided to the Company a cure period in order to regain compliance as follows:

● until the earlier of the Company’s next annual shareholders’ meeting or December 31, 2015; or

● if the next annual shareholders’ meeting is held before June 29, 2015, then the Company must evidence compliance no later than June 29, 2015.

The Company intends to add at least one additional independent member to the Audit Committee by the date required by Nasdaq Listing Rule 5605.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 08, 2015
Document And Entity Information
Entity Registrant Name	Echo Therapeutics, Inc.
Entity Central Index Key	0001031927
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		11,128,275
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2015

Property And Equipment Tables

PROPERTY AND EQUIPMENT

	2015	2014	Estimated Useful Lives
Computer equipment	$ 336,258	$ 334,865	3
Office and laboratory equipment	740,177	740,177	3-5
Furniture and fixtures	596,936	755,444	7
Manufacturing equipment	111,980	111,980	5
Leasehold improvements	769,147	825,589	3 - 7
Total property and equipment	2,554,498	2,768,055
Less accumulated depreciation and amortization	1,623,928	1,629,462
Property and equipment, net	$ 930,570	$ 1,138,593

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Licensing revenue		$ 19,107
Total revenues		19,107
Operating Expenses:
Research and development	831,333	1,266,202
Selling, general and administrative	1,482,265	1,323,162
Loss on disposal of property and equipment	108,840
Depreciation and amortization	86,704	99,900
Total operating expenses	2,509,142	2,689,264
Loss from operations	(2,509,142)	(2,670,157)
Other Income (Expense):
Gain (loss) on revaluation of derivative warrant liability	(257,845)	140,000
Financing expense	(5,534,000)
Interest expense	(2,725)	(242,884)
Other expense, net	(5,794,570)	(102,884)
Net loss	$ (8,303,712)	$ (2,773,041)
Net loss per common share, basic and diluted	$ (0.72)	$ (0.23)
Basic and diluted weighted average common shares outstanding	11,548,590	11,858,894

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EQUITY TRANSACTIONS

3 Months Ended

Mar. 31, 2015

Equity Transactions

Note 6. EQUITY TRANSACTIONS

Restart of Operations and related option grants

On January 2, 2015, in conjunction with restarting the operations of the Company, stock option grants to purchase 400,000 shares of Common Stock at an exercise price of $1.35 were issued to various employees primarily at our Franklin, Massachusetts research and development facility. On January 5, 2015, an additional stock option grant was made to purchase 50,000 shares of our Common stock at an exercise price of $1.48 to our new Manager of Business Development in Iselin, New Jersey. On March 2, 2015, we issued another stock option grant to purchase 20,000 shares of our Common Stock at $2.34 to a senior technician hired for our Franklin facility. All grants vest over a three years with 1/3 vesting immediately and the balance vesting equally at each of the two respective anniversary periods. All grants were made pursuant to the 2008 Plan.

Board Matters

On January 7, 2015, the Board realigned annual compensation at $30,000 per annum per director. Each director, other than our CEO whose employment agreement precluded him from receiving director compensation the first year, received a stock option to purchase 150,000 shares of our Common Stock at an exercise price of $1.62 vesting 25% immediately and then 25% at the beginning of each quarter thereafter. These options contain a condition where they are only exercisable after the average closing price of the Company’s common stock for the ten (10) days prior to exercise, equals or exceeds $7.50 per share. Such amount was valued using a binomial lattice model and included in share-based compensation expense.

Exchange of Common Stock for Series F Preferred Stock

On January 9, 2015 and again on March 31, 2015, Platinum Partners Value Arbitrage Fund, L.P. and Platinum Partners Liquid Opportunity Fund, L.P. exchanged 843,526 and 208,884 and 356,474 and 91,116, respectively of their common shares held for Series F Preferred Stock. Based on the terms of the Series F (e.g. conversion ratio of 1:1 and no liquidation preference) the Company determined that the value of the Series F is equivalent to the common shares.

Capital Contribution

Late in the third quarter of 2014 the research and development operations of the Company were suspended and key personnel were laid off. In October 2014, two of our directors received a non-recourse loan for $500,000 from PPVA. The purpose of this contribution was to provide the directors monies to advance their plan for the Company and attempt to maintain its viability during the suspension of operations. $440,675 was expended in the fourth quarter of 2014 by these directors primarily for salaries of key employees and targeted technology efforts focused on the wearable technology sector. The Company considered this expenditure by two of its directors a capital contribution since the funds were spent on matters specifically related to the operations of the Company. In February 2015, the $440,675 capital contribution together with the balance of monies received in 2015 of $59,325, equivalent to the original $500,000 the two directors had received, was settled in Series F Shares by the Company to PPVA. See discussion below.

Settlement of Amounts Owed for Series F Preferred Stock and Warrants

On September 23, 2014, the Company announced that, as it believed that its current liquidity was insufficient to fund its needs beyond September 30, 2014, it was suspending its product development, research, manufacturing and clinical programs and operations to conserve its liquidity and capital resources. The workforce reduction due to the suspension of operations comprised approximately 70% of Echo’s workforce, leaving only administrative personnel.  Affected employees were notified on September 23, 2014. The employees whose employment was terminated as part of the workforce reduction were not offered severance pay. The Company indicated that they could possibly incur additional costs not currently contemplated due to events that may occur as a result of, or that were associated with, the workforce reduction.

At the time of the work force reduction announcement, Platinum Management (NY) LLC, together with its affiliates, a significant stockholder of the Company (“Platinum”), was in the process of engaging in a proxy contest with the Company pursuant to which it sought to ultimately remove three of the then-current directors of the Company. In conjunction therewith, Platinum provided $500,000 on a non-recourse basis to two of the Company’s directors whose removal Platinum was not seeking, namely Michael Goldberg and Shepard Goldberg, which was recorded as a capital contribution (“Contribution”) in 2014. Proceeds of the Contribution were utilized for retaining certain key employees and for research and technology initiatives, all for the benefit of the Company. A small portion of the monies was not disbursed, which was transferred to the Company. At the time of the Contribution, Shepard Goldberg and Michael Goldberg agreed that, should the Contribution ultimately benefit the Company, they would use their best efforts to cause the Company to issue equity to Platinum as consideration for making the Contribution.

In December 2014, as part of a negotiated settlement agreement, the three directors, whom Platinum sought to remove, resigned as directors and Platinum agreed to make a direct investment in the Company.  In connection with the proxy contest, Platinum expended $550,000 on legal representation and related expenses (the “Expenses”). In its proxy statement, Platinum advised stockholders that it would pay all the costs associated with the solicitation of proxies, but would seek reimbursement from the Company, and not submit such reimbursement to a vote of stockholders.

On February 12, 2015, the Company agreed to reimburse Platinum for its Contribution and the Expenses it incurred in the proxy fight. In this regard, the Board of Directors of the Company determined that both the Contribution and Expenses together resulted in the Company being able to continue operations and put into place a strong management team.  Pursuant to a Reimbursement Agreement, dated February 12, 2015 (the “Reimbursement Agreement”), Platinum received 548,177 shares of Series F Convertible Preferred Stock (consisting of 333,333 shares of Series F for the $500,000 capital contribution and 214,844 shares of Series F for the $550,000 of legal expenses they incurred, for a Series F share total of 548,177) and Warrants to purchase 333,333 shares of common stock of the Company.  These Warrants expire in five years and have a $3.00 per share exercise price. Additionally, the Company agreed to re-price 700,000 warrants, originally disbursed to Platinum in connection with its August 31, 2012 Loan Agreement, and referred to as the Derivative Warrants, currently priced in the $20.00 to $22.70 range per share, to $7.50 per share. The Company recorded a charge to legal expense for $328,000 representing the cost of re-pricing the Derivative Warrants. The Company also recorded a non-cash charge of $257,845 related to the change in the value of the derivative liability.  Additionally, the Company recorded a charge to financing expense of $924,000 representing the additional value given to the investors as a result of the closing market price of $2.56 being above the deal price of $1.50 used for the reimbursement of the $500,000 capital contribution. The shares issued for the legal expenses were done at the market close of the Company’s Common Stock on the date of the Reimbursement Agreement.

Equity Raise

In the first quarter of 2015, the Company received the second installment, or $1,000,000, of its $4,000,000 December 2014 financing and issued 666,667 shares of Series F Preferred Stock and warrants to purchase the same number of shares of Common Stock at an exercise price of $3.00 were issued to investors.. The Company recorded financing expense of $1,767,000 with a corresponding credit to additional paid in capital since the average market price on the dates the financing was received of $2.49 was above the deal price of $1.50, representing the excess value provided to the investors.

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DERIVATIVE LIABILITY

3 Months Ended

Mar. 31, 2015

Derivative Liability

Note 5. DERIVATIVE LIABILITY

Derivative warrant liability:

As a result of having warrants which are outstanding, issued in connection with a 2012 Credit Facility (which was terminated in October 2014), we are required to record the changes in the value of these derivative warrants through their expirations in November 2017. The table below presents the changes in the derivative warrant liability, which is measured at fair value on a recurring basis and classified as Level 3 in fair value hierarchy:

	2015	2014
Derivative warrant liability as of January 1	$ 208,155	$ 1,119,155
Gain (loss) on revaluation	(257,845)	911,000
Derivative warrant liability as of March 31	$ 466,000	$ 208,155

None of the derivative warrants were exercised in 2015 or 2014 pursuant to cashless exercise provisions.

Derivative financing liability:

In December 2014, the Company reached agreement with investors to provide $4,000,000 of installment financing in exchange for Series F Preferred Stock and warrants. The deal was priced at $1.50 per share, or the stock price in effect, if lower. At March 31, 2015, installments totaling $2,000,000 still remained to be paid by investors, potentially representing 1,333,333 shares of Series F Preferred to be issued in the future with warrants to purchase the same number of common shares at the agreed exercise price of $3.00. Our closing market price at March 31, 2015 of $2.13 per share, was $0.63 above the deal price of $1.50. As a result of the market price being higher than the stated deal price, the Company was required to record a charge to financing expense and a corresponding credit to derivative liability representing the potential value to be provided in excess of the potential cash proceeds calculated as follows:

Excess of Market share price over deal share price ($2.13 vs. $1.50)	$             0.63
Potential future share issuance	1,333,333
	$       840,000
Fair value of warrants utilizing Black-Scholes model	2,003,000
	$    2,843,000

As the Company receives subsequent cash installments, the derivative liability will increase or decrease depending on the fair value of the shares and warrants on the date the installments are made. Prior installments were issued at the fair market of Common Stock which was below the contractual price of $1.50 and therefore such liability had a nominal value. Subsequent to March 31, 2015 we collected $500,000 of the remaining $2,000,000 when our stock price was $2.18. This will result in an additional financing charge in the second quarter for that installment since it was above the value of $2.13 per share of our Common Stock at March 31, 2015.

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WARRANTS (Tables)

3 Months Ended

Mar. 31, 2015

Warrants Tables

Warrants assumptions utilized by the Company

Warrants	Shares	Weighted- Average Exercise Price
Outstanding warrants at January 1, 2015	1,847,066	$ 10.04
Granted	1,000,000	$ 3.00
Forfeited	(37,638)	$  22.50
Outstanding warrants at March 31, 2015	2,809,428	$ 4.10

Outstanding Warrants

Type of Warrant/ Range of Exercise Prices	Expirations	Number Outstanding	Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price	Number Exercisable
Derivative:
$7.50	8/31/17 to 11/6/17	700,000	2.48	$ 7.50	700,000
Equity:
$2.75 - $3.00	12/10/18 to 03/09/20	2,109,428	4.70	$ 2.97	2,109,428
Total outstanding		2,809,428			2,809,428

Warrant Activity

Risk-free interest rate	.70%
Expected dividend yield	—
Expected term (contractual term)	2.5  years
Forfeiture rate	—
Expected volatility	102 %

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DERIVATIVE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Liabilities Tables

Derivative warrant liability

	2015	2014
Derivative warrant liability as of January 1	$ 208,155	$ 1,119,155
Gain (loss) on revaluation	(257,845)	911,000
Derivative warrant liability as of March 31	$ 466,000	$ 208,155

Derivative financing liability

Excess of Market share price over deal share price ($2.13 vs. $1.50)	$             0.63
Potential future share issuance	1,333,333
	$       840,000
Relative fair value of warrants utilizing Black-Scholes model	2,003,000
	$    2,843,000

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RESTRICTED STOCK

3 Months Ended

Mar. 31, 2015

Restricted Stock

Note 9. RESTRICTED STOCK

For restricted stock issued and outstanding during the three month period ended March 31, 2015 and 2014, the Company incurred non-cash compensation expense of approximately $21,000 and $161,000, respectively, each net of estimated forfeitures.

During the three months ended March 31, 2015, the Company did not grant restricted shares of Common Stock to certain officers, employees, directors and consultants of the Company.

A summary of non-vested restricted stock activity as of and for the three months ended March 31, 2015 is as follows:

Restricted Stock	Shares	Weighted- Average Grant-Date Fair Value
Non-vested shares at January 1, 2015	47,958	$ 9.74
Granted	—	$ —
Vested	(8,000)	$ 3.56
Forfeited	(1,082)	$ 6.83
Non-vested shares at March 31, 2015	38,876	$ 11.09

Among the 38,876 shares of non-vested restricted stock, the various vesting criteria include the following:

· 14,185 shares of restricted stock vest upon the FDA approval of our CGM system or the sale of the Company;

· 21,066 shares of restricted stock vest over 4 years, at each of the anniversary dates of the grants; and

· 3,625 shares of restricted stock vest over 1 year, at each of the anniversary dates of the grants.

As of March 31, 2015, there was approximately $97,000 of total unrecognized compensation expense related to non-vested share-based restricted stock arrangements granted pursuant to the Company’s equity compensation plans that vest over time in the foreseeable future. As of March 31, 2015, the Company cannot estimate the timing of completion of performance vesting requirements required by certain of these restricted stock grant arrangements. Compensation expense related to these restricted share grants will be recognized when the Company concludes that achievement of the performance vesting conditions is probable.

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EQUITY COMPENSATION PLANS

3 Months Ended

Mar. 31, 2015

Equity Compensation Plans

Note 7. EQUITY COMPENSATION PLANS

In March 2003, the Company’s shareholders approved its 2003 Stock Option and Incentive Plan (the “2003 Plan”). Pursuant to the 2003 Plan, the Company’s Board of Directors (or its committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors. As of March 31, 2015, there were 5,000 restricted shares of Common Stock issued and options to purchase an aggregate of 26,500 shares of Common Stock outstanding under the 2003 Plan and no shares are available for future grants due to the 2003 Plan’s expiration.

In May 2008, the Company’s shareholders approved the 2008 Equity Compensation Plan, as amended (the “2008 Plan”). The 2008 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted stock to employees, consultants and non-employee directors of the Company. The maximum number of shares available under the 2008 Plan is 10,000,000 shares. As of March 31, 2015, there were 27,391 restricted shares of Common Stock issued and options to purchase 1,516,233 shares of Common Stock outstanding under the 2008 Plan and 8,443,376 shares available for future grants.

The following table shows the remaining shares available for future grants for each plan and outstanding shares:

	Equity Compensation Plans		Not Pursuant to a Plan
	2003 Plan	2008 Plan
Shares Available For Issuance
Total reserved for stock options and restricted stock	160,000	10,000,000
Net restricted stock issued net of cancellations	(5,000)	(27,391)
Stock options granted	(154,449)	(2,945,883)
Add back options cancelled before exercise	92,349	1,416,650
Less shares no longer available due to Plan expiration	(92,900)	—
Remaining shares available for future grants at March 31, 2015	—	8,443,376
Stock options granted	154,449	2,945,883	310,000
Less: Stock options cancelled	(92,349)	(1,416,650)	(193,333)
Stock options exercised	(35,600)	(13,000)	(66,667)
Net shares outstanding before restricted stock	26,500	1,516,233	50,000
Net restricted stock issued net of cancellations	5,000	27,391	6,485
Outstanding shares at March 31, 2015	31,500	1,543,624	56,485

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STOCK OPTIONS

3 Months Ended

Mar. 31, 2015

Stock Options

Note 8. STOCK OPTIONS

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model with certain assumptions noted below. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the options. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercise and employee termination and forfeitures within the valuation model. The expected term of stock options granted under the Company’s stock plans is based on the average of the contractual term (generally 10 years) and the vesting period (generally 24 to 42 months). The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.

For options issued and outstanding during the three month periods ended March 31, 2015, and 2014, the Company recorded additional paid-in capital and non-cash compensation expense of $383,000 and $158,000, respectively, each net of estimated forfeitures.

The assumptions used principally for stock options granted to employees and members of the Company’s Board of Directors in the three months ended March 31, 2015 and 2014 were as follows:

	2015	2014
Risk-free interest rate	1.52% – 1.61%	1.99% – 2.71%
Expected dividend yield	—	—
Expected term	5 years	6.5 years
Forfeiture rate (excluding fully vested stock options)	15%	15%
Expected volatility	90%	141%

A summary of stock option activity as of and for the three months ended March 31, 2015 is as follows:

Stock Options	Shares	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding options at January 1, 2015	1,039,900	$ 3.00
Granted	770,000	$ 1.49
Exercised	—	$ —
Forfeited or expired	(217,167)	$ 3.69
Outstanding options at March 31, 2015	1,592,733	$ 2.18	9.23 years	$ —
Exercisable options at March 31, 2015	531,000	$ 3.06	8.52 years	$ —

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2015 was $1.49 per share. As of March 31, 2015, there was approximately $1,068,000 of total unrecognized compensation expense related to non-vested share-based option compensation arrangements. With the exception of the unrecognized share-based compensation related to certain restricted stock grants to officers and employees that contain performance conditions related to FDA approval for Symphony or the sale of substantially all of the stock or assets of the Company, unrecognized compensation is expected to be recognized over the next four years.

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WARRANTS

3 Months Ended

Mar. 31, 2015

Warrants

Note 10. WARRANTS

In the three months ended March 31, 2015, the Company issued warrants to purchase 666,667 shares of our common stock connection with a partial closing related to the private placement of the Company’s Common Stock as well as the 333,333 shares of our common stock in connection with a Reimbursement Agreement. See Notes 5 and 6.

The Derivative Warrants to purchase 700,000 shares of our Common Stock, at exercise prices ranging from $20.00 to $22.70 and expiring in 2017, are included in the outstanding warrants at December 31, 2014 and 2013. On February 12, 2015, these warrants were re-priced to $7.50 to compensate PPVA in connection with the Reimbursement Agreement reached between the Company and PPVA. See Notes 5 and 6.

A summary of warrant activity for the three months ended March 31, 2015 is as follows:

Warrants	Shares	Weighted- Average Exercise Price
Outstanding warrants at January 1, 2015	1,847,066	$ 10.04
Granted	1,000,000	$ 3.00
Forfeited	(37,638)	$  22.50
Outstanding warrants at March 31, 2015	2,809,428	$ 4.10

At March 31, 2015, the Company had the following outstanding warrants:

Type of Warrant/ Range of Exercise Prices	Expirations	Number Outstanding	Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price	Number Exercisable
Derivative:
$7.50	8/31/17 to 11/6/17	700,000	2.48	$ 7.50	700,000
Equity:
$2.75 - $3.00	12/10/18 to 03/09/20	2,109,428	4.70	$ 2.97	2,109,428
Total outstanding		2,809,428			2,809,428

The Company uses valuation methods and assumptions that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. The following assumptions were utilized by the Company:

Risk-free interest rate	.70%
Expected dividend yield	—
Expected term (contractual term)	2.5  years
Forfeiture rate	—
Expected volatility	102 %

Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the warrant.

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RESTRICTED STOCK (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Shares
Nonvested at January 1, 2014	47,958
Granted
Vested	(8,000)
Forfeited	(1,082)
Nonvested at June 30, 2014	38,876
Weighted- Average Grant-DateFair Value
Nonvested at January 1, 2014	$ 9.74
Granted
Vested	$ 3.56
Forfeited	$ 6.83
Nonvested at June 30, 2014	$ 11.09

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STOCK OPTIONS (Tables)

3 Months Ended

Mar. 31, 2015

Stock Options Tables

Assumption used for stock option granted

	2015	2014
Risk-free interest rate	1.52% – 1.61%	1.99% – 2.71%
Expected dividend yield	—	—
Expected term	5 years	6.5 years
Forfeiture rate (excluding fully vested stock options)	15%	15%
Expected volatility	90%	141%

Stock option activity

Stock Options	Shares	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding options at January 1, 2015	1,039,900	$ 3.00
Granted	770,000	$ 1.49
Exercised	—	$ —
Forfeited or expired	(217,167)	$ 3.69
Outstanding options at March 31, 2015	1,592,733	$ 2.18	9.23 years	$ —
Exercisable options at March 31, 2015	531,000	$ 3.06	8.52 years	$ —

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DERIVATIVE LIABILITIES (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Derivative Liabilities Details
Derivative warrant liability as of January 1	$ 208,155	$ 1,119,155
Gain (loss) on revaluation	(257,845)	911,000
Derivative warrant liability as of March 31	$ 466,000	$ 208,155

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (USD $)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance, Amount at Dec. 31, 2014	$ 35,899	$ 126,295	$ 137,292,157	$ (127,932,066)	$ 9,522,285
Beginning Balance, Shares at Dec. 31, 2014	3,589,949	12,629,695
Exchange - Common Stock for Series F, Shares	1,500,000	(1,500,000)
Exchange - Common Stock for Series F, Amount	15,000	(15,000)
Proceeds from issuance of Series F and warrants, Shares	666,667
Proceeds from issuance of Series F and warrants, Amount	6,667		2,760,333		2,767,000
Capital contribution			59,325		59,325
Issuance of Series F pursuant to Reimbursement Agreement, Shares	548,177
Issuance of Series F pursuant to Reimbursement Agreement, Amount	5,482		1,796,518		1,802,000
Share-based compensation, net of restricted stock cancellations, Shares		(1,420)
Share-based compensation, net of restricted stock cancellations, Amount		(14)	403,849		403,835
Net loss				(8,303,712)	(8,303,712)
Ending balance, Amount at Mar. 31, 2015	$ 63,048	$ 111,281	$ 142,312,182	$ (136,235,778)	$ 6,250,733
Ending Balance, Shares at Mar. 31, 2015	6,304,793	11,128,275

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OPERATING LEASE COMMITMENTS

3 Months Ended

Mar. 31, 2015

Operating Lease Commitments

Note 4. OPERATING LEASE COMMITMENTS

The Company leased approximately 7,900 square feet of corporate office space in a multi-story building located in Philadelphia, Pennsylvania under a lease expiring May 31, 2017. The company terminated this lease early and moved to Iselin, New Jersey on January 15, 2015 where the Company has leased 2,800 square feet of office space for 38 months at a monthly rental of approximately $7,700. The Company posted a $77,000 Letter of Credit to secure the lease which is reduced to $38,500 after nineteen months of occupancy, assuming no defaults, as defined.

The Company leases approximately 37,000 square feet of manufacturing, laboratory and office space in a single-story building located in Franklin, Massachusetts under a lease expiring October 31, 2017. On May 5, 2015, the Company signed a lease for approximately 10,000 square feet for a research and development facility in Littleton, Massachusetts. The lease is for 65 months. Effective base monthly rent over the lease term will be $11,470. The Company secured the property with a Letter of Credit for $150,000. The Letter of Credit is expected to be reduced to $50,000 after 24 months of timely lease payments. The Company expects to move to the new facility from its Franklin, Massachusetts research and development facility on or about July 1, 2015. The Company agreed to post a $50,000 Letter of Credit until July 1, 2015 while the Littleton facility was being improved. The Company will terminate its Franklin lease about 28 months early and may be expected to incur certain undetermined termination fees as a result.

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DERIVATIVE LIABILITIES (Details1) (USD $)	3 Months Ended
	Mar. 31, 2015
Derivative Liabilities Details1
Excess of Market share price over deal share price ($2.13 vs. $1.50)	$ 0.63
Future share issuance	1,333,333
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Issuances	$ 840,000
Relative fair value of warrants utilizing	2,003,000
Excess value represented by the future issuance	$ 2,843,000

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WARRANTS (Details 2)	3 Months Ended
	Mar. 31, 2015
Warrants
Risk-free interest rate	0.70%
Expected dividend yield	0.00%
Expected term (contractual term)	2 years 6 months
Forfeiture rate	0.00%
Expected volatility	102.00%

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EQUITY COMPENSATION PLANS (Tables)

3 Months Ended

Mar. 31, 2015

Equity Compensation Plans Tables

EQUITY COMPENSATION PLANS

	Equity Compensation Plans		Not Pursuant to a Plan
	2003 Plan	2008 Plan
Shares Available For Issuance
Total reserved for stock options and restricted stock	160,000	10,000,000
Net restricted stock issued net of cancellations	(5,000)	(27,391)
Stock options granted	(154,449)	(2,945,883)
Add back options cancelled before exercise	92,349	1,416,650
Less shares no longer available due to Plan expiration	(92,900)	—
Remaining shares available for future grants at March 31, 2015	—	8,443,376
Stock options granted	154,449	2,945,883	310,000
Less: Stock options cancelled	(92,349)	(1,416,650)	(193,333)
Stock options exercised	(35,600)	(13,000)	(66,667)
Net shares outstanding before restricted stock	26,500	1,516,233	50,000
Net restricted stock issued net of cancellations	5,000	27,391	6,485
Outstanding shares at March 31, 2015	31,500	1,543,624	56,485