Document:

Exhibit
      10.1

     

     

    AGREEMENT
      OF SALE

     

    

    NexMed
      (USA), Inc., Seller

     

     

    and

    
 

    Pharmar
      & Pharmar LLC, Buyer

     

    

    

    
      	
              Property:

            	
              89
                Twin Rivers Drive and 113 Milford Road

            
	 	
              East
                Windsor, Mercer County, New
                Jersey

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    TABLE
      OF CONTENTS

    
      Page

    

     

    
      	
              1.

            	
              Agreement
                to Sell and Purchase; Facility Lease

            	
              1

            
	 	 	 
	
              2.

            	
              Purchase
                Price; Deposit.

            	
              1

            
	 	 	 
	
              3.

            	
              Quality
                of Title. 

            	
              3

            
	 	 	 
	
              4.

            	
              Seller's
                Representations, Warranties and Covenants

            	
              4

            
	 	 	 
	
              5.

            	
              Buyer's
                Representations, Warranties and Covenants

            	
              5

            
	 	 	 
	
              6.

            	
              Buyer’s
                Due Diligence; Condition of the Property

            	
              6

            
	 	 	 
	
              7.

            	
              Closing

            	
              9

            
	 	 	 
	
              8.

            	
              Closing
                Documents

            	
              10

            
	 	 	 
	
              9.

            	
              Intentionally
                Omitted

            	
              11

            
	 	 	 
	
              10.

            	
              Possession

            	
              11

            
	 	 	 
	
              11.

            	
              Closing
                Costs

            	
              11

            
	 	 	 
	
              12.

            	
              Apportionments

            	
              11

            
	 	 	 
	
              13.

            	
              Maintenance;
                Casualty

            	
              12

            
	 	 	 
	
              14.

            	
              Condemnation

            	
              13

            
	 	 	 
	
              15.

            	
              Buyer's
                Default

            	
              13

            
	 	 	 
	
              16.

            	
              Seller's
                Default

            	
              13

            
	 	 	 
	
              17.

            	
              Termination

            	
              14

            
	 	 	 
	
              18.

            	
              Seller's
                Liability

            	
              14

            
	 	 	 
	
              19.

            	
              Assignability
                

            	
              14

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    
      

      TABLE
        OF CONTENTS

      (continuted)

      
        Page

      

       

    

    
      	
              20.

            	
              Brokers

            	
              14

            
	 	 	 
	
              21.

            	
              Confidentiality

            	
              15

            
	 	 	 
	
              22.

            	
              Notices

            	
              15

            
	 	 	 
	
              23.

            	
              Recording

            	
              16

            
	 	 	 
	
              24.

            	
              Whole
                Agreement; Amendments; Survival

            	
              16

            
	 	 	 
	
              25.

            	
              Captions;
                Pronouns

            	
              16

            
	 	 	 
	
              26.

            	
              Counterparts

            	
              17

            
	 	 	 
	
              27.

            	
              Holidays

            	
              17

            
	 	 	 
	
              28.

            	
              Governing
                Law

            	
              17

            
	 	 	 
	
              29.

            	
              Submission
                not an Offer or Option

            	
              17

            
	 	 	 
	
              30.

            	
              Right
                to Bifurcate House Closing

            	
              17

            
	 	 	 
	
              31.

            	
              No
                Additional Offers for Purchase of Property

            	
              17

            

    

    

    Exhibits

     

    
      	
              Exhibit
                “A-1”

            	
              -

            	
              The
                Building

            
	
              Exhibit
                “A-2”

            	
              -

            	
              The
                House

            
	
              Exhibit
                “B”

            	
              -

            	
              Personal
                Property 

            
	
              Exhibit
                “C”

            	
              -

            	
              Facility
                Lease

            
	
              Exhibit
                “D”

            	
              -

            	
              Management
                and Service Agreements

            
	
              Exhibit
                “E”

            	
              -

            	
              Deed

            
	
              Exhibit
                “F”

            	
              -

            	
              Bill
                of Sale

            
	
              Exhibit
                “G”

            	
              -

            	
              Non-Foreign
                Affidavit

            
	
              Exhibit
                “H”

            	
              -

            	
              Affidavit
                of Title

            
	 	 	 

    

    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    

     

    TABLE
      OF DEFINED TERMS

    
      	
              Agreement

            	
              1

            
	
              Bill
                of Sale

            	
              11

            
	
              Building

            	
              1

            
	
              Buyer

            	
              1

            
	
              Buyer
                Party

            	
              9

            
	
              Buyer’s
                Closing Documents

            	
              12

            
	
              Buyer’s
                Statement

            	
              3

            
	
              Change

            	
              10

            
	
              Closing

            	
              10

            
	
              Closing
                Date

            	
              10

            
	
              Deed

            	
              11

            
	
              Deposit

            	
              1

            
	
              Due
                Diligence Period

            	
              3

            
	
              Escrow
                Agent

            	
              1

            
	
              Estimate

            	
              13

            
	
              Facility
                Lease

            	
              1

            
	
              House

            	
              1

            
	
              Improvements

            	
              1

            
	
              Land

            	
              1

            
	
              Permitted
                Encumbrances

            	
              3

            
	
              Personal
                Property

            	
              1

            
	
              Property

            	
              1

            
	
              Purchase
                Price

            	
              1

            
	
              Seller

            	
              1

            
	
              SELLER
                PARTY

            	
              8

            
	
              Seller’s
                Closing Documents

            	
              11

            
	
              Seller’s
                Repair Election

            	
              13

            
	
              SNDA

            	
              11

            

    

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    

      Discussion
        Draft

    

    
 

    AGREEMENT
      OF SALE

     

    

    This
      Agreement of Sale (“Agreement”) is entered into as of the 13th day of August,
      2007 (the “Effective Date”) by and between NexMed (USA), Inc., a Delaware
      corporation (“Seller”), and Pharmar & Pharmar, LLC, a New Jersey- limited
      liability company (“Buyer”).

     

    In
      consideration of the mutual agreements herein set forth, the parties hereto,
      intending to be legally bound, agree as follows.

     

    1. Agreement
      to Sell and Purchase; Facility Lease.
      

     

    (a) For
      the
      Purchase Price (as defined in Section 2 below) and subject to the terms and
      conditions hereof, Seller agrees to sell to Buyer, and Buyer agrees to purchase
      from Seller fee simple absolute title to all and singular the following (which
      are herein sometimes collectively referred to as the “Property”):

     

    (i) that
      certain tract of land, situated at 89 Twin Rivers Drive, East Windsor, Mercer
      County, New Jersey and comprising approximately five (5) acres, which tract
      is
      more particularly described in Exhibit
      A-1
      hereto
      (the “Building”); 

     

    (ii) that
      certain tract of land, situated at Block 20.06, Lot 5, 113 Milford Road, East
      Windsor, Mercer County, New Jersey, which tract is more particularly described
      in Exhibit
      A-2
      hereto
      (the “House,” and together with the Building, the “Land”);

     

    (iii) the
      buildings, structures, improvements and fixtures erected or located on the
      Land
      (collectively, the “Improvements”); 

     

    (iv) the
      tenements, hereditaments, appurtenances, rights of way, strips, gores,
      easements, rights and privileges in any way pertaining or beneficial to the
      Land
      or Improvements; and 

     

    (v) the
      tangible personal property listed on Exhibit
      B
      hereto
      (the “Personal Property”). 

     

    (b) At
      Closing (as defined in Section 7 below), Seller and Buyer shall enter into
      a
      lease in the form attached hereto as Exhibit
      C
      (the
“Facility Lease”) pursuant to which Buyer, as landlord, shall lease the
      Building, to Seller, as tenant. 

     

    2. Purchase
      Price; Deposit.

     

    (a) The
      purchase price for the Property is Five Million Eight Hundred Thousand Dollars
      ($5,800,000.00) (the “Purchase Price”) and is payable by Buyer as
      follows:

     

    (i) Two
      Hundred Ninety Thousand Dollars ($290,000.00) (the “Deposit”) shall be paid to
      Fidelity National Title Insurance Company (“Escrow Agent”) by wire transfer of
      immediately available federal funds to Escrow Agent within two (2) days after
      the Effective Date; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) the
      balance of the Purchase Price, subject to the adjustments and prorations
      described in this Agreement, shall be paid at Closing (as defined in Section
      7
      of this Agreement) by wire transfer of immediately available federal funds,
      transferred to the order or account of Seller or such other person as Seller
      may
      designate in writing.

     

    (b) The
      Deposit shall be held by the Escrow Agent in a non-interest bearing account
      with
      a federally-insured bank or other federally-insured lending institution. Escrow
      Agent shall hold the Deposit in accordance with the terms and conditions of
      this
      Agreement, subject to the following:

     

    (i) Escrow
      Agent undertakes to perform only such duties as are expressly set forth in
      this
      Agreement and no implied duties or obligations shall be read into this Agreement
      against Escrow Agent.

     

    (ii) Escrow
      Agent may act in reliance upon any writing or instrument or signature which
      it,
      in good faith, believes, and any statement or assertion contained in such
      writing or instrument, and may assume that any person purporting to give any
      writing, notice, advice or instrument in connection with the provisions of
      this
      Agreement has been duly authorized to do so. Escrow Agent shall not be liable
      in
      any manner for the sufficiency or correctness as to form, manner and execution,
      or validity of any instrument deposited in escrow, nor as to the identity,
      authority, or right of any person executing the same, and Escrow Agent's duties
      under this Agreement shall be limited to those provided in this Agreement.
      

     

    (iii) Unless
      Escrow Agent discharges any of its duties under this Agreement in a negligent
      manner or is guilty of willful misconduct with regard to its duties under this
      Agreement, Seller and Buyer shall indemnify Escrow Agent and hold it harmless
      from any and all claims, liabilities, losses, actions, suits or proceedings
      at
      law or in equity, or other expenses, fees, or charges of any character or
      nature, which it may incur or with which it may be threatened by reason of
      its
      acting as Escrow Agent under this Agreement; and in such connection Seller
      and
      Buyer shall indemnify Escrow Agent against any and all expenses including
      reasonable attorneys' fees and the cost of defending any action, suit or
      proceeding or resisting any claim in such capacity.

     

    (iv) If
      the
      parties (including Escrow Agent) shall be in disagreement about the
      interpretation of this Agreement, or about their respective rights and
      obligations, or the propriety of any action contemplated by Escrow Agent, or
      the
      application of the Deposit, Escrow Agent shall hold the Deposit until the
      receipt of written instructions from both Buyer and Seller or a final order
      of a
      court of competent jurisdiction. In addition, in any such event, Escrow Agent
      may, but shall not be required to, file an action in interpleader to resolve
      the
      disagreement. Escrow Agent shall be indemnified for all costs and reasonable
      attorneys' fees in its capacity as Escrow Agent in connection with any such
      interpleader action and shall be fully protected in suspending all or part
      of
      its activities under this Agreement until a final judgment in the interpleader
      action is received.

     

    (v) Escrow
      Agent shall otherwise not be liable for any mistakes of fact or errors of
      judgment, or for any acts or omissions of any kind, unless caused by its
      negligence or willful misconduct.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c) Buyer
      and
      Seller hereby appoint Escrow Agent as, and Escrow Agent agrees to act as “the
      person responsible for closing” the transaction which is the subject of this
      Agreement, pursuant to Internal Revenue Code of 1986 Section 6045(e). Escrow
      Agent shall prepare and file the informational return (IRS Form 1099-B) required
      by and otherwise comply with the terms of IRS § 6045(e). Escrow Agent further
      agrees to indemnify and hold Buyer, Seller and the respective attorneys harmless
      from and against all claims, costs, liabilities, penalties or expenses resulting
      from Escrow Agent’s failure to file the appropriate reports and otherwise comply
      with the terms of the Internal Revenue Code pursuant to this
      paragraph.

     

    3. Quality
      of Title.
      

     

    (a) Title
      to
      the Land shall be good and marketable and insurable by a reputable title
      insurance company licensed to do business in New Jersey, subject to the
      following (collectively, “Permitted Encumbrances”): 

     

    (i) All
      matters of record, including without limitation any deed restrictions relating
      to the management of Hazardous Substances (as defined below);

     

    (ii) Provisions
      of existing building and zoning laws;

     

    (iii) The
      leasehold estate created by, and all the terms, covenants and conditions set
      forth in, the Facility Lease;

     

    (iv) Such
      real
      estate taxes for the then current year as are not due and payable on the date
      of
      the Closing;

     

    (v) Any
      liens
      for municipal betterments assessed after the day of the Closing; 

     

    (vi) Any
      matter that would be disclosed by a survey and physical inspection of the
      Property;

     

    (vii) All
      utility and road easements and rights of way; and 

     

    (viii) standard
      printed exceptions, exclusions and disclaimers which are part of the ALTA’s form
      owner’s policy.

     

    (b) No
      later
      than fifteen (15) days following the Effective Date, Escrow Agent shall, at
      Buyer’s sole cost and expense, prepare and deliver to Buyer and Seller a title
      commitment pertaining to the Property leading to the issuance of an ALTA
      extended coverage owner’s policy of title insurance, together with copies of all
      Schedule B items and all other recorded items referred to in such commitment.
      

     

    (c) Within
      the sixty (60) day period commencing on the Effective Date (the “Due Diligence
      Period”), Buyer shall notify Seller in writing with a statement specifying any
      defects in title (“Buyer’s Statement”). Seller shall notify Buyer no later than
      ten (10) days after receipt of Buyer’s Statement whether Seller will remedy such
      defects. If Seller does not agree to remove such defects prior to Closing,
      Buyer
      shall have the right prior to the expiration of the Due Diligence Period, either
      to (a) waive the defect and proceed to Closing without abatement or reduction
      of
      the Purchase Price, or (b) terminate this Agreement and obtain a refund of
      the
      Deposit, and upon such refund this Agreement and all rights and obligations
      of
      the respective parties hereunder shall be null and void. If Seller fails to
      respond to Buyer’s notice within such ten (10) day period, then Seller shall be
      deemed to have agreed to cure such objection or defect. If Buyer fails to
      deliver such notice before the expiration of the Due Diligence Period, or if
      Seller agrees or is deemed to have agreed to cure any objection or defect raised
      by Buyer, then Buyer shall be deemed to have accepted title in its then
      condition (subject to any cure obligation of Seller) and to have irrevocably
      waived the foregoing condition precedent. From the Effective Date, Seller shall
      not permit any further encumbrances to appear of record on the Property without
      Buyer’s written approval.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    4. Seller's
      Representations, Warranties and Covenants.
      

     

    (a) In
      order
      to induce Buyer to enter into this Agreement and to complete Closing, Seller
      represents and warrants to Buyer as follows:

     

    (i) Seller
      is
      the owner of the Property. 

     

    (ii) There
      are
      no unpaid bills or claims for labor or services performed or materials furnished
      or delivered during the last four (4) months for alterations, repairs, work,
      or
      new construction on the Property, except for those disclosed to Buyer at Closing
      in writing by Seller. 

     

    (iii) Seller
      is
      duly organized, validly subsisting and in good standing under the laws of
      Delaware, with all legal power and authority to undertake, observe and perform
      all of Seller's agreements and obligations hereunder and under Seller’s Closing
      Documents (as defined in Section 8 below), and the execution and delivery hereof
      and the performance by Seller of their obligations hereunder will not violate
      or
      constitute an event of default under the terms or provisions of any agreement,
      document or other instrument to which Seller is a party or by which they or
      the
      Property are bound. 

     

    (iv) This
      Agreement constitutes, and when executed and delivered Seller’s Closing
      Documents will constitute, the valid and binding obligations of Seller,
      enforceable in accordance with their terms.

     

    (v) To
      Seller’s actual knowledge, without investigation or inquiry, there are no
      proceedings at law or in equity before any court, grand jury, administrative
      agency or other investigative body, or governmental department, commission,
      board, agency, bureau or instrumentality of any kind pending or, threatened,
      against or affecting Seller or the Property that (i) involve the validity or
      enforceability of this Agreement or any other instrument or document to be
      delivered by Seller pursuant hereto, (ii) enjoin or prevent or threaten to
      enjoin or prevent the performance of Seller’s obligations hereunder, (iii)
      relate specifically to the Property or use and occupancy thereof or (iv) the
      title thereto, including but not limited to any unrecorded agreements or
      encumbrances. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (vi) There
      are
      no existing or pending contracts of sale, options to purchase or rights of
      first
      refusal or first offer with respect to the Property, or any part thereof,
      recorded or unrecorded.

     

    (vii) Other
      than the Permitted Encumbrances, there are no leases or other occupancy
      agreements pursuant to which Seller has granted another party the right to
      use
      or occupy all or any portion of the Property after the Closing
      Date.

     

    (viii) Seller
      is
      not in the hands of a receiver nor is an application for the appointment of
      a
      receiver pending; Seller has not made an assignment for the benefit of
      creditors, nor has Seller filed, or had filed against it, any petition in
      bankruptcy.

     

    (ix) Seller
      has not received any written notice that the Property has been registered or
      certified as “historic” by any local, State or Federal governmental entity or
      historic commission.

     

    (x) Seller
      has not received any written notice from any federal, state, county or municipal
      authority which alleges that the Property is in violation with any statute,
      rule, regulation or ordinance applicable to the Property.

     

    (xi) Seller
      has not received any written notice from any federal, state, county or municipal
      authority of any pending or threatened condemnation or similar action in the
      nature of eminent domain with respect to all or any portion of the
      Property.

     

    (xii) There
      are
      no management, service, or other agreements with respect to or affecting the
      Property, recorded or unrecorded, which will survive the Closing, except as
      set
      forth on Exhibit
      D
      hereto.

     

    (xiii) No
      portion of the Property is assessed as farmland under the Farmland Assessment
      Act, N.J.S.A.
      54:4-23.1 et seq.

     

    (xiv) Seller
      represents that Seller is not a “foreign person” as such term is defined under
      Section 7701 (a) of the Internal Revenue Code of 1986, as amended.

     

    (b) The
      representations and warranties contained in this Section 4 are true, accurate
      and complete and not misleading in any material respect as of the Effective
      Date
      and shall be deemed to be repeated at and as of the Closing Date, and shall
      be
      true, accurate and complete and not misleading in any material respect as of
      such date, except for acts or omissions expressly permitted by other provisions
      of this Agreement. The representations and warranties contained in this Section
      4 shall survive the Closing for a period of one (1) year and any claim for
      a
      breach of the representations and warranties must be brought within such one
      (1)
      year period. Buyer will not have any right to bring any action against Seller
      as
      a result of any untruth or inaccuracy of such representations and warranties,
      or
      any such breach, unless and until the aggregate amount of all liability and
      losses arising out of any such untruth or inaccuracy, or any such breach,
      exceeds One Hundred Thousand Dollars ($100,000.00), in which event Buyer may
      seek to recover from Seller for all such liability and losses (not just the
      portion of such losses that exceed One Hundred Thousand Dollars ($100,000.00));
      provided, however, in no event will Seller’s liability for all such
      misrepresentations and breaches herein exceed Five Hundred Thousand Dollars
      ($500,000.00) in the aggregate. 

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    5. Buyer's
      Representations, Warranties and Covenants.
      

     

    (a) In
      order
      to induce Seller to enter into this Agreement and to complete Closing, Buyer
      represents and warrants to Seller as follows:

     

    (i) Buyer
      is
      duly organized, validly subsisting and in good standing under the laws of New
      Jersey, with all legal power and authority to undertake, observe and perform
      all
      of Buyer’s agreements and obligations hereunder and under Buyer’s Closing
      Documents (as defined in Section 8 below).

     

    (ii) This
      Agreement constitutes, and when executed and delivered Buyer’s Closing Documents
      will constitute, the valid and binding obligations of Buyer, enforceable in
      accordance with their terms. 

     

    (iii) Buyer
      (i)
      is represented by competent counsel, (ii) understands the assumptions of risk
      and liability set forth in this Agreement, and (iii) has the financial
      wherewithal to fulfill its financial obligations under this
      Agreement.

     

    (b) The
      representations and warranties contained in this Section 5 are true, accurate
      and complete and not misleading in any material respect as of the Effective
      Date
      and shall be deemed to be repeated at and as of the Closing Date, and shall
      be
      true, accurate and complete and not misleading in any material respect as of
      such date, except for acts or omissions expressly permitted by other provisions
      of this Agreement. The representations and warranties contained in this Section
      5 shall survive the Closing for a period of one (1) year and any claim for
      a
      breach of the representations and warranties must be brought within such one
      (1)
      year period. Seller will not have any right to bring any action against Buyer
      as
      a result of any untruth or inaccuracy of such representations and warranties,
      or
      any such breach, unless and until the aggregate amount of all liability and
      losses arising out of any such untruth or inaccuracy, or any such breach,
      exceeds Ten Thousand Dollars ($10,000.00), in which event Seller may seek to
      recover from Buyer for all such liability and losses (not just the portion
      of
      such losses that exceed Ten Thousand Dollars ($10,000.00)); provided, however,
      in no event will Buyer’s liability for all such misrepresentations and breaches
      herein exceed Two Million Dollars ($2,000,000.00) in the aggregate.

     

    6. Buyer’s
      Due Diligence; Condition of the Property.

     

    (a) During
      the term of this Agreement, Buyer may perform, at Buyer's sole expense, a survey
      of the Property and environmental and engineering investigations of the Property
      and the Improvements as Buyer deems necessary; provided, however, that such
      investigations may not include subsurface investigations or other invasive
      physical testing without the express written consent of Seller. As part of
      Buyer’s investigations, Buyer may obtain from the New Jersey Department of
      Environmental Protection the following items: (i) a Letter of Interpretation
      (if
      required) regarding the delineation and/or existence of wetlands (if any) on
      the
      Property; and (ii) all approvals (if required) regarding stormwater management
      on the Property. To facilitate Buyer's investigations, Buyer shall have the
      right, during the term of this Agreement, to examine and copy at Buyer's expense
      the assessments, reports and/or correspondence regarding the environmental
      condition of the Property as well as any other assessments, reports and/or
      correspondence available at Seller’s office located on the Property. Buyer shall
      be permitted to enter upon the Property during the term of this Agreement for
      the purpose of conducting its investigations on the following terms and
      conditions: (i) prior to any entry onto the Property, Buyer shall provide to
      Seller an insurance certificate confirming that Buyer has in effect a policy
      of
      commercial general liability insurance, with a reputable insurance company,
      naming Seller as an additional insured party with limits of not less than
      $1,000,000.00 for each occurrence and $2,000,000.00 in the annual aggregate
      for
      bodily injury (including death) and $1,000,000.00 in annual aggregate for
      property damage; (ii) Buyer shall promptly repair any and all damages to
      the Property arising in connection with Buyer’s entry onto the Property and
      shall restore the Property to the same condition as before such entry; and
      (iii)
      Buyer shall indemnify and hold Seller harmless from and against any and all
      claims arising from or by reason of Buyer's entry upon the Property. Buyer
      shall
      schedule any such examinations of the documents at Seller’s office located at
      the Property and any inspection of the Property with Seller, who shall have
      the
      right to have a representative present at all times during examinations and
      inspections performed by Buyer. Buyer shall have the right to communicate with
      any and all of Seller’s consultants, employees, management companies, tenants
      and government officials in connection with Seller’s investigation of the
      Property. In the event the results of any of Buyer's investigations are not
      satisfactory to Buyer in Buyer’s sole discretion, Buyer shall have the right, in
      its absolute discretion, for any reason, to terminate this Agreement before
      the
      expiration of the Due Diligence Period, in which case the Deposit shall be
      promptly refunded to Buyer. If Buyer does not terminate this Agreement as
      aforesaid, this contingency shall be deemed satisfied, and Buyer shall be deemed
      to have irrevocably waived the foregoing condition precedent. Buyer hereby
      confirms that, if Buyer does not terminate this Agreement on or before the
      expiration of the Due Diligence Period, Buyer will be satisfied with the
      condition of the Property, and Buyer will be accepting the Property in its
      "AS-IS" condition as of the expiration of the Due Diligence Period.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (b) Prior
      to
      Closing, Seller shall comply with ISRA (as defined below) and obtain and provide
      to Buyer either: 

     

    (i) a
      letter
      from the New Jersey Department of Environmental Protection (“NJDEP”) stating
      that the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et. seq.
      and
      the regulations promulgated thereunder (collectively “ISRA”) are not applicable
      to the transaction contemplated by this Agreement (a “Letter of
      Non-Applicability”); or 

     

    (ii) an
      approved Negative Declaration (as defined by ISRA), De Minimis Quantity
      Exemption (as defined by ISRA), Expedited Review (as defined by ISRA), Regulated
      Underground Storage Tank Waiver (as defined by ISRA), Remediation in Progress
      Waiver (as defined by ISRA) or No Further Action Letter (as defined by ISRA)
      (the Negative Declaration, De Minimis Quantity Exemption, Expedited Review,
      Regulated Underground Storage Tank Waiver, Remeditation in Progress Waiver
      or No
      Further Action Letter, as the case may be, are hereinafter referred to
      collectively as the “ISRA Clearance”) for each property subject to the
      transaction contemplated by this Agreement and ISRA. 

     

    (c) If
      Seller
      is unable to obtain a Letter of Non-Applicability or ISRA Clearance prior to
      Closing for each property subject to the transaction contemplated by this
      Agreement and ISRA, then Seller shall apply for and, prior to Closing, enter
      into a Remediation Agreement (as defined by ISRA) with NJDEP for each property
      subject to the transaction contemplated by this Agreement and ISRA for which
      a
      Letter of Non-Applicability or ISRA Clearance cannot be obtained. In any such
      Remediation Agreement, Seller shall pay for and be identified as the sole party
      responsible for:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (i) compliance
      with the Remediation Agreement after Closing; 

     

    (ii) obtaining
      ISRA Clearance after the Closing; and

     

    (iii) providing
      all necessary financial assurance required by NJDEP under any such Remediation
      Agreement.

     

    (d) Buyer
      acknowledges that: (i) Seller has already made, prior to the Effective Date,
      a
      substantial amount of information relating to the Property available for Buyer’s
      examination; (ii) Seller will be making the Property and additional information
      available to Buyer during the Due Diligence Period; (iii) Buyer will inspect
      the
      Property and such information to the extent deemed necessary by Buyer; and
      (iv)
      Buyer will be relying solely on the results of its own examinations and
      inspections with respect to the physical and environmental condition of the
      Property and all other aspects of the Property. Except as expressly provided
      in
      this Agreement, Seller has not made and does not make any representation of
      any
      nature as to the physical condition or operation of the Property, as to the
      accuracy, thoroughness or completeness of, or the conclusions drawn in, any
      information provided by Seller to Buyer, or as to any other matter or thing
      affecting or related to the Property, and Buyer hereby expressly acknowledges
      that no such other representations have been made by Seller or relied on by
      Buyer. Seller shall not be liable or bound in any manner by any expressed or
      implied warranties, guaranties, promises, statements, representation, or
      information pertaining to the Property, made or furnished by any agent,
      employee, servant or other person representing or purporting to represent
      Seller, unless such warranties, guaranties, promises, statements,
      representations or information are expressly and specifically set forth in
      this
      Agreement. All representations, warranties, understandings and agreements
      heretofore had between the parties hereto are merged in this Agreement, which
      alone fully and completely expresses their agreement.

     

    (e) TO
      THE
      FULLEST EXTENT PERMITTED BY LAW, BUYER HEREBY UNCONDITIONALLY AND IRREVOCABLY
      RELEASES AND FOREVER DISCHARGES SELLER, SELLER’S OFFICERS, DIRECTORS, EMPLOYEES
      AND AGENTS, AND EACH OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS,
      MEMBERS, PARTNERS, EMPLOYEES AND AGENTS (EACH A “SELLER PARTY” AND COLLECTIVELY
      THE “SELLER PARTIES”) FROM ANY AND ALL LIABILITY OR RESPONSIBILITY FOR CLAIMS,
      LOSSES AND DEMANDS, INCLUDING THOSE ARISING FROM PERSONAL INJURY OR DEATH,
      AND
      ALL CONSEQUENCES THEREOF (INCLUDING ANY INTERRUPTION OR INTERFERENCE WITH ANY
      BUSINESS OR ACTIVITIES BEING CONDUCTED ON THE PROPERTY AND ANY LOSS OF
      OPPORTUNITY), WHETHER NOW KNOWN OR NOT, WHICH MAY ARISE FROM (1) ANY LATENT
      OR
      PATENT DEFECTS, ANY HIDDEN OR CONCEALED CONDITIONS, (2) THE CONDITION,
      STRUCTURAL INTEGRITY, OPERABILITY, MAINTENANCE OR REPAIR OF ANY BUILDINGS,
      EQUIPMENT, FURNITURE, FURNISHINGS OR IMPROVEMENTS, OR (3) THE COMPLIANCE OF
      THE
      PROPERTY WITH, OR VIOLATION OF, ANY LAW (EXCLUDING ENVIRONMENTAL LAW), STATUTE,
      ORDINANCE, RULE OR REGULATION OF ANY GOVERNMENTAL ENTITY, INCLUDING, WITHOUT
      LIMITATION, APPLICABLE ZONING ORDINANCES, BUILDING AND HEALTH CODES.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (f) In
      addition to the foregoing release, if the Closing occurs, Buyer shall indemnify,
      defend and hold harmless each Seller Party from and against any and all
      liabilities, claims, demands, suits, administrative proceedings, causes of
      action, costs, damages, personal injuries and property damages, losses and
      expenses, both known and unknown, present and future, at law or in equity
      arising out of, by virtue of or related in any way to: (i) any environmental
      conditions, including, without limitation, the presence, Release or threatened
      Release or placement on, in or from the Property, or any portion thereof, of
      Hazardous Substances occurring after the Closing, except to the extent Seller,
      as tenant, is obligated to indemnify Buyer, as landlord, pursuant to Section
      13(e)(ii) of the Facility Lease, (ii) the violation of any Environmental Laws
      occurring after the Closing, except to the extent Seller, as tenant, is
      obligated to indemnify Buyer, as landlord, pursuant to Section 13(e)(ii) of
      the
      Facility Lease. 

     

    (g) If
      the
      Closing occurs, Seller shall indemnify, defend and hold harmless Buyer, Buyer’s
      officers, directors, employees and agents, and each of their respective
      affiliates, officers, directors, members, partners, employees and agents (each
      a
“Buyer’s Party” and collectively the “Buyer’s Parties”) from and against any and
      all liabilities, claims, demands, suits, administrative proceedings, causes
      of
      action, costs, damages, personal injuries and property damages, losses and
      expenses, both known and unknown, present and future, at law or in equity
      arising out of, by virtue of or related in any way to: (i) any environmental
      conditions, including, without limitation, the presence, Release or threatened
      Release or placement on, in or from the Property, or any portion thereof, of
      Hazardous Substances occurring during Seller’s Building Environmental Period,
      Seller’s House Environmental Period and after the Closing to the extent Seller,
      as tenant, is obligated to indemnify Buyer, as landlord, pursuant to Section
      13(e)(ii) of the Facility Lease, (ii) the violation of any Environmental Laws
      occurring during Seller’s Building Environmental Period, Seller’s House
      Environmental Period and after the Closing to the extent Seller, as tenant,
      is
      obligated to indemnify Buyer, as landlord, pursuant to Section 13(e)(ii) of
      the
      Facility Lease. 

     

    For
      purposes of this Agreement, the following terms shall have the following
      meanings:

     

    (1) “Environmental
      Law” means any federal, state, or local statute, law, order, regulation,
      ordinance, constitution, agreement, permit, or decision relating to pollution
      or
      protection of human health, safety or the environment, including natural
      resources, as well as any principles of common law under which a person may
      be
      held liable for the Release of any Hazardous Substance into the
      environment.

     

    (2) “Hazardous
      Substances” means any gaseous, liquid or solid chemical, material, substance,
      contaminant or waste that may or could pose a hazard to the environment or
      human
      health or safety, including (a) any “hazardous substances” as defined by the
      federal Comprehensive Environmental Response, Compensation and Liability Act,
      42
      U.S.C. §9601 et seq., the New Jersey Spill Compensation and Control Act,
      N.J.S.A. 58:10-23.11a et seq., and the Industrial Site Recovery Act, N.J.S.A.
      13:1K-6 et seq. (b) any “extremely hazardous substance,” “hazardous chemical,”
or “toxic chemical” as those terms are defined by the federal Emergency Planning
      and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq., (c) any “hazardous
      waste,” as defined under the federal Solid Waste Disposal Act, as amended by the
      Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., and the
      Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. (d) any “pollutant,” as
      defined under the federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.,
      (e) any chemical, material, substance, contaminant or waste, whether gaseous,
      liquid or solid, that is regulated under any Environmental Law, and (f) any
      asbestos, polychlorinated biphenyls (“PCB’s”), petroleum, petroleum products and
      urea formaldehyde and mold.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (3) “Release”
      means any release, spill, emission, leaching, leaking, migration, dumping,
      emptying, pumping, injection, deposit, disposal, discharge or dispersal of
      any
      Hazardous Substance into the indoor or outdoor environment, or into, on, or
      from
      any property.

     

    (4) “Seller’s
      Environmental Building Liability Period” means the period from October 17, 2000
      through the Closing Date. 

     

    (5) “Seller’s
      Environmental House Liability Period” means the period from February 13, 2002
      through the Closing Date. 

     

    (h) Buyer
      acknowledges and agrees that the provisions of this Section 6 are a material
      factor in Seller's acceptance of the Purchase Price and that Seller would be
      unwilling to sell the Property unless Seller and the other Seller Parties are
      expressly released and indemnified in accordance with subsections 6(d) and
      6(e)
      above.

     

    (i) The
      provisions of this Section 6 shall survive the Closing or earlier termination
      of
      this Agreement.

     

    7. CLOSING.
      

     

    (a) The
      closing of the conveyance of the Property pursuant to this Agreement (“Closing”)
      shall be held at 10:00 A.M. prevailing local time thirty (30) days after the
      expiration of the Due Diligence Period (the “Closing Date”). Closing shall be
      effected through an escrow with the Escrow Agent or, if a closing by escrow
      is
      not possible, then at the offices of Hill Wallack LLP, 202 Carnegie Center,
      Princeton, New Jersey. 

     

    (b) All
      of
      Buyer's representations and warranties contained in this Agreement shall be
      true
      and correct at the Closing as though made at and as of the Closing. All of
      Seller's representations and warranties contained in this Agreement shall be
      true and correct at the Closing as though made at and as of the Closing. With
      respect to representations and warranties of Seller: (a) Seller shall promptly
      notify Buyer of any material changes therein (a “Change”) promptly upon Seller
      becoming aware of any such Change; and (b) Seller shall not have any liability
      to Buyer, whether prior to, at or following Closing, for any Change except
      to
      the extent such Change: (1) is caused by Seller; and (2) materially and
      adversely affects any of the Property and Buyer's intended use thereof. In
      the
      event of a Change caused by Seller which materially and adversely affects any
      of
      the Property and Buyer's intended use thereof, Buyer may elect to terminate
      this
      Agreement if the Change is not cured or otherwise satisfied to Buyer's
      reasonable satisfaction by the Closing. With respect to representations and
      warranties of Buyer: (a) Buyer shall promptly notify Seller of any material
      Change therein promptly upon Buyer becoming aware of any such Change; and (b)
      Buyer shall not have any liability to Seller, whether prior to, at or following
      the Closing, for any Change, except to the extent such Change (i) is caused
      by
      Buyer, and (ii) materially and adversely affects Buyer's ability to perform
      its
      obligations under this Agreement.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    8. Closing
      Documents.

     

    (a) The
      obligations of Buyer hereunder are subject to the fulfillment of the conditions
      specified below by Seller prior to or on the Closing Date (any one of which
      may
      be waived in whole or in part by Buyer at or prior to Closing). At Closing,
      Seller shall execute and notarize, where appropriate, and deliver to
      Buyer:

     

    (i) A
      fully
      executed and acknowledged bargain and sale deed with covenants against grantor’s
      acts (“Deed”) in the form set forth as Exhibit
      E.
      

     

    (ii) A
      fully
      executed and acknowledged bill of sale (“Bill of Sale”) in the form set forth as
Exhibit
      F.
      

     

    (iii) A
      Non-Foreign Affidavit as required by the Foreign Investors in Real Property
      Tax
      Act, as amended in the form set forth on Exhibit
      G.
      

     

    (iv) All
      documents required by the Buyer’s title insurance company which are reasonably
      necessary in order for said title company to issue an ALTA form owner's title
      insurance policy to Buyer. 

     

    (v) A
      fully
      executed Facility Lease in the form set forth on Exhibit
      C.
      

     

    (vi) A
      subordination, non-disturbance and attornment agreement on a form prescribed
      by
      Buyer’s lender with substance reasonably acceptable to Seller, Buyer and Buyer’s
      lender (“SNDA”), signed and notarized by Seller. 

     

    (vii) A
      fully
      executed and acknowledged Affidavit of Title in the form set forth on
Exhibit
      H.
      

     

    (viii) A
      fully
      executed Seller’s Residency Certification/Exemption. 

     

    (ix) All
      documents required by the East Windsor Township Housing Division which are
      reasonably necessary for the transfer of the House, including, without
      limitation, a certificate of occupancy and smoke detector certification (if
      applicable). 

     

    (x) Keys
      to
      all locks on the Property. 

     

    All
      of
      the foregoing documents and materials are sometimes herein collectively referred
      to as the (“Seller’s Closing Documents”).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (b) The
      obligations of Seller hereunder are subject to the fulfillment of the conditions
      specified below by Buyer prior to or on the Closing Date (any one of which
      may
      be waived in whole or in part by Seller at or prior to Closing). At Closing,
      Buyer shall deliver to Seller:

     

    (i) The
      balance of the Purchase Price as described in Subsection 2(a)
      above.

     

    (ii) A
      fully
      executed Facility Lease in the form set forth on Exhibit
      C.
      

     

    (iii) A
      SNDA,
      signed and notarized by Buyer and Buyer’s lender.

     

    (iv) All
      documents required by the East Windsor Township Housing Division which are
      reasonably necessary for the transfer of the House. 

     

    All
      of
      the foregoing documents and materials are sometimes herein collectively referred
      to as the (“Buyer’s Closing Documents”).

     

    9. Intentionally
      Omitted.
      

     

    10. Possession.
      At
      Closing, Seller shall deliver to Buyer actual possession of the Property
      subject, however, to the rights of Seller under the Facility Lease.

     

    11. Closing
      Costs.
      

     

    (a) At
      Closing, all real estate transfer taxes, documentary stamp taxes, recording
      taxes or similar charges, if any, shall be paid in accordance with standard
      New
      Jersey conveyancing practice. All other recording costs and closing costs of
      any
      nature or description shall be borne or apportioned in accordance with custom
      and practice in New Jersey. Each party shall bear its own counsel fees.

     

    (b) At
      the
      Closing, Buyer shall pay to Escrow Agent the cost of all title search and exam
      fees, the premium for all policies of title insurance, any additional premiums
      for any extended or other coverages obtained by Buyer and for any title
      endorsements required by Buyer or Buyer’s lenders. 

     

    (c) At
      the
      Closing, Seller shall not be obligated to reimburse Buyer for any costs and
      expenses that Buyer incurs in order to perform any diligence hereunder or to
      procure any purchase money financing for the acquisition of the Property.

     

    12. Apportionments.
      

     

    (a) At
      Closing, all real estate taxes applicable to the Property for the tax year
      in
      which Closing occurs shall be apportioned between Seller and Buyer as of the
      Closing Date. Such apportionment shall be based on the respective tax years
      for
      which such taxes are assessed, and on the most recent assessment of the Land
      and
      the Improvements and the then applicable tax rates. If Closing occurs prior
      to
      the date on which the applicable real estate tax rates are fixed for the tax
      year in which Closing occurs, such taxes shall be apportioned as aforesaid
      on
      the basis of the tax rates for the preceding tax year, and if there is any
      increase or decrease in the tax rates for the tax year in which Closing occurs,
      the parties shall adjust such apportionment after the Closing promptly following
      the final promulgation of such tax rates by the relevant taxing
      authorities.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (b) All
      utilities, water and sewer charges, based upon the applicable billing period
      for
      each such charge, shall be prorated by Buyer and Seller at Closing

     

    (c) The
      provisions of this Section 12 shall survive the Closing.

     

    13. Maintenance;
      Casualty.

     

    (a) Between
      the Effective Date and the Closing Date, subject to the other provisions of
      this
      Section 13, Seller shall maintain the Property in substantially the same
      condition as it now is, reasonable wear and tear excepted.

     

    (b) If
      the
      Improvements are damaged prior to Closing, Seller shall give Buyer prompt notice
      thereof. Thereafter, Seller shall retain a reputable, independent architect
      or
      contractor reasonably approved by Buyer to estimate the cost to repair or
      replace such damage (the “Estimate”) and shall deliver to Buyer the Estimate
      within twenty (20) days after the damage occurred. If the architect or
      contractor estimates that the cost to repair or replace such damage is more
      than
      One Million Dollars ($1,000,000.00), then Buyer shall have the right to
      terminate this Agreement by written notice to Seller within ten (10) days of
      the
      delivery of the Estimate to Buyer. Notwithstanding the foregoing, if Seller
      notifies Buyer at the time Seller furnishes the Estimate that Seller is willing
      to perform all required repairs and replacements to restore the Improvements
      to
      substantially the same condition as they were prior to the damage (“Seller’s
      Repair Election”), then Buyer shall have no termination right (regardless of
      amount of the Estimate) and the Closing Date shall be postponed for up to three
      (3) months, as Seller shall elect by notice to Buyer, so that Seller can
      complete the necessary repairs and replacements. In the event that Seller
      exercises the Seller’s Repair Election, Seller will cause the repairs and
      replacements to be made by a reputable contractor, in compliance with applicable
      laws and regulations, such that the Improvements are repaired and restored
      no
      later than three (3) months after the closing date as originally scheduled
      herein. The Property shall not be deemed to be complete unless the Property
      is
      in substantially the same condition as of the Effective Date. Seller will assign
      to Buyer at Closing all warranties from all contractors and material and
      equipment suppliers and manufacturers relating to the repair, restoration and
      replacement work.

     

    (c) If
      this
      Agreement cannot be terminated pursuant to Subsection 13(b), or if Buyer elects
      not to terminate the Agreement notwithstanding any such damage (and a failure
      to
      terminate within the aforementioned ten (10) day period shall be deemed to
      be an
      election not to terminate), then (i) Seller shall file appropriate proofs of
      loss and shall properly adjust all applicable insurance policies,
      (ii) provided insurance proceeds are made available therefor, Seller shall
      repair such damage to the extent necessary to restore the Improvements to a
      safe
      condition before Closing or to prevent further damage to or deterioration of
      the
      Improvements, except that if Seller has exercised Seller’s Repair Election, then
      Seller will repair or restore the Improvements in accordance with Section 13(b)
      irrespective of the amount or availability of insurance proceeds, (iii) except
      to the extent used to repair and restore the Improvements, all proceeds of
      such
      insurance actually received by Seller shall be applied as a credit against
      the
      Purchase Price, (iv) at Closing Seller shall assign to Buyer, in form reasonably
      satisfactory to Buyer, all unpaid claims and rights relating to such damage
      and
      shall credit the applicable deductible amount against the Purchase Price, and
      (v) at and following Closing, Seller shall give Buyer, at Buyer's expense,
      such
      further assurances of such claims and rights and such assignment as Buyer may
      from time to time reasonably request.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (d) The
      provisions of this Section 13 shall survive the Closing.

     

    14. Condemnation.
      If the
      entire Property or a material part thereof (as defined below) is taken by
      eminent domain, or a proceeding is initiated to effect such a taking by eminent
      domain, prior to Closing, Seller shall promptly notify Buyer, and Buyer may
      terminate this Agreement by written notice to Seller within ten (10) days of
      receiving Seller’s notice. If (i) less than a material part of the Property
      is taken, or a proceeding is initiated to effect such a taking, prior to
      Closing, or (ii) Buyer elects not to terminate this Agreement even though the
      entire Property or a material part thereof is taken by eminent domain, or a
      proceeding is initiated to effect such a taking by eminent domain, prior to
      Closing (and a failure to terminate within the aforementioned ten (10) day
      period shall be deemed to be an election not to terminate), then in either
      case
      (A) Seller shall file appropriate claims with the condemning authority,
      (B) provided condemnation proceeds are made available therefor, Seller
      shall repair any damage to the extent necessary to restore the Property to
      a
      safe condition (where only a partial condemnation occurs), (C) except to the
      extent used to repair and restore the Property, all proceeds of such
      condemnation actually received by Seller shall be applied as a credit against
      the Purchase Price, (D) at Closing Seller shall assign to Buyer, in form
      reasonably satisfactory to Buyer, all unpaid claims and rights relating to
      such
      condemnation, and (E) at and following Closing, Seller shall give Buyer, at
      Buyer's expense, such further assurances of such claims and rights and such
      assignment as Buyer may from time to time reasonably request. The provisions
      of
      this Section 14 shall survive the Closing. For the purposes of this Section
      14,
      a taking of a “material part” of the Property shall mean any taking that
      involves more than ten percent (10%) of the acreage of Building.

     

    15. Buyer's
      Default.
      In the
      event Buyer shall default in the observance or performance of any of its
      obligations hereunder, then Seller, at its option, shall have the right, as
      its
      sole and exclusive remedy, to terminate this Agreement and retain the Deposit
      as
      liquidated damages it being expressly understood that the retention of such
      Deposit by Seller as aforesaid constitutes a fair and reasonable amount for
      the
      damage sustained by Seller by reason of Buyer’s default of this Agreement.

     

    16. Seller's
      Default.
      If
      Seller fails to complete Closing or to convey to Buyer title to the Property
      as
      required by this Agreement, then Buyer shall have the right, as Buyer's sole
      right and remedy, either to (a) take such title to the Property as Seller can
      give with an adjustment of the Purchase Price that is mutually agreed upon
      by
      Seller and Buyer, (b) terminate this Agreement and receive the Deposit, or
      (c)
      enforce this Agreement by specific performance. Notwithstanding the foregoing,
      Buyer’s right to sue Seller for specific performance shall terminate and be of
      no further force and effect if not exercised on or prior to the date that is
      60
      days after the scheduled Closing Date. Accordingly, if Buyer does not file
      a
      lawsuit against Seller for specific performance of this Agreement on or before
      such date, Buyer’s right to do so shall lapse.

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    17. Termination.
      Whenever this Agreement specifies a right of Buyer or Seller to terminate this
      Agreement, such right shall be exercisable only by the exercising party giving
      written notice thereof to the other party in accordance with Section 22 below,
      whereupon all rights and obligations of the parties hereunder shall terminate,
      except to the extent otherwise expressed in this Agreement, and all original
      counterparts of this Agreement shall be returned to Seller
      promptly.

     

    18. Seller's
      Liability.
      Except
      for any provision of this Agreement that expressly survives Closing or the
      termination of this Agreement, upon the earlier to occur of Closing or the
      termination of this Agreement by Buyer or Seller pursuant to a termination
      right
      specified herein, Seller automatically shall be deemed relieved and released
      from all obligations and liability to Buyer under this Agreement. 

     

    19. Assignability
      .
      

     

    (a) Seller
      shall not assign this Agreement or any rights hereunder. 

     

    (b) Prior
      to
      Closing, Buyer may at its option freely assign this Agreement to any three
      (3)
      entities controlled by, controlling or under common control with the named
      Buyer
      (an “affiliated entity”), without the consent of Seller; however, Buyer shall
      provide Seller with written notice and reasonable evidence documenting the
      relationship between Buyer and the single assignee at least five (5) days prior
      to the Closing Date and if not delivered this right and any assignment shall
      be
      null and void. Otherwise, Buyer may not assign this Agreement or any rights
      or
      remedies of Buyer hereunder without Seller’s prior written consent, in Seller’s
      sole discretion. Any such assignment by Buyer shall not relieve Buyer from
      any
      of its obligations hereunder. Subject to the foregoing, all of the terms,
      covenants and conditions of this Agreement shall inure to the benefit of and
      bind the respective successors and assigns of Buyer. 

     

    20. Brokers.
      Buyer
      covenants, represents and warrants to Seller that Buyer has had no dealing
      or
      negotiations with any broker or agent or finder in connection with respect
      to
      this Agreement other than Mercer Oak Realty, LLC. Buyer shall pay Mercer Oak
      Realty, LLC a commission pursuant to a separate agreement. Seller covenants,
      represents and warrants to Buyer that Seller has had no dealing or negotiations
      with any broker or agent or finder in connection with respect to this Agreement
      other than CB Richard Ellis and Byron Real Estate Co., Inc. Seller shall pay
      CB
      Richard Ellis and Byron Real Estate Co., Inc. commissions pursuant to separate
      agreements. Buyer and Seller each covenant and agree to pay, hold harmless
      and
      indemnify the other from and against any and all costs, expenses, including
      reasonable attorneys’ fees, and liability for any compensation, commissions or
      charges claimed by any other broker or agent with whom the indemnifying party
      has had any dealings or negotiations with respect to this
      Agreement.

     

    21. Confidentiality.
      

     

    (a) Buyer
      agrees to keep confidential and not to use, other than in connection with its
      determination whether to proceed with the purchase of the Property in accordance
      with Section 6 hereof, any of the documents, material or information regarding
      the Property supplied to Buyer by Seller or by any third party at Sellers'
      request except to Buyer's consultants or attorneys on a “need to know” basis,
      unless Buyer is compelled to disclose such documents, material or information
      by
      law or by subpoena and excluding any information previously known to the Buyer,
      any information obtained by Buyer from a third party who had the right to
      disclose such information to Buyer, and any information as it becomes generally
      known to others without breach by Buyer of its obligations hereunder. Buyer
      agrees to indemnify and hold harmless Seller from and against any and all
      losses, damages, claims and liabilities of any kind (including without
      limitation reasonable attorneys' fees) arising out of Buyer's breach of this
      Section 21. In the event that the Closing does not occur in accordance with
      the
      terms of this Agreement, Buyer shall return to Seller all of the documents,
      material or information regarding the Property supplied to Buyer by Seller
      or at
      the request of Seller. The provisions of this Section 21 shall survive the
      termination of this Agreement but shall no longer be applicable following
      Closing in accordance with the terms of this Agreement.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (b) Except
      as
      may be required by applicable laws or stock exchange rules (and then only with
      written notice to Seller and an opportunity to review), Buyer (or any affiliate
      thereof) will not make a public announcement of the transactions contemplated
      by
      this Agreement without the prior written consent of Seller, such consent not
      to
      be unreasonably withheld or delayed.

     

    22. Notices.
      All
      notices (including without limitation approvals, consents and exercises of
      rights or options) required by or relating to this Agreement shall be in writing
      and shall be personally delivered, delivered by reputable overnight courier
      or
      mailed United States registered or certified mail, return receipt requested,
      postage prepaid, via facsimile transmission with confirmation of receipt to
      the
      other respective party at its address below set forth, or at such other address
      as such other party shall designate by notice, and shall be effective when
      delivered to such address. Such notices shall be effective when dispatched,
      except that the time period within which any party may respond to a notice
      pursuant to this Agreement shall not commence until the earlier of such party’s
      actual receipt of such notice, the third business day after dispatch in the
      case
      of notices by certified mail, or the first business day after dispatch for
      timely next day delivery by overnight delivery.

     

    
      	
              Seller:

            	
              NexMed
                (USA), Inc.

              89
                Twin Rivers Drive

              East
                Windsor, NJ 08520

              Attention:
                Mark Westgate

              Fax:
                (609) 426-0340

            
	 	 
	
              With
                a required copy to:

            	
              Morgan,
                Lewis & Bockius LLP

              1701
                Market Street

              Philadelphia,
                PA 19103-2921

              Attention:
                Joseph D. Horter

              Fax:
                (215) 963-5001

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              Buyer:

            	
              Pharmar
                & Pharmar LLC

              1052
                Route 202/206 North

              Bridgewater,
                NJ 08807

              Attention:
                Vinod Patel

              Fax:
                (609) 526-0433

            
	 	 
	
              With
                a required copy to:

            	
              Hill
                Wallack LLP

              202
                Carnegie Center

              Princeton,
                NJ 08543-5226

              Attention:
                Joseph A. Vales, Esquire

              Fax:
                (609) 452-1888

            
	 	 
	
              Escrow
                Agent:

            	
              Fidelity
                National Title Insurance Company

              3705
                Quakerbridge Road 

              Suite
                205

              Mercerville,
                NJ 08619

              Attention:
                Debbie Kane

              Fax:
                (609)-584-2405

            

    

     

    23. Recording.
      Neither
      this Agreement nor any notice or memorandum hereof shall be recorded or
      otherwise filed or made a matter of public record and any attempt to record
      or
      file same by Buyer shall be deemed a default by Buyer hereunder.

     

    24. Whole
      Agreement; Amendments; Survival.
      This
      Agreement sets forth all of the agreements, representations, warranties and
      conditions of the parties hereto with respect to the subject matter hereof,
      and
      supersedes all prior or contemporaneous agreements, representations, warranties
      and conditions. Any exhibits and riders referred to above constitute parts
      of
      this Agreement. No alteration, amendment, modification or waiver of any of
      the
      terms or provisions hereof, and no future representation or warranty by either
      party with respect to this transaction, shall be valid unless the same be in
      writing and signed by the party against whom enforcement of same is sought.
      Except for the provisions of this Agreement which expressly contemplate survival
      of the Closing or earlier termination of this Agreement, (a) none of the terms
      of this Agreement shall survive Closing or early termination of this Agreement,
      and (b) if the Closing occurs, the delivery and acceptance of Seller’s Closing
      Documents and Buyer’s Closing Documents shall effect a merger and be deemed to
      establish the full performance of the parties hereunder. 

     

    25. Captions;
      Pronouns.
      The
      captions of the sections of this Agreement are for convenience only and have
      no
      meaning with respect to this Agreement or the rights or obligations of the
      parties hereto. Unless the context clearly indicates a contrary intent or unless
      otherwise specifically provided herein: “person”, as used herein, includes an
      individual, corporation, partnership, trust, unincorporated association,
      government, governmental authority, or other entity; “Property” includes each
      portion of the Property and each estate and interest therein; “hereof”, “herein”
and “hereunder” and other words of similar import refer to this Agreement as a
      whole; “Agreement” includes these presents as supplemented or amended from time
      to time by written instrument(s) entered into by Seller and Buyer; “Buyer”
includes Buyer's successors and assigns; “Seller” includes Seller's successors
      and assigns; “parties” means Buyer and Seller; and “governmental authority”
means any federal, state or municipal governmental body, or any political
      subdivision thereof, or any court, agency, authority or officer of any of the
      foregoing. Whenever the context may require, any pronoun used herein shall
      include the corresponding masculine, feminine or neuter forms, and the singular
      form of pronouns or nouns shall include the plural and vice versa.

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    26. Counterparts.
      This
      Agreement may be executed by the parties hereto in any number of separate
      counterparts, all of which, when delivered, shall together constitute one and
      the same Agreement.

     

    27. Holidays.
      Wherever this Agreement provides for a date, day or period of time on or prior
      to which action or events are to occur or not occur, and if such date, day
      or
      last day of such period of time falls on a Saturday, Sunday or legal holiday,
      then same shall be deemed to fall on the immediately following business
      day.

     

    28. Governing
      Law.
      This
      Agreement and all issues arising hereunder shall be governed by the laws of
      the
      State of New Jersey.

     

    29. Submission
      not an Offer or Option.
      The
      submission of this Agreement or a summary of some or all of its provisions
      for
      examination or negotiation by Buyer or Seller does not constitute an offer by
      Seller or Buyer to enter into an agreement to sell or purchase the Property,
      and
      neither party shall be bound to the other with respect to any such purchase
      and
      sale until a definitive agreement satisfactory to the Buyer and Seller in their
      sole discretion is executed and delivered by both Seller and Buyer.

     

    30. Right
      to Bifurcate House Closing.
      Buyer
      shall have the right to bifurcate the House Closing from the Closing for the
      balance of the Property and to designate another entity to take title to the
      House at a purchase price equal to $1.00 consideration.

     

    31. No
      Additional Offers for Purchase of Property.
      Seller
      shall not accept any offers for the purchase of the Property unless and until
      this Agreement is terminated in accordance with the terms of this
      Agreement.

     

    

    [SIGNATURES
      ON NEXT PAGE]

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date and
      year first above written.

    
      	 	
              Seller:

            
	 	 
	 	
              NexMed
                (USA), Inc. 

            
	 	 
	 	
              By:
                /s/
                Mark
                Westgate              

            
	 	
              Name:
                Mark Westgate

            
	 	
              Title:
                Vice President & CFO

            
	 	 
	 	
              Buyer:

            
	 	 
	 	
              Pharmar
                & Pharmar LLC 

            
	 	 
	 	
              By:
                /s/
                Vinod
                Patel                     
                

            
	 	
              Name:
                Vinod Patel

            
	 	
              Title:
                President and CEO

            
	 	 
	 	
              Escrow
                Agent:

              (Signing
                solely for the purpose of confirming its agreement to Subsections
                2(b),
                2(c) and 3(b) of this Agreement)

            
	 	 
	 	
              Fidelity
                National Title Insurance Company

            
	 	 
	 	
              By:
                /s/
                Robert S.
                Dember           
                

            
	 	
              Name:
                Robert S. Dember

            
	 	
              Title:
                Senior Commercial Underwriter

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      “A-1”

     

    The
      Building

     

    

    Description
      of Tax Map Lot 6 Block 20.06 situated in East Windsor Township, Mercer County,
      New Jersey. 

    

    Beginning
      at a point situated along the southerly right of way line of Twin Rivers Drive
      (66 feet wide), said point being located 25.00 feet from the intersection of
      the
      westerly prolongation of the same and the northerly prolongation of the easterly
      right of way line of Milford Road (66 feet wide); thence running 

    

    1. South
      85°
      22’ 26”
East along the southerly right of way line of Twin Rivers Drive, 208.27 feet
      to
      a point; thence

    

    2. Easterly
      along the same, along a curve to the right having a radius of 967.00 feet and
      a
      arc length of 242.60 feet to a point; thence

    

    3. South
      06°
      55’ 34”
West along the common line of Lots 6 and 190 Block 20.06, 371.02 feet to a
      point; thence

    

    4. North
      80°
      46’ 41”
West along the common line of Lots 4 and 6 Block 20.06; 293.02 feet to a point;
      thence

    

    5. North
      04°
      37’ 34”
East along the common line of Lots 5 and 6 Block 20.06, 150.00 feet to a point;
      thence 

    

    6. North
      80°
      46’ 41”
West along the same, 166.90 feet to a point; thence

    

    7. North
      04°
      37’ 34”
East along the easterly line of Milford Road, 189.14 feet to a point;
      thence

    

    8. Easterly
      along the same, along a curve to the right having a radius of 25.00 feet and
      an
      arc length of 39.27 feet to the point and place of beginning.

    

    Containing
      151,009 s.f. more or less

    

    

    
      
        
        

      

      
        A-1-1

        
          

        

      

      
        
        

      

    

    Exhibit
      “A-2”

     

    The
      House

     

    All
      that
      certain lot, parcel or tract of land, situate and lying in the Township of
      East
      Windsor, County of Mercer and State of New Jersey being more particularly
      described as follows: 

    

    Beginning
      at a point in the centerline of Milford Road, said point being distant 246.20
      feet southwestwardly from the intersection of the said centerline of Milford
      Road with the centerline of Twin Rivers Drive and running; thence

    

    (1)
      Along
      Lot 6, South 73 degrees 15 minutes East, a distance of 200.00 feet to a point;
      thence

    

    (2)
      Along
      same, South 12 degrees 00 minutes West, a distance of 150.00 feet to a point
      in
      line with Lot 4; thence

    

    (3)
      Along
      the northeasterly line of a portion of Lot 4, North 73 degrees 15 minutes West,
      a distance of 200.00 feet to the point in the centerline of Milford Road;
      thence

    

    (4)
      Along
      the centerline of Milford Road, North 12 degrees 00 minutes East, a distance
      of
      150.00 feet to the point and place of Beginning. 

    

    The
      above
      description was drawn in accordance with a survey prepared by Crest Engineering
      Associates, Inc., Daniel P. Hundley, P.L.S., dated February 8,
      2002.

    

    FOR
      INFORMATIONAL PURPOSES ONLY: BEING ALSO KNOWN as Lot 5 in Block 20.06 on the
      Official Tax Map of the Township of East Windsor, Mercer County,
      NJ.

    
      
        
        

      

      
        A-2-1

        
          

        

      

      
        
        

      

    

    Exhibit
      “B”

     

    Personal
      Property

     

    
      	
              NexMed,
                Inc.

            	 	 	 	 	 	 	 
	
              List
                of Equipment Sold with Building

            	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              Asset

            	 	
              Asset
                description

            	 	 	
              Acquis.val.

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              20003

            	 	
              KOHLER
                GENERATOR 600 KVA

            	 	
              75,000.00

            	 
	 	 	
              20004

            	 	
              TWO
                BYRN MODEL Furnace Boilers

            	
              83,863.20

            	 
	 	 	
              20005

            	 	
              USP
                WATER SYSTEM PER QUOTE AD101-06-10

            	
              250,143.83

            	 
	 	 	
              20006

            	 	
              HVAC
                CHILLERS

            	 	 	
              159,883.00

            	 
	 	 	
              20007

            	 	
              HVAC
                CONTROLS

            	 	 	
              313,995.00

            	 
	 	 	
              20008

            	 	
              REFRIGERATION
                SYSTEM Cold Box in Warehouse

            	
              84,000.00

            	 
	 	 	
              20009

            	 	
              Custom
                Advantage Air Condensor Chiller System

            	
              6,687.50

            	 
	 	 	
              20013

            	 	
              LAB
                CABINETS & CASEWORK

            	 	
              181,583.54

            	 
	 	 	
              20014

            	 	
              Walk
                in Refrigerator Cold Box

            	 	
              8,700.00

            	 
	 	 	
              20025

            	 	
              FIRE
                DOOR FOR CARTONING ROOM

            	
              8,547.60

            	 
	 	 	
              20026

            	 	
              2
                Ton AC Unit for Computer Room (Fujitsu)

            	
              6,060.00

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              30003

            	 	
              Steer
                rite hydraulic pallet truck

            	 	
              666.43

            	 
	 	 	
              30006

            	 	
              COLD
                ROOM 8X8

            	 	 	
              9,708.00

            	 
	 	 	
              30010

            	 	
              Easy
                to Climb steel rolling plateform ladder

            	
              658.24

            	 
	 	 	
              30024

            	 	
              6
                FOOT STEEL TABLES WITH BACKSPLASH

            	
              580.27

            	 
	 	 	
              30026

            	 	
              6
                FOOT STEEL TABLES WITH BACKSPLASH

            	
              580.27

            	 
	 	 	
              30394

            	 	
              Model
                522LS Autoclave

            	 	
              77,785.90

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              70083

            	 	
              41
                aeron chairs by herman Miller

            	 	
              29,270.00

            	
              Note
                1

            
	 	 	
              70084

            	 	
              Office
                furniture

            	 	 	
              57,325.80

            	
              Note
                2

            
	 	 	
              70085

            	 	
              EW
                Furniture

            	 	 	
              13,740.00

            	
              Note
                3

            
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	
              TOTAL

            	 	
              1,368,778.58

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	
              Note
                1:

            	 	 	
              Note
                2:

            	 	 	
              Note
                3:

            	 	 
	
              Includes:

            	 	 	
              Includes:

            	 	 	
              Includes:

            	 	 
	
              9
                office chairs

            	 	
              Conference
                table

            	 	
              10
                - 5 drawer files

            	 	 
	
              15
                task chairs

            	 	
              Reception
                desk

            	 	
              8
                side chairs

            	 	 
	
              20
                conference chairs

            	 	
              30
                chairs with no arms

            	
              15
                cubes

            	 	 
	
              $10k
                of installation

            	 	
              10
                stools

            	 	 	
              15
                desks for cube

            	 	 
	 	 	 	 	
              10
                chairs with vinyl

            	 	
              15
                files ( one per cube)

            	 
	 	 	 	 	 	 	 	
              7
                files for the offices (one per office)

            	 

    

    

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    Exhibit
      “C”

     

    Facility
      Lease

     

    

    

    

    LEASE
      AGREEMENT

     

    Pharmar
      & Pharmar LLC

    “Landlord”

     

    and
      

     

    NexMed
      (USA), Inc. 

    “Tenant”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    
      	
              1.

            	
              Premises
                and Term

            	
              1

            
	 	 	 
	
              2.

            	
              Rent

            	
              1

            
	 	 	 
	
              3.

            	
              Taxes
                and Other Charges

            	
              2

            
	 	 	 
	
              4.

            	
              Utilities
                and Other Service Charges

            	
              3

            
	 	 	 
	
              5.

            	
              Maintenance
                and Repair

            	
              3

            
	 	 	 
	
              6.

            	
              Use

            	
              4

            
	 	 	 
	
              7.

            	
              Compliance
                with Law

            	
              4

            
	 	 	 
	
              8.

            	
              Sublease
                and Assignment.

            	
              4

            
	 	 	 
	
              9.

            	
              Fire
                or Other Casualty

            	
              5

            
	 	 	 
	
              10.

            	
              Insurance

            	
              7

            
	 	 	 
	
              11.

            	
              Alterations
                and Additions

            	
              8

            
	 	 	 
	
              12.

            	
              Condemnation

            	
              9

            
	 	 	 
	
              13.

            	
              Environmental
                Provisions

            	
              10

            
	 	 	 
	
              14.

            	
              Indemnification

            	
              13

            
	 	 	 
	
              15.

            	
              Default
                by Tenant

            	
              14

            
	 	 	 
	
              16.

            	
              Landlord’s
                Remedies

            	
              14

            
	 	 	 
	
              17.

            	
              Default
                by Landlord

            	
              15

            
	 	 	 
	
              18.

            	
              Quiet
                Possession

            	
              17

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    
      
        

        TABLE
          OF
          CONTENTS

        (continuted)

        
          Page

        

         

      

    

    
      	
              19.

            	
              Subordination
                and Non-Disturbance

            	
              17

            
	 	 	 
	
              20.

            	
              Inspection

            	
              18

            
	 	 	 
	
              21.

            	
              Surrender

            	
              18

            
	 	 	 
	
              22.

            	
              Signs

            	
              18

            
	 	 	 
	
              23.

            	
              Notices

            	
              18

            
	 	 	 
	
              24.

            	
              Brokers

            	
              19

            
	 	 	 
	
              25.

            	
              Waiver

            	
              19

            
	 	 	 
	
              26.

            	
              Tenant
                Holding Over

            	
              19

            
	 	 	 
	
              27.

            	
              Estoppel
                Certificates

            	
              19

            
	 	 	 
	
              28.

            	
              Delivery
                for Examination

            	
              19

            
	 	 	 
	
              29.

            	
              Tenant’s
                Equipment Financing

            	
              20

            
	 	 	 
	
              30.

            	
              Furniture

            	
              20

            
	 	 	 
	
              31.

            	
              Miscellaneous

            	
              20

            

    

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    LEASE
      AGREEMENT

     

    THIS
      LEASE AGREEMENT made this        
      day of
                    ,
      2007
      (the “Commencement Date”), by and between Pharmar & Pharmar LLC (“Landlord”)
      and NexMed (USA), Inc. (“Tenant”).

     

    Background

     

    Landlord
      is the owner of certain premises located at and known as 89 Twin Rivers Drive,
      East Windsor, Mercer County, New Jersey (the “Premises”). The Premises consists
      of (i) the land described in Exhibit
      “A”
      (the
“Land”), (ii) the buildings and improvements constructed thereon (the
“Improvements”), (iii) all easements, rights of way, licenses, privileges and
      appurtenances, if any, belonging to or inuring to the benefit of the Land or
      the
      Improvements. (For the avoidance of doubt, the Improvements do not include
      Tenant’s Property (as hereinafter defined).) Landlord desires to let and demise
      to Tenant and Tenant desires to take and hire from Landlord the Premises,
      subject to the terms and conditions hereinafter set forth.

     

    Agreement

     

    NOW
      THEREFORE, intending to be legally bound, Landlord and Tenant hereby agree
      as
      follows:

     

    32. Premises
      and Term.
      

     

    (a) Landlord
      hereby lets and demises to Tenant and Tenant hereby takes and hires from
      Landlord the Premises for a term (the “Lease Term”) beginning on the
      Commencement Date and expiring without further notice or act on the last day
      of
      the month in which the second (2nd)
      anniversary of the Commencement Date occurs, unless sooner terminated or
      extended as provided herein. 

     

    (b) So
      long a
      Tenant Default (as hereinafter defined) has not occurred beyond any applicable
      notice or cure periods under this Lease, Tenant shall have the option to renew
      this Lease for one (1) consecutive renewal term (the “Renewal Term”) of one (1)
      year, commencing on the first day following the expiration of the Lease Term
      and
      the same terms and conditions as set forth in this Lease shall apply to such
      Renewal Term, except that the Annual Fixed Rent set forth in Exhibit
      “B”
      due from
      Tenant during such Renewal Term shall be increased to $780,000.00 per year.
      Tenant shall exercise its option to renew the Lease Term by giving written
      notice to Landlord not less than three (3) months prior to the expiration of
      the
      Lease Term. 

     

    (c) At
      any
      time after the sixth (6th)
      month
      of the Lease Term, Tenant shall have the right to terminate this Lease upon
      ninety (90) days written notice to Landlord. Tenant shall vacate the Premises
      by
      the end of the ninety (90) day period and shall continue to pay Rent, as
      hereinafter defined, until the last day of the ninety (90) day period. This
      right of termination is exclusive to the Tenant and may not be assigned or
      transferred to any future tenant, assignee or transferee.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    33. Rent.

     

    (a) Beginning
      on the Commencement Date, Tenant shall pay to Landlord in lawful money of the
      United States minimum annual rental in the amounts set forth in Exhibit
      “B”
      (“Annual
      Fixed Rent”) in equal monthly installments of one-twelfth of the amount thereof,
      payable in advance on the first day of each and every calendar month during
      the
      Lease Term. The first such monthly installment shall be due and payable on
      the
      Commencement Date. If the Commencement Date occurs on a day other than the
      first
      day of a calendar month or if the Lease Term ends on a day other than the last
      day of a calendar month, the Rent due for the partial calendar months occurring
      at the commencement and expiration of the Lease Term shall be prorated on a
      per
      diem basis. 

     

    (b) Except
      as
      otherwise set forth in this Lease, all costs, expenses and obligations with
      respect to the Premises shall be paid by Tenant, so that, except as otherwise
      set forth in this Lease, the Annual Fixed Rent payable by Tenant to Landlord
      hereunder shall be “net” to Landlord.

     

    (c) All
      sums
      other than Annual Fixed Rent payable by Tenant under this Lease are referred
      to
      hereinafter as “Additional Rent” and Landlord shall have the same rights and
      remedies for non-payment thereof as Landlord has for non-payment of Annual
      Fixed
      Rent. Annual Fixed Rent and Additional Rent are sometimes referred to
      hereinafter collectively as “Rent”.

     

    (d) Except
      as
      otherwise set forth in this Lease, all monetary obligations shall be paid
      without notice or demand and without set-off, counterclaim, recoupment,
      abatement, suspension, deferment, diminution, deduction, reduction or defense.
      

     

    (e) In
      order
      to compensate Landlord for the additional expense Landlord may incur in the
      event Tenant is delinquent in the payment of Rent, Tenant agrees to pay a late
      charge of Fifty Dollars ($50.00) per day and interest to Landlord at the Overdue
      Interest Rate (as hereinafter defined) on account of any payment of Rent that
      is
      not paid within five (5) days after the same is due, from the date that any
      such
      payment is due to the actual date of payment. As used herein, the term "Overdue
      Interest Rate" shall mean two percent (2%) per annum over the interest rate
      quoted from time to time by Wachovia Bank, N.A. (or such other national bank
      with offices in New Jersey as may be selected by Landlord), as its "prime"
      rate
      of interest. Notwithstanding the foregoing, the interest and late fee referred
      to in this Section 2(e) shall not be payable with respect to the first
      occurrence during any twelve (12) month period during the Lease Term that Tenant
      fails to make a payment of Rent when due, until five (5) days after Landlord
      delivers written notice of such delinquency to Tenant. If Tenant’s payment of
      Rent is still delinquent on the sixth (6th)
      day
      after Landlord delivers such written notice, then Landlord shall be entitled
      to
      the forgoing late charge and interest as of the first day that Tenant’s payment
      of Rent was delinquent. Landlord shall only be required to deliver Tenant notice
      of such delinquency once during any twelve (12) month period during the Lease
      Term. 

     

    
      
        
        

      

      
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    (f) If
      Landlord receives two (2) or more checks from Tenant which are returned by
      Tenant’s bank for insufficient funds, Landlord may require that all checks
      thereafter be bank certified or cashier’s checks (without limiting Landlord’s
      other remedies). All bank service charges resulting from any returned checks
      shall be borne by Tenant.

     

    34. Taxes
      and Other Charges.

     

    (a) Tenant
      shall pay before any fine, penalty, interest or cost may be added thereto,
      or
      become due or be imposed by operation of law for the non-payment thereof, all
      taxes, including municipal and school taxes, assessments, rates and charges,
      county taxes, excises, levies, and all other license and permit fees and other
      governmental charges, including but not limited any establishment fees,
      manufacturing fees, or impact fees imposed by the federal, state or municipal
      government or any such governmental agency, and any taxes, charges or fees
      in
      lieu of any of the foregoing, which during the Lease Term may be assessed,
      levied, confirmed, imposed upon, or become due and payable with respect to
      the
      Premises or any part thereof or any appurtenance thereto (all of which are
      hereinafter collectively called “Taxes”). Landlord shall promptly submit to
      Tenant copies of all such Tax bills directed to Landlord. Tenant shall pay
      such
      Taxes directly to the government or other public authority charged with the
      collection thereof. Tenant shall deliver to Landlord copies of receipts or
      canceled checks showing the payment of such Taxes.

     

    (b) All
      Taxes
      which shall be charged, laid, levied, assessed or imposed for each fiscal period
      in which the Lease Term terminates shall be apportioned pro rata between
      Landlord and Tenant in accordance with the portion of the relevant fiscal period
      during which the Lease Term shall be in effect. In the event that any payment
      of
      Taxes is due during the Lease Term with respect to a fiscal period that extends
      beyond the Lease Term, Landlord shall pay Tenant Landlord’s proportionate share
      thereof (based upon the portion of the fiscal period that extends beyond the
      Lease Term) at least ten (10) days prior to the date that payment is due with
      the maximum discount. Provided that Tenant receives Landlord’s payment as
      aforesaid, Tenant shall remit to the taxing authority, the full amount due
      for
      the relevant fiscal period. If Tenant does not receive Landlord’s payment as
      aforesaid, Tenant shall remit to the taxing authority, Tenant’s proportionate
      share of Taxes for the relevant fiscal period. In the event that any payment
      of
      Taxes is due after the expiration of the Lease Term with respect to a fiscal
      period that includes part of the Lease Term, Tenant shall pay to Landlord
      Tenant’s proportionate share thereof (based upon the portion of the fiscal
      period that was included in the Lease Term) with the last monthly payment of
      Rent due to Landlord. 

     

    (c) If
      any
      special assessment with respect to the Premises may be paid in installments,
      Tenant shall be obligated to pay only those installments which become due and
      payable during the Lease Term.

     

    (d) Nothing
      herein contained shall require or be construed to require Tenant to pay any
      transfer, recording, inheritance, estate, succession, franchise, excise,
      business privilege, income, gross receipts or profit tax, or capital levy that
      is or may be imposed upon Landlord. 

     

    
      
        
        

      

      
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    (e) Tenant
      shall have the right to request that Landlord contest any increase in any Taxes
      levied against the Premises and Landlord shall have the right to decide whether
      to contest such increase in its sole and absolute discretion. 

     

    35. Utilities
      and Other Service Charges.
      During
      the Lease Term, Tenant will pay for all water, gas, oil, electricity, heat,
      telephone, sewage, trash removal, janitorial and landscaping services and snow
      removal and all other utilities and services used by Tenant in the Premises,
      except as otherwise expressly set forth in this Lease. Landlord is not obligated
      to provide or pay for any utilities or services supplied to the
      Premises.

     

    36. Maintenance
      and Repair.

     

    (a) Except
      as
      set forth in subsection 5(b) below, Tenant, at its sole cost and expense
      throughout the Lease Term, shall keep and maintain the Premises, including,
      but
      not limited to all plumbing, electrical, sewage, life-safety, heating,
      ventilating, and air-conditioning systems, and all pipes, wires, lines and
      conduits contained therein or which are part thereof, in the same order and
      condition as they are on the Commencement Date and shall make all repairs,
      replacements and renewals necessary to keep them in such order and condition,
      reasonable wear and tear and damage by fire or other casualty (including the
      elements) excepted. In addition, Tenant, at its sole cost and expense, shall
      seal or stripe the parking areas as commercially reasonable and necessary to
      maintain such areas in good condition. 

     

    (b) Landlord,
      at its own cost and expense, shall keep and maintain the roof, the roof drain,
      outside walls, foundation and structural components of the Improvements
      (including the footings, exterior walls, foundations and structural steel
      columns and girders) in good order and condition and will make all necessary
      repairs, replacements and renewals necessary to keep them in such order and
      condition, reasonable wear and tear and damage by fire or other casualty
      (including the elements) excepted. In addition, Landlord, at its sole cost
      and
      expense, shall pave the parking areas as commercially reasonable and necessary
      to maintain such areas in good condition. 

     

    37. Use.
      Tenant
      shall have the right to use the Premises for its intended purpose as a
      pharmaceutical manufacturing facility, including office, laboratory and
      pharmaceutical manufacturing facility. Tenant shall not use or occupy or permit
      any of the Premises to be used or occupied, nor do or permit anything to be
      done
      in or on any of the Premises, in a manner which would or might constitute a
      public or private nuisance or waste,
      or
      which would prevent Landlord from (i) obtaining or maintaining any permits,
      licenses, or approvals for the Property as a pharmaceutical manufacturing
      facility or (ii) insuring the Property or increasing the cost of insuring the
      Property. 

     

    38. Compliance
      with Law.
      Except
      as set forth in the following paragraph, Tenant agrees that during the Lease
      Term, it will, at its own cost and expense, promptly comply with: (a) all
      present and future federal, state, county, city and municipal or other statutes,
      charters, laws, rules, orders, regulations and ordinances affecting the
      Premises, the occupancy, use or repair thereof; (b) all rules, orders, and
      regulations of all public officers including the police, health and fire
      departments and with the National Board of Fire Underwriters or other similar
      organizations for the prevention of fire or the corrections of hazardous
      conditions; and (c) the requirements of all insurance companies having policies
      or public liability, fire and other insurance at any time in force and effect
      with respect to the Premises and its permanent improvements. Tenant’s
      obligations to comply with this Section 7 shall include, without limitation
      obtaining all permits, licenses, certificates and approvals to conduct its
      business in the Premises, or any necessary waivers or variances, without thereby
      subjecting Landlord or the Premises to any costs, requirements, liabilities
      or
      restrictions. 

     

    
      
        
        

      

      
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    Notwithstanding
      the foregoing, Tenant shall in no event have any obligation to do any of the
      following, all of which shall be done by Landlord at its sole cost and expense:
      (a) make any repair or replacement which would otherwise be Landlord’s
      responsibility under subsection 5(b) of
      this
      Lease; (b) correct, remedy, repair or replace any condition which was in
      existence prior to the Commencement Date; or (c) correct or remedy any
      environmental problem which was not caused or created by Tenant on or after
      the
      Commencement Date.

     

    39. Sublease
      and Assignment.
      

     

    (a) Tenant
      shall not be permitted to sublease all or any portion of the Premises or assign
      this Lease without the prior written approval of Landlord, which may be withheld
      or denied in Landlord’s sole discretion. 

     

    (b) Notwithstanding
      foregoing provisions of this Section, Tenant will have the right to assign
      the
      Lease or sublet all or any part of the Premises to an affiliate of Tenant which
      is in existence on the Commencement Date without obtaining Landlord’s prior
      approval, but Tenant shall provide notice of Tenant’s intent to assign or sublet
      at least fifteen (15) days prior to the effective date of the same and shall
      provide current audited financial statements for any affiliate. Furthermore,
      any
      affiliate of Tenant shall be permitted to use all or any part of the Premises,
      and such use shall not be considered an assignment of the Lease or a sublet
      of
      the Premises. The term “affiliate of Tenant” shall mean any person(s),
      partnership(s), corporation(s), or other form of business or legal association
      or entity that has a net worth in excess of Five Million Dollars ($5,000,000.00)
      and (i) owning or controlling Tenant, under common ownership or control with
      Tenant, or controlled by Tenant or (ii) acquiring all or substantially all
      of
      Tenant’s assets or ownership interests. 

     

    (c) No
      subleasing of the Premises or assignment of this Lease, nor the granting of
      any
      consent by Landlord with respect thereto, shall release or relieve Tenant from
      liability for the payment of Rent or performance of any other obligations of
      Tenant under this Lease, except in the case of an assignment of this Lease
      to an
      assignee that has a net worth on the date of the assignment in excess of Five
      Million Dollars ($5,000,000.00) (in which case Tenant shall be released from
      any
      further liability or obligation thereafter arising under this
      Lease).

     

     

    
      
        
        

      

      
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    40. Fire
      or Other Casualty.

     

    (a) The
      term
“Major Casualty” as used in this Section means any fire or other casualty
      (including the elements) which causes damage to or destruction of the Premises
      of such an extent that, in the opinion of an independent licensed engineer
      or
      architect retained by Tenant, it would require one hundred twenty (120) days
      or
      more to restore the Premises to the condition which existed prior to the Major
      Casualty, from the date that such restoration is commenced. The term “Minor
      Casualty” as used in this Section means any fire or other casualty (including
      the elements) which causes damage to or destruction of the Premises of such
      an
      extent that it would require less than one hundred twenty (120) days to restore
      the Premises to the condition which existed prior to the Minor Casualty, from
      the date that such restoration is commenced. The term “Casualty” as used in this
      Section means either a Minor Casualty or a Major Casualty.

     

    (b) Immediately
      following the occurrence of a Casualty, Tenant shall notify Landlord of the
      Casualty. Within thirty (30) days of the Casualty, Tenant shall send written
      notice to Landlord estimating the date (“Restoration Completion Date”) that the
      Premises will be fully restored to the condition which existed prior to the
      Casualty, including a copy of the opinion of an independent engineer or
      architect setting forth the estimate of the number of days required to restore
      the Premises to the condition which existed prior to the Casualty, from the
      date
      that such restoration is commenced. Landlord shall have the right, but not the
      obligation, to have its own engineer or architect evaluate the damage and
      estimate the number of days required to restore the Premises to the condition
      which existed prior to the Casualty, from the date that such restoration is
      commenced. 

     

    (c) In
      the
      event of a Minor Casualty, Tenant shall proceed with reasonable diligence to
      restore the Premises as nearly as possible to its condition prior to the
      occurrence of the Minor Casualty. In the event that the insurance proceeds
      are
      insufficient to complete repair, restoration or rebuilding of the Premises,
      Tenant shall be solely responsible for such deficiency and shall be directly
      responsible for payment of any costs in excess of the insurance proceeds,
      including without limitation any deductible under the insurance
      policy.

     

    (d) In
      the
      event of a Major Casualty, then either Landlord or Tenant may elect to cancel
      and terminate this Lease as of the date of the occurrence of the Major Casualty
      by giving written notice to the non-canceling party of its election to do so
      within thirty (30) days after the date of occurrence of such damage. If the
      Lease is terminated by either party, then Tenant shall (i) assign to Landlord
      all of Tenant’s right, title and interest in and to all insurance proceeds paid
      or payable to Tenant on account of the Improvements (but Tenant shall retain
      all
      right, title and interest in and to all insurance proceeds paid or payable
      to
      Tenant on account of Tenant’s Property), (ii) pay to Landlord the deductible
      carried by Tenant to the extent such deductible exceeds One Hundred Thousand
      Dollars ($100,000.00) (except that Tenant shall pay the full deductible if
      the
      Major Casualty is the result of the sole negligence of Tenant, its agents,
      servants, employees, contractors, invitees or licensees), (iii) be released
      from
      all further obligation to repair, restore or rebuild the Premises under this
      Lease. Upon the termination of this Lease under this Section, both Landlord
      and
      Tenant shall be released from further obligations to the other party coincident
      with the surrender of possession of the Premises, except for any Rent, charges,
      costs, or items which have theretofore accrued and are then unpaid.

     

    
      
        
        

      

      
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    (e) In
      the
      event that there occurs any Casualty and this Lease is not terminated by either
      Tenant or Landlord pursuant to subsection 9(d), then Tenant shall act diligently
      and in good faith to restore and repair the Premises to its condition prior
      to
      the occurrence of the Casualty. In the event that Tenant is responsible for
      restoring the Premises and the insurance proceeds are insufficient to complete
      repair, restoration or rebuilding of the Premises, Tenant shall be solely
      responsible for such deficiency and shall be directly responsible for payment
      of
      any costs in excess of the insurance proceeds, including without limitation
      any
      deductible under the insurance policy. Tenant’s obligation to pay Rent for any
      portion of the Premises shall be equitably abated from the date of the Casualty
      until the date that the Premises has been substantially restored; provided,
      however, that such abatement shall apply only to the portion of the Premises
      rendered unusable for the operation of Tenant’s business. 

     

    (f) In
      the
      event of any reconstruction, restoration, or re-fixturing of the Premises by
      Tenant under this section, Tenant shall promptly obtain receipt of said
      insurance proceeds and commence reconstruction, restoration or re-fixturing
      of
      the Premises and shall diligently prosecute such work to completion. Tenant
      shall, before commencing any such reconstruction, restoration or re-fixturing,
      at its expense obtain, all permits, approvals and certificates required by
      any
      governmental or quasi-governmental bodies and (upon completion) certificates
      of
      final approval thereof and shall deliver promptly duplicates of all such
      permits, approvals and certificates to Landlord and Tenant agrees to carry
      and
      will cause Tenant's contractors and sub-contractors to carry such workman's
      compensation, general liability, personal and property damage insurance as
      Landlord may reasonably require. Upon completion of the reconstruction,
      restoration or re-fixturing, Tenant shall obtain and deliver to Landlord final
      unconditional lien waivers with respect to all work performed in, on or to
      the
      Premises from all contractors employed by Tenant and/or its contractors in
      connection with the reconstruction, restoration or re-fixturing. If any
      mechanic's lien is filed against the Premises for work claimed to have been
      done
      for, or materials furnished to Tenant, whether or not done pursuant to this
      Section 9, the same shall be discharged by Tenant within thirty (30) days after
      Tenant receives notice of such mechanic’s lien, at Tenant's expense, by filing a
      bond, or as is otherwise required by law. 

     

    41. Insurance.

     

    (a) During
      the Lease Term, Tenant, at its expense, shall purchase and maintain in
      effect:

     

    (i) a
      standard fire and casualty insurance with extended coverage (i.e., “all risk
      coverage”) in an amount equal to the full replacement value of the Improvements
      with a reasonable deductible of no more than Ten Thousand Dollars ($10,000.00)
      and rent loss insurance; 

     

    (ii) comprehensive
      general liability insurance in the amount of at least $2,000,000.00, combined
      single limit, and a general aggregate limit of $5,000,000.00, naming Landlord
      as
      an additional insured.

     

    
      
        
        

      

      
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    (iii) insurance
      coverage for all risks of physical loss or damage insuring the full replacement
      value of Tenant’s Property and other personal property of Tenant.

     

    (iv) statutory
      worker’s compensation insurance, and employer’s liability insurance with a Five
      Hundred Thousand Dollar ($500,000.00) minimum limit covering all of Tenant’s
      employees. Such liability insurance shall include, without limitation, products
      and completed operations liability insurance, fire and legal liability
      insurance, and such other coverage as Landlord may reasonably require from
      time
      to time. 

     

    (b) All
      insurance required by subsection 10(a) above shall be carried with companies
      licensed to do business in the State of New Jersey having an A.M. Best’s rating
      of at least A-/VII. All insurance policies required to be carried by Tenant
      under this Lease (except for worker’s compensation insurance) shall (i) name
      Landlord, and any other parties designated by Landlord as additional insureds,
      (ii) as to liability coverages, be written on an “occurrence” basis, (iii)
      provide that Landlord shall receive thirty (30) days notice from the insurer
      before any cancellation or change in coverage, and (iv) contain a provision
      that
      no act or omission of Tenant shall affect or limit the obligation of the insurer
      to pay the amount of any loss sustained. Each such policy shall contain a
      provision that such policy and the coverage evidenced thereby shall be primary
      and non-contributing with respect to any policies carried by Landlord.

     

    (c) Tenant
      may, at its option, include the insurance coverage required by subsection 10(a)
      above in general or blanket policies of insurance. If general or blanket
      policies of insurance are maintained, the policy shall include a provision
      to
      the effect that the aggregate limit of $5,000,000.00 shall apply separately
      to
      the Premises. 

     

    (d) Tenant
      hereby releases Landlord from any and all liability or responsibility to Tenant
      or anyone claiming through or under Tenant by way of subrogation or otherwise
      for any loss or damage to property covered by any insurance then in force (and,
      if none is in force, then to the extent such damage would have been covered
      had
      the insurance required by subsection 10(a)(i) been procured and maintained),
      even if such loss or damage shall have been caused by the fault or negligence
      of
      Landlord or anyone for whom Landlord may be responsible; provided, however,
      that
      this release shall be applicable and in force and effect only with respect
      to
      any loss or damage occurring during such time as the policy or policies of
      insurance covering said loss shall contain a clause or endorsement to the effect
      that this release shall not adversely affect or impair such insurance or
      prejudice the right of Tenant to recover thereunder. Tenant agrees, at its
      sole
      cost, to obtain such a clause or endorsement if it is available. 

     

    (e) Any
      loss
      under the fire and casualty insurance policy shall be adjusted with the
      insurance companies by and at the cost of Tenant, but, if Tenant has exercised
      the right to terminate this Lease in accordance with subsection 9(d) above,
      settlement shall be subject to the approval of Landlord (not to be unreasonably
      withheld, conditioned or delayed) and the proceeds from the settlement shall
      be
      assigned to Landlord in accordance with subsection 9(d) above.

     

    
      
        
        

      

      
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    (f) Except
      for Landlord’s acts, omissions or negligence, Landlord shall not be liable for
      any damage or damages of any nature whatsoever to persons or property caused
      by
      explosion, fire, theft or breakage, vandalism, falling plaster, by sprinkler,
      drainage or plumbing systems, or air conditioning equipment, by the interruption
      of any public utility or service, by steam, gas, electricity, water, rain or
      other substances leaking, issuing or flowing into any part of the Premises,
      by
      natural occurrence, acts of the public enemy, riot, strike, insurrection, war,
      court order, requisition or order of governmental body or authority, or by
      anything done or omitted to be done by any person in the Premises, it being
      agreed that Tenant shall be responsible for obtaining appropriate insurance
      to
      protect its interests.

     

    42. Alterations
      and Additions.

     

    (a) Tenant
      will be entitled to make alterations that do not exceed $10,000 (other than
      Major Alterations (as hereinafter defined)) and any alterations necessary to
      maintain the Premises in accordance with Good Manufacturing Practices (“GMP”) as
      defined by the U.S. Food and Drug Administration (“FDA”) including, but not
      limited to, specific alterations required by the FDA in connection with its
      periodic inspection of the Premises without obtaining Landlord’s approval, but
      Tenant shall provide notice of Tenant’s intent to perform any alterations at
      least fifteen (15) days prior to the date on which the work is scheduled to
      commence. Tenant shall not make any Major Alteration to the Improvements without
      first securing Landlord’s written approval, which approval shall not be
      unreasonably withheld, conditioned or delayed. The term “Major Alteration” means
      any alteration or addition which could adversely affect demising walls, the
      sewer, plumbing, roof, any structural component, or any electrical or mechanical
      system of the Improvements. Any alterations and additions shall be executed
      by
      Tenant in a good and workmanlike manner. Tenant shall, before making any
      alterations, at its expense obtain, all permits, approvals and certificates
      required by any governmental or quasi-governmental bodies and (upon completion)
      certificates of final approval thereof and shall deliver promptly duplicates
      of
      all such permits, approvals and certificates to Landlord and Tenant agrees
      to
      carry and will cause Tenant's contractors and sub-contractors to carry workman's
      compensation, general liability, personal and property damage insurance. Upon
      completion of any Major Alteration, Tenant shall obtain and deliver to Landlord
      final unconditional lien waivers with respect to all work performed in, upon
      or
      to the Premises from all contractors employed by Tenant and/or its contractors
      in connection with the Major Alteration. Except as hereinafter provided, all
      alterations made by Tenant shall become the property of Landlord and shall
      be
      surrendered to Landlord upon the expiration or earlier termination of this
      Lease. When granting consent for any Major Alternation, Landlord shall indicate
      whether it will require the removal of the Major Alteration at the expiration
      or
      earlier termination of the Lease. Tenant shall remove Major Alterations that
      Landlord requested be removed at the expiration or earlier termination of the
      Lease. Tenant shall repair at its sole cost and expense all damage caused to
      the
      Premises by removal of any Major Alterations.

     

    (b) No
      mechanic’s liens or other lien shall be allowed against the Premises as a result
      of Tenant’s alterations to the Premises. Tenant shall promptly pay all persons
      furnishing labor, materials, or services with respect to any work performed
      by
      Tenant on the Premises. Any mechanic’s liens filed against the Premises for work
      done or materials supplied to Tenant in the making of alterations, decorations,
      installations, additions, or improvements shall be promptly paid or bonded
      and
      discharged within forty five (45) days following notice to Tenant of the
      intention by the labor material supplier to assert or file such lien. Tenant
      agrees to indemnify and to save and hold Landlord harmless against all
      judgments, costs, expenses and reasonable attorneys fees Landlord may incur
      by
      reason of Tenant’s failure to discharge such liens. 

     

     

    
      
        
        

      

      
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    43. Condemnation

     

    (a) The
      term
“Total Taking” as used herein means any taking of all or a portion of the
      Premises by condemnation or other governmental proceeding as a result of which
      it is unreasonable or impossible for Tenant to properly conduct its business
      in
      the Premises. The term “Partial Taking” means any taking of a portion of the
      Premises, other than a Total Taking. The term “Taking” means either a Total
      Taking or a Partial Taking.

     

    (b) In
      the
      event of a Taking, the entire proceeds of any condemnation award or compensation
      shall belong to Landlord, except as hereinafter provided. In such event, Tenant
      shall and hereby does assign all right, title and interest in any condemnation
      award or compensation to Landlord, except as hereinafter provided, and Tenant
      shall and hereby does waive in favor of Landlord any interest therein, except
      as
      hereinafter provided. If the Taking is a Total Taking or if the Taking is a
      Partial Taking which adversely affects Tenant’s ability to use the Premises,
      then Tenant shall be entitled to claim from the condemning authorities such
      compensation as may be separately awarded or recoverable by Tenant in its own
      right on account of any and all damages to Tenant’s business by reason of the
      condemnation and for or on account of any cost or a loss to which Tenant might
      be put in relocating its business or in removing Tenant’s personalty, provided
      however, that such claim by Tenant and award thereto does not diminish, reduce
      or affect the Landlord’s condemnation award.

     

    (c) In
      the
      event of a Partial Taking, Landlord shall, using due diligence, repair and
      restore the balance of the Premises remaining after the condemnation as nearly
      as possible to the condition as existed prior to the Partial Taking, provided
      however, Landlord shall not be required to expend more on such restoration
      work
      than the condemnation award received and retained by Landlord for the Premises.
      Following a Partial Taking, Rent shall be equitably adjusted in the event that
      Tenant’s use of the Premises is adversely affected by such Partial
      Taking.

     

    44. Environmental
      Provisions

     

    (a) Definitions.
      For
      purposes of this Section 13, the following terms shall have the following
      meanings:

     

    (i) “Environmental
      Law” means any federal, state, or local statute, law, order, regulation,
      ordinance, constitution, agreement, permit, or decision relating to pollution
      or
      protection of human health, safety or the environment, including natural
      resources, as well as any principles of common law under which a person may
      be
      held liable for the Release of any Hazardous Substance into the
      environment.

     

    (ii) “Hazardous
      Substances” means any gaseous, liquid or solid chemical, material, substance,
      contaminant or waste that may or could pose a hazard to the environment or
      human
      health or safety, including (a) any “hazardous substances” as defined by the
      federal Comprehensive Environmental Response, Compensation and Liability Act,
      42
      U.S.C. §9601 et seq., the New Jersey Spill Compensation and Control Act,
      N.J.S.A. 58:10-23.11a et seq., and the Industrial Site Recovery Act, N.J.S.A.
      13:1K-6 et seq. (b) any “extremely hazardous substance,” “hazardous chemical,”
or “toxic chemical” as those terms are defined by the federal Emergency Planning
      and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq., (c) any “hazardous
      waste,” as defined under the federal Solid Waste Disposal Act, as amended by the
      Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., and the
      Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. (d) any “pollutant,” as
      defined under the federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.,
      (e) any chemical, material, substance, contaminant or waste, whether gaseous,
      liquid or solid, that is regulated under any Environmental Law, and (f) any
      asbestos, polychlorinated biphenyls (“PCB’s”), petroleum, petroleum products and
      urea formaldehyde and mold.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (iii) “Release”
      means any release, spill, emission, leaching, leaking, migration, dumping,
      emptying, pumping, injection, deposit, disposal, discharge or dispersal of
      any
      Hazardous Substance into the indoor or outdoor environment, or into, on, or
      from
      any property.

     

    (iv) “Remedial
      Action” means any action required by Environmental Law to address a Release of
      Hazardous Substances, including, but not limited to, investigations, abatement,
      corrective actions, response actions, removal actions, or
      remediation.

     

    (v) “Tenant’s
      Environmental Building Liability Period” means the period from October 17, 2000
      through the expiration or termination of the Lease Term. 

     

    (b) Prohibition.
      Tenant
      shall not generate, use, store, treat or dispose of Hazardous Substances on,
      under or in the Premises or any part thereof without prior written authorization
      by Landlord. Such prohibition shall not apply to Hazardous Substances that
      are
      generated, used, or stored in the ordinary course of Tenant conducting its
      business or any other permitted use of the Premises, including the repairs
      or
      maintenance of the Premises, provided such Hazardous Substances are generated,
      used, stored, treated or disposed of in compliance with Environmental Law.
      

     

    (c) Tenant
      Activities.

     

    (i) Tenant
      shall, at its own cost, comply with all Environmental Laws in connection with
      Tenant’s operations or activities at the Premises.

     

    (ii) Remedial
      Action.
      If the
      presence, Release, threat of Release, placement on or in the Premises or any
      portion thereof, or the generation, transportation, storage, treatment, or
      disposal at, on, in, under or from the Premises, or any portion thereof of
      any
      Hazardous Substance, to the extent
      occurring in connection with Tenant’s operations or activities at the Premises
      during the Lease Term or Tenant’s Building Environmental Liability Period: (a)
      gives rise to liability (including, but not limited to, a Remedial Action)
      under
      Environmental Laws, (b) causes an adverse public health effect, or (c) pollutes,
      or threatens to pollute the environment, Tenant shall promptly take, at Tenant’s
      sole cost and expense, any and all Remedial Action reasonably necessary to
      respond to such Hazardous Substances, and mitigate exposure to liability arising
      from the Hazardous Substance, if and to the extent required by Environmental
      Law. When conducting any such remedial measures, Tenant shall comply with all
      Environmental Laws. 

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (iii) Tenant
      shall have the right, but not the obligation, to perform an environmental
      assessment of the Premises, at any time, including on or about the expiration
      of
      the Lease Term. The written results or report of any such environmental
      assessment shall be provided by Tenant to Landlord.

     

    (d) Landlord
      Activities.
      

     

    (i) Landlord
      shall promptly provide Tenant copies of all written, non-routine communications,
      permits or agreements with any governmental authority or agency (federal, state
      or local) or any private entity relating in any way to the presence, Release,
      threat of Release, placement on, in or from the Premises, or any portion
      thereof, or the generation, transportation, storage, treatment or disposal
      in,
      on, or from the Premises of any Hazardous Substances prior to or during the
      Lease Term. 

     

    (ii) Remedial
      Action.
      If
      the presence, Release, threat of Release, placement on, in or from the Premises,
      or any portion thereof, or the generation, transportation, storage, treatment
      or
      disposal at, on, in, under or from the Premises, or any portion thereof, of
      any
      Hazardous Substance, to
      the
      extent caused by Landlord or any third party not connected or related to Tenant,
      occurs during the Lease Term or Tenant’s Building Environmental Liability
      Period:
      (a) gives rise to liability (including, but not limited, to a Remedial Action)
      under Environmental Laws, (b) causes an adverse public health effect, or (c)
      pollutes, or threatens to pollute the environment, Landlord shall promptly
      take,
      at Landlord’s sole cost and expense, any and all Remedial Action reasonably
      necessary to respond to such Hazardous Substances, and mitigate exposure to
      liability arising from the Hazardous Substances, if any, to the extent required
      by Environmental Laws. 

     

    (e) Environmental
      Indemnification.

     

    (i) Notwithstanding
      anything to the contrary contained in this Lease, Landlord hereby indemnifies
      and holds Tenant, and its affiliates, partners, directors, officers, agents
      and
      employees harmless from and against any and all claims, including, without
      limitation, costs incurred in connection with ISRA (as defined below)
      compliance, arising from or in connection with (A) any environmental conditions,
      including, without limitation, the presence, Release or threatened Release
      or
      placement on, in or from the Premises, or any portion thereof, of Hazardous
      Substances occurring during the Lease Term if caused by Landlord or a third
      party not connected or related to Tenant, (B)
      the
      violation of any Environmental Laws occurring during the Lease Term if caused
      by
      Landlord or a third party not connected or related to Tenant, or (C) any breach
      or default by Landlord in the full payment and/or performance of its obligations
      under this Section. 

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (ii) Notwithstanding
      anything to the contrary contained in this Lease, Tenant hereby indemnifies,
      defends and holds Landlord, and its respective partners, directors, officers,
      agents and employees harmless from and against any and all claims, including,
      without limitation, costs incurred in connection with ISRA (as defined below)
      compliance, arising from or in connection with (A) any environmental conditions,
      including, without limitation, the presence, Release, or threatened Release
      or
      placement on, in or from the Premises, or any portion thereof, of Hazardous
      Substances as a result of Tenant’s operations or activities on the Premises
      during the Lease Term and Tenant’s Building Environmental Liability Period, (B)
      the violation of any Environmental Laws to the extent arising from Tenant’s
      operations or activities on the Premises during Tenant’s Building Environmental
      Liability Period, or (C) any breach or default by Tenant in the full payment
      and/or performance of its obligations under this Section.

     

    (f) Landlord’s
      and Tenant’s obligations under this Section 13 shall survive the expiration or
      any termination of the Lease.

     

    (g) ISRA
      Compliance.
      Upon
      the closure of Tenant’s operations at the Premises, Tenant shall comply with
      ISRA (as defined below). Within sixty (60) days after the expiration or earlier
      termination of this Lease, Tenant shall obtain and provide to Landlord either:
      

     

    (i) a
      letter
      from the New Jersey Department of Environmental Protection (“NJDEP”) stating
      that the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et. seq.
      and
      the regulations promulgated thereunder (collectively “ISRA”) are not applicable
      to the expiration or earlier termination of this Lease (a “Letter of
      Non-Applicability”); or 

     

    (ii) an
      approved Negative Declaration (as defined by ISRA) or No Further Action Letter
      (as defined by ISRA) (the Negative Declaration or No Further Action Letter,
      as
      the case may be, are hereinafter referred to collectively as the “ISRA
      Clearance”) relating to the Premises. 

     

    (h) If
      Tenant
      is unable to obtain a Letter of Non-Applicability or ISRA Clearance within
      sixty
      (60) days after the expiration or earlier termination of this Lease, then Tenant
      shall apply for and enter into a Remediation Agreement (as defined by ISRA)
      with
      NJDEP or an amendment to an existing Remediation Agreement with NJDEP for the
      Premises. In any such Remediation Agreement, Tenant shall pay for and be
      identified as the sole party responsible for:

     

    (i) compliance
      with the Remediation Agreement; and

     

    (ii) obtaining
      ISRA Clearance,
      provided, however, that such obligations of Tenant under such Remediation
      Agreement shall in no way affect the indemnity obligations of Tenant and
      Landlord pursuant to this Lease. 

     

    (i) Landlord’s
      and Tenant’s obligations under this Article shall survive the expiration or any
      termination of the Lease. 

     

    45. Indemnification.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (a) In
      addition to its indemnification obligations under Section 13, Tenant covenants
      and agrees to exonerate, indemnify, defend, protect and save Landlord harmless
      from and against any and all claims, demands, losses, suits, damages, costs,
      charges and expenses, including reasonable architect’s, engineer’s and
      attorney’s fees, which may be imposed upon, incurred by, or asserted against
      Landlord and arising, directly or indirectly, out of in connection with (i)
      injury to persons or damage to property caused by the negligence or otherwise
      act or omission of Tenant, its agents, employees, contractors, invitees,
      licensees or guests, (ii) any breach by Tenant of any covenant, agreement,
      representation or warranty made by Tenant pursuant to this Lease, (iii) Tenant’s
      operations or activities on the Premises, and (iv) use and occupancy of the
      Premises by Tenant, its agents, employees, contractors, invitees, licenses
      or
      guests. 

     

    (b) In
      addition to its indemnification obligations under Section 13, Landlord covenants
      and agrees to exonerate, indemnify, defend, protect and save Tenant harmless
      from and against any and all claims, demands, losses, suits, damages, costs,
      charges and expenses, including reasonable architect’s, engineer’s and
      attorney’s fees, which may be imposed upon, incurred by, or asserted against
      Tenant and arising, directly or indirectly, out of in connection with (i) injury
      to persons or damage to property caused by the negligence or otherwise act
      or
      omission of Landlord, its agents, employees, contractors, invitees, licensees
      or
      guests, (ii) any breach by Landlord of any covenant, agreement, representation
      or warranty made by Landlord pursuant to this Lease, (iii) Landlord’s operations
      or activities on the Premises, and (iv) use of the Premises by Landlord, its
      agents, employees, contractors, invitees, licenses or guests. 

     

    (c) All
      indemnity obligations of Landlord and Tenant arising under this Lease, including
      without limitation Section 13 above and this Section 14, and all claims,
      demands, damages and losses assertable by Landlord and Tenant against the other
      in any suit or cause of action arising out of or relating to this Lease, the
      Premises, or the use and occupancy thereof, are limited as follows:

     

    (i) by
      the
      releases and waivers expressed in subsection 10(d);

     

    (ii) all
      of
      the claims for indemnification and other recoveries shall be limited to direct,
      proximately caused damages, and shall exclude all special, consequential,
      indirect, exemplary or incidental damages, including business loss or
      interruption, of any kind whether arising in contract, tort, product liability
      or otherwise, suffered by the party asserting the claim or seeking the recovery;
      and

     

    (iii) in
      the
      event that Landlord and Tenant are determined to be contributorily responsible
      for the indemnified injury or loss, each indemnitor’s obligation shall be
      limited to the indemnitor’s equitable share of the losses, costs or expenses to
      be indemnified against based on the relative culpability of each indemnifying
      person whose negligence or willful acts or omissions contributed to the injury
      or loss.

     

    46. Default
      by Tenant.
      The
      occurrence of any one of the following shall constitute an event of default
      by
      Tenant (“Tenant Default”):

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (a) failure
      by Tenant to pay any installment of Annual Fixed Rent or any other sum required
      to be paid by Tenant pursuant to this Lease within five (5) days after Tenant
      receives written notice from Landlord that the same is due, provided that
      Landlord shall only be required to deliver Tenant notice of such failure once
      during any twelve (12) month period during the Lease Term;

     

    (b) failure
      by Tenant to perform or comply with any other covenant or condition of this
      Lease to be performed or complied with by Tenant within thirty (30) days after
      written notice thereof from Landlord and such additional time, if any, as is
      reasonably necessary to cure such failure, provided Tenant commences to cure
      such failure within such thirty (30) day period and thereafter prosecutes such
      cure to completion with reasonable diligence; or

     

    (c) the
      filing of a petition against Tenant for adjudication of it as a bankrupt or
      insolvent, or for its reorganization or the appointment of a receiver or trustee
      for the benefit of its creditors, if such petition is not dismissed within
      sixty
      (60) days of filing; or the filing of such a petition by Tenant; or an
      assignment by Tenant for the benefit of creditors; or the taking of possession
      of the property of Tenant by any governmental officer or agency pursuant to
      statutory authority for the dissolution or liquidation of Tenant.

     

    47. Landlord’s
      Remedies.

     

    (a) In
      addition to all other remedies available to Landlord at law or equity, if any
      Tenant Default under this Lease shall have occurred and be continuing, Landlord
      shall have all of the following rights and remedies:

     

    (i) terminate
      this Lease and all the estate of Tenant in the Premises by giving Tenant fifteen
      (15) days’ written notice of termination, and, upon the date specified in such
      notice, the Lease Term and the estate hereby granted shall expire and terminate
      with the same force and effect as if the date set forth in such notice were
      the
      date herein before fixed for the expiration of the Lease Term;

     

    (ii) with
      or
      without terminating this Lease, reenter and repossess the Premises, or any
      part
      thereof, and relet, or attempt to relet, any or all parts of the
      Premises;

     

    (iii) terminate
      Tenant’s right to possession of the Premises and to recover (i) all Rent which
      shall have accrued and remain unpaid through the date of termination; plus
      (ii)
      the amount by which the unpaid Rent for the balance of the Lease Term,
      discounted to present value at six percent (6%), shall exceed the then fair
      rental value of the Premises for the balance of the Lease Term, similarly
      discounted, plus (iii) any other amount necessary to compensate Landlord for
      all
      the damages caused by Tenant’s failure to perform its obligations under this
      Lease (including, without limitation, reasonable attorneys’ and accountants’
fees, costs of alterations of the Premises, interest costs and brokers’ fees
      incurred upon any reletting of the Premises);

     

    (iv) pay
      or
      perform for the account of Tenant any obligation or work to be paid or done
      by
      Tenant pursuant to the provisions of this Lease which Tenant has failed to
      pay
      or perform, and Landlord may reenter and repossess such part of the Premises
      as
      may be necessary to perform such work. Tenant shall pay to Landlord on demand
      as
      Additional Rent the amount reasonably paid or expended by Landlord to do the
      work or otherwise cure the default by Tenant.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (b) In
      the
      event of any termination of this Lease or repossession of the Premises or any
      part thereof under this Section by reason of an occurrence of a Tenant Default,
      Tenant shall pay to Landlord the Annual Fixed Rent and all other sums required
      to be paid by Tenant to and including the date of such termination or
      repossession; and, thereafter, Tenant shall, until the end of what would have
      been the expira-tion of the Lease Term in the absence of such termination or
      repossession, and whether or not the Premises or any part thereof shall have
      been relet, be liable to Landlord for, and shall pay to Landlord as agreed,
      current damages, the Annual Fixed Rent and all other sums which would be payable
      under this Lease by Tenant in the absence of such termination or repossession,
      less the net proceeds, if any, of any reletting effected for the account of
      Tenant pursuant to subsection 15(a)(ii), after
      deducting from such proceeds all of Landlord’s reasonable expenses in connection
      with such reletting (including, without limitation, all reasonable related
      repossession costs, brokerage commissions, legal expenses, attorney’s fees,
      employees’ expenses, alteration costs and expenses of preparation of such
      reletting). Tenant shall pay such current damages on the days on which the
      Annual Fixed Rent would have been payable under this Lease in the absence of
      such termination or repossession, and Landlord shall be entitled to recover
      the
      same from Tenant on each such day. Following such termination of this Lease
      or
      repossession of the Premises, Landlord shall use commercially reasonable efforts
      to re-let the Premises (i.e., listing the Premises with a commercial real estate
      broker) on commercially reasonable terms and to otherwise mitigate its
      damages.

     

    (c) Landlord
      shall look only to Tenant for the satisfaction of Landlord’s remedies under this
      Lease and no assets of Tenant’s affiliates, partners, officers, directors,
      shareholders or principals, disclosed or undisclosed, shall be subject to levy,
      execution or other enforcement procedure for the satisfaction of Landlord’s
      remedies under this Lease.

     

    48. Default
      by Landlord.

     

    (a) The
      following shall be an event of default by Landlord (a “Landlord
      Default”):

     

    (i) failure
      by Landlord to pay any sum required to be paid by Landlord pursuant to this
      Lease within five (5) days after Landlord receives notice from Tenant that
      the
      same is due and payable; or

     

    (ii) failure
      by Landlord to perform or comply with any covenant or condition of this Lease
      to
      be performed or complied with by Landlord within thirty (30) days after written
      notice thereof from Tenant and such additional time, if any, as is reasonably
      necessary to cure such failure, provided Landlord commences to cure such failure
      within such thirty (30) day period and thereafter prosecutes such cure to
      completion with reasonable diligence.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (b) Upon
      the
      occurrence of a Landlord Default, Tenant may, at its election, perform the
      obligation which Landlord has failed to perform for the account of Landlord.
      Notwithstanding the foregoing, in case of an emergency where there is an
      immediate threat to the Premises or Tenant’s property therein as a result of
      Landlord’s failure to perform any obligation under this Lease, Tenant shall have
      the right to perform any obligation that Landlord has failed to perform, without
      giving the notice and opportunity for cure required for such failure to
      constitute a Landlord Default. Tenant shall, however, give such notice as may
      be
      reasonable under the circumstances (which notice may, for this purpose, consist
      of telephonic notice).

     

    (c) Landlord
      shall pay Tenant upon written demand all reasonable costs incurred by Tenant
      in
      performing Landlord’s obligations under the preceding paragraph. If Landlord
      fails to pay Tenant such amounts within five (5) days after demand therefor,
      Landlord agrees to also pay a late charge of Fifty Dollars ($50.00) per day
      and
      interest to Tenant at the Overdue Interest Rate beginning on the first day
      that
      such payment was demanded until the date that Tenant receives payment.

     

    (d) The
      rights and remedies granted to Tenant pursuant to this Section are in addition
      to all other rights and remedies which Tenant may have by law or equity on
      account of a failure by Landlord to perform its obligations under this
      Lease.

     

    (e) None
      of
      Landlord’s covenants, undertakings or agreements under this Lease is made or
      intended as personal covenants, undertakings or agreements by Landlord, or
      by
      any of Landlord’s shareholders, directors, officers, trustees or constituent
      partners. All liability for damage or breach or nonperformance by Landlord
      shall
      be collectible only out of Landlord’s interest from time to time in the
      Premises, and no personal liability is assumed by nor at any time may be
      asserted against Landlord or any of Landlord’s shareholders, directors,
      officers, trustees or constituent partners.

     

    (f) Upon
      the
      sale or other conveyance or transfer of Landlord’s interest in the Premises, the
      transferor shall be relieved of all covenants and obligations of Landlord
      arising under this Lease from and after the closing of such sale, conveyance
      or
      transfer, provided the transferee assumes the obligations of Landlord under
      this
      Lease from and after the date of transfer.

     

    49. Quiet
      Possession.
      Landlord covenants and agrees that, so long as Tenant keeps and performs each
      and every covenant and condition contained herein to be kept and performed
      by
      Tenant, Tenant shall quietly possess and enjoy the Premises without hindrance
      or
      molestation by Landlord or any party claiming under or by Landlord.

     

    50. Subordination
      and Non-Disturbance.

     

    (a) Landlord
      hereby represents to Tenant that there are no mortgages, judgments or liens
      encumbering the Premises except those set forth in Exhibit
      “C”.
      Simultaneously with the execution of this Lease, Landlord has delivered to
      Tenant Non-Disturbance Agreements (as hereinafter defined), on a form prescribed
      by Landlord’s lender and with substance reasonably acceptable to Tenant,
      executed by the holders of all such mortgages, judgments and liens.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (b) This
      Lease and the estate, interest and rights hereby created are subordinate to
      any
      mortgage or mortgages hereafter placed upon the Premises or any estate or
      interest therein, and to all renewals, modifications, consolidations,
      replacements and extensions of the same, and any substitutes therefor. Tenant
      agrees that in the event any person, firm corporation or other entity (including
      any mortgagee) acquires the right to possession of the Premises, Tenant shall,
      if requested by such person, firm, corporation or other entity, attorn to and
      become the tenant of such person, firm, corporation or other entity upon the
      same terms and conditions as are set forth herein for the balance of the Lease
      Term. Notwithstanding the foregoing, any mortgagee may, at any time, subordinate
      its mortgage to this Lease, without Tenant’s consent, by notice in writing to
      Tenant, and thereupon this Lease shall be deemed prior to such mortgage without
      regard to their respective dates of execution and delivery, and in that event,
      such mortgagee shall have the same rights with respect to this Lease as if
      this
      Lease had been executed prior to the execution and delivery of the
      mortgage.

     

    (c) The
      foregoing provisions of this subsection are subject, however, to the express
      condition that the holder of any mortgage to which this Lease is subordinate
      shall deliver to Tenant an agreement in form and substance reasonably acceptable
      to Tenant (a “Nondisturbance Agreement”) which shall provide that if (and for as
      long as) no Tenant Default under this Lease has occurred and is continuing,
      then
      (i) Tenant shall not be made a party to the foreclosure of any mortgage, or
      any
      action or proceeding by any mortgagee to recover possession of the Building,
      (ii) Tenant’s possession shall not be disturbed, and (iii) this Lease shall not
      be canceled or terminated and shall continue in full force and effect upon
      such
      foreclosure or recovery of possession upon all the terms, covenants, conditions
      and agreements set forth in this Lease.

     

    (d) Although
      the subordination and attornment provisions of this subsection are automatic
      subject to the foregoing condition, if requested by the mortgagee, such
      Nondisturbance Agreement shall also include the subordination and attornment
      provisions set forth above and shall be executed by Tenant.

     

    51. Inspection.
      Subject
      to Tenant's reasonable security requirements, Landlord shall have the right
      upon
      reasonable notice and at reasonable times during business hours to inspect
      all
      parts of the Premises and during the last four (4) months of the Lease Term
      to
      show the interior and exterior of the Premises to prospective tenants. Landlord
      shall not in any way interfere with or disrupt the operation of Tenant’s
      business in the exercise by Landlord of its rights under this Section and shall,
      at all times, observe Tenant's reasonable security requirements.

     

    52. Surrender.
      At the
      expiration or earlier termination of the Lease Term, Tenant shall surrender
      and
      deliver possession of the Premises in the same condition it is as of the
      Commencement Date, subject only to reasonable wear and tear, damage by fire
      or
      other casualty (including the elements) that Tenant is not obligated to restore
      pursuant to Section 9 above, and alterations and additions made by Tenant during
      the Lease Term that Landlord elects not to have removed pursuant to Section
      11
      above.
      In
      addition, Tenant shall decontaminate, repair, or clean-up the laboratories
      at
      the Premises to remove any contamination from the laboratories resulting from
      Tenant's operations.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    53. Signs.
      Tenant
      shall have the right to place signs upon the exterior of the Premises
      identifying Tenant, provided such signs comply with the local ordinances and
      regulations and are of a reasonable size. Upon the expiration of the Lease
      Term,
      Tenant shall remove all signage and shall restore and repair any damage caused
      by the installation or removal of such signs.

     

    54. Notices.
      All
      notices to be given to either party hereunder shall be in writing and shall
      be
      sent to the following addresses:

     

    
      	
              Tenant:

            	
              NexMed
                (USA), Inc.

              89
                Twin Rivers Drive

              East
                Windsor, NJ 08520

              Attention:
                Mark Westgate

              Fax:
                (609) 426-0340

            
	 	 
	
              With
                a required copy to:

            	
              Morgan,
                Lewis & Bockius LLP

              1701
                Market Street

              Philadelphia,
                PA 19103-2921

              Attention:
                Joseph D. Horter

              Fax:
                (215) 963-5001

            
	 	 
	
              Landlord:

            	
              Pharmar
                & Pharmar LLC

              1052
                Route 202/206 North

              Bridgewater,
                NJ 08807

              Attention:
                Vinod Patel

              Fax:

            
	 	 
	
              With
                a required copy to:

            	
              Hill
                Wallack LLP

              202
                Carnegie Center

              Princeton,
                NJ 08543-5226

              Attention:
                Joseph A. Vales, Esquire

              Fax:
                (609) 452-1888

            

    

     

    Notices
      shall be sufficient if personally delivered, delivered by reputable overnight
      courier or mailed United States registered or certified mail, return receipt
      requested, postage prepaid, via facsimile transmission with confirmation of
      receipt to the other respective party at its address set forth above. Notices
      shall be effective on the date of delivery (if a business day) or the next
      business day after delivery (if delivery does not occur on a business day).
      The
      party to whom notice is to be given may change the address for the giving of
      notices set forth above by delivering notice of such change to the other
      party.

     

    55. Brokers.
      Landlord covenants, represents and warrants to Tenant that Landlord has had
      no
      dealing or negotiations with any broker or agent or finder in connection with
      respect to this Lease. Tenant covenants, represents and warrants to Landlord
      that Tenant has had no dealing or negotiations with any broker or agent or
      finder in connection with respect to this Lease. Landlord and Tenant each
      covenant and agree to pay, hold harmless and indemnify the other from and
      against any and all costs, expenses, including reasonable attorneys’ fees, and
      liability for any compensation, commissions or charges claimed by any other
      broker or agent with whom the indemnifying party has had any dealings or
      negotiations with respect to this Lease.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    56. Waiver.
      Any
      particular waiver by Landlord or Tenant of any covenant or condition of this
      Lease shall extend to that particular case only in the manner specified and
      shall not be construed as applying to or in any manner waiving any further
      or
      other rights hereunder. The receipt of Rent by Landlord, with knowledge of
      any
      breach of this Lease by Tenant or of any default on the part of Tenant in any
      of
      the conditions or covenants of this Lease, shall not be deemed to be a waiver
      of
      any provision of this Lease.

     

    57. Tenant
      Holding Over.
      Any
      hold over by Tenant beyond the expiration of the Lease Term shall give rise
      to a
      tenancy from month-to-month, cancellable on thirty (30) days’ written notice by
      either party, notwithstanding the provisions of any law or rule to the contrary.
      During any such hold over period, Tenant shall pay one hundred fifty percent
      (150%) of the Annual Fixed Rent last prevailing hereunder as agreed liquidated
      damages for holding over and Additional Rent and any other charges or costs
      incurred during the hold-over period for which Tenant is responsible for under
      the Lease

     

    58. Estoppel
      Certificates.
      Each of
      the parties hereby agrees to deliver to the other, from time to time, within
      twenty (20) days after request therefor, an estoppel certificate certifying
      that
      this Lease is in full force and effect and that the requesting party is not
      in
      default under the terms hereof (or if the foregoing is not the case, giving
      an
      explanation thereof).

     

    59. Delivery
      for Examination.
      The
      submission of this instrument for review and examination does not constitute
      an
      offer by the party submitting the same to lease the Premises. This instrument
      shall not become effective as a lease, nor shall Landlord or Tenant have any
      obligation hereunder, unless and until this instrument has been executed by
      and
      delivered to the parties.

     

    60. Tenant’s
      Equipment Financing.
      Tenant
      may from time to time own or hold in the Premises furniture, trade fixtures
      and
      equipment related to Tenant’s business (collectively, “Tenant’s Property”).
      Tenant shall have the right to pledge all or any part of Tenant’s Property, and
      Landlord shall subordinate any rights it may have (including any “landlord’s
      lien”) with respect to the same. The terms and conditions of any such
      subordination shall be mutually agreed upon by Landlord and Tenant’s lender.
      Landlord shall not unreasonably withhold, condition or delay its approval of
      the
      terms and conditions of any such subordination agreement.

     

    61. Landlord’s
      Personal Property.
      Tenant
      shall have the right to use Landlord’s furniture, fixtures, personal property
      and equipment located at the Premises and specified on Exhibit
      “D”
      (“Landlord’s Personal Property”). Tenant, at its sole cost and expense
      throughout the Lease Term, shall keep and maintain Landlord’s Personal Property
      in the same order and condition as they are on the Commencement Date, reasonable
      wear and tear excepted. 

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    62. Miscellaneous.

     

    (a) The
      headings preceding each section of this Lease are for convenience of reference
      only and shall not affect the construction or meaning of the provisions
      hereof.

     

    (b) If
      any
      part of this Lease is found to be invalid or unenforceable, it shall not affect
      any remaining portion of this Lease, which shall continue to be in full force
      and effect and be severable from any invalid provision.

     

    (c) This
      Lease, including any exhibits
      hereto, constitutes the entire
      agreement between the parties and shall not be modified except by written
      agreement between the
      parties.

     

    (d) This
      Lease is legally binding upon the parties hereto and their successors and
      assigns. 

     

    (e) Neither
      this Lease nor any memorandum of lease or short form lease shall be recorded
      in
      any public land records.

     

    (f) Time
      is
      of the essence of each and every provision of this Lease.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Lease to be executed the
      day and year first above written.

     

    
      	 	 	
              LANDLORD:

               

              Pharmar
                & Pharmar LLC

               

               

              By:                                                                          

               

              Name:                                                                      

               

              Title:                                                                        

            
	 	 	
               

              TENANT:

               

              NexMed
                (USA), Inc. 

               

              By:                                                                          

               

              Name:                                                                      

               

              Title:                                                                        

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      “A”

    

    Legal
      Description

    

    Description
      of Tax Map Lot 6 Block 20.06 situated in East Windsor Township, Mercer County,
      New Jersey. 

    

    Beginning
      at a point situated along the southerly right of way line of Twin Rivers Drive
      (66 feet wide), said point being located 25.00 feet from the intersection of
      the
      westerly prolongation of the same and the northerly prolongation of the easterly
      right of way line of Milford Road (66 feet wide); thence running 

    

    1. South
      85°
      22’ 26”
East along the southerly right of way line of Twin Rivers Drive, 208.27 feet
      to
      a point; thence

    

    2. Easterly
      along the same, along a curve to the right having a radius of 967.00 feet and
      a
      arc length of 242.60 feet to a point; thence

    

    3. South
      06°
      55’ 34”
West along the common line of Lots 6 and 190 Block 20.06, 371.02 feet to a
      point; thence

    

    4. North
      80°
      46’ 41”
West along the common line of Lots 4 and 6 Block 20.06; 293.02 feet to a point;
      thence

    

    5. North
      04°
      37’ 34”
East along the common line of Lots 5 and 6 Block 20.06, 150.00 feet to a point;
      thence 

    

    6. North
      80°
      46’ 41”
West along the same, 166.90 feet to a point; thence

    

    7. North
      04°
      37’ 34”
East along the easterly line of Milford Road, 189.14 feet to a point;
      thence

    

    8. Easterly
      along the same, along a curve to the right having a radius of 25.00 feet and
      an
      arc length of 39.27 feet to the point and place of beginning.

    

    Containing
      151,009 s.f. more or less

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    Exhibit
      “B”

    

    

    Annual
      Fixed Rent

    

    $720,000.00
      per year. 

    

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    Exhibit
      “D”

     

    Landlord’s
      Personal Property

     

    
      	
              NexMed,
                Inc.

            	 	 	 	 	 	 	 
	
              List
                of Equipment Sold with Building

            	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              Asset

            	 	
              Asset
                description

            	 	 	
              Acquis.val.

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              20003

            	 	
              KOHLER
                GENERATOR 600 KVA

            	 	
              75,000.00

            	 
	 	 	
              20004

            	 	
              TWO
                BYRN MODEL Furnace Boilers

            	
              83,863.20

            	 
	 	 	
              20005

            	 	
              USP
                WATER SYSTEM PER QUOTE AD101-06-10

            	
              250,143.83

            	 
	 	 	
              20006

            	 	
              HVAC
                CHILLERS

            	 	 	
              159,883.00

            	 
	 	 	
              20007

            	 	
              HVAC
                CONTROLS

            	 	 	
              313,995.00

            	 
	 	 	
              20008

            	 	
              REFRIGERATION
                SYSTEM Cold Box in Warehouse

            	
              84,000.00

            	 
	 	 	
              20009

            	 	
              Custom
                Advantage Air Condensor Chiller System

            	
              6,687.50

            	 
	 	 	
              20013

            	 	
              LAB
                CABINETS & CASEWORK

            	 	
              181,583.54

            	 
	 	 	
              20014

            	 	
              Walk
                in Refrigerator Cold Box

            	 	
              8,700.00

            	 
	 	 	
              20025

            	 	
              FIRE
                DOOR FOR CARTONING ROOM

            	
              8,547.60

            	 
	 	 	
              20026

            	 	
              2
                Ton AC Unit for Computer Room (Fujitsu)

            	
              6,060.00

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              30003

            	 	
              Steer
                rite hydraulic pallet truck

            	 	
              666.43

            	 
	 	 	
              30006

            	 	
              COLD
                ROOM 8X8

            	 	 	
              9,708.00

            	 
	 	 	
              30010

            	 	
              Easy
                to Climb steel rolling plateform ladder

            	
              658.24

            	 
	 	 	
              30024

            	 	
              6
                FOOT STEEL TABLES WITH BACKSPLASH

            	
              580.27

            	 
	 	 	
              30026

            	 	
              6
                FOOT STEEL TABLES WITH BACKSPLASH

            	
              580.27

            	 
	 	 	
              30394

            	 	
              Model
                522LS Autoclave

            	 	
              77,785.90

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
              70083

            	 	
              41
                aeron chairs by herman Miller

            	 	
              29,270.00

            	
              Note
                1

            
	 	 	
              70084

            	 	
              Office
                furniture

            	 	 	
              57,325.80

            	
              Note
                2

            
	 	 	
              70085

            	 	
              EW
                Furniture

            	 	 	
              13,740.00

            	
              Note
                3

            
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	
              TOTAL

            	 	
              1,368,778.58

            	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	
              Note
                1:

            	 	 	
              Note
                2:

            	 	 	
              Note
                3:

            	 	 
	
              Includes:

            	 	 	
              Includes:

            	 	 	
              Includes:

            	 	 
	
              9
                office chairs

            	 	
              Conference
                table

            	 	
              10
                - 5 drawer files

            	 	 
	
              15
                task chairs

            	 	
              Reception
                desk

            	 	
              8
                side chairs

            	 	 
	
              20
                conference chairs

            	 	
              30
                chairs with no arms

            	
              15
                cubes

            	 	 
	
              $10k
                of installation

            	 	
              10
                stools

            	 	 	
              15
                desks for cube

            	 	 
	 	 	 	 	
              10
                chairs with vinyl

            	 	
              15
                files ( one per cube)

            	 
	 	 	 	 	 	 	 	
              7
                files for the offices (one per office)

            	 

    

    

    
      
        
        

      

      
        D-1EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT ("Agreement")
      is
      made and entered into this 18th day of May, 2007 (the "Signing
      Date"),
      by
      and among BIOANALYTICAL SYSTEMS, INC., a corporation organized under the laws
      of
      the State of Indiana ("Company"),
      and
      Richard M. Shepperd ("Employee").

     

    Preliminary
      Statements:

     

    A. The
      Company is engaged in the business of providing contract research services
      and
      manufacturing and distributing scientific instruments ("Business").

     

    B. The
      Company wishes to employ Employee on the terms and conditions contained herein,
      and Employee wishes to enter into such employment. 

     

    In
      consideration of the premises and mutual covenants and agreements contained
      herein, the parties hereby agree as follows:

     

    ARTICLE
      1

     

    Term,
      Compensation, and Benefits

     

    Section
      1.1.
      Term.
      The
      Company hereby agrees to employ the Employee, and the Employee hereby accepts
      employment with the Company, on the terms and conditions set forth in this
      Agreement until December 31, 2009 (the "Initial
      Term").
      The
      Initial Term shall be extended for successive three month periods (the
      "Additional
      Terms,"
      and
      together with the Initial Term, the "Employment
      Period"),
      except that if either the Employee or the Company gives the other party written
      notice at least thirty (30) days before the end of the Initial Term, or any
      Additional Term, then this Agreement shall expire at the end of its then current
      term.

     

    Section
      1.2.
      Compensation
      and Benefits.
      

     

    Section
      1.2.1.
      Salary.
      The
      Company will pay Employee a base salary of $35,000.00 per month. Salary shall
      be
      paid in equal semi-monthly installments in arrears. 

     

    Section
      1.2.2.
      Discretionary
      Bonus.
      Employee will be eligible for an annual bonus, which shall be based upon
      Employee’s performance of his duties during the preceding twelve (12) month
      period of employment. The amount and terms of such bonus shall be determined
      by
      the Compensation Committee of the Board of Directors of the Company in its
      sole
      discretion.

     

    Section
      1.2.3.
      Stock
      Options.
      As of
      the Signing Date, Employee will be granted options to purchase Two Hundred
      Seventy-five Thousand (275,000) of the Company's common shares, pursuant to
      an
      option agreement to be entered into by the Company and Employee as of the date
      hereof (the "Option
      Agreement"),
      at a
      price per share equal to the closing price for the Company's common shares
      as
      reported on the NASDAQ Stock Market on the last trading day prior to the Signing
      Date, subject to approval of such grant by the shareholders of the Company
      at
      the next annual meeting of shareholders, unless a special meeting of
      shareholders is held prior thereto, in which case shareholder approval shall
      be
      sought at such special meeting. Except as otherwise provided in this Agreement
      or the Option Agreement, such options shall vest in three (3) installments
      as
      follows: (a) the first installment of Seventy-Five Thousand (75,000) shares
      shall vest on the date the shareholders of the Company approve the grant of
      the
      options, (b) the second installment of One Hundred Thousand (100,000) shares
      shall vest on December 1, 2008, and (c) the final installment of One Hundred
      Thousand (100,000) shares shall vest on December 1, 2009. All unvested options
      shall vest immediately upon a Change in Control. If (a) the Company's
      shareholders do not approve the grant of options described in this Section
      1.2.3,
      and (b)
      all conditions which must be satisfied prior to the exercise of any options
      under the option agreement and hereunder (including the continued employment
      of
      Employee) are satisfied at the time each installment of options would have
      otherwise become vested, Employee shall be eligible for a cash bonus to be
      paid
      in three (3) installments on the Company's first regular payroll payment date
      after (i) the date of the meeting at which the Company's shareholders fail
      to
      approve the option grant, (ii) December 1, 2008, and (iii) December 1, 2009.
      Each such bonus payment shall be in an amount determined by subtracting
      the
      closing stock price on the Signing Date from the closing stock price on the
      last
      trading day prior to each such payment date (each such price, the "Future
      Closing Price")
      and
multiplying
      the
      result (but only if a positive number) by the number of options that would
      have
      vested and become exercisable on such date if the shareholders had approved
      the
      option grant. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      1.2.4 Expense
      Reimbursement. Employee
      will be entitled to reimbursement of travel, entertainment and other out of
      pocket expenses incurred by him in the course of his employment in accordance
      with the Company's standard reimbursement policies.

     

    Section
      1.2.5.
      Vacation
      Policy.
      Employee will be eligible for three (3) weeks of vacation each year of the
      Employment Period. Employee's compensation shall continue to be paid in full
      during each vacation period. Any unused vacation remaining at the end of any
      year ending on an anniversary date of the effective date hereof, or January
      1,
      shall carry over to the following one-year period commencing on such anniversary
      date (the "Following
      Year"),
      but
      shall not carry over beyond the Following Year. Vacation time not used prior
      to
      the expiration of the Following Year will be banked for short-term disability
      as
      described in the Company Employee Handbook. 

     

    Section
      1.2.6.
      Other
      Benefits.
      During
      the Employment Period, the Employee shall be entitled to participate in all
      employee benefit plans which are generally made available to employees of the
      Company, subject to the eligibility, qualification, waiting period and other
      terms and conditions of such plans as they shall be in effect from time to
      time
      unless listed herein as exceptions from those terms and conditions.

     

    Section
      1.2.7.
      Required
      Withholdings.
      All
      amounts to be paid hereunder shall be paid in accordance with normal payroll
      procedures of the Company and shall be subject to all required withholdings
      and
      deductions.

     

    ARTICLE
      2

     

    Duties

     

    Section
      2.1 Duties.
      During
      the Employment Period, the Employee will be the chief executive officer of
      the
      Company with the titles President and Chief Executive Officer and shall have
      full responsibility and decision-making authority for the day-to-day operations
      of the Company's business, subject to the general control of the Board of
      Directors. The Employee shall report to and serve at the pleasure of the Board
      of Directors of the Company and shall perform such other services as the Board
      of Directors of the Company may reasonably require to conduct the Company's
      business. Notwithstanding any other provisions of this Agreement, the Company
      shall not impose employment duties or constraints of any kind upon the Employee
      which would require the Employee to violate any ordinance, regulation, statute
      or other law. The Employee shall devote his full working time, attention and
      energy to the performance of the duties imposed hereunder. The Employee shall
      conform to such hours of work as may from time to time reasonably be required
      of
      him and shall not be entitled to receive any additional remuneration for work
      outside his normal hours. The Employee will NOT
      be held
      financially, legally, or otherwise liable for any past practices or actions
      or
      decisions made by the Company, or its predecessors prior to the start of the
      Employee's beginning date of employment.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    ARTICLE
      3

     

    Confidentiality,
      Non-Solicitation and Other Matters

     

    Section
      3.1.
      Confidentiality
      Agreement.
      The
      Employee, prior to and during the term of employment under this Agreement,
      has
      had and will have access to and has become or will become familiar with
      information, whether or not originated by the Employee, which is used in or
      related to the Business or the business of the Company and its subsidiaries
      and
      affiliates of the Company and is (a) proprietary to, about, or created by the
      Company its subsidiaries or its affiliates, (b) designated as confidential
      by
      the Company, its subsidiaries or its affiliates, or (c) not generally known
      to
      or ascertainable by proper means by the public ("Confidential
      Information").

     

    Further,
      the Employee has had and will have access to Proprietary Items (as defined
      below) proprietary to the Company, its subsidiaries or its affiliates.
      "Proprietary Items" shall mean all legally-recognized rights which result from
      or are derived from the Employee's work product or the work product of others
      made for the Company, its subsidiaries or its affiliates, including all past,
      present and future work product made for the Company, its subsidiaries or its
      affiliates, or with knowledge, use or incorporation of Confidential Information,
      including, but not limited to works of authorship, developments, inventions,
      innovations, designs, discoveries, improvements, trade secrets, trademarks,
      applications, techniques, know-how and ideas, whether or not patentable or
      copyrightable, conceived or made or developed by the Employee (solely or in
      cooperation with others) or others during the term of this Agreement or prior
      to
      or during his tenure with the Company, or which are reasonably related to the
      Business or the business of the Company or certain subsidiaries or affiliates
      of
      the Company or the actual or demonstrably anticipated research and development
      of the Company.

     

    The
      Employee agrees that any Confidential Information and Proprietary Items will
      be
      treated in full confidence and shall not be used, directly or indirectly, by
      him, except as required in the course of his employment with the Company, nor
      shall the same be disclosed to any other firms, organizations, or persons
      outside of the Company's employees bound by similar agreement, during the term
      of this Agreement or at any time thereafter. All Confidential Information and
      Proprietary Items, whether prepared by the Employee or otherwise, coming into
      his possession shall remain the exclusive property of the Company and shall
      not
      be permanently removed from the premises of the Company under any circumstances
      whatsoever, without the prior written consent of the Company. Upon termination
      of Employee's employment with the Company for any reason, Employee shall
      immediately return and deliver to the Company all Proprietary Items and all
      documents and other items containing Confidential Information, including all
      copies thereof.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    The
      Employee will not be obliged to keep information confidential to the extent
      that
      the information has ceased to be confidential and has entered the public domain
      otherwise than due to the Employee's acts. The provisions of this Section
      3.1
      shall be
      in addition to, and shall not affect, the Employee's common law duty of fidelity
      to the Company.

     

    Section
      3.2.
      Disclosure
      and Assignment of Inventions.
      Employee will promptly disclose in writing to the Company complete information
      concerning each and every invention, discovery, improvement, device, design,
      apparatus, practice, process, method or product, whether patentable or not,
      made, developed, perfected, devised, conceived or first reduced to practice
      by
      Employee, either solely or in collaboration with others, during his employment
      by the Company, or within six (6) months thereafter, whether or not during
      regular working hours, relating either directly or indirectly to the business,
      products, practices or techniques of the Company (hereinafter referred to as
      "Inventions").
      Employee hereby acknowledges that any and all of said Inventions are the
      property of the Company and hereby assigns and agrees to assign to the Company
      any and all of Employee's right, title and interest in and to any and all of
      such Inventions.

     

    Section
      3.3.
      Non-solicitation.
      The
      Employee agrees that during the Employee's employment with the Company and
      for
      an additional period of the two (2) years immediately following termination
      of
      the Employee's employment with the Company, the Employee shall not directly
      or
      indirectly, as an individual or as a director, officer, contractor, employee,
      consultant, partner, investor or in any other capacity with any corporation,
      partnership or other person or entity, other than the Company (an "Other
      Entity"),
      (i)
      contact or communicate with any person or entity who was a customer or client
      of
      the Company in the Business during the period in which the Employee was employed
      by the Company, or any person or entity with whom the Company had discussions
      regarding that person or entity becoming a client or customer of the Company
      in
      the Business during the period in which the Employee was employed by the
      Company, for the purpose of inducing any such customer or client to move its
      account from the Company to another company in the Business or otherwise
      terminate or modify in a manner that is adverse to the Company its relationship
      with the Company; provided, however, that nothing in this sentence shall prevent
      the Employee from becoming employed by or providing consulting services to
      any
      such customer or client of the Company in the Business, or (ii) solicit any
      other employee of the Company for employment or a consulting or other services
      arrangement with an Other Entity or to otherwise terminate their employment
      with
      the Company. The restrictions of this Section
      3.3
      shall
      not be deemed to prevent the Employee from owning not more than five per cent
      (5%) of the issued and outstanding shares of any class of securities of an
      issuer whose securities are listed on a national securities exchange or
      registered pursuant to Section 12(g) of the Securities Exchange Act of 1934,
      as
      amended. In the event a court of competent jurisdiction determines that the
      foregoing restriction is unreasonable in terms of geographic scope or otherwise
      then the court is hereby authorized to reduce the scope of said restriction
      and
      enforce this Section
      3.3
      as so
      reduced. If any sentence, word or provision of this Section
      3.3
      shall be
      severed herefrom and the remainder shall be enforced as it the unenforceable
      sentence, word or provision did not exist. Notwithstanding any provision of
      this
      Agreement to the contrary, the terms and conditions of this Section
      3.3
      shall
      survive for a period of two (2) years following termination of the Employee's
      employment with the Company, at which time the terms and conditions of this
      Section
      3.3
      shall
      terminate.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Section
      3.4.
      Survival.
      Except
      as set forth below, the provisions of Sections
      3.1,
      3.2
      and
3.3
      shall
      survive and be enforceable following termination of Employee's employment with
      the Company, regardless of the reason for or circumstances of such termination.
      

     

    ARTICLE
      4

     

    Termination
      of Employment

     

    Section
      4.1.
      Resignation
      by the Employee.
      The
      Employee may resign from his employment with the Company at any time by
      providing written notice to the Company of resignation as set forth below.
      

     

    Section
      4.1.1.
      Resignation
      with "Good Reason."
      Employee may resign at any time for "good reason," due to:

     

    (a) a
      material breach of this Agreement by the Company which continues after the
      Employee has given the Company thirty (30) days' written notice of such breach,
      or 

     

    (b) the
      assignment to the Employee of duties materially inconsistent with this Agreement
      other than in accordance with the terms of this Agreement, and the Company
      has
      not rectified such assignment within thirty (30) days after the Employee has
      given the Company written notice of such breach. 

     

    A
      termination by the Employee for "good reason" shall entitle the Employee to
      the
      same compensation and benefits as if the Employee had been terminated by the
      Company without Cause. In the event of a termination by the Employee for "good
      reason," the provisions of Section
      3.3
      shall
      not apply and shall be of no force or effect. 

     

    Section
      4.1.2.
      Resignation
      Without "Good Reason."
      The
      Employee may resign from his employment with the Company at any time by
      providing written notice to the Company at least fourteen (14) days prior to
      the
      effective date of the resignation (the actual effective date of such resignation
      pursuant to any subsection of Section
      4.1
      being
      the "Resignation
      Date").

     

    Section
      4.1.3.
      Post-Resignation
      Undertakings.
      Upon
      any resignation by the Employee, the Employee shall use reasonable best efforts
      to assist the Company in good faith to effect a smooth transition. 

     

    Section
      4.2.
      Termination
      by the Company.
      The
      Company may terminate the Employee's employment with the Company at any time
      (the actual date of termination being referred to as the "Termination
      Date")
      with
      or without Cause (as defined herein), by providing written notice of the
      Termination Date to the Employee ("Termination
      Notice").
      Unless otherwise provided in a Termination Notice, any Termination Notice shall
      be effective immediately and Employee's employment shall terminate on the
      Termination Date set forth therein. Upon termination of Employee by the Company
      pursuant to Section
      4.2,
      the
      Employee shall use reasonable best efforts to assist the Company in good faith
      to effect a smooth transition. Upon receipt by the Employee of a Termination
      Notice pursuant to this Section
      4.2,
      the
      Company may request the Employee to vacate the premises owned by the Company
      and
      used in connection with the Business within a reasonable time. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Section
      4.2.1.
      Termination
      by the Company With Cause.
      This
      Agreement shall be deemed to be terminated and the employment relationship
      between the Employee and the Company shall be deemed severed upon written notice
      to the Employee by the Company after the occurrence of any of the following,
      each of which shall constitute "Cause" for purposes of this
      Agreement:

     

    (a) The
      final, non-appealable imposition of any restrictions or limitations by any
      governmental authority having jurisdiction over the Employee to such an extent
      that he cannot render the services for which he was employed.

     

    (b) The
      Employee (i) willfully and continually fails or refuses (without proper cause)
      to substantially perform the duties of his employment and to adhere in all
      material respects to the provisions of this Agreement and the written policies
      of the Company, which failure shall not be remedied within ten (10) business
      days after written notice from the Company to the Employee, or (ii) conducts
      himself in a fraudulent manner, or (iii) conducts himself in an unprofessional
      or unethical manner which in the reasonable judgment of the Board of Directors
      of the Company is detrimental to the Company.

     

    (c) The
      Employee willfully and continually fails or refuses to adhere to any written
      agreements to which the Employee and the Company or any of its affiliates are
      parties, which failure shall not be remedied within ten (10) business days
      after
      written notice from the Company to the Employee.

     

    (d) Employee
      is convicted of a felony or a crime involving moral turpitude or enters a plea
      of nolo contendere thereto.

     

    Section
      4.2.2.
      Termination
      upon Employee's Death.
      The
      Employee's employment shall be automatically terminated and the employment
      relationship between the Employee and the Company shall be deemed severed upon
      the death of the Employee during the Employment Period. 

     

    Section
      4.2.3.
      Termination
      upon Employee's Permanent Disability.
      The
      Company shall may terminate Employee's employment upon fourteen (14) days notice
      in the event of the
      permanent disability of the Employee, which for the purposes of this Agreement
      is defined as the Employee's inability, through physical or mental illness
      or
      other cause, to perform, in the opinion of the Board, his normal duties as
      an
      employee for a period of ninety (90) days out of any one hundred twenty (120)
      day period during the term of this Agreement or for a period of ninety (90)
      consecutive days.  

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Section
      4.3.
      Consequences
      of Termination of Employment.
      

     

    Section
      4.3.1.
      Termination
      without Cause and Resignation with "Good Reason."
      In the
      event of termination of Employee's employment without Cause pursuant to
Section
      4.2.1
      or the
      resignation by Employee for "good reason" pursuant to Section
      4.1.1,
      (a) the
      Company shall pay to Employee the Employee's then current salary through the
      Termination Date or Resignation Date, payable to Employee no later than the
      Company's next regular payroll payment date following the Resignation Date
      or
      Termination Date, and shall pay Employee as compensation for loss of office
      (i)
      a sum equal to Employee's then-current base salary for the remainder of the
      Initial Term, to be paid in equal monthly installments over the period following
      the Termination Date or Resignation Date, which payments shall be paid in
      accordance with the normal payroll procedures of the Company and shall be
      subject to all required withholdings and deductions, provided that such payments
      shall cease if the Employee becomes employed during such period, (ii) all
      vacation accrued as of the Termination Date or Resignation Date calculated
      in
      accordance with Section
      1.2.5,
      payable
      to Employee no later than the Company's next regular payroll payment date
      following the Resignation Date or Termination Date, and (iii) all bonuses earned
      but not paid as of the Termination Date or Resignation Date; and (b) the
      provisions of Section
      3.3
      shall
      not apply and shall be of no further force or effect. Payment of the bonus,
      if
      any, shall be made on or before March 31 of the year following the Resignation
      Date or Termination Date.

     

    Section
      4.3.2.
      Termination
      for Cause and Resignation without Good Reason.
      In the
      event of termination of Employee's employment for Cause or the resignation
      by
      Employee without "good reason," the Company shall pay to Employee the Employee's
      earned but unpaid then-current base salary through the Termination Date or
      Resignation Date, payable to Employee no later than the Company's next regular
      payroll payment date following the Resignation Date or Termination Date, and
      which payments shall be subject to all required withholdings and deductions,
      (b)
      all vacation accrued as of the Termination Date or Resignation Date calculated
      in accordance with Section
      1.2.5,
      payable
      to Employee no later than the Company's next regular payroll payment date
      following the Resignation Date or Termination Date, and (c) all bonuses earned
      but not paid as of the Termination Date or Resignation Date. Payment of the
      bonus, if any, shall be made on or before March 31 of the year following the
      Resignation Date or Termination Date.

     

    Section
      4.3.3.
      Death
      of Employee.
      In the
      event of the death of Employee, the Company shall pay to Employee's executor,
      personal representative, administrator, or heirs, as the case may be, the
      Employee's earned but unpaid then-current base salary through the date of the
      Employee's death, payable no later than the Company's next regular payroll
      payment date following the death of Employee, which payment shall be subject
      to
      all required withholdings and deductions, (b) all vacation accrued as of the
      Termination Date calculated in accordance with Section
      1.2.5,
      payable
      no later than the Company's next regular payroll payment date following the
      death of Employee, and (c) all bonuses earned but not paid as of the date of
      Employee’s death. Payment of the bonus, if any, shall be made on or before March
      31 of the year following Employee's death.

     

    Section
      4.3.4.
      Permanent
      Disability of Employee.
      In the
      event of termination of Employee's employment as a consequence of Employee's
      Permanent Disability, the Company shall pay to Employee the Employee's earned
      but unpaid then-current base salary through the Termination Date, payable to
      Employee no later than the Company's next regular payroll payment date following
      the Termination Date, and which payments shall be subject to all required
      withholdings and deductions, (b) all vacation accrued as of the Termination
      Date
      calculated in accordance with Section
      1.2.5,
      payable
      to Employee no later than the Company's next regular payroll payment date
      following the Termination Date, and (c) all bonuses earned but not paid as
      of
      the Termination Date. Payment of the bonus, if any, shall be made on or before
      March 31 of the year following the Termination Date. 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    Section
      4.3.5.
      Additional
      Compensation. Employee
      shall not be entitled to other compensation as a result of the termination
      of
      his employment for any reason, except pursuant to Article
      5.
      

     

    ARTICLE
      5

     

    Change
      in Control

     

    The
      Board
      of Directors of the Company (the "Board")
      has
      determined that it is in the best interests of the Company and its shareholders
      to assure that the Company will have the continued dedication of the Employee,
      notwithstanding the possibility or occurrence of a Change in Control (as defined
      below) of the Company. The Board believes it is imperative to diminish the
      inevitable distraction of the Employee by virtue of the personal uncertainties
      and risks created by a pending or threatened Change in Control and to encourage
      the Employee's full attention and dedication to the Company currently and in
      the
      event of any pending, threatened or actual Change in Control, and to provide
      the
      Employee with compensation and benefits arrangements upon a Change in Control
      which are consistent with the Employee’s significant leadership position and
      which are competitive. (See Addendum
      A
      for
      Definition of "Change
      in Control").
      If
      Employee receives compensation pursuant to this Article
      5,
      Employee shall not be entitled to any compensation payable pursuant to
Article
      4.
      

     

    Section
      5.1.
      Involuntary
      Termination/Change in Control.
      In the
      case of involuntary termination of the Employee, resulting from a Change in
      Control of the Company, and due to one or more of the following conditions
      being
      met up to one (1) year following such Change in Control:

     

    (a) Elimination
      or diminution of the Employee’s position, authority, duties and responsibilities
      relative to the most significant of those held, exercised and assigned at any
      time during the six (6) month period immediately preceding a Change in Control;
      or

     

    (b) Change
      in
      location requiring the Employee’s services to be performed at a location other
      than the location where the Employee was employed immediately preceding a Change
      in Control, other than any office which is the headquarters of the Company
      and
      is less than thirty-five (35) miles from such location.

     

    The
      Employee will be deemed to have received written notice of involuntary
      termination and will be paid compensation in the form of Terminal Pay as set
      forth in this Article
      5.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Section
      5.2.
      Terminal
      Pay.
      In the
      event of the termination of Employee's employment pursuant to Section
      5.1,
      Employee will receive terminal pay, equal to Eight Thousand Three Hundred
      Thirty-three and 34/100 Dollars ($8,333.34) for each month remaining in the
      Employment Period as of the date of termination of employment (plus
      a
      prorated amount at the same rate for any portion of a month remaining in the
      Employment Period as of such date), which amount shall be payable to the
      Employee by the Company no later than the Company's next regular payroll payment
      date following the date of termination of Employee's employment subject to
      all
      required withholdings and deductions (the "Terminal
      Pay").

     

    Section
      5.3.
      Special
      Bonus.
      In
      addition to the Terminal Pay, the Employee will be eligible, based on
      performance, for any special bonus program which may be instituted by the
      Company in recognition of particular assignments, duties or responsibilities
      required during the crucial transition period leading up to, or following,
      the
      Change in Control.

     

    ARTICLE
      6

     

    Miscellaneous

     

    Section
      6.1.
      Relationship
      between the Parties.
      The
      relationship between the Company and the Employee shall be that of an employer
      and an employee, and nothing contained herein shall be construed or deemed
      to
      give the Employee any interest in any of the assets of the Company.

     

    Section
      6.2. Eligibility.
      Employee must provide proof of eligibility to work in the United States, within
      three days of employment, as mandated by current federal employment laws. Proof
      of eligibility includes a valid driver's license, original social security
      card,
      passport, certified birth certificate, or an unexpired employment eligibility
      card.

     

    Section
      6.3.
      Notices.
      Any
      notice required or permitted to be given under this Agreement shall be in
      writing and delivered personally or sent by certified mail, addressed to the
      party entitled to receive said notice, at the following addresses:

     

    
      
        
          
            	
                    If
                      to Company:

                  	
                    Bioanalytical
                      Systems Inc.

                  	 
	
                     

                  	
                    2701
                      Kent Avenue

                  	 
	
                     

                  	
                    West
                      Lafayette, IN 47906

                  	 
	
                     

                  	
                    Attn:
                      Board of Directors

                  	 
	
                     

                  	
                     

                  	 
	
                    If
                      to Employee:

                  	
                    Richard
                      M. Shepperd

                  	 
	
                     

                  	
                    2701
                      Kent Avenue

                  	 
	
                     

                  	
                    West
                      Lafayette, IN 47906

                  	 

          

           

        

      

    

    or
      at
      such other address as may be specified from time to time in notices given in
      accordance with the provisions of this Section
      5.3.

     

    Section
      6.4.
      Enforceability.
      Both
      the Company and the Employee stipulate and agree that if any portion, paragraph
      sentence, term or provision of this Agreement shall to any extent be declared
      illegal, invalid or unenforceable by a duly authorized court of competent
      jurisdiction, then, (a) the remainder of this Agreement or the application
      of
      such portion, paragraph, sentence, term or provision in circumstances other
      than
      those as to which it is so declared illegal, invalid or unenforceable, shall
      not
      be affected thereby, (b) this Agreement shall be construed in all respects
      as if
      the illegal, invalid or unenforceable matter had been omitted and each portion
      and provision of this Agreement shall be valid and enforceable to the fullest
      extent permitted by law and (c) the illegal, invalid or unenforceable portion,
      paragraph, sentence, term or provision shall be replaced by a legal, valid
      and
      enforceable provision which most closely reflects the intention of the parties
      hereto as reflected herein.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Section
      6.5.
      Nonwaiver.
      The
      failure of either party hereto to insist in any one or more instances upon
      performance of any of the provisions of this Agreement or to pursue its or
      his
      rights hereunder shall not be construed as a waiver of any such provisions
      or as
      the relinquishment of any such rights.

     

    Section
      6.6.
      Succession.
      This
      Agreement shall inure to the benefit of and be binding upon the parties hereto
      and upon their heirs, personal representatives, and successor entities. This
      Agreement may not be assigned by either party without prior written agreement
      of
      the other party.

     

    Section
      6.7.
      Governing
      Law.
      The
      laws of the State of Indiana shall govern the construction and enforceability
      of
      this Agreement.

     

    Section
      6.8.
      Entire
      Agreement.
      This
      Agreement constitutes the entire Agreement between the parties as to the subject
      matter contained herein and all other agreements or understandings are hereby
      superseded and terminated.

     

    Section
      6.9.
      Headings.
      The
      headings of the sections are inserted for convenience only and do not affect
      the
      interpretation or construction of the sections.

     

    Section
      6.10.
      Remedies.
      Employee acknowledges that a remedy at law for any breach or threatened breach
      of the provisions of Sections
      3.1
      through
3.3
      of this
      Agreement would be inadequate and therefore agrees that the Company shall be
      entitled to injunctive relief, both preliminary and permanent without any
      requirement to post a bond or other surety, in addition to any other available
      rights and remedies in case of any such breach or threatened breach; provided,
      however, that nothing contained herein shall be construed as prohibiting the
      Company from pursuing any other remedies available for any such breach or
      threatened breach. Employee further acknowledges and agrees that in the event
      of
      a breach by Employee of any provision of Sections
      3.1
      through
3.3
      of this
      Agreement, the Company shall be entitled, in addition to all other remedies
      to
      which the Company may be entitled under this Agreement, to recover from Employee
      its reasonable costs including attorney's fees if the Company is the prevailing
      party in an action by the Company. This Agreement is entered into by the Company
      for itself and in trust for each of its affiliates with the intention that
      each
      company will be entitled to enforce the terms of this Agreement directly against
      Employee.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company and the Employee have executed, or caused to be
      executed, this Agreement as of the day and year first written
      above.

     

    
      	
              "COMPANY"

               

              Bioanalytical
                Systems, Inc.

            	 	 	"EMPLOYEE"
	 	 	 	 
	By:
/s/
              Michael R. Cox  	 	 	/s/ Richard
              M. Shepperd 
	
              

              Michael
                R. Cox 

              Vice
                President-Finance and 

              Chief
                Financial Officer

            	 	 	
              
Richard
              M. Shepperd

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    

    ADDENDUM
      A

     

    Definition
      of Change in Control

    

    A
      "Change
      in Control" shall mean the occurrence of any of the following
      events:

     

    
      	 	
              1

            	
              Approval
                by shareholders of the Company of (a) any consolidation or merger
                of the
                Company in which the Company is not the continuing or surviving
                corporation or pursuant to which shares of stock of the Company would
                be
                converted into cash, securities or other property, other than a
                consolidation or merger of the Company in which holders of its common
                shares immediately prior to the consolidation or merger have substantially
                the same proportionate ownership of voting common stock of the surviving
                corporation immediately after the consolidation or merger as immediately
                before, or (b) a sale, lease, exchange or other transfer (in one
                transaction or a series of related transactions) of all or substantially
                all the assets of the Company.

            

    

     

    
      	 	
              2

            	
              A
                change in the majority of members of the Board of Directors of the
                Company
                within a twenty-four (24) month period unless the election, or nomination
                for election by the Company shareholders, of each new director was
                approved by a vote of two-thirds (2/3) of the directors then still
                in
                office who were in office at the beginning of the twenty-four (24)
                month
                period.

            

    

     

    
      	 	
              3

            	
              The
                Company combines with another company and is the surviving corporation
                but, immediately after the combination, the shareholders of the Company
                immediately prior to the combination do not hold, directly or indirectly,
                more than fifty percent (50%) of the share of voting common stock
                of the
                combined company (there being excluded from the number of shares
                held by
                such shareholders, but not from the shares of voting common stock
                of the
                combined company, any shares received by affiliates (as defined in
                the
                rules of the SEC) of such other company in exchange for stock of
                such
                other company). 

            

    

     

    

    
      
         

      

      
        12

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