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Unassociated Document

    EXECUTIVE
      EMPLOYMENT AGREEMENT

     

    This
      Executive Employment Agreement (the “Agreement”)
      by and
      between Richard J. McCready (“Executive”) and
      NorthStar Realty Finance Corp. (the “Company”),
      is
      dated as of March 14, 2006 (the “Effective
      Date”).
      

     

    WHEREAS,
      Executive and the Company desire to memorialize the terms and conditions related
      to Executive’s employment by the Company.

     

    NOW
      THEREFORE, in consideration of the mutual covenants contained herein and other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    1. Agreements
      Between the Parties.
      This
      Agreement is intended to memorialize all of the terms and conditions of
      Executive’s employment by the Company.

     

    2. Employment.
      

     

    (a) Term.
      The
      Company shall employ Executive, and Executive agrees to be employed with the
      Company, upon the terms and conditions set forth in this Agreement, for the
      period beginning on the Effective Date and ending on
      the
      third anniversary of the Effective Date
      (the
“Employment
      Period”);
      provided,
      however,
      that
      commencing on the third anniversary of the Effective Date and on each subsequent
      anniversary of the Effective Date (each such anniversary, a “Renewal
      Date”),
      the
      Employment Period shall automatically be extended for one additional year
      unless, not later than 90 days prior to such Renewal Date, the Company or
      Executive shall have given written notice not to extend the Employment Period;
      provided,
      further,
      however,
      that the Employment Period shall be subject to earlier termination as provided
      in Section 5(b) hereof (the “Term”).
      

     

    (b) Base
      Salary.
      Executive’s initial base salary shall be $150,000 per annum (pro-rated for
      partial calendar years), payable in equal bi-monthly installments (as in effect
      from time to time, the “Base
      Salary”).
      In
      subsequent years of the Term, the Base Salary shall be subject to annual review
      and adjustment from time to time by the compensation committee of the Company’s
      board of directors (the “Compensation
      Committee”),
      taking into account such factors as the Compensation Committee deems
      appropriate, including
      but not limited to the amount of Executive’s business time devoted to the
      affairs of the Company and the salaries of executive
      officers
      having similar titles and performing similar functions as Executive at
comparable
      companies

     

    (c) Annual
      Cash Bonus.
      For
      fiscal years during the Executive’s employment with the Company, Executive shall
      participate in an annual cash incentive compensation plan as adopted and
      approved by the board of directors of the Company (the “Board”)
      from
      time to time, with applicable corporate and individual performance targets
      and
      maximum award amounts determined by the Board (the “Annual
      Cash Bonus”).
      The
      initial target amount of the Annual Cash Bonus shall be 100% of Executive’s Base
      Salary, but the actual Annual Cash Bonus amount shall be determined by the
      Board, in its discretion, subject to approval of the Compensation Committee.
      Any
      Annual Cash Bonus payable to Executive will be paid at the time the Company
      normally pays such bonuses to its senior executives, but in no event later
      than
      90 days following the end of the applicable fiscal year, and will be subject
      to
      the terms and conditions of the applicable annual cash incentive compensation
      plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (d) Long
      Term Incentive Plan.
      During
      Executive’s employment with the Company, Executive shall be eligible to receive
      long term equity incentive compensation awards (which may consist of restricted
      stock, stock options, stock appreciation rights or other types of equity or
      cash
      bonus awards, as determined by the Board in its discretion) pursuant to the
      Company’s equity incentive compensation plans and programs in effect from time
      to time including, without limitation, the Company’s 2004 Omnibus Stock
      Incentive Plan, the 2004 Long-Term Incentive Bonus Plan and the 2006
      Outperformance Plan.
      These
      awards shall be granted in the discretion of the Board and shall include such
      terms and conditions (including performance objectives) as the Board deems
      appropriate.

     

    (e) Vacation.
      Executive shall be eligible for up to four weeks of annual vacation to be
      accrued and payable in accordance with the Company’s policy with respect to
      senior executives.

     

    (f) Other
      Benefits.
      In
      addition, Executive will be eligible to participate in all fringe benefit plans
      and retirement plans of the Company, as are generally available to the other
      senior management employees of the Company, such as health insurance plans,
      disability insurance plans, life insurance plans, expense reimbursement and
      the
      Company’s 401(k) retirement plan.

     

    3.  Duties
      of Executive.
      

     

    (a) Duties
      of Position.
      During
      the Employment Period, Executive shall serve as Executive Vice President,
      General Counsel and Secretary of the Company. Notwithstanding the foregoing,
      Executive’s title(s) may be modified by the Chief Executive Officer,
provided
      that in
      the event of any such modification Executive’s new title(s), duties and
      authority shall be consistent with those of a senior executive officer of the
      Company at such time, and Executive shall, in any event, report directly to
      the
      Chief Executive Officer or Board of Directors. Executive’s duties shall include,
      without limitation, such duties and responsibilities, consistent with
      Executive’s title (as may be modified from time to time in accordance with this
      Agreement), training and experience, as are from time to time reasonably
      assigned to Executive by the Board or the Company’s Chief Executive Officer.
 Executive
      agrees to devote not less than a majority of Executive’s business time,
      attention and energies to the performance of the duties assigned to Executive
      hereunder, and to perform such duties faithfully, diligently and to the best
      of
      Executive’s abilities and subject to such laws, rules, regulations and policies
      from time to time applicable to the Company’s employees. Notwithstanding the
      above, nothing in this Agreement shall preclude Executive from devoting a
      portion of Executive’s business time, attention and energies to the performance
      of Executive’s duties as President and Chief Operating Officer of NorthStar
      Capital Investment Corp. and other business endeavors. The Company may assign
      all or a portion of its rights and obligations under this agreement to any
      of
      its affiliates or enter into an agreement with any of its affiliates that
      provides that Executive will perform services on behalf of such affiliate and
      Executive agrees to provide such services, as directed by the
      Company.

     

    
      
        
        

      

      
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    (b) Confidential
      Information.
      Executive shall hold in confidence for the benefit of the Company all of the
      information (other than information concerning
      corporate opportunities)
      and
      business secrets in respect of the Company and all of its affiliates, including,
      but not limited to, all information and data relating to or concerned with
      the
      business, finances, pending transactions and other affairs of the Company and
      all of its affiliates, and Executive shall not at any time before or after
      Executive’s employment by
      the
      Company
      is
      terminated
      for any
      reason, or Executive resigns for any reason, willfully use or disclose or
      divulge any such information or data to any other Person (as defined below)
      except (i) with the prior written consent of the Company, (ii) to the
      extent necessary to comply with applicable law or the valid order of a court
      of
      competent jurisdiction, in which event Executive shall notify the Company as
      promptly as reasonably practicable (and, if possible, prior to making such
      disclosure) and (iii) in the performance of Executive’s duties hereunder. With
      respect to information concerning corporate opportunities of the Company and
      all
      of its affiliates that are developed, initiated or become known to Executive
      during his employment with the Company, Executive shall hold in confidence
      for
      the benefit of the Company all of such information in respect of the Company
      and
      all of its affiliates, including, but not limited to, all information and data
      relating to or concerned with such opportunities of the Company and all of
      its
      affiliates, and Executive shall not at any time before or within one year after
      Executive’s employment by the Company is terminated for any reason, or Executive
      resigns for any reason, willfully use or disclose or divulge any information
      relating to any such corporate opportunities to or for the benefit of the
      Executive or any other Person (as defined below) except (i) with the prior
      written consent of the Company, (ii) to the extent necessary to comply with
      applicable law or the valid order of a court of competent jurisdiction, in
      which
      event Executive shall notify the Company as promptly as reasonably practicable
      (and, if possible, prior to making such disclosure) and (iii) in the performance
      of Executive’s duties hereunder. The foregoing provisions of this Section 3(b)
      shall not apply to any information or data which has been previously disclosed
      to the public or is otherwise in the public domain in each case other than
      as a
      result of the breach by Executive of his obligations under this Section 3(b).
      For purposes of this Agreement, “Person”
means
      an individual, corporation, partnership, limited liability company, joint
      venture, association, trust, unincorporated organization, other entity or
“group” (as defined in the Securities Exchange Act of 1934).

    

    4. Termination
      of Employment.
      Executive’s
      employment hereunder may be terminated in accordance with this Section 4.

     

    (a) Death.
      Executive’s employment hereunder shall terminate upon his death.

     

    (b) Disability.
      If, as
      a result of Executive’s incapacity due to physical or mental illness, Executive
      shall have been absent from the full-time performance of his duties hereunder
      for the entire period of six consecutive months, and within 30 days after
      written Notice of Termination (as defined in Section 8) is given shall not
      have
      returned to the performance of his duties hereunder on a full-time basis, the
      Company may terminate Executive’s employment hereunder for “Disability.”

     

    
      
        
        

      

      
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    (c) Cause.
      The
      Company may terminate Executive’s employment hereunder for Cause. For purposes
      of this Agreement, the Company shall have “Cause”
to
      terminate Executive’s employment hereunder upon the occurrence of any of the
      following events:

     

    (i) the
      conviction of Executive for the commission of a felony;

     

    (ii) continuing
      willful failure for 10 business days to substantially perform his duties
      hereunder in a manner consistent (other than such failure resulting from
      Executive’s incapacity due to physical or mental illness or subsequent to the
      issuance of a Notice of Termination by Executive for Good Reason) after demand
      for substantial performance is delivered by the Company in writing that
      specifically identifies the manner in which the Company believes Executive
      has
      not substantially performed his duties; or

     

    (iii) misconduct
      by Executive (including, but not limited to, breach by Executive of the
      provisions of Section 7) that is demonstrably and materially injurious to the
      Company or its subsidiaries, whether monetarily or otherwise.

     

    (d) Good
      Reason.
      Executive may terminate his employment hereunder for “Good
      Reason”
within
      30 days after the occurrence, without his written consent, of one of the
      following events that has not been cured within 10 business days after written
      notice thereof has been given by Executive to the Company:

     

    (i) the
      assignment to Executive of a title or duties that are materially inconsistent
      with his status as a senior executive officer of the Company, or if Executive
      is
      directed to directly report to other than the Board or the Company’s Chief
      Executive Officer;

     

    (ii) a
      reduction by the Company in Executive’s Base Salary or a failure by the Company
      to pay any Base Salary or contractually committed cash bonus payment amounts
      when due;

     

    (iii) following
      a Change of Control (as defined below) of the Company, the requirement by the
      Company that the principal place of performance of Executive’s services be at a
      location more than fifty (50) miles from the greater New York City metropolitan
      area;

     

    (iv) any
      purported termination of Executive’s employment which is not effected pursuant
      to a Notice of Termination satisfying the requirements of Section
      5(a);

     

    
      
        
        

      

      
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    (v) a
      material failure by the Company to comply with any other material provision
      of
      this Agreement. 

     

    (e) Change
      of Control.
      For the
      purposes of Section 4(d) above, a “Change
      of Control”
of
      the
      Company shall be deemed to have occurred if an event set forth in any one of
      the
      following paragraphs (i)-(iii) shall have occurred: 

     

    (i) any
      Person is or becomes Beneficial Owner (as defined below), directly or
      indirectly, of securities of the Company representing thirty-five percent (35%)
      or more of the combined voting power of the then outstanding securities of
      the
      Company, excluding (A) any Person who becomes such a Beneficial Owner in
      connection with a transaction described in clause (x) of paragraph (ii) below,
      (B) any Person who becomes such a Beneficial Owner through the issuance of
      such
      securities with respect to purchases made directly from the Company, and (C)
      NorthStar Capital Investment Corp. (“NCIC”)
      and
      its controlled affiliates; or

     

    (ii) the
      consummation of a merger or consolidation of the Company with any other
      corporation or the issuance of voting securities of the Company in connection
      with a merger or consolidation of the Company (or any direct or indirect
      subsidiary of the Company) pursuant to applicable stock exchange requirements,
      other than (x) a merger or consolidation which would result in the voting
      securities of the Company outstanding immediately prior to such merger or
      consolidation continuing to represent (either by remaining outstanding or by
      being converted into voting securities of the surviving entity or any parent
      thereof) fifty percent (50%) or more of the combined voting power of the
      securities of the Company or such surviving entity or any parent thereof
      outstanding immediately after such merger or consolidation, or (y) a merger
      or
      consolidation effected to implement a recapitalization of the Company (or
      similar transaction) in which no Person, other than NCIC together with its
      controlled affiliates, is or becomes the Beneficial Owner, directly or
      indirectly, of securities of the Company representing thirty-five percent (35%)
      or more of the combined voting power of the then outstanding securities of
      the
      Company; or 

     

    (iii) the
      stockholders of the Company approve a plan of complete liquidation or
      dissolution of the Company or an agreement for the sale or disposition by the
      Company of all or substantially all of the assets of the Company.

     

    For
      purposes of this Agreement, “Beneficial
      Owner”
shall
      have the meaning set forth in Rule 13d-3 under the Exchange Act.

     

    (f) The
      Company may terminate Executive’s employment at any time for any reason,
      including without Cause.

     

    
      
        
        

      

      
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    5. Termination
      Procedure.
      

     

    (a) Notice
      of Termination.
      Any
      termination of Executive’s employment by the Company or by Executive (other than
      termination pursuant to Section 6(a) hereof) shall be communicated by written
      Notice of Termination to the other party hereto in accordance with Section
      12.
      For purposes of this Agreement, a “Notice
      of Termination”
shall
      mean a notice that shall indicate the specific termination provision in this
      Agreement relied upon and shall set forth in reasonable detail the facts and
      circumstances claimed to provide a basis for termination of Executive’s
      employment under the provision so indicated.

     

    (b) Effect
      of Date of Termination.
      “Date
      of Termination”
of
      this
      Agreement shall mean (i) if the Term of this Agreement expires without renewal
      as of the third anniversary of the Effective Date or any subsequent Renewal
      Date, the date of such expiration (ii) if Executive’s employment is terminated
      pursuant to Section 4(a) above, the date of Executive’s death (iii) if the
      Executive’s employment is terminated pursuant to Section 4(b) above, 30 days
      after delivery to the Executive of Notice of Termination (provided that
      Executive shall not have returned to the performance of his duties on a
      full-time basis during such 30 day period), (iv) if Executive’s employment
      is terminated pursuant to Sections 4(c) and 4(f) above, the date specified
      in
      the Notice of Termination, and (v) if Executive’s employment is terminated
      pursuant to Section 4(d) above, the date on which a Notice of Termination is
      given or any later date (within 30 days) set forth in such Notice of
      Termination, provided,
      however,
      that,
      if within 30 days after any Notice of Termination is given pursuant to Section
      4(d)(iii) above, the party receiving such Notice of Termination notifies the
      other party that a dispute exists concerning the termination, the Date of
      Termination shall be the date on which the dispute is finally determined, either
      by mutual written agreement of the parties, by a binding and final arbitration
      award or by a final judgment, order or decree of a court of competent
      jurisdiction (the time for appeal therefrom having expired and no appeal having
      been perfected). Upon the Date of Termination, the Term of this Agreement shall
      expire and the Company shall have no further obligation to the Executive except
      to the extent the Executive is otherwise entitled to any unpaid salary or
      benefits hereunder and insurance coverage in accordance with applicable law;
      provided that the provisions set forth in Sections 3(b), 6(b), 6(c), 7, and
      14
      hereof and this Section 5(b) shall remain in full force and effect after the
      termination of the Executive’s employment, notwithstanding the expiration of the
      Term of or termination of this Agreement.

     

    6. Obligations
      of the Company Upon Termination of Employment.

     

    (a) Expiration
      of Term, By the Company for Cause or by Executive without Good Reason. If
      Executive’s employment shall be terminated: 

     

    (i) due
      to
      and upon expiration of the Term of this Agreement the Company shall pay
      Executive his full salary through the Date of Termination at the rate in effect
      at the time Notice of Termination is given, and an amount equal to the product
      of (x) all bonuses and awards that would have been earned by Executive upon
      completion of each award cycle that began during the Term but had not been
      completed as of the Date of Termination, calculated as though the full
      achievement of all goals and targets relating thereto had been achieved in
      full
      and (y) a fraction, the numerator of which shall be the number of days from
      the
      beginning of the applicable bonus or award cycle to and including the Date
      of
      Termination and the denominator of which shall be the number of days in such
      cycle; or 

     

    
      
        
        

      

      
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    (ii) if
      Executive’s employment shall be terminated by the Company for Cause or by
      Executive without Good Reason, then the Company shall pay Executive his Base
      Salary (at the rate in effect at the time Notice of Termination is given)
      through the Date of Termination, and the Company shall have no additional
      obligations to Executive under this Agreement.

     

    (b) For
      any other reason.
      If
      Executive’s employment shall be terminated for any reason other than those
      provided in Section 6(a) above, then: 

     

    (i) the
      Company shall pay Executive his full salary through the Date of Termination
      at
      the rate in effect at the time Notice of Termination is given, and an amount
      equal to the product of (x) all bonuses and awards that would have been earned
      by Executive upon completion of each award cycle that began during the Term
      but
      had not been completed as of the Date of Termination, calculated as though
      the
      full achievement of all goals and targets relating thereto had been achieved
      in
      full and (y) a fraction, the numerator of which shall be the number of days
      from
      the beginning of the applicable
      bonus or award cycle to and including the Date of Termination and the
      denominator of which shall be the number of days in such cycle; and

     

    (ii) in
      lieu
      of paying any further compensation to Executive for periods subsequent to the
      Date of Termination, the Company shall pay to the Executive severance payments
      in the form of continuation of Executive’s Base Salary in effect as of the Date
      of Termination for a period of two years following such Date of Termination
      (the
“Severance
      Payment Period”).

     

    (c) Excise
      Taxes.

     

    (i) If
      any of
      the payments or benefits received or to be received by Executive, whether
      pursuant to the terms of this Agreement or any other plan, arrangement or
      agreement with the Company are deemed by the Auditor (as defined below), the
      Company’s tax counsel (“Tax
      Counsel”)
      or the
      Internal Revenue Services to constitute an excess parachute payment under
      Section 280(G) of the Internal Revenue Code of 1986, as amended (the
“Code”)
      (all
      such payments and benefits, excluding the Gross-Up Payment (which is defined
      below), being hereinafter referred to as the “Total
      Payments”),
      the
      Company shall pay to Executive an additional amount (the “Gross-Up
      Payment”)
      such
      that the net amount retained by Executive, after deduction of any total excise
      tax, together with all applicable interest and penalties (collectively, the
      “Excise
      Tax”)
      Tax on
      the Total Payments and any federal, state and local income and employment taxes
      and Excise Tax upon the Gross-Up Payment, shall be equal to the Total
      Payments.

     

    
      
        
        

      

      
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    (ii) For
      purposes of determining whether any of the Total Payments will be subject to
      the
      Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments
      shall be treated as “parachute payments” (within the meaning of section
      280G(b)(2) of the Code) unless, in the opinion of Tax Counsel reasonably
      acceptable to Executive and selected by the accounting firm which was,
      immediately prior to the change in control, the Company’s independent auditor
      (the “Auditor”),
      such
      payments or benefits (in whole or in part) do not constitute parachute payments,
      including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess
      parachute payments” within the meaning of section 280G(b)(l) of the Code shall
      be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
      such excess parachute payments (in whole or in part) represent reasonable
      compensation for services actually rendered (within the meaning of section
      280G(b)(4)(B) of the Code) in excess of the base amount allocable to such
      reasonable compensation, or are otherwise not subject to the Excise Tax, and
      (iii) the value of any noncash benefits or any deferred payment or benefit
      shall
      be determined by the Auditor in accordance with the principles of sections
      280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
      Gross-Up Payment, Executive shall be deemed to pay federal income tax at the
      highest marginal rate of federal income taxation in the calendar year in which
      the Gross-Up Payment is to be made and state and local income taxes at the
      highest marginal rate of taxation in the state and locality of Executive’s
      residence on the Date of Termination (or if there is no Date of Termination,
      then the date on which the Gross-Up Payment is calculated for purposes of this
      Section 6(b)), net of the maximum reduction in federal income taxes which could
      be obtained from deduction of such state and local taxes. If there has not
      been
      a Date of Termination with respect to Executive, the Company shall cause the
      Gross-Up Payment to be calculated within 30 days of a written request to that
      effect from Executive.

     

    (iii) Executive
      and the Company shall each reasonably cooperate with the other in connection
      with any administrative or judicial proceedings concerning the existence or
      amount of liability for Excise Tax with respect to the Total
      Payments.

     

    (iv) The
      payments provided in this Section 6(c) shall be made not later than the fifth
      day following the Date of Termination (or if there is no Date of Termination,
      then the fifth day following date on which the Gross-Up Payment is calculated
      for purposes of Section 6(c), provided,
      however,
      that if
      the amounts of such payments cannot be finally determined on or before such
      day,
      the Company shall pay to Executive on such day an estimate, as determined in
      good faith by the Company, in accordance with Section 6(b), of the minimum
      amount of such payments to which Executive is clearly entitled and shall pay
      the
      remainder of such payments (together with interest on the unpaid remainder)
      at
      120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as
      the
      amount thereof can be determined but in no event later than the thirtieth (30th)
      day after the occurrence of a Date of Termination. At the time that payments
      are
      made under this Agreement, the Company shall provide Executive with a written
      statement setting forth the manner in which such payments were calculated and
      the basis for such calculations including, without limitation, any opinions
      or
      other advice the Company has received from Tax Counsel, the Auditor or other
      advisors or consultants (and any such opinions or advice which are in writing
      shall be attached to the statement).

     

    
      
        
        

      

      
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    7. Non-Solicitation
      and Business Relationships.
      Executive
      agrees that during Executive’s employment by the Company and for one year
      following the Executive’s
      Date of Termination (the
      “Non-Solicitation
      Period”),
      Executive shall not, directly or indirectly, (i) solicit, induce, or attempt
      to
      solicit or induce any officer, director, employee,
      consultant,
      agent
or
      joint
      venture partner of
      the
      Company or any of its affiliates to terminate his, her or its employment or
      other relationship with the Company or any of its affiliates for the purpose
      of
      associating with any competitor of any the Company or any of its affiliates,
      or
      otherwise encourage any such person to leave or sever his, her or its employment
      or other relationship with the Company or any of its affiliates for any other
      reason,
      or
      authorize the taking of such actions by any other person or entity, or assist
      or
      participate with any such person or entity in taking such action.

     

    8. Confidentiality.
      Each
      party to this Agreement shall keep strictly confidential the terms of this
      Agreement, provided, that (i) either party to this Agreement may disclose the
      terms of this Agreement with the prior written consent of the other party,
      (ii)
      either party to this Agreement may disclose the terms of this Agreement to
      the
      extent necessary to comply with law or legal process, in which event the
      disclosing party shall notify the other party to this Agreement as promptly
      as
      practicable (and, if possible, prior to making such disclosure), (iii) either
      party to this Agreement may disclose the terms of this Agreement to outside
      counsel, underwriters and accountants and (iv) the Company may disclose the
      terms of this Agreement in public filings with the Securities and Exchange
      Commission or other regulatory agencies, without notice to Executive, to the
      extent that it believes such disclosure to be prudent, necessary or required
      by
      applicable law in connection with the operation of the business of the Company
      and shall have the right to file a copy of this Agreement with such regulating
      agencies, it being understood that if this Agreement is so disclosed or filed,
      Executive shall thereafter be released from his obligation in respect of this
      Section 8.

     

    9. No
      Waiver.
      No
      failure or delay on the part of the Company or Executive in exercising any
      right, power or remedy hereunder shall operate as a waiver thereof, nor shall
      any single or partial exercise of any such right, power or remedy preclude
      any
      other or further exercise thereof or the exercise of any other right, power
      or
      remedy. The remedies provided for herein are cumulative and are not exclusive
      of any remedies that may be available to the Company or Executive at law or
      in
      equity. No waiver of or consent to any departure by either the Company or
      Executive from any provision of this Agreement shall be effective unless signed
      in writing by the party entitled to the benefit thereof. No amendment,
      modification or termination of any provision of this Agreement shall be
      effective unless signed in writing by all parties hereto. Any waiver of any
      provision of this Agreement, and any consent to any departure from the terms
      of
      any provision of this Agreement, shall be effective only in the specific
      instance and for the specific purpose for which made or given.

     

    
      
        
        

      

      
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    10. Severability
      of Provisions.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof or affecting the validity or enforceability of such provision
      in any other jurisdiction. Moreover, if any one or more of the provisions
      contained in this Agreement shall be held to be excessively broad as to
      duration, activity or subject, such provision shall be construed by limiting
      and
      reducing it so as to be enforceable to the maximum extent allowed by applicable
      law.

     

    11. Non-Assignability.
      The
      rights and obligations of Executive under this Agreement are personal to
      Executive and may not be assigned or delegated to any other Person; provided,
      however, that nothing in this Agreement shall preclude Executive from
      designating any of his beneficiaries to receive any benefits payable hereunder
      upon his death, or his executors, administrators or other legal representatives
      from assigning any rights hereunder to the person or persons entitled
      thereto.

     

    12. Notices.
      Any
      notice given hereunder shall be in writing and shall be deemed to have been
      given when delivered by messenger or courier service (against appropriate
      receipt), or mailed by registered or certified mail (return receipt requested),
      addressed as follows:

     

    
      	 	
              If
                to the Company:

            	
              NorthStar
                Realty Finance Corp.

              527
                Madison Avenue, 16th
                Floor

              New
                York, NY 10022

              Attention:
                Chief Executive Officer

            
	   	    	    
	 	
              If
                to Executive:

            	
              Richard
                J. McCready 

              527
                Madison Avenue, 16th
                Floor

              New
                York, NY 10022

            

    

     

    or
      at
      such other address as shall be indicated to the parties hereto in writing.
      Notice of change of address shall be effective only upon receipt.

     

    13. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York applicable to contracts made and to be entirely
      performed within such State.

     

    14. Dispute
      Resolution:

     

    (a) Subject
      to the provisions of Section 14(b), any dispute, controversy
      or
      claim arising between the parties relating to this Agreement, or otherwise
      relating in any way to Executive’s employment by or interest in the Company or
      any of its affiliate (whether such dispute arises under any federal, state
      or
      local statute or regulation, or at common law), shall be resolved by final
      and
      binding arbitration before a single arbitrator, selected by the American
      Arbitration Association in accordance with its rules pertaining at the time
      the
      dispute arises. In such arbitration proceedings, the arbitrator shall have
      the
      discretion, to be exercised in accordance with applicable law, to allocate
      among
      the parties the arbitrator’s fees, tribunal and other administrative and
      litigation costs and, to the prevailing party, attorneys’ fees. The award of the
      arbitrator may be confirmed before and entered as a judgment of any court having
      jurisdiction over the parties. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    (b) The
      provisions of Section 14(a) shall not apply with respect to any application
      made
      by the Company for injunctive relief under this Agreement.

     

    15. Headings.
      The
      paragraph headings used or contained in this Agreement are for convenience
      of
      reference only and shall not affect the construction of this
      Agreement.

     

    16. Entire
      Agreement.
      This
      Agreement and any agreements executed contemporaneously herewith constitute
      the
      entire agreement between the parties with respect to the matters set forth
      herein, and there are no promises or undertakings with respect thereto relative
      to the subject matter hereof not expressly set forth or referred to herein
      or
      therein.

     

    17. Execution
      in Counterparts.
      This
      Agreement may be executed in any number of counterparts and by different
      parties hereto on separate counterparts, each of which counterparts, when so
      executed and delivered, shall be deemed to be an original and all of which
      counterparts, taken together, shall constitute but one and the same
      Agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement.

     

    /s/
      Richard J. McCready   

    Richard
      J. McCready 

     

    NORTHSTAR
      REALTY FINANCE CORP.

     

    By: /s/
      David T. Hamamoto

           David
      T.
      Hamamoto

          
Chief
      Executive Officer

     

    
      
        
        

      

      
        12EMPLOYMENT
      AGREEMENT

    

    EMPLOYMENT
      AGREEMENT
      dated
      December 15, 2005 by and between NexMed, Inc., a Nevada corporation (the
      "Company") and Vivian H. Liu (the "Executive"). 

    

    WHEREAS,
      the Company desires to continue to employ Executive and to enter into
      an
      agreement (the "Agreement") embodying the terms of such employment;

    

    WHEREAS,
      the Company considers it essential to its best interests and the best interests
      of its stockholders to foster the continued employment of Executive by the
      Company during the term of this Agreement; and 

    

    WHEREAS,
      Executive is willing to accept and continue her employment on the terms
      hereinafter set forth in this Agreement. 

    

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants herein and
      for
      other good and valuable consideration, the parties agree as follows:

    

    
      	1.	
              Term
                of Employment.
                Subject to earlier termination in accordance with the provisions
                of
                Section 6 of this Agreement, Executive shall be employed by the Company
                pursuant to the terms of this Agreement for a period commencing on
                December 15, 2005 (the "Effective Date") and ending on December 15,
                2008
                (the "Expiration Date"); provided,
                however,
                that,
                the term of employment under this Agreement (the "Employment Term")
                shall
                be automatically extended for one additional year unless and until
                either
                party gives notice to the other, at least 60 days before the Expiration
                Date, that the Employment Term should not be automatically
                extended.

            

    

     

    
      	2.	
              Position.

            

    

     

    
      	
            	(a)	
              During
                the Employment Term, Executive shall be employed as an Executive
                Vice
                President of the Company, and shall have such duties, authority,
                and
                responsibility as are commensurate with her position, subject to
                the
                direction of the Company's Board of Directors (the "Board"). Executive
                shall initially have the title of Executive Vice President and Acting
                Chief Executive Officer of the
                Company.

            

    

     

    
      	
            	(b)	
              During
                the Employment Term, Executive shall devote all of her business time
                and
                attention to the performance of her duties hereunder faithfully and
                to the
                best of her abilities and shall not undertake employment with, or
                participate in, the conduct of the business affairs of any other
                person,
                corporation, or entity; provided,
                that,
                nothing shall preclude Executive from (i) with the prior written
                approval
                of the Board, serving in due course as a director, trustee or member
                of a
                committee of any organization or (ii) participating in the affairs
                of any
                recognized charitable organizations, or in any community affairs,
                of
                Executive's choice. 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
            	(c)	
              Executive's
                duties hereunder shall be performed for the Company worldwide, with
                particular emphasis in the Company's headquarters in East Windsor,
                New
                Jersey. 

            

    

     

    
      	3.	
              Compensation.
                

            

    

     

    
      	
            	(a)	
              Base
                Salary.
                During the Employment Term, the Company shall pay Executive a base
                salary,
                subject to increase at the discretion of the Board of Directors of
                the
                Company (the "Board"), at the annual rate of $200,000
                (the "Base Salary"), payable in regular installments in accordance
                with
                the Company's usual payroll
                practices.

            

    

     

    
      	
            	(b)	
              Bonus.
                With respect to each calendar year during the Employment Term, Executive
                shall be eligible to earn an annual bonus award (the "Bonus"). The
                amount
                of the Bonus shall be determined by the Board, or the Compensation
                Committee of the Board (the "Compensation Committee"), in its sole
                discretion, based upon the achievement by the Company of objective
                financial targets established and determined by the Board or the
                Compensation Committee in consultation with Executive no later than
                the
                end of the first month of such calendar year. The Bonus in respect
                of each
                calendar year in the Employment Term shall be paid as promptly as
                practicable following the delivery of the Company's audited financial
                statements for such year or, if later, by April 30 of the calendar
                year
                following such year. Unless otherwise stated herein, the Bonus shall
                not
                accrue until the date on which it is paid, and Executive must be
                employed
                on the date the Bonus is paid in order to receive the
                Bonus.

            

    

     

    
      	
            	(c)	
              Stock
                Option Grants.
                

            

    

     

    
      	
            	(i)	
              On
                December 15, 2005, the Compensation Committee approved a grant to
                Executive of an option to purchase an aggregate of 180,000 shares
                of the
                Company's common stock (the "Option") based on the closing price
                of the
                Company’s Common Stock on December 14, 2005, of ninety-two cents ($.92)
                per share. The Option shall vest in three equal installments (33.33%
                of
                the Stock Option Shares, which represents 60,000 Stock Option Shares)
                on
                December 31, 2006, December 31, 2007, and December 31, 2008, respectively,
                assuming continuous and uninterrupted employment until such dates.
                The
                Company will provide the Executive the ability to perform a cashless
                exercise of all Stock Options, in accordance with the vesting
                schedule.

            

    

     

    
      	
            	(ii)	
              The
                Option shall be subject to The NexMed, Inc. Stock Option and Long-Term
                Incentive Compensation Plan (the "Option Plan") and the applicable
                stock
                option agreement. 

            

    

     

    
      	
            	(iii)	
              In
                addition to the foregoing, the Compensation Committee may recommend
                to the
                Board that additional stock options be granted to Executive in accordance
                with the terms and subject to the conditions of the Option
                Plan.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
            	(iv)	
              All
                of Executive's outstanding but unvested stock options shall vest
                immediately upon the occurrence of a Change in Control (as defined
                in
                Appendix A hereto).

            

    

     

    
      	4.	
              Employee
                Benefits.
                During the Employment Term, Executive shall be eligible for inclusion,
                to
                the extent permitted by law, as a full-time employee of the Company
                or any
                of its subsidiaries, in any and all of the following plans, programs,
                and
                policies in effect at the time: (i) pension, profit sharing, savings,
                and
                other retirement plans and programs, (ii) life and health (medical,
                dental, hospitalization, short-term and long-term disability) insurance
                plans and programs, (iii) stock option and stock purchase plans and
                programs, (iv) accidental death and dismemberment protection plans
                and
                programs, (v) travel accident insurance plans and programs, (vi)
                vacation
                policy (Executive shall have six weeks of vacation per calendar year),
                and
                (vii) other plans and programs sponsored by the Company or any subsidiary
                for employees or executives generally, including any and all plans
                and
                programs that supplement any or all of the foregoing types of plans
                or
                programs. 

            

    

     

    
      	5.	
              Business
                Expenses and Perquisites.
                The Company shall reimburse to Executive, or pay directly, all reasonable
                expenses incurred by Executive in connection with the business of
                the
                Company, and its subsidiaries and affiliates, including but not limited
                to
                business-class travel, reasonable accommodations, and entertainment,
                subject to documentation in accordance with the Company's policy.
                

            

    

     

    
      	6.	
              Termination.
                

            

    

     

    
      	
            	(a)	
              By
                the Company for Cause.
                The Company may, for Cause, terminate Executive's employment hereunder
                at
                any time by written notice to Executive. For purposes of this Agreement,
                the term "Cause" shall mean Executive's (i) engaging in fraud against
                the
                Company or misappropriation of funds of the Company, (ii) disregard
                or
                failure to follow specific and reasonable directives of the Board,
                (iii)
                willful failure to perform her duties as Executive Vice President
                and
                Acting Chief Executive Officer of the Company, (iv) willful misconduct
                resulting in material injury to the Company, (v) violation of the
                terms of
                the Confidential Information and Intellectual Property Agreement
                between
                Executive and NexMed (U.S.A.), Inc., a wholly-owned subsidiary of
                the
                Company, dated October 4, 2000 (the "Intellectual Property Agreement")
                attached hereto as Exhibit "A", (vi) conviction of, or Executive's
                plea of
                guilty or no contest to, a felony or any crime involving as a material
                element fraud or dishonesty, or (vii) material breach (not covered
                by
                clauses (i) through (vi) of this paragraph) of any of the other provisions
                of this Agreement; provided,
                that,
                in the case of subclauses (ii), (iii) or (vii), Cause shall not exist
                if
                the act or omission deemed to constitute Cause is cured (if curable)
                by
                Executive within thirty (30) days after written notice thereof to
                Executive by the Company. For purposes of the foregoing, no act,
                or
                failure to act, on Executive's part shall be considered "willful"
                unless
                done, or omitted to be done, by Executive other than in good faith,
                and
                without reasonable belief that her action or omission was in furtherance
                of the interests of the Company. 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    In
      the
      event of the termination of Executive's employment under this Section 6(a)
      for
      Cause, the Employment Term shall end on the day of such termination and the
      Company shall pay to Executive, no later than the payroll cycle following
      Executive’s termination, in one lump sum: (i) any accrued but unpaid Base
      Salary, less applicable deductions, including salary in respect of any accrued
      and accumulated vacation due to Executive at the date of such termination;
      and
      (ii) any amounts owing, but not yet paid, pursuant to Section 5
      hereof.

    

    Except
      as
      specifically set forth in Section 8 hereof, the Company shall have no further
      obligations to Executive under this Agreement. 

    

    
      	
            	(b)	
              Disability
                or Death.
                If Executive should suffer a Permanent Disability, the Company may
                terminate Executive's employment hereunder upon ten (10) or more
                days'
                prior written notice to Executive. If Executive should pass away
                during
                the term of this Agreement, Executive’s employment shall be deemed
                terminated on her date of death. For purposes of this Agreement,
                a
                "Permanent Disability" shall be deemed to have occurred only when
                Executive has qualified for benefits (including satisfaction of any
                applicable waiting period) under the Company's or a subsidiary's
                long-term
                disability insurance arrangement (the "LTD Policy"). In the event
                of the
                termination of Executive's employment hereunder by reason of Permanent
                Disability or death, the Employment Term shall end on the day of
                such
                termination and the Company shall pay, no later than the payroll
                cycle
                following Executive’s termination, to Executive or Executive's legal
                representative (in the event of Permanent Disability), or any beneficiary
                or beneficiaries designated by Executive to the Company in writing,
                or to
                Executive's estate if no such beneficiary has been so designated
                (in the
                event of Executive's death), a single lump sum payment of: (i) any
                accrued
                but unpaid Base Salary, less applicable deductions, including salary
                in
                respect of any accrued and accumulated vacation, due to Executive
                at the
                date of such termination; (ii) any amounts owing, but not yet paid,
                pursuant to Section 5 hereof. 

            

    

     

    In
      addition, upon a termination under this Section 6(b), and upon the satisfaction
      of the conditions set forth herein: (1) Executive shall receive a pro rata
      Bonus
      for the calendar year in which such termination occurs, equal to the Bonus
      she
      would have received, to the extent all criteria for such a Bonus have been
      met
      (with the exception of the Executive being employed of the date the Bonus is
      to
      be paid), for the calendar year of said termination multiplied by a fraction,
      the numerator of which is the number of days in such year preceding and
      including the date of termination, and the denominator of which is 365. Said
      pro-rata Bonus shall be paid at the same time as the Bonus would have been
      paid
      had Executive remained employed by the Company through the date of payment;
      (2)
      Executive shall receive any unpaid Bonus for the calendar year preceding her
      termination, to the extent that all criteria for such bonus have been met (with
      the exception of the Executive being employed on the date the Bonus is to be
      paid). Said Bonus shall be paid at the same time as the Bonus would have been
      paid had Executive remained employed by the Company through the date of payment;
      and (3) all of Executive's outstanding but unvested stock options granted
      pursuant to Section 3(c) of this Agreement shall vest immediately. The payment
      of the Bonuses and the acceleration of Executive’s options are conditioned upon
      Executive (or her legal representative) signing a release in favor of the
      Company, as provided for in Section 6(f).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Except
      as
      specifically set forth in Section 8 hereof, the Company shall have no further
      obligations to Executive under this Agreement. 

    

    
      	
            	(c)	
              By
                the Company without Cause.
                The Company may, without Cause, terminate Executive's employment
                hereunder
                at any time upon ten (10) or more days' written notice to Executive.
                The
                Company, in its sole discretion, may provide the Executive with ten
                (10)
                days’ pay in lieu of notice. In the event Executive's employment is
                terminated pursuant to this Section 6(c), the Employment Term shall
                end on
                the day of such termination and the Company shall pay to Executive,
                no
                later than the payroll cycle following Executive’s termination, in one
                lump sum: (i) any accrued but unpaid Base Salary, less applicable
                deductions, including salary in respect of any accrued and accumulated
                vacation, due to Executive at the date of such termination, and (ii)
                any
                amounts owing, but not yet paid, pursuant to Section 5 hereof.
                

            

    

     

    In
      addition, upon a termination under this Section 6(c), and upon the satisfaction
      of the conditions set forth herein: (1) Executive shall receive a pro rata
      Bonus
      for the calendar year in which such termination occurs, equal to the Bonus
      she
      would have received, to the extent all criteria for such a Bonus have been
      met
      (with the exception of the Executive being employed of the date the Bonus is
      to
      be paid), for the calendar year of said termination multiplied by a fraction,
      the numerator of which is the number of days in such year preceding and
      including the date of termination, and the denominator of which is 365. Said
      pro-rata Bonus shall be paid at the same time as the Bonus would have been
      paid
      had Executive remained employed by the Company through the date of payment;
      (2)
      Executive shall receive any unpaid Bonus for the calendar year preceding her
      termination, to the extent that all criteria for such bonus have been met (with
      the exception of the Executive being employed on the date the Bonus is to be
      paid). Said Bonus shall be paid at the same time as the Bonus would have been
      paid had Executive remained employed by the Company through the date of payment;
      (3) all of Executive's outstanding but unvested stock options granted pursuant
      to Section 3(c) of this Agreement shall vest immediately; and (4) Executive
      shall receive severance payments (the “Severance”) in an amount equal to the
      Executive's annual Base Salary at the time of such termination of one month
      for
      every fully completed year of service, up to one year. The payment of the
      Bonuses and the Severance, as well as the acceleration of Executive’s options,
      are conditioned upon Executive signing a release in favor of the Company, as
      provided for in Section 6(f). 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Except
      as
      specifically set forth in Section 8 hereof, the Company shall have no further
      obligations to Executive under this Agreement. 

    

    
      	
            	(d)	
              By
                Executive for Good Reason.
                If any of the events described below occurs during the Employment
                Term,
                Executive may terminate Executive's employment hereunder for Good
                Reason
                by written notice to the Company identifying the event or omission
                constituting Good Reason not more than one (1) month following the
                occurrence of such event and, in the case of subclauses (ii), (iii),
                or
                (iv) below, a failure by the Company to cure such act or omission
                within
                thirty (30) days after receipt of such written notice. In such event,
                the
                Employment Term and Executive's employment hereunder will be terminated
                effective as of the later of thirty-one (31) days after the Company's
                receipt of Executive's notice of termination or thirty-one (31) days
                after
                the event, and Executive's termination for Good Reason pursuant to
                this
                Section 6(d) shall be treated for all purposes as a termination without
                Cause pursuant to Section 6(c) and the provisions of Section 6(c)
                shall
                apply to such termination. The occurrence of any of the following
                events
                without Executive's consent shall permit Executive to terminate
                Executive's employment for "Good Reason" pursuant to this Section
                6(d):
                

            

    

     

    
      	
            	(i)	
              A
                "Change in Control" (as defined in Appendix A hereto) occurs;
                

            

    

     

    
      	
            	(ii)	
              The
                failure by the Company to observe or comply in any material respect
                with
                any of the material provisions of this Agreement;
                and

            

    

     

    
      	
            	(iii)	
              A
                material diminution in Executive's
                duties.

            

    

     

    
      	
            	(iv)	
              The
                assignment to Executive of duties that are materially inconsistent
                with
                Executive’s duties or that materially impair Executive’s ability to
                function as the Executive Vice President and Acting Chief Executive
                Officer of the Company.

            

    

     

    
      	
            	(v)	
              The
                relocation of Executive’s primary office from a location that is more than
                50 miles from both (a) the Company’s executive offices at the time of
                relocation and (b) Executive’s primary residence at the time of such
                relocation.

            

    

     

    Except
      as
      specifically set forth in Section 8 hereof, the Company shall have no further
      obligations to Executive under this Agreement. 

    

    
      	
            	(e)	
              By
                Executive without Good Reason.
                Executive may terminate the Employment Term and Executive's employment
                hereunder at any time without Good Reason upon thirty (30) days advance
                written notice to the Company. In the event Executive's employment
                is
                terminated pursuant to this Section 6(e), the Company shall pay to
                Executive, no later than ten (10) days after the last day of Executive's
                employment, in one lump sum, the sum of (i) any accrued but unpaid
                Base
                Salary, less applicable deductions, including salary in respect of
                any
                accrued and accumulated vacation, due to Executive at the date of
                such
                termination, and (ii) any amounts owing, but not yet paid, pursuant
                to
                Section 5 hereof. 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Except
      as
      specifically set forth in Section 8 hereof, the Company shall have no further
      obligations to Executive under this Agreement. 

    

    
      	
            	(f)	
              Release.
                Notwithstanding any other provision of this Agreement to the contrary,
                Executive acknowledges and agrees that any and all payments and benefits
                to which Executive is entitled under this Section 6(b), 6(c), or
                6(d),
                with the exception of accrued salary, accrued vacation payments,
                and
                payments pursuant to Section 5 of this Agreement, are conditioned
                upon and
                subject to Executive's first executing a Confidential Separation
                Agreement
                including a general waiver and release (and the expiration of any
                associated revocation period), in such reasonable and customary form
                as
                shall be prepared by the Company, of all claims Executive may have
                against
                the Company, and related entities and individuals.
                

            

    

     

    
      	7.	
              No
                Mitigation; Employee Benefit Plans.
                Executive shall not be required to mitigate amounts payable to her
                under
                this Agreement by seeking other employment or otherwise, and there
                shall
                be no offset against amounts payable to Executive under this Agreement
                on
                account of Executive's subsequent employment. Amounts payable to
                Executive
                under this Agreement shall not be offset by any claims that the Company
                may have against Executive, and such amounts payable to Executive
                under
                this Agreement shall not be affected by any other circumstances,
                including, without limitation, any counterclaim, recoupment, defense,
                or
                other right that the Company may have against Executive or others.
                Provided,
                however,
                that,
                payments made to Executive as a result of the termination of Executive's
                employment hereunder shall not be considered as includible compensation
                with respect to any employee benefit plans maintained by the Company,
                except to the extent otherwise required by law.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	8.	
              Indemnification.
                In the event that Executive is made a party or threatened to be made
                a
                party to any action, suit, or proceeding, whether civil, criminal,
                administrative, or investigative (a "Proceeding"), by reason of
                Executive's employment with, or serving as an officer of, the Company,
                the
                Company shall indemnify and hold Executive harmless, and defend Executive
                to the fullest extent authorized by the laws of the state in which
                the
                Company is incorporated, as the same exist and may hereafter be amended,
                against any and all claims, demands, suits, judgments, assessments,
                and
                settlements (collectively the "Claims"), including all expenses incurred
                or suffered by Executive in connection therewith (excluding, however,
                any
                legal fees incurred by Executive for Executive's own counsel, except
                as
                otherwise provided in this Section 8, and excluding any proceedings
                initiated by executive), and such indemnification shall continue
                as to
                Executive even after Executive is no longer employed by the Company
                hereunder, and shall inure to the benefit of Executive's heirs, executors,
                and administrators; provided,
                however,
                that,
                Executive promptly gives written notice to the Company of any such
                Claims
                (although Executive's failure to promptly give notice shall not affect
                the
                Company's obligations under this Section 8 except to the extent that
                such
                failure prejudices the Company or its ability to defend such Claims).
                The
                Company shall have the right to undertake, with counsel or other
                representatives of its own choosing, the defense or settlement of
                any
                Claims. In the event that the Company shall fail to notify Executive,
                within ten days of its receipt of Executive's written notice, that
                the
                Company has elected to undertake such defense or settlement, or if
                at any
                time the Company shall otherwise fail to diligently defend or pursue
                settlement of such Claims, then Executive shall have the right to
                undertake the defense, compromise, or settlement of such Claims,
                in which
                event the Company shall hold Executive harmless from any legal fees
                incurred by Executive for Executive's counsel. Neither Executive
                nor the
                Company shall settle any Claims without the prior written consent
                of the
                other, which consent shall not be unreasonably withheld or delayed.
                In the
                event that the Company submits to Executive a bona fide settlement
                offer
                from the claimant of Claims (which settlement offer shall include
                as an
                unconditional term thereof the giving by the claimant or the plaintiff
                to
                Executive a release from all liability in respect of such Claims),
                and
                Executive refuses to consent to such settlement, then thereafter
                the
                Company's liability to Executive for indemnification hereunder with
                respect to such Claims shall not exceed the settlement amount included
                in
                such bona fide settlement offer, and Executive shall either assume
                the
                defense of such Claims or pay the Company's attorneys' fees and other
                out-of-pocket costs incurred thereafter in continuing the defense
                of such
                Claims. Regardless of which party is conducting the defense of any
                such
                Claims, the other party, with counsel or other representatives of
                its own
                choosing and at its sole cost and expense, shall have the right to
                consult
                with the party conducting the defense of such Claims and its counsel
                or
                other representatives concerning such Claims and Executive and the
                respective counsel or other representatives shall cooperate with
                respect
                to such Claims. The party conducting the defense of any such Claims
                and
                its counsel shall in any case keep the other party and its counsel
                (if
                any) fully informed as to the status of such Claims and any matters
                relating thereto. Executive and the Company shall provide to the
                other
                such records, books, documents, and other materials as shall reasonably
                be
                necessary for each to conduct or evaluate the defense of any Claims,
                and
                will generally cooperate with respect to any matters relating thereto.
                This Section 8 shall remain in effect after this Agreement is terminated,
                regardless of the reasons for such termination. The indemnification
                provided to Executive pursuant to this Section 8 shall not supersede
                or
                reduce any indemnification provided to Executive under any separate
                agreement, or the By-Laws of the Company; in this regard, it is intended
                that this Agreement shall expand and extend Executive's rights to
                receive
                indemnification. 

            

    

     

    
      	9.	
              Withholding.
                The Company shall have the right to deduct and withhold from all
                payments
                to Executive hereunder all payroll taxes, income tax withholding
                and other
                federal, state and local taxes and charges which currently are or
                which
                hereafter may be required by law to be so deducted and withheld.
                

            

    

     

    
      	10.	
              Restrictive
                Covenants.
                The restrictive covenants contained in the Confidential Information
                and
                Intellectual Property Agreement, signed by Executive on October 5,
                2000
                and attached hereto as Appendix B, including but not limited to,
                Section
                (2) (Confidential Information); Section 3 (Non-Solicitation of Employees);
                and Section 4 (Non-Compete), are incorporated by reference as if
                fully set
                forth herein. Executive hereby reaffirms her obligations under that
                agreement.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	11.	
              Non-Assignability.
                Executive's rights and benefits hereunder are personal to Executive,
                and
                shall not be alienated, voluntarily or involuntarily assigned, or
                transferred. 

            

    

     

    
      	12.	
              Binding
                Effect.
                This Agreement shall be binding upon the parties hereto, and their
                respective assigns, successors, executors, administrators, and heirs.
                In
                the event the Company becomes a party to any merger, consolidation,
                or
                reorganization, this Agreement shall remain in full force and effect
                as an
                obligation of the Company or its successor(s) in interest. None of
                the
                payments provided for by this Agreement shall be subject to seizure
                for
                payment of any debts or judgments against Executive or Executive's
                beneficiary or beneficiaries, nor shall Executive or any such beneficiary
                or beneficiaries have any right to transfer or encumber any right
                or
                benefit hereunder. 

            

    

     

    
      	13.	
              Entire
                Agreement; Modification.
                

            

    

     

    
      	
            	(a)	
              This
                Agreement supersedes all prior agreements, with the exception of
                the
                Confidential Information and Intellectual Property Agreement, and
                all
                other agreements (or portions thereof) that deal with confidentiality
                or
                intellectual property. This Agreement sets forth the entire understanding
                among the parties hereto with respect to the subject matter hereof,
                may
                not be changed orally, and may be changed only by an agreement in
                writing
                signed by the parties hereto. 

            

    

     

    

    
      	 	
              (b)

            	
              Executive
                acknowledges that from time to time, the Company may establish, maintain
                and distribute manuals, handbooks or personnel policies, and officers
                or
                other representatives of the Company may make written or oral statements
                relating to personnel policies and procedures. Such manuals, handbooks
                and
                statements are intended only for general guidance. No policies, procedures
                or statements of any nature by or on behalf of the Company (whether
                written or oral, and whether or not contained in any manual or handbook
                or
                personnel policies), and no acts or practices of any nature, shall
                be
                construed to modify this Agreement or to create express or implied
                obligations of any nature to
                Executive.

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	14.	
              Notices.
                All notices and communications hereunder shall be in writing, sent
                by
                certified or registered mail, return receipt requested, postage prepaid;
                by facsimile transmission, with proof of the time and date of receipt
                retained by the transmitter; or by hand-delivery properly receipted.
                The
                actual date of receipt as shown by the return receipt therefore,
                the
                facsimile transmission sheet, or the hand-delivery receipt, as the
                case
                may be, shall determine the date on which (and, in the case of a
                facsimile, the time at which) notice was given. All payments required
                hereunder by the Company to Executive shall be sent postage prepaid,
                or,
                at Executive's election, shall be transferred to Executive electronically
                to such bank account as Executive may designate in writing to the
                Company,
                including designation of the applicable electronic address. The foregoing
                items (other than any electronic transfer to Executive) shall be
                addressed
                as follows (or to such other address as the Company and Executive
                may
                designate in writing from time to time):

            

    

     

    To
      the
      Company: 

    NexMed,
      Inc. 

    89
      Twin
      Rivers Drive

    East
      Windsor, NJ 08520

    Fax:
      609-426-9116

    Attention:
      Vice President of Finance and Chief Financial Officer

    

    To
      Executive: 

    Vivian
      H.
      Liu 

    6
      West
      Winds Drive

    Princeton
      Junction, NJ 08550

    Fax:
      609-750-1632

    

    
      	15.	
              Governing
                Law; Jurisdiction.
                This Agreement shall be governed by, and construed and enforced according
                to, the domestic laws of the State of New Jersey without giving effect
                to
                the principles of conflict of laws thereof, or such principles of
                any
                other jurisdiction, which could cause the application of the substantive
                law of any jurisdiction other than the State of New Jersey. The Company
                and Executive agree that the state or federal courts of New Jersey
                shall
                have exclusive jurisdiction to hear and determine any dispute which
                may
                arise under this Agreement. 

            

    

     

    
      	16.	
              Severability.
                The invalidity or unenforceability of any provision of this Agreement
                shall not affect the validity or enforceability of any other provision
                of
                this Agreement, and each other provision of the Agreement shall be
                severable and enforceable to the extent permitted by law.
                

            

    

     

    
      	17.	
              Headings.
                The headings of the Sections hereof are provided for convenience
                only and
                are not to serve as a basis for interpretation or construction, and
                shall
                not constitute a part, of this Agreement.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	18.	
              Signature
                in Counterparts.
                This Agreement may be signed in counterparts, each of which shall
                be an
                original, with the same effect as if the signatures thereto and hereto
                were upon the same instrument. 

            

    

     

    IN
      WITNESS WHEREOF, Executive has hereunto set her hand and the Company has caused
      this Agreement to be executed in its name on its behalf, all as of the day
      and
      year first above written. 

    

    

    
      	 	
              /s/
                Vivian H. Liu

              Vivian
                H. Liu 

              

              

              

              NEXMED,
                INC.

              

              

              

              By:/s/                                                                   
                

              Title:
                

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Appendix
      A

    Change
      in Control

    

    For
      the
      purpose of this Agreement, a "Change in Control" shall be deemed to have taken
      place if: 

    

    A. Individuals
      who, on the date hereof, constitute the Board (the "Incumbent Directors") cease
      for any reason to constitute at least a majority of the Board, provided that
      any
      person becoming a director subsequent to the date hereof, whose election or
      nomination for election was approved by a vote of at least two-thirds of the
      Incumbent Directors then on the Board (either by a specific vote or by approval
      of the proxy statement of the Company in which such person is named as a nominee
      for director, without written objection to such nomination) shall be an
      Incumbent Director; provided,
      however,
      that,
      no
      individual initially elected or nominated as a director of the Company as a
      result of an actual or threatened election contest with respect to directors
      or
      as a result of any other actual or threatened solicitation of proxies or
      consents by or on behalf of any person other than the Board shall be deemed
      to
      be an Incumbent Director; 

    

    B. Any
      "Person" (as such term is defined in Section 3(a)(9) of the Securities Exchange
      Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2)
      of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule
      13d-3 under the Exchange Act), directly or indirectly, of securities of the
      Company representing 25% or more of the combined voting power of the Company's
      then outstanding securities eligible to vote for the election of the Board
      (the
      "Voting Securities"); provided,
      however,
      that,
      the
      event described in this paragraph B shall not be deemed to be a Change in
      Control by virtue of any of the following acquisitions: (i) by the Company
      or
      any subsidiary of the Company in which the Company owns more than 25% of the
      combined voting power of such entity (a "Subsidiary"), (ii) by any employee
      benefit plan (or related trust) sponsored or maintained by the Company or any
      Subsidiary, (iii) by any underwriter temporarily holding the Company's Voting
      Securities pursuant to a public offering of such Voting Securities, (iv)
      pursuant to a Non-Qualifying Transaction (as defined in paragraph C immediately
      below), (v) pursuant to any acquisition by Executive or by any Person which
      is
      an "affiliate" (within the meaning of 17 C.F.R. § 230.405) of Executive (an
      "Excluded Person"); 

    

    C. The
      consummation of a merger, consolidation, statutory share exchange or similar
      form of corporate transaction involving the Company or any of its Subsidiaries
      that requires the approval of the Company's stockholders, whether for such
      transaction or the issuance of securities in the transaction (a "Business
      Combination"), unless immediately following such Business Combination: (i)
      more
      than 25% of the total voting power of (A) the corporation resulting from such
      Business Combination (the "Surviving Corporation"), or (B) if applicable, the
      ultimate parent corporation that directly or indirectly has beneficial ownership
      of 100% of the voting securities eligible to elect directors of the Surviving
      Company (the "Parent Corporation"), is represented by the Company's Voting
      Securities that were outstanding immediately prior to such Business Combination
      (or, if applicable, is represented by shares into which the Company's Voting
      Securities were converted pursuant to such Business Combination), and such
      voting power among the holders thereof is in substantially the same proportion
      as the voting power of the Company's Voting Securities among the holders thereof
      immediately prior to the Business Combination, (ii) no Person (other than (A)
      any employee benefit plan (or related trust) sponsored or maintained by the
      Surviving Corporation or the Parent Corporation or (B) an Excluded Person is
      or
      becomes the beneficial owner, directly or indirectly, of 25% or more of the
      total voting power of the outstanding voting securities eligible to elect
      directors of the Parent Corporation (or, if there is no Parent Corporation,
      the
      Surviving Corporation) and (iii) at least a majority of the members of the
      board
      of directors of the Parent Corporation (or, if there is no Parent Corporation,
      the Surviving Corporation) following the consummation of the Business
      Combination were Incumbent Directors at the time of the Board's approval of
      the
      execution of the initial agreement providing for such Business Combination
      (any
      Business Combination which satisfies all of the criteria specified in (i),
      (ii)
      and (iii) above shall be deemed to be a "Non-Qualifying Transaction");

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    D. A
      sale of
      all or substantially all of the Company's assets, other than to an Excluded
      Person; 

    

    E. The
      stockholders of the Company approve a plan of complete liquidation or
      dissolution of the Company; or 

    

    F. Such
      other events as the Board may designate. 

    

    Notwithstanding
      the foregoing, a Change in Control of the Company shall not be deemed to occur
      solely because any person acquires beneficial ownership of more than 25% of
      the
      Company's Voting Securities as a result of the acquisition of the Company's
      Voting Securities by the Company which reduces the number of the Company's
      Voting Securities outstanding; provided,
      that,
      if
      after such acquisition by the Company such person becomes the beneficial owner
      of additional Company Voting Securities that increases the percentage of
      outstanding Company Voting Securities beneficially owned by such person, a
      Change in Control of the Company shall then occur.

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