EXHIBIT 10.42
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated December
14, 2009 (the “Effective Date”), is made and entered into by and between NexMed,
Inc., a Nevada corporation (the “Company”) and Vivian H. Liu (the “Executive”),
and amends and restates that certain Employment Agreement between the parties,
dated October 3, 2007 (the “Prior Agreement”).

WHEREAS, the Company desires to continue to employ Executive and to enter into
this Agreement in connection with the Company’s acquisition of Bio-Quant, Inc.
pursuant to that certain Agreement and Plan of Merger by and among the Company,
BQ Acquisition Corp., Bio-Quant, Inc. and certain other parties thereto (the
“Merger Agreement”);

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

WHEREAS, Executive is willing to accept and continue her employment on the terms
hereinafter set forth in this Agreement and to forego any severance payments to
which she may otherwise be entitled under the Prior Agreement.

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

1.
Term of Employment. Subject to the terms and conditions set forth in Section 6
of this Agreement, Executive’s employment with the Company shall be “at will,”
and the Company and Executive shall each have the right to terminate Executive’s
employment hereunder. The term of Executive’s employment hereunder is referred
to herein as the “Employment Term.”.

 
2.
Position.

 
 
(a)
During the Employment Term, Executive shall be employed by the Company as
Executive Vice President, and shall have such duties, authority, and
responsibility as are commensurate with her position, subject to the direction
of the Company's Board of Directors (the “Board”).

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

 

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(c)
Executive's duties hereunder shall be performed for the Company worldwide, with
principal business activities expected to be at the Company's offices in East
Windsor, New Jersey and/or San Diego, California.

 
3.
Compensation.

 
 
(a)
Base Salary. During the Employment Term, the Company shall pay Executive a base
salary, subject to increase at the discretion of the Board, at the annual rate
of $280,000 (the “Base Salary”), payable in regular installments in accordance
with the Company's usual payroll practices.

 
 
(b)
Bonuses.

 
 
(i)
Annual Bonus. With respect to each calendar year during the Employment Term,
Executive shall be eligible to earn an annual bonus award (the “Bonus”) in an
amount not to exceed 50% of Executive’s annual Base Salary. The amount of the
Bonus shall be determined by the Board, or the Compensation Committee of the
Board (the “Compensation Committee”), in its sole discretion, based upon the
achievement by the Company of objective performance measures established and
determined by the Board or the Compensation Committee in consultation with
Executive no later than the end of the first month of such calendar year. The
Bonus, if any, with respect to each calendar year in the Employment Term shall
be paid as promptly as practicable following the delivery of the Company's
audited financial statements for such year, but not later than March 15 of the
calendar year following the calendar year for which the Bonus is payable. Unless
otherwise stated herein, the Bonus shall not accrue until the date on which it
is paid, and Executive must be employed on the date the Bonus is paid in order
to receive the Bonus.

 
 
(ii)
Signing Bonus. In addition to the Bonus, Executive will receive a one-time
signing bonus of $50,000, payable in two installments of $25,000 each due 60 and
90 days from the Effective Date (the “Signing Bonus”).

 
 
(iii)
Incentive Bonus. In addition to the Bonus and the Signing Bonus, Executive shall
be entitled to receive a one-time bonus with a value of $100,000, payable
one-half in cash and one-half in Company common stock (valued at the fair market
value of the stock one day prior to the date of payment) (the “Incentive
Bonus”). The Incentive Bonus shall be earned, if at all, within a one-year
period from the Effective Date upon the achievement of certain performance and
integration goals to be established by the Company’s Compensation Committee.
Upon the achievement of such goals, Executive’s right to receive the Incentive
Bonus shall be fully vested and not subject to any further performance or
service requirements. The Incentive Bonus, to the extent earned, shall be paid
only upon the Executive’s termination of service with the Company.

 
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(c)
Stock Option Grants. The Compensation Committee shall consider annually whether
to grant any equity-based compensation awards to the Executive in accordance
with the terms and subject to the conditions of the Company’s equity
compensation plans.

 
 
(d)
Other Equity Awards.

 
 
(i)
Commencing with the execution of this Agreement and each anniversary thereafter
during the Employment Term, the Executive shall receive an annual grant of
restricted common stock from the Company’s equity compensation plans with a
grant-date fair value of $20,000 (measured with reference to the Company’s
closing stock price on the NASDAQ stock market on the date of grant) and that
vests over a one-year period from the date of grant. The unvested shares shall
be subject to a right of reacquisition by the Company to the extent that the
Executive does not remain in the continuous service of the Company during the
vesting period. This grant is subject to the Company’s stockholders approving an
increase in the number of shares available under the Company’s equity
compensation plans.

 
 
(ii)
Commencing with the execution of this Agreement and each anniversary thereafter
during the Employment Term, the Executive shall receive an annual grant of
250,000 shares of restricted common stock from the Company’s equity compensation
plans that vests over a one-year period from the date of grant. This grant is
subject to the Company’s stockholders approving an increase in the number of
shares available under the Company’s equity compensation plans.

 
 
(iii)
As promptly as practicable after the execution of this Agreement, Executive
shall be awarded one-time stock grant consisting of 1,000,000 shares of the
Company’s common stock. The shares shall be fully vested on the date of grant.

 
 
(e)
Relocation Expenses. In connection with Executive’s planned move to San Diego,
California, which is expected to be completed within six months following the
consummation of this Agreement, the Company will pay $25,000 to Executive for
such relocation, payable in a lump sum on the Effective Date.

 
4.
Employee Benefits. During the Employment Term, Executive shall be eligible for
inclusion, to the extent permitted by law, as a full-time employee of the
Company or any of its subsidiaries, in any and all of the following plans,
programs, and policies in effect at the time: (i) pension, profit sharing,
savings, and other retirement plans and programs, (ii) life and health (medical,
dental, hospitalization, short-term and long-term disability) insurance plans
and programs, (iii) stock option and stock purchase plans and programs, (iv)
accidental death and dismemberment protection plans and programs, (v) travel
accident insurance plans and programs, (vi) vacation policy (Executive shall
have six weeks of paid vacation per calendar year), and (vii) other plans and
programs sponsored by the Company or any subsidiary for employees or executives
generally, including any and all plans and programs that supplement any or all
of the foregoing types of plans or programs. Nothing in this Agreement shall
preclude the Company or any of its subsidiaries or affiliates from terminating
or amending any employee benefit plan or program from time to time after the
date of this Agreement.

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

 
6.
Termination. Subject to this Section 6, either party may terminate this
Agreement at any time and from time to time. In the event of the termination of
Executive's employment, the Employment Term shall end on the day of such
termination.

 
 
(a)
By the Company for Cause. The Company may, for Cause, terminate Executive’s
employment hereunder at any time by written notice to Executive. For purposes of
this Agreement, the term “Cause” shall mean Executive’s (i) engaging in fraud
against the Company or misappropriation of funds of the Company, (ii) disregard
or failure to follow specific and reasonable directives of the Board, (iii)
willful failure to perform her duties as Executive Vice President of the
Company, (iv) willful misconduct resulting in material injury to the Company,
(v) violation of the terms of the Intellectual Property Agreement referred to in
Section 11 below, (vi) conviction of, or Executive’s plea of guilty or no
contest to, a felony or any crime involving as a material element fraud or
dishonesty, or (vii) material breach (not covered by clauses (i) through (vi) of
this paragraph) of any of the other provisions of this Agreement; provided,
that, in the case of subclauses (ii), (iii) or (vii), Cause shall not exist if
the act or omission deemed to constitute Cause is cured (if curable) by
Executive within thirty (30) days after written notice thereof to Executive by
the Company. For purposes of the foregoing, no act, or failure to act, on
Executive’s part shall be considered “willful” unless done, or omitted to be
done, by Executive other than in good faith, and without reasonable belief that
her action or omission was in furtherance of the interests of the Company.

 
In the event of the termination of Executive’s employment under this Section
6(a) for Cause, the Employment Term shall end on the day of such termination and
the Company shall pay to Executive, no later than the payroll cycle following
Executive’s termination, in one lump sum: (i) any accrued but unpaid Base
Salary, less applicable deductions, including salary in respect of any accrued
and accumulated vacation due to Executive at the date of such termination; and
(ii) any amounts owing, but not yet paid, pursuant to Section 5 hereof.
 
Except as specifically set forth in Section 9 hereof, the Company shall have no
further obligations to Executive under this Agreement
 
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(b)
Disability or Death. If Executive should suffer a Permanent Disability, the
Company may terminate Executive’s employment hereunder upon ten (10) or more
days’ prior written notice to Executive. If Executive should pass away during
the term of this Agreement, Executive’s employment shall be deemed terminated on
his date of death. For purposes of this Agreement, a “Permanent Disability”
shall be deemed to have occurred only when Executive has qualified for benefits
(including satisfaction of any applicable waiting period) under the Company’s or
a subsidiary’s long-term disability insurance arrangement. In the event of the
termination of Executive’s employment hereunder by reason of Permanent
Disability or death, the Employment Term shall end on the day of such
termination and the Company shall pay, no later than the payroll cycle following
Executive’s termination, to Executive or Executive’s legal representative (in
the event of Permanent Disability), or any beneficiary or beneficiaries
designated by Executive to the Company in writing, or to Executive’s estate if
no such beneficiary has been so designated (in the event of Executive’s death),
a single lump sum payment of: (i) any accrued but unpaid Base Salary, less
applicable deductions, including salary in respect of any accrued and
accumulated vacation, due to Executive at the date of such termination; (ii) any
amounts owing, but not yet paid, pursuant to Section 5 hereof.

 
In addition, upon a termination under this Section 6(b), and upon the
satisfaction of the conditions set forth herein: (1) Executive shall receive a
pro rata Bonus for the calendar year in which such termination occurs, equal to
the Bonus she would have received, to the extent all criteria for such a Bonus
have been met (with the exception of the requirement that Executive be employed
on the date the Bonus is to be paid), for the calendar year of said termination
multiplied by a fraction, the numerator of which is the number of days in such
year preceding and including the date of termination, and the denominator of
which is 365. Said pro-rata Bonus shall be paid at the same time as the Bonus
would have been paid had Executive remained employed by the Company through the
date of payment, but in any event, not later than March 15 of the calendar year
following the calendar year for which the Bonus is payable; (2) Executive shall
receive any unpaid Bonus for the calendar year preceding her termination, to the
extent that all criteria for such bonus have been met (with the exception of the
requirement that Executive be employed on the date the Bonus is to be paid).
Said Bonus shall be paid at the same time as the Bonus would have been paid had
Executive remained employed by the Company through the date of payment; and (3)
all of Executive’s outstanding but unvested equity awards granted pursuant to
Sections 3(c) and 3(d) of this Agreement shall vest immediately. The payment of
any Bonus pursuant to clause (1) or clause (2) above and the acceleration of
Executive’s options and stock pursuant to clause (3), are conditioned upon
Executive (or her legal representative) signing a release in favor of the
Company, as provided for in Section 6(f).
 
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(c)
By the Company without Cause. The Company may, without Cause, terminate
Executive’s employment hereunder at any time upon ten (10) or more days’ written
notice to Executive. The Company, in its sole discretion, may provide the
Executive with ten (10) days’ pay in lieu of notice. In the event Executive’s
employment is terminated pursuant to this Section 6(b), the Employment Term
shall end on the effective date of termination of the Employment Term (the “Date
of Termination”), and the Company shall pay to Executive, no later than the
payroll cycle following Executive’s termination, in one lump sum: (i) any
accrued but unpaid Base Salary, less applicable deductions, including salary in
respect of any accrued and accumulated vacation, due to Executive at the date of
such termination, and (ii) any amounts owing, but not yet paid, pursuant to
Section 5 hereof.

 
In addition, upon a termination under this Section 6(c) and upon the
satisfaction of the conditions set forth herein: (1) Executive shall receive a
pro rata Bonus for the calendar year in which such termination occurs, equal to
the Bonus she would have received, to the extent all criteria for such a Bonus
have been met (with the exception of the requirement that Executive be employed
on date the Bonus is to be paid), for the calendar year of said termination
multiplied by a fraction, the numerator of which is the number of days in such
year preceding and including the date of termination, and the denominator of
which is 365. Said pro-rata Bonus shall be paid at the same time as the Bonus
would have been paid had Executive remained employed by the Company through the
date of payment, but in any event, not later than March 15 of the calendar year
following the calendar year for which the Bonus is payable; (2) Executive shall
receive any unpaid Bonus for the calendar year preceding her termination, to the
extent that all criteria for such bonus have been met (with the exception of the
Executive being employed on the date the Bonus is to be paid). Said Bonus shall
be paid at the same time as the Bonus would have been paid had Executive
remained employed by the Company through the date of payment; and (3) all of
Executive’s outstanding but unvested equity awards granted pursuant to Sections
3(c) and 3(d) of this Agreement shall vest immediately. The payment of any Bonus
pursuant to clause (1) or clause (2) above or the acceleration of Executive’s
options and stock pursuant to clause (3) are conditioned upon Executive signing
a release in favor of the Company, as provided for in Section 6(g).
 
Except as specifically set forth in Section 9 hereof, the Company shall have no
further obligations to Executive under this Agreement.
 
 
(d)
Resignation by Executive for Good Reason. If any of the events described below
occurs during the Employment Term, Executive may terminate Executive’s
employment hereunder for Good Reason by written notice to the Company
identifying the event or omission constituting Good Reason not more than one (1)
month following the occurrence of such event and, in the case of subclauses
(ii), (iii), or (iv) below, a failure by the Company to cure such act or
omission within thirty (30) days after receipt of such written notice. In the
event that Executive elects to terminate employment pursuant to this Section
6(d), the Employment Term and Executive’s employment hereunder will be
terminated effective as of the later of thirty-one (31) days after the Company’s
receipt of Executive’s notice of termination or thirty-one (31) days after the
event, and Executive’s resignation for Good Reason pursuant to this Section 6(d)
shall be treated for all purposes as a termination without Cause pursuant to
Section 6(c) and the provisions of Section 6(c) shall apply to such termination,
including the payment of the Severance Amount. The occurrence of any of the
following events without Executive’s consent shall permit Executive to terminate
Executive’s employment for “Good Reason” pursuant to this Section 6(d):

 
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(i)
A “Change in Control” (as defined in Appendix A attached hereto) occurs;

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

 
 
(iii)
A material diminution in Executive’s duties;

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

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

 
Except as specifically set forth in Section 9 hereof, the Company shall have no
further obligations to Executive under this Agreement.
 
 
(e)
By Executive without Good Reason. Executive may terminate the Employment Term
and Executive’s employment hereunder at any time without Good Reason upon thirty
(30) days advance written notice to the Company. In the event Executive’s
employment is terminated pursuant to this Section 6(e), the Company shall pay to
Executive, no later than ten (10) days after the last day of Executive’s
employment, in one lump sum, the sum of (i) any accrued but unpaid Base Salary,
less applicable deductions, including salary in respect of any accrued and
accumulated vacation, due to Executive at the date of such termination, (ii) any
amounts owing, but not yet paid, pursuant to Section 5 hereof, and (iii) any
unpaid portions of the Signing Bonus and the Incentive Bonus.

 
Except as specifically set forth in Section 9 hereof, the Company shall have no
further obligations to Executive under this Agreement
 
 
(f)
Release. Notwithstanding any other provision of this Agreement to the contrary,
Executive acknowledges and agrees that any and all payments and benefits to
which Executive is entitled under Section 6(b), 6(c) or 6(d), with the exception
of accrued salary, accrued vacation payments, and payments pursuant to Section 5
of this Agreement, are conditioned upon and subject to Executive’s first
executing a general waiver and release (and the expiration of any associated
revocation period), in such reasonable and customary form as shall be prepared
by the Company, of all claims Executive may have against the Company, and
related entities and individuals.

 
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7.
Required Postponement for Specified Executives.

 
 
(a)
Specified Executive Delay. Notwithstanding anything in this Agreement to the
contrary, if required by section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and if Executive is considered a Specified Executive (as
defined herein) and payment of any amounts under this Agreement is required to
be delayed for a period of six months after separation from service pursuant to
Section 409A of the Code, payment of such amounts shall be delayed as required
by section 409A, and the accumulated amounts shall be paid in a lump sum payment
within five days after the end of the six-month period. If Executive dies during
the postponement period prior to the payment of benefits, the amounts withheld
on account of section 409A shall be paid to the personal representative of
Executive’s estate within 60 days after the date of Executive’s death.

 
 
(b)
“Specified Executive” shall mean an employee who, at any time during the
12-month period ending on the identification date, is a “specified employee”
under section 409A of the Code, as determined by the Compensation Committee of
the Board or its delegate. The determination of Specified Executives, including
the number and identity of persons considered officers and the identification
date, shall be made by the Compensation Committee or its delegate in accordance
with the provisions of section 409A of the Code and the regulations issued
thereunder.

 
8.
No Mitigation; Employee Benefit Plans. Executive shall not be required to
mitigate amounts payable to her under this Agreement by seeking other employment
or otherwise, and there shall be no offset against amounts payable to Executive
under this Agreement on account of Executive's subsequent employment. Amounts
payable to Executive under this Agreement shall not be offset by any claims that
the Company may have against Executive, and such amounts payable to Executive
under this Agreement shall not be affected by any other circumstances,
including, without limitation, any counterclaim, recoupment, defense, or other
right that the Company may have against Executive or others; provided, however,
that payments made to Executive as a result of the termination of Executive's
employment hereunder shall not be considered as includible compensation with
respect to any employee benefit plans maintained by the Company, except to the
extent otherwise required by law.

 
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9.
Indemnification. In the event that Executive is made a party or threatened to be
made a party to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (a “Proceeding”), by reason of Executive's
employment with, or serving as an officer of, the Company, the Company shall
indemnify and hold Executive harmless, and defend Executive to the fullest
extent authorized by the laws of the state in which the Company is incorporated,
as the same exist and may hereafter be amended, against any and all claims,
demands, suits, judgments, assessments, and settlements (collectively the
“Claims”), including all expenses incurred or suffered by Executive in
connection therewith (excluding, however, any legal fees incurred by Executive
for Executive's own counsel, except as otherwise provided in this Section 9, and
excluding any Proceedings initiated by executive), and such indemnification
shall continue as to Executive even after Executive is no longer employed by the
Company hereunder, and shall inure to the benefit of Executive's heirs,
executors, and administrators; provided, however, that, Executive promptly gives
written notice to the Company of any such Claims (although Executive's failure
to promptly give notice shall not affect the Company's obligations under this
Section 9 except to the extent that such failure prejudices the Company or its
ability to defend such Claims). The Company shall have the right to undertake,
with counsel or other representatives of its own choosing, the defense or
settlement of any Claims. In the event that the Company shall fail to notify
Executive, within ten days of its receipt of Executive's written notice, that
the Company has elected to undertake such defense or settlement, or if at any
time the Company shall otherwise fail to diligently defend or pursue settlement
of such Claims, then Executive shall have the right to undertake the defense,
compromise, or settlement of such Claims, in which event the Company shall hold
Executive harmless from any legal fees incurred by Executive for Executive's
counsel. Neither Executive nor the Company shall settle any Claims without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed. In the event that the Company submits to Executive a bona
fide settlement offer from the claimant of Claims (which settlement offer shall
include as an unconditional term thereof the giving by the claimant or the
plaintiff to Executive a release from all liability in respect of such Claims),
and Executive refuses to consent to such settlement, then thereafter the
Company's liability to Executive for indemnification hereunder with respect to
such Claims shall not exceed the settlement amount included in such bona fide
settlement offer, and Executive shall either assume the defense of such Claims
or pay the Company's attorneys' fees and other out-of-pocket costs incurred
thereafter in continuing the defense of such Claims. Regardless of which party
is conducting the defense of any such Claims, the other party, with counsel or
other representatives of its own choosing and at its sole cost and expense,
shall have the right to consult with the party conducting the defense of such
Claims and its counsel or other representatives concerning such Claims and
Executive and the respective counsel or other representatives shall cooperate
with respect to such Claims. The party conducting the defense of any such Claims
and its counsel shall in any case keep the other party and its counsel (if any)
fully informed as to the status of such Claims and any matters relating thereto.
Executive and the Company shall provide to the other such records, books,
documents, and other materials as shall reasonably be necessary for each to
conduct or evaluate the defense of any Claims, and will generally cooperate with
respect to any matters relating thereto. This Section 9 shall remain in effect
after this Agreement is terminated, regardless of the reasons for such
termination. The indemnification provided to Executive pursuant to this Section
9 shall not supersede or reduce any indemnification provided to Executive under
any separate agreement, or the By-Laws of the Company; in this regard, it is
intended that this Agreement shall expand and extend Executive's rights to
receive indemnification.

 
10.
Withholding. The Company shall have the right to deduct and withhold from all
payments to Executive hereunder all payroll taxes, income tax withholding and
other federal, state and local taxes and charges which currently are or which
hereafter may be required by law to be so deducted and withheld.

 
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11.
Additional Agreements. As a condition to her continued employment hereunder,
Executive shall execute and deliver to the Company a Confidential Information
and Intellectual Property Agreement in the form attached hereto as Exhibit A
(the “Intellectual Property Agreement”), which shall be incorporated herein by
reference. Executive and the Company hereby agree that such Intellectual
Property Agreement shall supersede the Confidential Information and Intellectual
Property Agreement between Executive and NexMed (U.S.A.), Inc., a wholly-owned
subsidiary of the Company, dated October 4, 2000 (the “Prior IP Agreement”), and
that upon execution and delivery of the Intellectual Property Agreement, the
Prior IP Agreement shall terminate and be of no further force or effect.

 
12.
Non-Assignability. Executive's rights and benefits hereunder are personal to
Executive, and shall not be alienated, voluntarily or involuntarily assigned, or
transferred.

 
13.
Binding Effect. This Agreement shall be binding upon the parties hereto, and
their respective assigns, successors, executors, administrators, and heirs. In
the event the Company becomes a party to any merger, consolidation, or
reorganization, this Agreement shall remain in full force and effect as an
obligation of the Company or its successor(s) in interest. None of the payments
provided for by this Agreement shall be subject to seizure for payment of any
debts or judgments against Executive or Executive's beneficiary or
beneficiaries, nor shall Executive or any such beneficiary or beneficiaries have
any right to transfer or encumber any right or benefit hereunder.

 
14.
Entire Agreement; Modification.

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

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

 
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15.
Notices. All notices and communications hereunder shall be in writing, sent by
certified or registered mail, return receipt requested, postage prepaid; by
facsimile transmission, with proof of the time and date of receipt retained by
the transmitter; or by hand-delivery properly receipted. The actual date of
receipt as shown by the return receipt therefore, the facsimile transmission
sheet, or the hand-delivery receipt, as the case may be, shall determine the
date on which (and, in the case of a facsimile, the time at which) notice was
given. All payments required hereunder by the Company to Executive shall be sent
postage prepaid, or, at Executive's election, shall be transferred to Executive
electronically to such bank account as Executive may designate in writing to the
Company, including designation of the applicable electronic address. The
foregoing items (other than any electronic transfer to Executive) shall be
addressed as follows (or to such other address as the Company and Executive may
designate in writing from time to time):

 
To the Company:
NexMed, Inc.
6330 Nancy Ridge Dr., Suite 103
San Diego, CA 92121
Attention: Chief Executive Officer

To Executive:
Vivian H. Liu
c/o NexMed, Inc.
6330 Nancy Ridge Dr., Suite 103
San Diego, CA 92121

16.
Section 409A of the Code. This Agreement is intended to comply with section 409A
of the Code and its corresponding regulations, to the extent applicable.
Accordingly, all provisions herein, or incorporated herein by reference, shall
be construed and interpreted to comply with section 409A of the Code and any
applicable exceptions thereunder. Notwithstanding anything in this Agreement to
the contrary, payments may only be made under this Agreement upon an event and
in a manner permitted by section 409A of the Code, to the extent applicable. As
used in the Agreement, the term “termination of employment” shall mean
Executive’s separation from service with the Company within the meaning of
section 409A of the Code and the regulations promulgated thereunder. For
purposes of section 409A, the right to a series of payments under the Agreement
shall be treated as a right to a series of separate payments. Any amounts
payable solely on account of an involuntary separation from service of Executive
within the meaning of section 409A of the Code shall be excludible from the
requirements of section 409A of the Code, either as involuntary separation pay
or as short-term deferral amounts to the maximum possible extent. All
reimbursements and in-kind benefits provided under the Agreement shall be made
or provided in accordance with the requirements of section 409A of the Code,
including, where applicable, the requirement that (i) any reimbursement shall be
for expenses incurred during Executive’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred, and (iv) the right to reimbursement
or in-kind benefits is not subject to liquidation or exchange for another
benefit.

 
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17.
Governing Law; Jurisdiction. This Agreement shall be governed by, and construed
and enforced according to, the domestic laws of the State of California without
giving effect to the principles of conflict of laws thereof, or such principles
of any other jurisdiction, which could cause the application of the substantive
law of any jurisdiction other than the State of California. The Company and
Executive agree that the state or federal courts located in San Diego,
California shall have exclusive jurisdiction to hear and determine any dispute
which may arise under this Agreement.

 
18.
Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, and each other provision of the Agreement shall be severable
and enforceable to the extent permitted by law.

 
19.
Headings. The headings of the Sections hereof are provided for convenience only
and are not to serve as a basis for interpretation or construction, and shall
not constitute a part, of this Agreement.

 
20.
Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

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

/s/ Vivian H. Liu
Vivian H. Liu
 
NEXMED, INC.
 
By:
/s/ Bassam Damaj
 
     Bassam Damaj
 
     Chief Executive Officer

 

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APPENDIX A

Change in Control

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

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

B. Any “Person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities eligible to vote for the election of the Board (the
“Voting Securities”); provided, however, that, the event described in this
paragraph B shall not be deemed to be a Change in Control by virtue of any of
the following acquisitions: (i) by the Company or any subsidiary of the Company
in which the Company owns more than 50% of the combined voting power of such
entity (a “Subsidiary”), (ii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, (iii) by any
underwriter temporarily holding the Company’s Voting Securities pursuant to a
public offering of such Voting Securities, (iv) pursuant to a Non-Qualifying
Transaction (as defined in paragraph C immediately below), (v) pursuant to any
acquisition by Executive or by any Person which is an “affiliate” (within the
meaning of 17 C.F.R. § 230.405) of Executive (an “Excluded Person”);

C. The consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company’s stockholders, whether
for such transaction or the issuance of securities in the transaction (a
“Business Combination”), unless immediately following such Business Combination:
(i) more than 50% of the total voting power of (A) the corporation resulting
from such Business Combination (the “Surviving Corporation”), or (B) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Company (the “Parent Corporation”), is represented by
the Company’s Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which the
Company’s Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of the Company’s Voting
Securities among the holders thereof immediately prior to the Business
Combination, (ii) no Person (other than (A) any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation or (B) an Excluded Person is or becomes the beneficial owner,
directly or indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (iii) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (i), (ii) and (iii)
above shall be deemed to be a “Non-Qualifying Transaction”);
 

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D. A sale of all or substantially all of the Company’s assets, other than to an
Excluded Person;
 
E. The stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or

F. Such other events as the Board may designate.
 
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur (i) solely as a result of the Closing or any of the transactions
contemplated under the Merger Agreement or (ii) solely because any person
acquires beneficial ownership of more than 50% of the Company’s Voting
Securities as a result of the acquisition of the Company’s Voting Securities by
the Company which reduces the number of the Company’s Voting Securities
outstanding; provided, that, if after such acquisition by the Company such
person becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall then occur.
 

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EXHIBIT A

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

NEXMED, INC.

Employee Confidentiality and Assignment Agreement

In consideration and as a condition of my employment or continued employment by
NexMed, Inc. (the “Company”), I agree as follows:

1.           Proprietary Information.  I agree that all information, whether or
not in writing, concerning the Company’s business, technology, business
relationships or financial affairs which the Company has not released to the
general public (collectively, “Proprietary Information”) is and will be the
exclusive property of the Company.  By way of illustration, Proprietary
Information may include information or material which has not been made
generally available to the public, such as:  (a) corporate information,
including plans, strategies, methods, policies, resolutions, negotiations or
litigation; (b) marketing information, including strategies, methods, customer
identities or other information about customers, prospect identities or other
information about prospects, or market analyses or projections; (c) financial
information, including cost and performance data, debt arrangements, equity
structure, investors and holdings, purchasing and sales data and price lists;
and (d) operational and technological information, including plans,
specifications, manuals, forms, templates, software, designs, methods,
procedures, formulas, discoveries, inventions, improvements, concepts and ideas;
and (e) personnel information, including personnel lists, reporting or
organizational structure, resumes, personnel data, compensation structure,
performance evaluations and termination arrangements or documents.  Proprietary
Information also includes information received in confidence by the Company from
its customers or suppliers or other third parties.
 
2.           Recognition of Company’s Rights.  I will not, at any time, without
the Company’s prior written permission, either during or after my employment,
disclose any Proprietary Information to anyone outside of the Company, or use or
permit to be used any Proprietary Information for any purpose other than the
performance of my duties as an employee of the Company.  I will cooperate with
the Company and use my best efforts to prevent the unauthorized disclosure of
all Proprietary Information.  I will deliver to the Company all copies of
Proprietary Information in my possession or control upon the earlier of a
request by the Company or termination of my employment.
 
3.           Rights of Others.  I understand that the Company is now and may
hereafter be subject to non-disclosure or confidentiality agreements with third
persons which require the Company to protect or refrain from use of Proprietary
Information.  I agree to be bound by the terms of such agreements in the event I
have access to such Proprietary Information.
 
4.           Commitment to Company; Avoidance of Conflict of Interest.  While an
employee of the Company, I will devote my full-time efforts to the Company’s
business and I will not engage in any other business activity that conflicts
with my duties to the Company.  I will advise the president of the Company (or,
if I am an executive officer of the Company, the Company’s Board of Directors)
or his or her nominee at such time as any activity of either the Company or
another business presents me with a conflict of interest or the appearance of a
conflict of interest as an employee of the Company.  I will take whatever action
is requested of me by the Company to resolve any conflict or appearance of
conflict which it finds to exist.
 
5.           Developments.  I will make full and prompt disclosure to the
Company of all inventions, discoveries, designs, developments, methods,
modifications, improvements, processes, algorithms, databases, computer
programs, formulae, techniques, trade secrets, graphics or images, and audio or
visual works and other works of authorship (collectively “Developments”),
whether or not patentable or copyrightable, that are created, made, conceived or
reduced to practice by me (alone or jointly with others) or under my direction
during the period of my employment.  I acknowledge that all work performed by me
is on a “work for hire” basis, and I hereby do assign and transfer and, to the
extent any such assignment cannot be made at present, will assign and transfer,
to the Company and its successors and assigns all my right, title and interest
in all Developments that (a) relate to the business of the Company or any
customer of  the Company or any of the products or services being researched,
developed, manufactured or sold by the Company or which may be used with such
products or services; or (b) result from tasks assigned to me by the Company; or
(c) result from the use of premises or personal property (whether tangible or
intangible) owned, leased or contracted for by the Company (“Company-Related
Developments”), and all related patents, patent applications, trademarks and
trademark applications, copyrights and copyright applications, and other
intellectual property rights in all countries and territories worldwide and
under any international conventions (“Intellectual Property Rights”).

 

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To preclude any possible uncertainty, I have set forth on Exhibit A attached
hereto a complete list of Developments that I have, alone or jointly with
others, conceived, developed or reduced to practice prior to the commencement of
my employment with the Company that I consider to be my property or the property
of third parties and that I wish to have excluded from the scope of this
Agreement (“Prior Inventions”). If disclosure of any such Prior Invention would
cause me to violate any prior confidentiality agreement, I understand that I am
not to list such Prior Inventions in Exhibit A but am only to disclose a cursory
name for each such invention, a listing of the party(ies) to whom it belongs and
the fact that full disclosure as to such inventions has not been made for that
reason.  I have also listed on Exhibit A all patents and patent applications in
which I am named as an inventor, other than those which have been assigned to
the Company (“Other Patent Rights”).  If no such disclosure is attached, I
represent that there are no Prior Inventions or Other Patent Rights.  If, in the
course of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine or other work done for the Company, I hereby
grant to the Company a nonexclusive, royalty-free, paid-up, irrevocable,
worldwide license (with the full right to sublicense) to make, have made,
modify, use, sell, offer for sale and import such Prior
Invention.  Notwithstanding the foregoing, I will not incorporate, or permit to
be incorporated, Prior Inventions in any Company-Related Development without the
Company’s prior written consent.
 
As required pursuant to Section 2872 of the California Labor Code, I acknowledge
that the Company has notified me that the provisions of this paragraph 5 do not
apply to an invention which qualifies fully under the provisions of Section 2870
of the California Labor Code.  Specifically, such provisions do not apply to,
and I am not required to transfer to the Company, any invention developed
entirely on my own time without using the Company’s equipment, supplies,
facilities, or trade secret information except for those inventions that either
(a) relate at the time of conception or reduction to practice of the invention
to the Company’s business, or actual or demonstrably anticipated research or
development of the Company; or (b) result from any work performed by the
Employee for the Company.  However, I will also promptly disclose to the Company
any such Developments for the purpose of determining whether they qualify for
such exclusion.  I understand that to the extent this Agreement is required to
be construed in accordance with the laws of any state which precludes a
requirement in an employee agreement to assign certain classes of inventions
made by an employee, this paragraph 5 will be interpreted not to apply to any
invention which a court rules and/or the Company agrees falls within such
classes.  I also hereby waive all claims to any moral rights or other special
rights which I may have or accrue in any Company-Related Developments.
 
6.           Documents and Other Materials.  I will keep and maintain adequate
and current records of all Proprietary Information and Company-Related
Developments developed by me during my employment, which records will be
available to and remain the sole property of the Company at all times.
 
All files, letters, notes, memoranda, reports, records, data, sketches,
drawings, notebooks, layouts, charts, quotations and proposals, specification
sheets, or other written, photographic or other tangible material containing
Proprietary Information, whether created by me or others, which come into my
custody or possession, are the exclusive property of the Company to be used by
me only in the performance of my duties for the Company.  Any property situated
on the Company’s premises and owned by the Company, including without limitation
computers, disks and other storage media, filing cabinets or other work areas,
is subject to inspection by the Company at any time with or without notice.  In
the event of the termination of my employment for any reason, I will deliver to
the Company all files, letters, notes, memoranda, reports, records, data,
sketches, drawings, notebooks, layouts, charts, quotations and proposals,
specification sheets, or other written, photographic or other tangible material
containing Proprietary Information, and other materials of any nature pertaining
to the Proprietary Information of the Company and to my work, and will not take
or keep in my possession any of the foregoing or any copies.
 
7.           Enforcement of Intellectual Property Rights.  I will cooperate
fully with the Company, both during and after my employment with the Company,
with respect to the procurement, maintenance and enforcement of Intellectual
Property Rights in Company-Related Developments.  I will sign, both during and
after the term of this Agreement,  all papers, including without limitation
copyright applications, patent applications, declarations, oaths, assignments of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Company-Related
Development.  If the Company is unable, after reasonable effort, to secure my
signature on any such papers, I hereby irrevocably designate and appoint each
officer of the Company as my agent and attorney-in-fact to execute any such
papers on my behalf, and to take any and all actions as the Company may deem
necessary or desirable in order to protect its rights and interests in any
Company-Related Development.
 
8.           Non-Solicitation.  During my employment and for a period of twelve
(12) months following the termination of my employment for any reason (the
“Restricted Period”), I will not, directly or indirectly, in any manner, other
than for the benefit of the Company, solicit, entice or attempt to persuade any
other employee or consultant of the Company to leave the services of the Company
for any reason.  I acknowledge and agree that if I violate any of the provisions
of this paragraph 8, the running of the Restricted Period will be extended by
the time during which I engage in such violation(s).
 
9.           Government Contracts.  I acknowledge that the Company may have from
time to time agreements with other persons or with the United States Government
or its agencies which impose obligations or restrictions on the Company
regarding inventions made during the course of work under such agreements or
regarding the confidential nature of such work.  I agree to comply with any such
obligations or restrictions upon the direction of the Company. In addition to
the rights assigned under paragraph 5, I also assign to the Company (or any of
its nominees) all rights which I have or acquired in any Developments, full
title to which is required to be in the United States under any contract between
the Company and the United States or any of its agencies.

 
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10.           Prior Agreements.  I hereby represent that, except as I have fully
disclosed previously in writing to the Company, I am not bound by the terms of
any agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of my employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other
party.  I further represent that my performance of all the terms of this
Agreement as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by me in confidence or in trust prior to my employment with the
Company. I will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.
 
11.           Remedies upon Breach.   I understand that the restrictions
contained in this Agreement are necessary for the protection of the business and
goodwill of the Company and I consider them to be reasonable for such
purpose.  Any breach of this Agreement is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of such breach,
the Company, in addition to such other remedies which may be available, will be
entitled to specific performance and other injunctive relief.
 
12.           Use of Voice, Image and Likeness.   I give the Company permission
to use any and all of my voice, image and likeness, with or without using my
name, in connection with the products and/or services of the Company, for the
purposes of advertising and promoting such products and/or services and/or the
Company, and/or for other purposes deemed appropriate by the Company in its
reasonable discretion, except to the extent expressly prohibited by law.
 
13.           Publications and Public Statements.  I will obtain the Company’s
written approval before publishing or submitting for publication any material
that relates to my work at the Company and/or incorporates any Proprietary
Information.  To ensure that the Company delivers a consistent message about its
products, services and operations to the public, and further in recognition that
even positive statements may have a detrimental effect on the Company in certain
securities transactions and other contexts, any statement about the Company
which I create, publish or post during my period of employment and for six (6)
months thereafter, on any media accessible by the public, including but not
limited to electronic bulletin boards and Internet-based chat rooms, must first
be reviewed and approved by an officer of the Company before it is released in
the public domain.
 
14.           No Employment Obligation.  I understand that this Agreement does
not create an obligation on the Company or any other person to continue my
employment.  I acknowledge that, unless otherwise agreed in a formal written
employment agreement signed on behalf of the Company by an authorized officer,
my employment with the Company is at will and therefore may be terminated by the
Company or me at any time and for any reason.
 
15.           Survival and Assignment by the Company.  I understand that my
obligations under this Agreement will continue in accordance with its express
terms regardless of any changes in my title, position, duties, salary,
compensation or benefits or other terms and conditions of employment. I further
understand that my obligations under this Agreement will continue following the
termination of my employment regardless of the manner of such termination and
will be binding upon my heirs, executors and administrators.  The Company will
have the right to assign this Agreement to its affiliates, successors and
assigns.  I expressly consent to be bound by the provisions of this Agreement
for the benefit of the Company or any parent, subsidiary or affiliate to whose
employ I may be transferred without the necessity that this Agreement be
resigned at the time of such transfer.
 
16.           Disclosure to Future Employers. I will provide a copy of this
Agreement to any prospective employer, partner or coventurer prior to entering
into an employment, partnership or other business relationship with such person
or entity.
 
17.           Severability.  In case any provisions (or portions thereof)
contained in this Agreement shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.  If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
 
18.           Interpretation.  This Agreement will be deemed to be made and
entered into in the State of California, and will in all respects be
interpreted, enforced and governed under the laws of the State of California.  I
hereby agree to consent to personal jurisdiction of the state and federal courts
situated within San Diego County, California for purposes of enforcing this
Agreement, and waive any objection that I might have to personal jurisdiction or
venue in those courts.

 
[End of Text]
 
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I UNDERSTAND THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS.  BY SIGNING BELOW, I
CERTIFY THAT I HAVE READ IT CAREFULLY AND AM SATISFIED THAT I UNDERSTAND IT
COMPLETELY.
 
IN WITNESS WHEREOF, the undersigned has executed this agreement as a sealed
instrument as of the date set forth below.

Signed:
     
(Employee’s full name)

Type or print name:
     
Social Security Number:
   
Date:
   

 
 

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EXHIBIT A

 
To:         NexMed, Inc.
 
From:     ____________________
 
Date:  _____________________
 
SUBJECT:
Prior Inventions

 
The following is a complete list of all inventions or improvements relevant to
the subject matter of my employment by the Company that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:
 
No inventions or improvements
 
See below:
 
_______________________________________________________________
 
_______________________________________________________________
 
_______________________________________________________________
 
Additional sheets attached
 
The following is a list of all patents and patent applications in which I have
been named as an inventor:
 
None
 
See below:
 
_______________________________________________________________
 
_______________________________________________________________
 
_______________________________________________________________
 
 

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