LEASE AGREEMENT BETWEEN CONNECTICUT GENERAL LIFE INSURANCE COMPANY AND AMERICAN PHARMED LABS, INC

Office Lease Agreement

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EPICEPT CORP | CONNECTICUT GENERAL LIFE INSURANCE COMPANY | AMERICAN PHARMED LABS, INC.

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Title: LEASE AGREEMENT BETWEEN CONNECTICUT GENERAL LIFE INSURANCE COMPANY AND AMERICAN PHARMED LABS, INC
Governing Law: New Jersey Date: 1/10/2005

LEASE AGREEMENT BETWEEN CONNECTICUT GENERAL LIFE INSURANCE COMPANY AND AMERICAN PHARMED LABS, INC, Parties: epicept corp , connecticut general life insurance company , american pharmed labs inc.

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EXHIBIT 10.12

LEASE AGREEMENT

BETWEEN

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

(LANDLORD)

-AND-

AMERICAN PHARMED LABS, INC.

(TENANT)

DATED: JULY 31, 1997

PREMISES: 270 SYLVAN AVENUE

ENGLEWOOD CLIFFS, NEW JERSEY

<PAGE>

LEASE

THIS LEASE, made as of the 31st day of July, 1997 by and between

CONNECTICUT GENERAL LIFE INSURANCE COMPANY, whose address is 900 Cottage Grove

Road, Hartford, Connecticut 06152 ("Landlord") and AMERICAN PHARMED LABS, INC.,

whose address is 21 Henderson Drive, West Caldwell, New Jersey 07006 ("Tenant").

ARTICLE 1. DEFINITIONS

For all purposes of this Lease, the following terms shall have the

meanings herein specified:

101. "Additional Rent" shall mean all amounts payable by Tenant under this

Lease, other than the payment of Minimum Annual Rent, including those items set

forth in Section 502 of this Lease.

102. "Base Year" shall mean the calendar year 1998.

103. "Brokers" shall mean Landlord's Broker and Tenant's Broker.

104. "Building" shall mean the office building known as the Office Center

at Englewood Cliffs constructed on the Land at 270 Sylvan Avenue, Englewood

Cliffs, New Jersey.

105. "Building Holidays" shall mean New Year's Day, Washington's Birthday,

Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,

Thanksgiving Day and Christmas Day, as each of said holidays are celebrated in

the State of New Jersey. In addition to the above denominated days, holidays

shall also include days prior or subsequent to the enumerated holidays such as

the Friday after Thanksgiving; Friday, when Christmas falls on a Thursday; etc.

In addition, if any holiday falls on a weekend and is celebrated by the State of

New Jersey or Federal Government on a weekday, such weekday shall also be deemed

a holiday hereunder.

106. "Business Hours" shall mean 8:00 a.m. to 6:00 p.m. on Mondays through

Fridays, excluding Building Holidays.

107. "Commencement Date" shall mean September 1, 1997 with respect to the

First Phase Space (the "First Commencement Date") and December 1, 1997 with

respect to the Second Phase Space (the "Second Commencement Date").

108. "Common Area" or "Common Areas" shall mean the Interior Common Areas

and the Exterior Common Areas.

109. "Demised Premises" shall mean that portion of the first (1st) floor

of the Building, consisting of approximately 9,605 gross rentable square feet of

office space, as shown on the floor plan of the Building annexed hereto as

Exhibit "A" and made a part hereof. The Demised Premises is comprised a portion

of the first floor consisting of

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approximately 6,537 gross rentable square feet (the "First Phase Space") and a

contiguous portion of the first floor consisting of approximately 3,068 gross

rentable square feet (the "Second Phase Space").

110. "Excusable Delay" shall mean a delay caused by governmental action,

or lack thereof, shortages or unavailability of materials and/or supplies, labor

disputes, strikes, slow downs, job actions, picketing, secondary boycotts, fire

or other casualty, delays in transportation, acts of God, requests of any

governmental agencies or authorities, acts of declared or undeclared war, public

disorder, riot or civil commotion, or by anything else beyond the reasonable

control of Landlord.

111. "Exterior Common Area" or "Exterior Common Areas" shall mean all

areas, structures, parking areas, access driveways, roadways, sidewalks, plazas,

landscaped areas, traffic lights, storm drainage facilities, sanitary sewer,

domestic and fire water systems, fire protection installations, electric power

and telephone cables and lines and other utility connections, facilities and

other improvements (above and below ground) which now exist or hereafter are

constructed on the Property for use in common by Landlord, Tenant and other

tenants located in the Building.

112. "Hazardous Substances" shall mean any "hazardous chemical,"

"hazardous substance" or similar term as defined in the Comprehensive

Environmental Responsibility Compensation and Liability Act, as amended (42

U.S.C. 9601, et. seq.), the New Jersey Industrial Site Recovery Act, as amended

(N.J.S.A. 13:1K-6 et seq.), the New Jersey Spill Compensation and Control Act,

as amended (N.J.S.A. 58:10-23.1 et seq.), any rules or regulations promulgated

thereunder, or in any other present or future applicable Federal, State or local

law, rule or regulation dealing with environmental protection.

113. "Interior Common Area" or "Interior Common Areas" shall mean those

areas devoted to corridors, elevator foyers, rest rooms, mechanical rooms,

janitorial closets, electrical and telephone closets, vending areas, and lobby

areas (whether at ground level or otherwise), and other similar facilities

provided for the common use or benefit of tenants generally and/or the public.

114. "Land" shall mean the real property, together with all easements and

appurtenances thereto, located at 270 Sylvan Avenue, Englewood Cliffs, New

Jersey.

115. "Landlord's Broker" shall mean Alexander Summer, L.L.C.

116. "Lease" or "this Lease" consists of this Agreement of Lease and

Exhibits "A" through "F" attached hereto and made a part hereof.

117. "Lease Year" shall mean each calendar year subsequent to 1997.

118. "Minimum Annual Rent" shall mean the fixed rental payable pursuant to

Section 501 of this Lease.

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119. "Operating Expenses" shall have the meaning given such term in

Section 502 of this Lease.

120. "Permitted Signage" shall mean interior and exterior signage for the

Demised Premises as more particularly described in Exhibit "B".

121. "Property" shall mean collectively the Land, the Building, the Common

Areas and all other improvements now or hereafter located thereon.

122. "Rent" shall mean Minimum Annual Rent and Additional Rent.

123. "Security" shall mean the amount to be deposited with Landlord by

Tenant pursuant to Section 4001 of this Lease.

124. "Tenant's Broker" shall mean Sylvan Lawrence Company, Inc.

125. "Tenant's Percentage" shall mean 7.91%. In the event the office

complex shall be increased by an addition or additions to the Building, or if

separate buildings containing rentable space are constructed as part of the

office complex, Tenant's Percentage shall be revised accordingly.

126. "Term", sometimes also referred to as the "Lease Term", shall mean

the time period commencing on the Commencement Date and terminating on the

Termination Date.

127. "Termination Date" shall mean September 30, 2005.

ARTICLE 2. DEMISED PREMISES

201. Landlord hereby leases to Tenant and Tenant hereby leases from

Landlord, for the Term and upon the terms, conditions, covenants and agreements

herein provided, the Demised Premises to be used exclusively by Tenant solely

for those uses permitted under Article 3 hereof.

ARTICLE 3. USE

301. Tenant shall use and occupy the Demised Premises for general office

purposes and a computerized analytical laboratory, which includes the use of

professional computer systems which are technically combined with research

microscopes and video cameras and monitors. The representative technical

procedures to be undertaken within the Demised Premises are primarily

computerized image processing, including microscopic optical determination of

tablets or patches including their size, weight or content or optical evaluation

of premanufactured commercial materials such as patch components and packing

materials. The computer laboratories will also simulate pharmaceutical

development processes and evaluate statistical documentations. Tenant shall not

use the Demised Premises for any purpose other than as described in this Section

301.

<PAGE>

ARTICLE 4. TERM AND POSSESSION

401. The Lease Term shall commence on the Commencement Date and shall

continue until the Termination Date.

402. During the Term hereof, Landlord may exercise all Landlord's powers,

authorities, remedies and benefits and Tenant shall perform all obligations of

Tenant.

403. The Demised Premises are leased to Tenant on an "as is" basis,

subject to (i) reasonable wear and tear, (ii) the rights of the present

occupant(s) of the Demised Premises to remove its or their trade fixtures and

other property from the Demised Premises, (iii) the completion of Landlord's

Work as provided in Article 6 hereof, and (iv) any express representations and

warranties of Landlord set forth herein. Except as expressly set forth herein,

neither Landlord nor Landlord's agents have made any representations or promises

with respect to the physical condition of the Building, the Land upon which it

is erected or the Demised Premises, the rents, leases, expenses of operation or

any other matter or thing affecting or related to the Demised Premises except as

herein expressly set forth and no rights, easements or licenses are acquired by

Tenant by implication or otherwise except as expressly set forth in the

provisions of this Lease. Tenant has inspected the Building and the Demised

Premises and is thoroughly acquainted with their condition, and agrees, subject

to the provisions of this Section 403, to take the same "as is" and acknowledges

that the taking of possession of the Demised Premises by Tenant shall be

conclusive evidence that the Demised Premises and Building of which the same

form a part were in good and satisfactory condition at the time such possession

was so taken, except for latent defects not readily apparent upon reasonable

inspection. Landlord represents that it has not received any notice of violation

of any applicable law, code and ordinance with respect to the Demised Premises.

404. Following the Second Commencement Date, the men's and women's

bathrooms on the first floor shall be for the exclusive use of Tenant.

405. In the event the Second Commencement Date is delayed beyond January

15, 1998, Tenant shall be entitled to one additional day of free Rent following

the Second Commencement Date for each day of such delay, unless Landlord's

failure to deliver the Second Phase Space by said date is a result of: (i)

Landlord's inability to obtain materials, finishes or installations requested by

Tenant which are not readily available from ordinary trade sources; or (ii) any

act or omission by Tenant or its agents, representatives, and/or employees (each

a "Tenant Delay"). In the event that the Second Commencement Date is delayed

beyond February 16, 1998 for any reason other than a Tenant Delay, Tenant may

terminate this Lease upon written notice to Landlord given no later than

February 23, 1998.

ARTICLE 5. RENT

501. During the Lease Term Tenant shall pay to Landlord Minimum Annual

Rent as follows:

<PAGE>

(a) Commencing on November 1, 1997 and continuing through and including

the sixtieth (60th) day after the Second Commencement Date, Tenant shall

pay to Landlord monthly installments of Minimum Annual Rent for the First

Phase Space only in the amount of Ten Thousand Three Hundred Fifty and

25/100 Dollars ($10,350.25).

(b) Commencing on the sixty-first (61st) day after the Second Commencement

Date and continuing through and including August 31, 2000, Tenant shall

pay to Landlord Minimum Annual Rent equal to One Hundred Eighty-Two

Thousand Four Hundred Ninety-Five and 00/100 Dollars ($182,495.00), which

shall be payable in monthly installments of Fifteen Thousand Two Hundred

Eight and 00/100 Dollars ($15,208.00).

August 31, 2003, Tenant shall pay to Landlord Minimum Annual Rent equal to

One Hundred Ninety-Six Thousand Nine Hundred Three and 00/100 Dollars

($196,903.00), which shall be payable in monthly installments of Sixteen

Thousand Four Hundred Eight and 00/100 Dollars ($16,408.00).

(d) Commencing on September 1, 2003 and continuing through and including

the Termination Date, Tenant shall pay to Landlord Minimum Annual Rent

equal to Two Hundred Six Thousand Five Hundred Eight and 00/100 Dollars

($206,508.00), which shall be payable in monthly installments of Seventeen

Thousand Two Hundred Nine and 00/100 Dollars ($17,209.00).

Each monthly installment of Minimum Annual Rent shall be made on the first day

of each and every calendar month during the Term. If the Commencement Date shall

be a day other than the first day of the month, the rental payment shall be pro

rated for said month. The first monthly installment of Minimum Annual Rent shall

be payable upon execution of this Lease.

502. In addition to the Minimum Annual Rent to be paid as herein provided,

Tenant shall pay, as Additional Rent, the cost of electrical energy consumed by

Tenant as provided for in Article 9 herein and Tenant's Percentage of escalation

of all Operating Expenses after the Base Year in accordance with this Article 5.

Operating Expenses shall include, without limitation, the following:

(a) Taxes:

(i) The amount of real estate taxes (or tax impositions in

substitution for real estate taxes), assessments, sewer rents,

rates and charges, state and local taxes, transit taxes or any

other governmental charge, general, special, ordinary or

extraordinary, hereinafter collectively called "Taxes" (but

not including income or franchise taxes or any other taxes

imposed upon or measured by Landlord's income or profits,

except if in substitution for real estate taxes as hereinafter

provided) which may now or hereafter be levied or

<PAGE>

assessed against the Building, the Property and related

improvements. Landlord shall take the benefit of the

provisions of any statute or ordinance permitting any

assessment to be paid over a period of time, and Tenant shall

be obliged to pay only Tenant's Percentage of the installments

of any such assessment applicable and payable during the Term

of this Lease or any renewal hereof;

(ii) Tenant's Percentage of Taxes in excess of the Taxes for the

Base Year shall be determined from the amount finally

determined to be legally due as a result of legal proceedings

or otherwise. In the event the Taxes for the Base Year have

not been finally determined by legal proceedings or otherwise

at the time of payment of Taxes for any subsequent year, the

actual amount of Taxes paid by Landlord for the Base Year

shall be used to calculate any excess thereof. Upon a final

determination of the Taxes for the Base Year by legal

proceedings or otherwise, Landlord shall deliver to Tenant a

statement setting forth the amount of Taxes for the Base Year

as finally determined and showing the computation of any

adjustment due to Landlord or to Tenant by reason thereof;

(iii) If Landlord shall receive any tax refund in respect of any tax

year following the Base Year, Landlord shall deduct from such

tax refund any expenses incurred in obtaining such tax refund,

and out of the remaining balance of such tax refund, Landlord

shall credit to Tenant Tenant's Percentage of such refund. Any

expenses incurred by Landlord in contesting the validity or

the amount of the assessed valuation of the Property or of any

Taxes for any year after the Base Year, to the extent not

offset by a tax refund, shall be included as an item of Taxes

for the tax year in which such contest shall be finally

determined for the purpose of computing the Additional Rent

due Landlord or any credit due to Tenant hereunder;

(iv) If the tax year for real estate taxes shall be changed, then

an appropriate adjustment shall be made in the computation of

the Additional Rent due to Landlord or any credit due to

Tenant, in accordance with sound accounting principles to

effectuate the changeover to any new tax year adopted by any

taxing authority; and

(v) If the last year of the Term ends on any day other than the

last day of a tax year, any payment due to Landlord or credit

due to Tenant by reason of any increase in Taxes shall be

prorated and Tenant covenants to pay any amount due to

Landlord within thirty (30) days after being billed therefor

and Landlord covenants to credit any amount due to Tenant, as

the case may be. These covenants shall survive the expiration

or termination of this Lease.

<PAGE>

(b) Costs of Operation:

(i) As used herein, the term "Costs of Operation" shall mean those

costs or expenses paid or incurred by Landlord for operating,

maintaining and repairing the Property, including, by way of

example and without limitation, the cost of electricity for

Common Areas including outside lighting, the cost of heating,

ventilating and air-conditioning the Building, water, sewer,

fuel, window cleaning, janitorial service, security, refuse

removal, insurance of all kinds carried by Landlord and

applicable to the Property (including without limitation, fire

and extended coverage insurance, public liability, elevator,

workmen's compensation, boiler and machinery, use and

occupancy, health, accident and group life insurance of all

employees and casualty rent insurance), snow removal,

maintenance and cleaning of the parking lot, mowing and

seeding of the lawn and tree areas, repairs of any kind for

which Landlord is not reimbursed, painting, replacement of

worn out mechanical or damaged equipment, uniforms, management

fees, equipment rentals or other operating costs paid pursuant

to such rentals, building and janitorial supplies, sundries,

sales or use tax on supplies or services, wages and salaries

of all persons engaged by Landlord in the operation,

maintenance and repair of the Property, legal and accounting

expenses, the cost of capital improvements or other

modifications to the Property which reduce costs of operation

of the Property (amortized over the useful lives of such

improvements or modifications), alterations and improvements

to the Property made by reason of the laws and requirements of

any public authorities or the requirements of insurance bodies

that was not applicable or in effect on the date of this

Lease, and any other expense or cost, which, in accordance

with generally accepted accounting principles and the standard

management practices for office buildings comparable to the

Building would be considered as an expense of operating,

maintaining or repairing the Property. Excluded from Costs of

Operation are the cost of the base Building capital upgrades

currently under construction, costs reimbursed by insurance,

the cost of work performed specifically for a tenant in the

Building for which such tenant reimburses Landlord, legal fees

incurred in connection with the negotiation, preparation and

enforcement of leases in the Building or with respect to any

disputes with brokers or tenants of the Building, costs in

connection with preparing space for a new tenant, real estate

brokers' commissions, any salaries paid to any principal,

owner or stockholder of Landlord unless paid as reimbursement

for specific services which may come under the definition of

operating expenses as set forth herein, the cost of any

capital improvements made to the Building which are or may be

required due to any violation of the Americans with

Disabilities

<PAGE>

Act of 1990 which is existing as of the date of this Lease

(provided that Tenant shall be responsible for the cost of any

such compliance within the Demised Premises) and any fines or

penalties incurred due to any violation by Landlord of any

governmental laws, rules or regulations existing as of the

date of this Lease. In no event shall the cost of any item

included in Operating Expenses exceed the actual cost incurred

by Landlord for such item.

503. The amount by which the Operating Expenses for each Lease Year exceed

the Base Year Operating Expenses shall be referred to herein as the "Operating

Expense Escalation." Tenant shall be responsible for Tenant' s Percentage of the

Operating Expense Escalation for each Lease Year following the Base Year, or pro

rata portion thereof, during the Term as hereinafter provided:

(a) On or about January 1 of each Lease Year following the Base Year,

Landlord shall send to Tenant a statement ("Landlord's Estimate") of

projected Operating Expenses for the applicable Lease Year. Landlord shall

indicate, as part of Landlord's Estimate, what Tenant's Percentage of the

Operating Expense Escalation shall be, said amount to be paid in equal

monthly installments (rounded up to the nearest whole dollar) in advance

by Tenant as Additional Rent commencing on January 1 of each applicable

Lease Year after the Base Year, as shall be reflected in Landlord's

Estimate.

(b) If, during the course of any Lease Year, Landlord shall have reason to

believe that the Operating Expenses shall be higher than Landlord's

Estimate, then Landlord shall have the right, but not the obligation, to

adjust Landlord' s Estimate by a lump sum invoice for the months of the

Lease Year which precede the revised projections, and in addition, to

advise Tenant of any adjustment in future monthly amounts with the end

result that Operating Expenses shall be on a reasonably current basis each

Lease Year.

Year and each Lease Year thereafter, or as soon thereafter as reasonably

feasible, Landlord shall send to Tenant a statement of actual expenses

incurred for the prior Lease Year showing the pro rata share of the

Operating Expense Escalation due from Tenant based on Tenant's Percentage.

For each Lease Year, in the event that the amount prepaid by Tenant for

the Operating Expense Escalation exceeds the amount that was actually due

based upon actual year end Operating Expenses, then Landlord shall issue a

credit to Tenant in an amount equal to the overcharge, which credit Tenant

may apply to future rental payments until Tenant has been fully credited

with the overcharge. If the credit due to Tenant is more than the

aggregate total of future rental payments, Landlord shall pay to Tenant

the difference between the credit and such aggregate total. In the event

Landlord has undercharged Tenant, then Landlord shall send Tenant an

invoice with the additional amount due which amount shall constitute

Additional Rent and shall be paid in full by Tenant within twenty (20)

days of receipt of such invoice.

<PAGE>

(d) Tenant or its representatives shall have the right, upon reasonable

notice, to examine the books and records of the Property with respect to

the items in the foregoing statement of Operating Expenses during normal

business hours at any time within thirty (30) days following the delivery

by Landlord to Tenant of the statement delivered by Landlord under

subparagraph (c) above. Tenant shall have an additional thirty (30) days

to file any written exception to any item of expense, however, nothing

herein shall be deemed to afford Tenant any right to withhold any payment

due from Tenant to Landlord as invoiced by Landlord.

504. Should this Lease commence or terminate at any time other than the

first day of a calendar year, any payment due to Landlord or to Tenant by reason

of any increase or decrease in Operating Expenses shall be prorated and Tenant

shall pay any amount due to Landlord within twenty (20) days after being billed

therefor.

505. If, with respect to Operating Expenses, the Building is not

ninety-five percent (95%) occupied during the establishment of the Base Year,

then the Operating Expenses actually incurred shall be adjusted during any such

period within the Base Year so as to reflect ninety-five percent (95%)

occupancy. Similarly, if, during any Lease Year or proportionate part thereof

subsequent to the Base Year the Building is less than ninety-five percent (95%)

occupied, then the actual costs incurred as Operating Expenses shall be

increased during any such period to reflect ninety-five percent (95%) occupancy

so that at all times after the Base Year, the Operating Expenses shall be actual

costs, but in the event less than ninety-five percent (95%) of the Building is

occupied during all or part of the Lease Year involved, the Operating Expenses

shall not be less than that which would have been incurred had ninety-five

percent (95%) of the Building been occupied. The aforesaid adjustment shall only

be made with respect to those items that are in fact affected by variations in

occupancy levels. To the extent any Operating Expense is separately billed or

metered or for which Landlord receives reimbursements, said space shall be

considered vacant space for purposes of the aforesaid adjustment with respect to

such separately billed or metered expense.

506. Tenant's obligations to make the payments required by this Article 5

as Additional Rent shall survive any termination of this Lease by lapse of time

or otherwise.

507. All payments of Rent, including Additional Rent, shall be paid to

Landlord without demand and without deduction, set-off or counterclaim on the

first (1st) day of every month during the Lease Term. Without waiving any of

Landlord's other remedies for Tenant's failure to pay Rent as in this Lease

contained, Tenant agrees that any Rent not paid by the fifth (5th) business day

of any month shall require payment by Tenant of a late charge calculated at five

percent (5%) of the amount due and unpaid. In addition, all Rent payments

hereunder not made within five (5) business days of the due date shall bear

interest at the rate of one and one-half percent (1-1/2%) per month. Anything

hereinabove contained to the contrary notwithstanding, it is expressly

understood and agreed that any late payment of Rent or other charges as required

in this Lease shall be deemed a default pursuant to the terms and conditions of

this Lease after the expiration of any applicable grace period and the giving of

any required notices, for which Landlord shall have such rights or remedies as

provided in this Lease.

<PAGE>

508. In the event that any business, rent or other taxes that are now or

hereafter levied upon Tenant's use or occupancy of the Demised Premises are

enacted, changed or altered so that any of such taxes are levied against

Landlord, or the mode of collection of such taxes is changed so that Landlord is

responsible for collection or payment of such taxes, Tenant shall pay any and

all such taxes to Landlord upon written demand from Landlord as Additional Rent.

509. Landlord shall have all the rights and remedies for the collection of

Additional Rent as are available to Landlord for the collection of the Minimum

Annual Rent pursuant to the terms of this Lease and as permitted by law.

510. Rent and all sums payable hereunder by Tenant to Landlord shall be

paid in the legal tender of the United States of America for the payment of

public and private debts to:

Connecticut General Life Insurance Company

c/o Alexander Summer, L.L.C.

East 80 Route 4

Paramus, New Jersey 07652

or to such other person or place as Landlord shall from time to time designate

by written notice to Tenant.

ARTICLE 6. TENANT IMPROVEMENTS

601. Landlord shall relocate the interior entry door to the First Phase

Space to the plane of the wall of the lobby and install a new door between the

First Phase Space and the Second Phase Space at a location designated by Tenant

("Landlord's Work"). Except for Landlord's Work, Landlord shall have no

obligation to alter, improve, decorate or otherwise prepare the Demised Premises

for Tenant's occupancy. Landlord shall, however, deliver the Demised Premises in

broom clean condition, free and clear of any debris. All furniture of the prior

tenant will be removed, except for the conference room table and reception desk.

Landlord makes no representations or warranties with respect to any property of

the prior tenant.

602. Provided that Tenant has delivered to Landlord an insurance

certificate in accordance with Article 13 hereof, Tenant shall be permitted

access to the First Phase Space on and after August 1, 1997 and the Second Phase

Space on and after November 1, 1997, for the sole purpose of installing

furniture, moveable furnishings, telephone systems and office equipment ("Tenant

Installations") and performing Tenant's Work (as herein defined). Subject to any

applicable municipal restrictions, Tenant shall be permitted twenty-four (24)

hour access to the Demised Premises seven (7) days a week for the purpose of

completing Tenant Installations and Tenant's Work. In the event that Tenant

performs any Tenant Installations or Tenant's Work prior to the Commencement

Date, Tenant agrees promptly to notify Landlord of the names of its agents,

contractors or subcontractors who are to work in the Demised Premises, and to

furnish Landlord with such other information as Landlord may reasonably require.

All work done by Tenant, its

<PAGE>

agents, contractors, subcontractors or employees shall be scheduled and

performed so as not to conflict, interfere with, or delay any work undertaken by

Landlord in the Building. In the event that Tenant, its agents, contractors,

subcontractors or employees do not work in harmony with, or interfere with,

labor employed by Landlord, its agents, contractors, subcontractors or employees

or in the event any work stoppage, jurisdictional labor dispute or other

interference with Landlord, its agents, contractors, subcontractors or employees

occurs Landlord shall have the right to require Tenant to remove or cause the

removal forthwith all of Tenant's agents, contractors and employees from the

Demised Premises and Tenant agrees to comply with such demand immediately. Any

of Tenant's Installations and Tenant's Work shall be installed solely at

Tenant's risk. Tenant shall be liable to Landlord in the event Tenant, its

employees, agents, contractors or subcontractors damage any mechanical

equipment, or other property.

603. Landlord shall provide Tenant with an aggregate allowance not to

exceed Forty-Five Thousand and 00/100 Dollars ($45,000.00) ("Tenant's

Allowance") to be applied to the cost of the construction of tenant improvements

to the Demised Premises to be made by Tenant ("Tenant's Work"). Tenant's Work

shall be performed in accordance with all terms and conditions of Article 7 of

this Lease. Landlord shall pay the cost for Tenant's Work, up to the amount of

Tenant's Allowance, as follows:

(a) Landlord shall have received a requisition from the authorized

representative of Tenant, together with copies of invoices for Tenant's

Work and a certification that Tenant has inspected and approved all work

and has unconditionally authorized the disbursement of that portion of the

Tenant's Allowance as set forth in the requisition.

(b) Landlord shall have the right to verify the actual cost of Tenant's

Work installed in the Demised Premises as of the date of the requisition.

shall be paid within thirty (30) days of Tenant's submission of the

requisitions.

604. Landlord shall provide Tenant with an aggregate allowance not to

exceed One Thousand and 00/100 Dollars ($1,000.00) for architectural services

and permit applications relating to Landlord's Work. Said reimbursement shall be

made in one (1) installment, which shall be paid within thirty (30) days of

Tenant's submission of invoices.

ARTICLE 7. ALTERATIONS BY TENANT AND TRADE FIXTURES

701. Tenant shall not do any work in or about the Demised Premises or make

any alterations or additions thereto, without the prior written consent of

Landlord. All such work to which Landlord consents shall be performed and

installed at Tenant's sole cost and expense in accordance with plans and

specifications to be supplied by Tenant, which plans and specifications, and the

contractors, subcontractors and all suppliers of labor or materials shall in all

instances first be subject to Landlord's approval. Landlord's approval shall not

be unreasonably withheld or delayed if such alterations or

<PAGE>

additions are (i) made completely within the Demised Premises, (ii) do not

require modification of the existing Building, (iii) do not affect any

structural component of the Building, (iv) do not lessen the value of the

Demised Premises, and (v) do not impair or interfere with any Building systems.

During the work, Tenant shall maintain such insurance as Landlord may reasonably

require for the benefit of Landlord or such other parties as Landlord shall

designate. Landlord may require that Tenant furnish a guarantee by each of

Tenant's prime contractors for the benefit of Landlord, Tenant and such other

parties as Landlord shall designate, that all work, materials and equipment will

be in accordance with the plans and specifications and that they will promptly,

upon notice, correct and repair at their own cost and expense any deficiency,

defect, fault or imperfection of materials, equipment or workmanship which

appears within one (1) year after completion of their work or installation. Upon

completion of any alterations or improvements, Tenant shall furnish Landlord

with complete as-built sepia drawings thereof.

702. No work or installation by Tenant at the Demised Premises, Land or

Building shall be done except after providing to Landlord appropriate assurances

including, but not limited to, guarantees and indemnifications in connection

with the possible filing of any construction liens and/or notice of unpaid

balance (commonly known as a "construction lien") in the local office, as

provided by law. If any such lien is filed, Tenant shall cause it to be

discharged or satisfied within fifteen (15) days of notice of filing.

703. No work, services or installation by Tenant in or about the Demised

Premises, Land or Building shall be performed or installed except by workmen and

mechanics working in harmony and not reasonably interfering with labor employed

by Landlord, Landlord's mechanics or their contractors or by any other Tenant or

their contractors. Any violation hereof shall automatically constitute a

permitted cancellation by Landlord of any prior Landlord's consent to or

permission for such work or installation.

704. Any alterations, improvements or additions made by Tenant shall

remain upon the Demised Premises at the expiration or earlier termination of

this Lease and shall become the property of Landlord, unless prior to the

termination of this Lease, Landlord gives Tenant written notice to remove the

same, in which event Tenant shall remove them and restore the Demised Premises

to the same good order and condition in which they were at the time of delivery

of possession to Tenant. Should Tenant fail to remove same and/or restore the

Demised Premises, Landlord may do same, and Tenant shall pay the cost and

expense thereof to Landlord as Additional Rent upon demand.

705. All trade fixtures installed by Tenant in the Demised Premises,

except lighting fixtures, heating and air-conditioning equipment, plumbing and

electrical systems, and fixtures and floor coverings, shall remain the property

of Tenant and shall be removed on or before the Termination Date or earlier

termination of this Lease, but may not be removed without Landlord's express

written consent at any time when Tenant is in default under any provision of

this Lease. At Landlord's option, any trade fixture not removed on or before the

Termination Date or earlier termination of this Lease shall

<PAGE>

either become Landlord's property, or Landlord may remove and dispose of them,

and in such event Tenant shall pay the cost and expense thereof to Landlord as

Additional Rent upon demand. Tenant shall promptly restore the Demised Premises

to the original order and condition upon removal of trade fixtures and shall

repair any and all damage caused by said removal.

706. Tenant shall be permitted to install a security system for the

Demised Premises in accordance with the provisions of this Article 7; provided

that Tenant shall furnish Landlord with copies of any keys or access codes used

in connection with such system.

707. Tenant shall be permitted to install a supplemental air conditioning

system (the "Supplemental System") at the exterior of the Building at its sole

cost and expense, subject to the following terms and conditions:

(a) The Supplemental System shall have a maximum cooling capacity of

twelve (12) tons. Tenant shall be responsible for any costs incurred by

Landlord in connection with the installation, maintenance and operation of

the Supplemental System, including the cost of providing any necessary

electrical installations required in connection therewith, subject the

provisions of Section 905. The exact location of the Supplemental System

and the method of installation shall be subject to the prior approval of

Landlord, which approval shall not be unreasonably withheld but may be

conditioned upon the installation of decorative landscaping, fencing or

louvers in the area of the Supplemental System.

(b) All permits and approvals required to install and maintain the

Supplemental System shall be obtained by Tenant and furnished to Landlord

prior to installation. The Supplemental System shall be designed,

constructed, installed, maintained and operated in compliance with all

applicable legal requirements.

tenant resulting from the installation or maintenance of the Supplemental

System shall be promptly repaired at Tenant's sole cost and expense.

Landlord shall have no liability for any damage to, or caused by, the

Supplemental System. Tenant indemnifies and agrees to hold Landlord

harmless from any loss or damage which Landlord may sustain in connection

with the Supplemental System, including all liabilities, costs or expenses

of any kind or nature incurred in connection with any claim or proceeding

brought thereon and the defense thereof.

(d) At the end of the Term hereof, the Supplemental System shall become

property of Landlord, provided, however, that Landlord reserves the right

to require the Tenant to remove the Supplemental System at Tenant's cost

and expense.

<PAGE>

ARTICLE 8. LANDLORD'S SERVICES

801. So long as Tenant is not in default beyond any applicable notice and

cure periods under any of the provisions of this Lease, Landlord shall:

(a) Provide air heating and air cooling during Business Hours. Air

heating and cooling shall be provided only when weather conditions

require. The heating, ventilating and air conditioning system

serving the Demised Premises shall meet the following performance

criteria:

(i) Summer conditions: maintaining 78 degrees Fahrenheit Dry Bulb

temperature at 50 % relative humidity, at 95 degrees Fahrenheit Dry

Bulb outdoor temperature.

(ii) Winter conditions: maintaining 68 degree Fahrenheit Dry Bulb

temperature at 0 degrees Fahrenheit outside temperature.

Landlord will not be responsible for the failure of the air

conditioning system to meet the above criteria if such failure

results from the occupancy of the Demised Premises with more than an

average of one (1) person per one hundred (100) square feet of

rentable space or if Tenant operates lighting or electrical

equipment the total connected electrical load of which exceeds six

and one-half (6.5) watts per rentable square foot.

(b) Provide electricity during Business Hours, subject to the terms of

Article 9.

as set forth in Exhibit "D" annexed hereto. Tenant shall pay to

Landlord the cost of removal from the Building of any of Tenant's

refuse and rubbish which exceeds the refuse and rubbish usually

attendant upon the use of such premises for general office purposes.

If Tenant requires air-conditioning or heat beyond Business Hours, Landlord will

furnish such air-conditioning or heat to the entire floor, provided Tenant gives

Landlord's agent twenty-four (24) hours advance notice of such requirement and

Tenant agrees to pay for the cost of such extra service in accordance with

Landlord's then current schedule of costs and assessments for the Building. The

current cost for such overtime service is Sixty and 00/100 Dollars ($60.00) per

hour for each hour during which Tenant shall so occupy the Demised Premises,

which sum shall be deemed to be the cost of providing services to the Demised

Premises for such periods. The aforementioned hourly charge of $60.00 per hour

shall be subject to increase by Landlord in the amount thereof in the event

that, and to the extent that the public utility supplying the Building shall

increase its charges from time to time.

802. Tenant shall have the right of twenty-four (24) hour, three hundred

sixty-five (365) day access to the Demised Premises, the Building and the

parking area. Subject to the provisions of Article 7, Tenant shall be permitted

to install, at its sole cost

<PAGE>

and expense, a security system in the Demised Premises. Tenant shall coordinate

the installation of its security system with Landlord in order to provide

Landlord with continued access to the Demised Premises.

803. Without liability or responsibility to Tenant and without diminution

of, or deduction from Rent, Landlord may from time-to-time suspend operation of

the heating, air-conditioning, elevator, plumbing and electrical systems, or any

service required to be rendered to Tenant under this Lease, when such suspension

shall become necessary by reason of strike, accident, emergency, or any other

cause beyond Landlord's control, or at such time as repairs, alterations,

replacements or improvements thereto are required to be made. Landlord shall use

reasonable efforts to not interfere with the services to be supplied to Tenant

but this shall not be deemed to be a representation or warranty to do so.

804. Landlord shall provide for the cleaning and maintenance of the public

portions of the Building in keeping with the ordinary standard for first-class

office buildings in the Northern New Jersey area as part of Operating Expenses.

Landlord shall also make such repairs as may be required to the exterior walls,

corridors, windows, roof, and other structural elements and equipment of the

Building.

ARTICLE 9. ELECTRICITY

901. The electric current shall be provided through the presently

installed electrical facilities, for Tenant's reasonable use in the Demised

Premises for ordinary lighting, personal computers, standard office equipment

and the usual business machines, including Xerox or other copying machines.

Landlord shall not be liable or responsible to Tenant for any loss or damage or

expense which Tenant may sustain or incur if either the quantity or character of

electric service is changed or is no longer available or suitable for Tenant's

requirements.

902. Provided Landlord elects to discontinue furnishing electric current

to a majority of other tenants at the Property, Landlord reserves the right to

discontinue furnishing electric current to Tenant at any time upon thirty (30)

days' written notice to Tenant, and from and after the effective date of such

termination, Landlord shall no longer be obligated to furnish Tenant with

electric current, provided, however, that such termination date may be extended

for a time reasonably necessary for Tenant to make arrangements to obtain

electric service directly from the public utility company servicing the

Property. If Landlord exercises such right of termination, this Lease shall

remain unaffected thereby and shall continue in full force and effect; and

thereafter Tenant shall diligently arrange to obtain electric service directly

from the public utility company servicing the Property, and may utilize the then

existing electric feeders, risers and wiring serving the Demised Premises to the

extent available and safely capable of being used for such purpose and only to

the extent of Tenant's then authorized connected load. Landlord shall be

obligated to pay no part of any cost required for Tenant's direct electric

service. Commencing with the date when Tenant receives such direct electric

service, and as long as Tenant shall continue to receive such electric service,

the Electricity Charge shall be abated.

<PAGE>

903. Landlord shall arrange for the provision of electric current to the

Demised Premises on a submetering basis at Landlord's sole cost and expense.

Tenant covenants and agrees to pay Landlord for the electric current provided,

at charges, terms and rates set, from time to time, during the Term of this

Lease by Landlord, based upon the consumption for the Demised Premises for the

applicable period, measured in kilowatts-hours (kwh), as a percentage of the

total electric current consumption for the Property of which the Demised

Premises is a part, provided such charges, terms and rates shall not exceed the

bulk rates charged by the utility to Landlord. Landlord shall have the right to

adjust the charges to Tenant for the consumption of electric current for the

Demised Premises if such consumption results in additional charges from the

utility company based upon rates for demand usage or peak hour consumption.

Where more than one meter measures the electric service of Tenant in the

Building, the electric service rendered through each meter may be computed and

billed separately in accordance with the rates herein. Bills therefor shall be

rendered at such times as Landlord may elect and the amount, as computed from a

meter, shall be deemed to be, and be paid as, Additional Rent.

904. Tenant agrees that it will make no electrical installations,

alterations, additions or changes to electrical equipment without the prior

written consent of Landlord in each instance, which consent shall not be

unreasonably withheld. Tenant will at all times comply with the rules,

regulations, terms and conditions applicable to service, equipment, wiring and

requirements of the public utility supplying electric current to the Property.

Landlord shall not be liable in any way to Tenant for any failure or defect in

the supply or character of electric service furnished to the Demised Premises by

reason of any requirement, act or omission of the public utility serving the

Property or for any other reason not attributable to Landlord. Tenant, at its

expense, shall furnish and install all replacement lighting tubes, lamps, bulbs

and ballasts in the Demised Premises. In the event that any bills or invoices

with respect to Landlord's supplying of electric current to Tenant are not paid

by Tenant within twenty (20) days after the same are rendered, Landlord may,

upon ten (10) days prior written notice, discontinue the service of electric

current to the Demised Premises without releasing Tenant from any liability

under this Lease and without Landlord or Landlord's agent incurring any

liability for any damage or loss sustained by Tenant by such discontinuance of

electric service. If any tax is imposed by any governmental authorities upon

Landlord's receipts from the sale or resale of electric current to Tenant,

Tenant covenants and agrees that, where permitted by law, Tenant's pro-rata

share of such taxes shall be passed on to, and included in the bill of, and paid

by, Tenant to Landlord.

905. Landlord represents that the current capacity of the electrical

service at the Demised Premises is approximately 6.5 watts per rentable square

foot, not including the electrical capacity required for base Building systems

such as HVAC and Common Area lighting presently serving the Demised Premises.

Tenant shall notify Landlord if Tenant's electrical power requirements exceed

6.5 watts per rentable square foot of the Demised Premises (not including the

electrical power requirements of base Building systems such as HVAC and Common

Area lighting presently serving the Demised Premises). Landlord or Landlord's

agent and Tenant shall promptly meet to establish a mutually agreeable plan to

upgrade the electrical service so as to efficiently provide

<PAGE>

Tenant with such additional electrical power as Tenant shall reasonably require

to meet the needs of Tenant's permitted use of the Demises Premises as set forth

in Article 3 hereof. All costs incurred by Landlord in connection with providing

such additional electrical capacity shall be paid by Tenant as Additional Rent,

except that (a) Landlord shall contribute up to $7,500 to such costs (but in no

event more than fifty percent (50%) of the entire cost) and (b) in the event

that all or any part of the equipment, conduits, risers or other components of

any such electrical upgrade can be utilized by Landlord or any other Tenant of

the Building, the cost of such upgrade in excess of Landlord's $7,500

contribution shall be equitably allocated between Tenant and Landlord. Landlord

shall without charge to Tenant cooperate with Tenant in implementing any such

electrical upgrade.

ARTICLE 10. MISCELLANEOUS COVENANTS OF TENANT

1001. Tenant shall:

(a) pay the Rent, including Minimum Annual Rent, Additional Rent, and

all other sums due under this Lease without notice or demand on the days

and times and at the places that the same are payable and without

abatement, deduction or set off except as otherwise expressly provided

herein;

(b) keep the Demised Premises in good order and repair, reasonable wear

and tear and damage by any casualty not occurring through act of Tenant or

Tenant's agents, employees, or invitees excepted. On demand pay Landlord

as Additional Rent, the cost of repair or restoration of the Demised

Premises, the Building or any part thereof together with interest at the

rate set forth in Section 507 herein, if damaged in whole or in part by

the act of Tenant or Tenant's agents, employees or invitees (to the extent

that such damage is not covered by the fire and extended coverage

insurance carried by Landlord);

Premises at the expiration or sooner termination of this Lease, in the

same condition in which Tenant has agreed to keep the same during the

continuance of this Lease, broom clean, and at such time, without demand

or delay, deliver to Landlord or its agent all keys and access cards for

the Demised Premises;

(d) at Tenant's expense, comply with all laws and ordinances, and all

rules, orders and regulations of all governmental authorities and of all

insurance bodies, at any time duly issued or in force, applicable to the

Demised Premises or any part thereof or to Tenant's use thereof, and

promptly correct any violation of, and comply with, all laws, ordinances,

notices, permits, or statements of occupancy, requirements, orders,

regulations and recommendations, now or hereafter in effect and of

whatever nature of any and all the Federal, State, County, Municipal

and/or other authorities and of the Board of Fire Underwriters and any

insurance organizations or associations, and/or companies, with respect to

Tenant's conduct or use of the Demised Premises. Except for structural

alterations required solely

<PAGE>

as a result of Tenant's particular use of the Demised Premises, Tenant

shall not be required to make any structural alterations in connection

with such compliance;

(e) pay to Landlord, as Additional Rent, any and all increases in

premiums on insurance now or hereafter carried by Landlord on the Demised

Premises, the Land or Building, which increases are caused in any way by

the occupancy of Tenant or by breach of any of the provisions of this

Lease;

(f) use reasonable precautions against fire or other casualty;

(g) give to Landlord prompt written notice (which in no event shall

exceed forty-eight (48) hours from the time of such accident or

occurrence) of any accident, fire, casualty or damage known to Tenant

occurring on or to the Demised Premises, and of any known defects in the

apparatus in the Demised Premises; and

(h) cause all occupants of the Demised Premises to conduct themselves in

such a manner as shall not be deemed improper or objectionable in the

reasonable judgment of Landlord, and in compliance with the rules and

regulations referred to in Article 19.

1002. Without the express written consent and approval of Landlord,

Tenant, its agents, employees or invitees or (when permitted) its assignees or

sub-tenants shall not do any of the following:

(a) occupy the Demised Premises in any manner or for any purpose except

as permitted in this Lease;

(b) if Tenant is a corporation, merge with or be acquired by another

entity, except where such entity assumes in writing the obligations of the

Tenant hereunder, or liquidate or dissolve, or otherwise permit or allow

control of said corporation to change or be affected by the transfer of

its stock except by reason of death of a shareholder or shareholders, or

by reason of a public issue or private placement of its securities;

Premises except as permitted and provided in Articles 6 or 7 hereof;

(d) use or operate any machinery that, in Landlord's reasonable opinion,

is harmful to the Demised Premises, the Building and/or the Property;

(e) do or suffer to be done, any act, matter or thing in violation of

the provisions of the insurance policies or whereby the said insurance or

any other insurance now in force or hereafter to be placed on the Demised

Premises, or on the Land or Building, shall become void or suspended, or

whereby the same shall be rated as a more hazardous risk than at the

execution hereof or at the time Tenant takes possession of the Demised

Premises;

<PAGE>

(f) remove, attempt to remove or manifest, in the reasonable opinion of

Landlord, an intention to remove substantially all of Tenant's goods or

property from or out of the Demised Premises, other than in the ordinary

course of business, without having first paid Landlord all Rent which may

become due during the entire Term of this Lease;

(g) permit any odor, noise, sound or vibration which may, in Landlord's

reasonable judgment, in any way tend to impair the use of any part of the

Land or Building or interfere with the business or occupancy of any other

tenant, or make or permit any disturbance of any kind in the Building, or

interfere in any way with other tenants or those having business in the

Building, or allow any occupant of the Demised Premises to conduct himself

in a manner improper or objectionable;

(h) obstruct any portion of the Common Areas, or use the same for any

purpose other than egress and ingress to and from the Demised Premises, or

use the same as a waiting room or lounging place for Tenant or its

employees or invitees;

(i) inscribe, paint or affix or permit to be inscribed, painted, or

affixed by any one any sign, advertisement or notice on any part of the

Building, inside or out, except within the Demised Premises, except as

provided under Section 3501;

(j) place any signaling, telegraphic, telephonic or other wires or

instruments in the Land, Building or Demised Premises, except for ordinary

and customary communications equipment within the Demised Premises and

otherwise as permitted in the Demised Premises with Landlord's consent,

which shall not be unreasonably withheld, and without such consent no

placement of any such apparatus shall be permitted;

(k) use electricity in the Demised Premises in excess of the capacity of

any of the electrical conductors and equipment in or otherwise serving the

Demised Premises, or add to or alter the electrical system servicing the

Demised Premises or connect thereto any additional fixtures, appliances or

equipment other than lamps, personal computers, standard office equipment,

typewriters and similar small office machines;

(l) use or occupy the Demised Premises or permit or suffer the same to

be used or occupied in violation of the use regulation permit or

certificate of occupancy issued for said Building or in violation of any

statute, ordinance or any requirement of any public authority, and the use

permitted by this Lease shall not be deemed a representation or guarantee

by Landlord that such use is lawful or permitted under any permit or

statement of occupancy or otherwise;

(m) execute or deliver any financing or security agreement or statement

that would be a lien upon the Demised Premises, the Land or Building; and

(n) vacate or desert the Demised Premises during any term of this Lease,

or permit the same to be empty or unoccupied.

<PAGE>

ARTICLE 11. RIGHTS RESERVED TO LANDLORD

1101. Landlord shall have the right, but shall be under no obligation, to

do the following things (at any time or times and from time to time) in or about

the Demised Premises and the Land or Building:

(a) make rules and regulations as in its reasonable judgment are

necessary for the safety, care and cleanliness of, and good order in the

Demised Premises, Land or Building;

(b) discontinue any facility or service not expressly covenanted for

herein, as they constitute no part of the consideration for this Lease;

Property, provided such action does not materially interfere with Tenant's

ingress and egress to the Demised Premises;

(d) prevent access to the Building by any person during any invasion,

mob riot, public excitement or other commotion by closing the doors or

otherwise;

(e) install, place upon or affix to the roof or exterior walls of the

Demised Premises and/or the Building, equipment, signs, displays, antennae

and any other object or structure provided it does not interfere with

Tenant's occupancy;

(f) make alterations or additions to, and build additional stories upon,

the Building or build adjoining the Building; and

(g) provided such action does not materially affect Tenant's access to

the Demised Premises, change the arrangement and/or location, or regulate

or eliminate the use, of Common Areas, including all entrances,

passageways, doors, doorways and corridors, whether or not connecting with

any street, sidewalk, transportation facility, concourse, subway, garage,

railroad station or any

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