Document:

Exhibit 10.1

* Portions marked with a "*" have been omitted pursuant to a request for
confidential treatment. Such portions have been filed separately with the SEC.

                   LICENSE, SUPPLY AND DISTRIBUTION AGREEMENT

THIS AGREEMENT is made the 1st day of July 2004 (the "Effective Date") by and
between NexMed, Inc., a corporation organized and existing under the laws of
Nevada having its principal place of business at 350 Corporate Boulevard,
Robbinsville, NJ 08691, USA (hereinafter referred to as "NexMed") and NexMed
International Limited, a corporation organized and existing under the laws of
the British Virgin Island having its principal place of business at Suite 2208
Windsor House, 311 Gloucester Road, Causeway Bay, Hong Kong (hereinafter known
as "NexMed International") and SCHERING AG, a corporation organized and existing
under the laws of Germany having its principal place of business at 13442
Berlin, Germany (hereinafter referred to as "Schering"). NexMed, NexMed
International and Schering are sometimes referred to herein individually as a
"Party" and collectively as the "Parties".

                                   WITNESSETH:

                  WHEREAS, NexMed is developing and will manufacture an
alprostadil cream formulation under the brand names Alprox TD;

                  WHEREAS, Schering is interested in the distribution,
marketing, promotion and the sale in the Territory (as defined below) of this
alprostadil cream product to be manufactured by NexMed;

                  WHEREAS, Schering, as a recognized pharmaceutical company, has
appropriate distribution partners and sales force along with adequate financial
resources for the distribution, marketing, promotion and sale of the Product (as
defined below);

                  WHEREAS, NexMed and Jenapharm GmbH and Co. KG an Affiliate of
Schering signed a Confidentiality Agreement on June 28, 2002; which was amended
to Schering on April 04, 2003 in order to govern the protection of confidential
information made available by the Parties in connection with the discussions
concerning this transaction;

                  WHEREAS, the Parties signed a Letter Agreement on December 1st
/ 10th, 2003, which contemplated that the Parties would negotiate a definitive
agreement which would incorporate certain terms and conditions set forth in such
Letter Agreement;

                  NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements contained herein, the Parties hereto,
intending to be legally bound, do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  1.1 Definitions. The following terms, when capitalized, shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined), when used in this Agreement.

                  "Affiliate" means any person, corporation, partnership, firm,
joint venture, or other entity which, directly or indirectly, by itself or
through one or more intermediaries, controls, is controlled by, or is under
common control with, NexMed or Schering, as the case may be. As used in this
definition, the term "control" means the possession of the power to direct or
cause the direction of the management and policies of an entity, whether through
the ownership of the outstanding voting securities or by contract or otherwise.

                  "Agreement" means this License, Supply and Distribution
Agreement and all schedules and exhibits attached hereto.

                  "Bankruptcy Event" shall have the meaning set forth in Section
14.2(d).

                  "Bulk Product" means the Product supplied in single use
disposable dispensers for final labeling and packaging, including outer
distribution and transport packaging, by Schering and released for the EU.

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                  "Business Day" means a day which is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
Robbinsville, New Jersey, USA or Berlin, Germany.

                  "CFR" means the US Code of Federal Regulations.

                  "Clinical Development" means all activities relating to
planning and execution of clinical studies in humans directed towards obtaining
Marketing Authorization of the Product in the Territory including, without
limitation, clinical studies and related Regulatory Approvals.

                  "CMC/Process Development" means the development of one or more
processes for the manufacture and packaging of the Product for Preclinical
Development, Clinical Development and Commercialization, and shall include,
without limitation, formulation, production, fill/finish, sourcing of
components, raw materials, and packaging supplies, development of methods and
controls appropriate for Regulatory Approval in the Territory, including assays,
quality control and quality assurance methodology and stability protocols.

                  "Commercialization" and "Commercialize" mean all activities
undertaken relating to the final packaging, pre-marketing, marketing, promotion,
distribution and sale of the Product.

                  "Confidential Information" shall have the meaning set forth in
Section 10.1.

                  "Control" or "Controlled" means the right to grant an
exclusive license or sublicense of Patents, know-how, Information or other
intangible rights as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.

                  "Development" and "Develop" mean all activities and
obligations relating to Existing Preclinical Development, Existing Trials,
Preclinical Development, Clinical Development and CMC/Process Development.

                  "ED" means erectile dysfunction.

                  "EMEA" means the European Medicines Evaluation Agency, or any
successor agency with responsibility for regulating the development, manufacture
and sale of human pharmaceutical products.

                  "EU cGMP" means the current Good Manufacturing Practices as
set out in Directive 2003/94 as effective of Nov. 2003, of the Commission of the
European Communities and further elaborated in The Rules Governing Medicinal
Products in the European Community, Volume IV - Guide to Good Manufacturing
Practice for Medicinal Products, Contract Manufacture and Analysis, as such may
be amended from time to time.

                  "European Marketing Authorization" means the Marketing
Authorization in the countries listed in Item 1 and Item 2 of Schedule 1

                  "European Union" means the countries listed under Item 1 of
Schedule 1

                  "Existing Development" means the Existing Preclinical
Development and the Existing Trials set out in Schedule 2 to this Agreement.

                  "Existing Preclinical Development" means the Preclinical
Development being carried out by NexMed as of the Effective Date, a description
of which is set out in Schedule 2 to this Agreement.

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                  "Existing Trials" means the ongoing (as of the Effective Date)
clinical studies of the Product.

                  "FDA" means the United States Food and Drug Administration, or
any successor agency.

                  "Field" means use of the Product in humans.

                  "Firm Order" shall have the meaning set forth in Section 8.3.1
(a).

                  "First Commercial Sale" means the date Schering or an
Affiliate or a sublicensee of Schering first sells commercially, pursuant to a
Regulatory Approval, a Product in any country of the Territory; provided,
however, that where such sale has occurred in a country for which pricing or
reimbursement approval is necessary for widespread sale, then such sale shall
not be deemed a First Commercial Sale until such pricing or reimbursement
approval has been obtained.

                  "GMP" means the Good Manufacturing Practices regulations
promulgated by the European Commission and/or the FDA and/or the GMP regulations
required by the local authorities of the countries where the Product will be
marketed including the EU cGMP and the US cGMP, as they may be amended from time
to time.

                  "Health Regulatory Authority" means EMEA, the national
competent authorities of the EU member states, FDA and other government entity
that has jurisdiction to grant Regulatory Approvals including, but not limited
to, Marketing Authorizations..

                  "Information" means (i) techniques, data and information
relating to the Product, including, but not limited to, inventions, practices,
methods, manufacturing processes, knowledge, know-how, skill, trade secrets,
experience, test data (including pharmacological, toxicological, preclinical and
clinical test data); data, records and information derived from Preclinical
Development, Clinical Development or CMC/Process Development, regulatory
submissions, adverse reactions, analytical and quality control data, marketing,
pricing, distribution, cost, sales and manufacturing data or descriptions, and
(ii) compounds, biologics, compositions of matter, viruses, assays and
biological materials within the Field relating to the Product.

                  "Losses" shall have the meaning set forth in Section 15.1.

                  "Major Countries" means Germany, France, Italy, Spain and
United Kingdom. Any of these countries is a "Major Country".

                  "Marketing Authorization" means the right to place a
proprietary medicinal product on a market in the Territory for commercial
exploitation.

                  "Marketing Authorization Application" means an application for
Regulatory Approval which is required before commercial sale, use or placing on
the market the Product as a proprietary medicinal product in a jurisdiction.
This includes, for the purposes of Regulatory Approval in the United States, a
Biologic License Application and all supplements filed pursuant to the
requirements of the FDA (including all documents, data and other information
concerning a Product which are necessary for, or included in, FDA approval to
market the Product), and, for the purposes of Regulatory Approval in the
European Union, applications pursuant to the current version of Directive
2001/83/EC or Council Regulation ECC/2309/81 as applicable. Any successor
legislation has to be followed accordingly.

                  ,,Mutual Recognition" or ,,mutually recognized" shall have
meaning as set out in current version of Directive 2001/83/EC or Council
Regulation ECC/2309/81 as applicable. Any successor legislation has to be
followed accordingly.

                  "Necessary Patents" shall have the meaning set forth in
Section 11.1.

                  "NexMed" means NexMed, Inc., NexMed International and all
other Affiliates of NexMed, except as otherwise specifically stated herein.

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                  "NexMed Domain Names" shall have the meaning set forth in
Section 12.2.2.

                  "NexMed Information" means Information within the Control of
NexMed as of the Effective Date or which comes within the Control of NexMed
during the term of this Agreement and relates to the manufacture, use or sale of
the Product. Notwithstanding anything herein to the contrary, NexMed Information
shall exclude NexMed Patents.

                  "NexMed Patents" means any Patents in the Territory owned or
Controlled by NexMed or its Affiliates as of the Effective Date or which comes
within the Control of NexMed or any of its Affiliates during the term of this
Agreement covering the use, importation, sale or offer for sale of the Product.

                  "NexMed Trademark" means the trademark "Alprox-TD" owned by
NexMed.

                  "Non-Commercialized Country" shall mean any European Union
country where Schering Commercialized the Product and determined to cease to
actively Commercialize the Product in such country.

                  "Non-Commercialized Ratio" shall mean the quotient received by
dividing (i) the total net sales for the Product generated in each
Non-Commercialized Country during the twelve (12) complete calendar months
immediately preceding the cessation of significant marketing activities in such
Non-Commercialized Countries, by (ii) the average annual net sales for the
Product in all European Union countries other than Non-Commercialized Countries
during the thirty-six (36) complete calendar months immediately preceding such
measurement date.

                  "Patents" means all existing patents and patent applications
and all patent applications hereinafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplemental patent
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing. "Patents" also includes a Supplementary
Certificate of Protection of a member state of the European Union and any other
similar protective rights in any other country.

                  "Patent Expenses" means the fees, expenses and disbursements
and outside counsel and agent fees incurred in connection with the preparation,
filing, prosecution and maintenance of NexMed Patents or Joint Patents including
NexMed' and Schering's costs of patent interference and opposition proceedings.

                  "Preclinical Development" means all activities relating to the
planning and execution of non-human studies conducted in in vitro or in relevant
in vivo animal models directed toward obtaining Regulatory Approval of a Product
in each jurisdiction in the Territory. This includes preclinical testing,
pharmacokinetics, toxicology, documentary and medical writing directly related
to Preclinical Development activities, and related regulatory affairs.

                  "Product" means a prescription pharmaceutical product for ED
containing NexMed's proprietary formulation of alprostadil as topical cream for
the transdermal use including the single use disposable dispenser and all
further improvements within the area of ED.

                  "QAA" shall mean the Quality Assurance Agreement attached
hereto as Schedule 3, which forms an integral part of this Agreement.

                  "Quality Specifications" means those specifications for
release of starting materials, packaging materials and the Bulk Product as set
forth in the QAA as amended from time to time.

                  "Registration Dossier" means any and all information,
processes, techniques and data relating to the Product owned and prepared by
NexMed and submitted to Health Regulatory Authorities in the format required by
the regulations applicable in the particular jurisdiction to obtain Regulatory
Approvals, including, but not limited to Marketing Authorizations.

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                  "Regulatory Approval" means all approvals, product and
establishment licenses, registrations or authorizations of any federal, state or
local Health Regulatory Authority, department, bureau or other governmental
entity, necessary for the manufacture, use, storage, importation, export,
transport, sale or placing on the market of the Product in a jurisdiction in the
Territory.

                  "Regulatory Correspondence" means all correspondence including
but not limited to letters with Health Regulatory Authorities.

                  "Schering Trademark" means the trademarks selected and owned
by Schering which it uses for the marketing of the Product, other than the
NexMed Trademark.

                  "Specifications" means all the specifications for the Product
as contained (i) in the technical files (ii) in the Registration Dossiers
prepared by NexMed and as has been approved by the Health Regulatory
Authorities.

                  "Shipment Date" shall have the meaning set forth in Section
8.5.2.

                  "Steering Committee" means the coordinating committee
established by the Parties in Section 5.1.

                  "Supply Price " shall have the meaning set forth in Section
9.1.

                  "Territory" means the countries listed in Schedule 1.

                  "Third Party" means any entity other than NexMed or Schering
and their respective Affiliates.

                  "US cGMP" means the FDA's current Good Manufacturing Practice
regulations as promulgated under the Act at 21 CFR (chapters 210, 211, 600 and
610), and as further defined by FDA guidance documents, as such may be amended
from time to time.

                                   ARTICLE II

                      LICENSES AND TRANSFER OF INFORMATION

2.1      Exclusive Patent and Information License to Schering

            (a)   NexMed International hereby grant to Schering an exclusive
                  (even as to NexMed) license, with a right to sublicense
                  (subject to Section 2.1(d)), under the claims contained in the
                  NexMed Patents and the NexMed Information to final package,
                  use, market, sell, import for sale and distribute the Product
                  in the Territory, subject to the terms and conditions hereof.
                  NexMed hereby represents and warrants to Schering that NexMed
                  International owns all rights held by NexMed and its
                  Affiliates to license the NexMed Patents and NexMed
                  Information in the Territory.

            (b)   A list of the NexMed Patents identified as of the Effective
                  Date is attached hereto as Schedule 6. If at any time during
                  the course of this Agreement any additional Patents in the
                  Territory are acquired by or come under the control of NexMed
                  that include any claims that cover the final packaging, use,
                  marketing, importation, sale, offer for sale or distribution
                  of the Product, such shall be added to the list attached
                  hereto as Schedule 6.

            (c)   Promptly following the Effective Date, NexMed shall disclose
                  and provide to Schering all Information relating to the
                  Product that is necessary for Schering to Commercialize the
                  Product in the Territory. If at any time during the course of
                  this Agreement any additional Information is acquired by
                  NexMed that is necessary for Schering to Commercialize the
                  Product in the Territory, NexMed shall promptly, upon such
                  acquisition, disclose and provide to Schering all such
                  additional Information; the disclosure and provision of such
                  additional Information is subject to any then existing Third
                  Party rights or confidentiality obligations with the exception
                  of safety data.

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            (d)   Sublicensing. Schering shall be permitted to sublicense or
                  subcontract to Affiliates and Third Parties any of Schering's
                  rights to Commercialize the Product in the Territory without
                  the prior written consent of NexMed; provided, however,
                  Schering shall provide NexMed within five (5) days after
                  execution with a copy of each executed sublicense agreement
                  with sublicensees. Schering is not obliged to provide NexMed
                  with such copy if such sublicense agreement is concluded
                  between Schering and one of its Affiliates or Partners in the
                  customary distribution chain. Schering shall ensure that each
                  of its Affiliates and sublicensees accepts and complies with
                  all of the terms and conditions of this Agreement as if such
                  Affiliates or sublicensees were a party to this Agreement and
                  Schering shall guarantee and be responsible for its
                  Affiliates' and sublicensees' performance under this
                  Agreement.

            (e)   Exclusivity. Neither Schering nor any of its Affiliates shall
                  during the Term, market, commercialize, sell, offer for sale
                  or have sold, or in-license or otherwise acquire any
                  prescription PDE5-inhibitor for the treatment of ED without
                  the prior written consent of NexMed which consent shall not be
                  unreasonably denied so long as such additional product will
                  not materially interfere with Schering's commercialization
                  efforts for the Product pursuant to this Agreement.

            (f)   NexMed Retained Rights. Any rights of NexMed not expressly
                  granted to Schering under the provisions of this Agreement
                  shall be retained by NexMed. In furtherance of the foregoing
                  and not in limitation thereof, NexMed shall retain the right
                  (a) to exploit NexMed Patents and NexMed Information to
                  Develop and Commercialize the Product outside the Territory,
                  without any duty to account to Schering or obtain Schering's
                  consent for such exploitation, (b) to exploit NexMed Patents
                  and NexMed Information for purposes unrelated to the Product,
                  without any duty to account to Schering or obtain Schering's
                  consent for such exploitation, and (c) to exploit the NexMed
                  Patents and NexMed Information outside the field of ED.

                                   ARTICLE III

                                   DEVELOPMENT

3.1      Development

            (a)   NexMed shall solely be responsible for the cost and control of
                  all Development of the Product.

            (b)   The Development to be conducted by NexMed pursuant to Section
                  3.1 (a) above shall be set out in the development plan
                  attached hereto as Schedule 4. NexMed shall be solely
                  responsible for preparing the development plan and making any
                  amendments to such development plan.

            (c)   NexMed shall use commercially reasonable efforts to
                  distinguish any product it sells that contains alprostadil
                  from the Product and shall use commercially reasonable efforts
                  to discourage and prevent any off-label use for ED of any such
                  other products that NexMed sells that contains alprostadil.

3.2      NexMed shall not conduct or support any clinical studies for the
         Product in a country of the Territory after obtaining Regulatory
         Approval in such country of the Territory without Schering's prior
         written consent.

                                   ARTICLE IV

                         REGISTRATION, PHARMACOVIGILANCE

4.1      In accordance with this Article IV, NexMed shall be solely responsible
         for the preparation of Marketing Authorization Applications including
         the Registration Dossiers to achieve Marketing Authorizations in the
         countries listed in Item 1 and 2 of Schedule 1. Schering will support
         NexMed in the performance of such activities in that Schering will
         assist in the development of the submission strategy, consult on the
         development of the submission plan and guide in the regulation
         interpretation.

4.2      A copy of each such Marketing Authorization Application for the
         countries listed in Item 1 and Item 2 of Schedule 1 and the respective
         Registration Dossier including respective amendments and updates shall
         be promptly provided to Schering. In connection with all Marketing
         Authorization Applications being prosecuted by NexMed in the countries
         listed in Item 1 and Item 2 of Schedule 1 NexMed agrees to provide
         Schering with a copy (which may be wholly or partly in electronic form)
         of all filings to Health Regulatory Authorities that it makes
         hereunder, such copy to be provided at the same time as NexMed makes
         the filing with the Health Regulatory Authority.

4.3      Registration in the countries listed in Item 1 and 2 of Schedule 1

4.3.1    Subject to Section 4.1, NexMed shall submit Marketing Authorization
         Application initially to all countries listed in Item 1 and 2 of
         Schedule 1, conduct and be solely responsible for the Marketing
         Authorization Application for the Product in all countries listed in
         Item 1 and 2 of Schedule 1 until the Product is mutually recognized.
         All such Marketing Authorization Applications shall be filed in the
         name of NexMed or its Affiliates and Schering shall be named as the
         distributor of the Product.

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4.3.2    In case NexMed will submit the Marketing Authorization Application
         under the MR-procedure, as set out in the current directive 2001/83/EC,
         NexMed shall within ninety (90) days after the Marketing Authorization
         in the Reference Member State apply for Marketing Authorization in the
         Concerned Member States.

4.3.3    Independently of the regulatory route followed to achieve Mutual
         Recognition, NexMed shall within five (5) Business Days after Mutual
         Recognition of the Product transfer the Marketing Authorization
         Applications to Schering or its Affiliates as indicated by Schering.

4.3.4    After Mutual Recognition of the Product Schering shall be responsible
         to obtain the national Marketing Authorizations in the Concerned Member
         States. NexMed shall be obliged to provide all Information and
         documents necessary to achieve this without undue delay. As a rule the
         Information and documents shall be provided within three (3) Business
         Days following request by Schering.

4.3.5    In the case a country listed in Item 1 and 2 of Schedule 1 refuses to
         Mutually Recognize the Marketing Authorization of the Product, Schering
         has the right to decide whether the Marketing Authorization Application
         is withdrawn in this Concerned Member State or whether the procedure is
         to be referred to arbitration by the CPMP according to the provisions
         of the Directive.

4.3.6    Until European Marketing Authorization of the Product, the fees for the
         Marketing Authorizations in the countries listed in Item 1 and 2 of
         Schedule 1 shall be born by NexMed. Thereafter and outside of the
         countries listed in Item 1 and 2 of Schedule 1, Schering shall bear all
         costs and expenses associated with preparing, obtaining and maintaining
         all Marketing Authorizations.

4.4      Registration in all other Countries of the Territory

4.4.1    Schering shall have the right, but not the obligation to apply in it's
         own name for the Marketing Authorization in all other countries of the
         Territory. Schering will prepare, obtain and maintain the Marketing
         Authorizations in all such other countries during the term of this
         Agreement at its own cost and in its name.

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4.4.2    Subject to any Third Party Rights and/or confidentiality obligations,
         NexMed shall grant Schering access to any information on the Product
         reasonably necessary to obtain and maintain the Marketing
         Authorizations in such other countries of the Territory of the Product
         and will answer as soon as possible the questions of the Health
         Regulatory Authorities related to the registration of the Product in
         such other countries of the Territory.

         During the term of this Agreement, NexMed and Schering shall cooperate
         in all regulatory activities in good faith.

4.5      Mutual Exchange Product Safety related Information; Recalls. NexMed and
         Schering will regularly inform each other of any information relating
         to the safety of the Product, including any serious unexpected and
         expected side effects of which the Parties shall inform each other
         expeditedly and in accordance with the relevant and current legislation
         of the countries of the Territory. Schering shall promptly notify
         NexMed of any material actions to be taken by Schering with respect to
         any recall or market withdrawal or other corrective action related to
         the Product in the Territory prior to such action so as to permit
         NexMed a reasonable opportunity to consult with Schering with respect
         thereto and Schering agrees to consider NexMed's consultation.

         Within a period of six (6) months of execution of the Agreement, and
         before the First Commercial Sale in one of the countries of the
         Territory and before enrollment of the first patient in a Schering
         sponsored phase IV study, the Parties agree to enter into a standard
         operating procedure which should be set up by both Parties to govern
         safety information exchange including but not limited to collection,
         investigation and reporting to Regulatory Authorities of
         Product-related adverse drug experience reports, such that each of the
         Parties can comply with its legal obligations worldwide. The standard
         operating procedure will encompass individual case safety reports from
         all sources as well as periodic reporting (e.g. Periodic Safety Update
         reports). The standard operating procedure will be promptly amended as
         changes in international legal obligations require. Each party shall
         provide to the other Party all data and results obtained from such
         phase IV studies and other studies regarding the safety of the Product.
         NexMed shall be free to utilize such data and results outside of the
         Territory; Schering shall be free to utilize such data and results for
         commercializing the Product in the Territory.

4.6      Participation by NexMed in Regulatory Affairs.

4.6.1    Notwithstanding anything to the contrary contained in this Article IV,
         within a reasonable time prior to making any regulatory filings or
         Marketing Authorization Applications with respect to a Product in the
         Territory and during any such Regulatory Approval or Marketing
         Authorization approval process, Schering will provide copies of any
         proposed filings and consult with, and consider in good faith any
         comments of, NexMed with respect to any filings to be made or other
         actions to be taken by Schering in the Territory.

4.6.2    If either Party is advised by its counsel that it must communicate with
         any Health Regulatory Authority in the Territory with respect to the
         subject matter hereof, it shall promptly, but not later than two (2)
         Business Days, advise the other Party of the same and provide the other
         Party in advance with a copy of any proposed written communication with
         such Health Regulatory Authority and comply with any and all reasonable
         requests of the other Party concerning any meeting or written or oral
         communication with such Health Regulatory Authority.

4.6.3    Each Party shall promptly and in accordance with applicable law provide
         to the other Party copies of any documents or correspondence received
         from any Health Regulatory Authority, but not later than two (2)
         Business Days after such receipt, that pertains to the Product
         (including without limitation any minutes from a meeting with respect
         thereto). Each Party shall provide the other Party with any documents
         or correspondence to be submitted to any Health Regulatory Authority in
         the Territory that relate to the Product in time sufficient to allow
         for a reasonable time to comment.

4.7      Change Management:

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4.7.1    Applicability. Sections 4.7.2 through 4.7.4 below shall apply from and
         after the time that the Marketing Authorization in the Territory has
         been transferred to Schering or its Affiliates and agents as
         contemplated by Section 4.3.3.

4.7.2    During the course of this Agreement, if either Schering or NexMed
         wishes to or is required to make a change to: (i) the Bulk Product or
         Bulk Product Specifications; or (ii) the manufacturing process for the
         Bulk Product; or (iii) the sites of manufacture of the Bulk Product; or
         any other aspects, which may have an influence or impact on the
         Regulatory Approval or approved Marketing Authorization of the Product
         in any country of the Territory (a "Change"), it shall submit to the
         other Party in writing details of the requested Change for prior
         written approval. Such Change may be initiated by Schering or NexMed or
         may be mandated by the appropriate Regulatory Authority in such
         country.

         Costs within this Section 4.7 shall include the costs for implementing
         a Change as well as all costs for the filing of a Change.

4.7.3    NexMed Change request:

         If NexMed requests a Change as a result of any change in governmental
         or Regulatory Requirements, Schering shall not unreasonably withhold or
         delay consent to it. The responsibility for and the costs arising out
         of such a Change shall be borne by NexMed.

         Where NexMed requests a Change due to NexMed voluntarily changing its
         manufacturing processes or otherwise, e.g. technical necessities at
         NexMed, both Parties shall discuss any such change. The responsibility
         for and the costs arising out of such a Change shall be borne by
         NexMed.

4.7.4    Schering Change request:

         If Schering voluntarily requests a Change, NexMed shall as soon as
         practicable review such proposed Change and provide Schering with its
         likely effect on NexMed's production systems together with the
         investments and/or the costs necessary to implement such a Change. If
         Schering wishes to proceed, and NexMed has no reasonable objections,
         NexMed shall use its commercially reasonable endeavors to achieve such
         Changes as quickly as possible. The responsibility for and the costs
         arising out of such a Change shall be borne by Schering.

         If Schering requests a Change as a result of any change in governmental
         or Regulatory Requirements in the Territoy, NexMed shall not
         unreasonably withhold or delay consent to it. The responsibility for
         and the costs arising out of such a Change shall be borne by NexMed.

         In any event, Schering shall be responsible for any subsequent
         regulatory submissions in the Territory, and NexMed will provide
         Schering with all Information necessary to compile the Registration
         Dossier to meet the respective governmental and/or regulatory
         requirements to change the particulars of the Marketing Authorization.

                                    ARTICLE V

                        STEERING COMMITTEE / WORKING TEAM

5.1      Establishment. The Parties hereby agree that promptly after execution
         of this Agreement or as the Parties decide as appropriate, they will
         form the Steering Committee composed of four (4) members (the "SC
         Members") with functions more fully described in Section 5.2 below.
         Each Party shall have the right to appoint two (2) SC Members to serve
         on the Steering Committee each of whom shall be (i) a member of the
         respective Party's senior management and (ii) duly authorized by such
         Party to transact the business of the Steering Committee. Upon written
         notice to the other, each Party shall be entitled to appoint substitute
         SC Member(s), provided that, such substitute(s) belong to the senior
         management of its respective Party. SC Members shall be allowed to be
         represented by proxy. The Parties hereby agree that the Steering
         Committee shall meet at least semi-annually at mutually agreeable dates
         and places and that, upon invitation of either Party, other
         representatives of Schering, NexMed, or both, shall be allowed to
         attend such meetings. The Parties further agree that each shall bear
         all expenses of its respective SC Members and representatives with
         respect to their participation in the Steering Committee.

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5.2      General Functions of the Steering Committee. The Parties agree that the
         functions of the Steering Committee shall be to exchange information
         and to jointly plan activities with respect to the Product, including
         marketing plans and promotional materials for the Territory. The
         Steering Committee shall also appoint a Working Team, as more fully
         described in Section 5.4 below and a Manufacturing and Supply Team, as
         more fully described in Section 8.2 below.

5.3      Decision-Making. The Parties hereby agree that all decisions and/or
         actions taken by the Steering Committee shall be taken exclusively by
         the unanimous express consent of all the SC Members. In the event the
         Steering Committee is unable to reach an agreement on any matter, then
         such matter shall be referred to the Chief Executive Officer of NexMed
         and to the Chief Executive Officer of Schering's Region Europe for
         their consideration and resolution. The Parties however agree that, in
         the event of any issue arising in connection with the marketing and the
         final packaging of the Product in the Territory, Schering's decision
         shall constitute the final decision, and in the event of any issue
         arising in connection with the Development of the Product, NexMed's
         decision shall constitute the final decision, and that any such
         decision shall be binding upon both Parties. Notwithstanding the
         foregoing, no Party shall be entitled to exercise its casting vote to
         require, in any way, that the other Party expend additional
         consideration or resources than such Party has expressly agreed to
         commit in this Agreement.

5.4      Working Team. Shortly following its formation, the Steering Committee
         shall appoint not more than five (5) representatives from each Party,
         (the "WT Members") one of whom shall necessarily be a project manager
         of its respective Party, to serve on the Working Team. Upon written
         notice to the other, each Party shall be entitled to appoint substitute
         WT Member(s). WT Members shall be allowed to be represented by proxy.

5.5      General Functions of the Working Team. The Parties agree that the
         Working Team's functions shall be to set up a life cycle management
         plan and dealing with all issues in the context of marketing of the
         Product and submit it for review by the Steering Committee, it being
         understood that such plan is not meant to encompass the NexMed Patents
         and/or NexMed Information. The Working Team shall be responsible for
         the implementation of the life cycle management plan and co-ordination
         of each Party's respective activities. The Parties agree that the
         Working Team shall meet at least once every four (4) months at mutually
         agreeable dates and places, and that, upon invitation of either Party,
         other representatives of Schering, NexMed, or both, shall be allowed to
         attend such meetings. The Parties further agree that each Party shall
         bear all expenses of its WT Members and representatives with respect to
         their participation in the Working Team.

5.6      Retention of Powers. The Parties hereby agree that, notwithstanding the
         creation of the Steering Committee and/or the Working Team and/or
         Manufacturing and Supply Team, each Party to this Agreement shall (i)
         at all times retain the rights and powers granted to it pursuant to the
         terms and conditions of this Agreement, and that (ii) except as
         otherwise expressly provided in this Agreement or expressly agreed to
         by the Parties in writing to that effect, neither the Steering
         Committee nor the Working Team nor the Manufacturing and Supply Team
         thereof shall be delegated or vested with any such rights or powers.
         Neither the Steering Committee nor the Working Team nor the
         Manufacturing and Supply Team shall have at any time the power to amend
         or modify this Agreement in any way, as such may only be amended or
         modified as provided in Section 16.13 of this Agreement.

                                   ARTICLE VI

                               MILESTONE PAYMENTS

6.1   Milestone Payments. Schering shall make the following payments ("Milestone
      Payments") to NexMed. Each of these Milestone Payments shall be paid only
      once regardless of the number of times the milestones are achieved by the
      Product. The payments shall be due within fifteen (15) Business Days after
      NexMed presents copies of the * to Schering; the payment for the sale of *
      units or more of the Product in a calendar year shall be due within
      fifteen (15) business day after the first achievement.

                                       10
<PAGE>

<TABLE>
<CAPTION>
 ------------- -------------------------------------------------------------------------- ------------------
     No.                                     MILESTONES                                  PAYMENT in (euro)
 ------------- -------------------------------------------------------------------------- ------------------
<S>                      <C>                                                              <C>
      1        (a)      _________*____________                of               Alprox TD  2,000,000.00
                    _____________*______________before December 31, 2006, or

               (b)      __________*___________ of Alprox TD ________*_________
 ------------- -------------------------------------------------------------------------- ------------------
      2        ________*____________   European   Authorities  or  _______*_______   the  5,000,000.00
               reference            member            state            ______*_________.
               --------------------------------------------------------------.
 ------------- -------------------------------------------------------------------------- ------------------
      3        Marketing  Authorization  in the  first  Major  Country  other  than  the  2,500,000.00
               reference  member  state  subsequent  to the  reference  member state for
               indication moderate to severe ED without specific tox warning
 ------------- -------------------------------------------------------------------------- ------------------
      4        Marketing  Authorization  in the  second  Major  Country  other  than the  2,500,000.00
               reference  member  state  subsequent  to the  reference  member state for
               indication moderate to severe ED without specific tox warning
 ------------- -------------------------------------------------------------------------- ------------------
      5        Marketing  Authorization  in the  third  Major  Country  other  than  the  2,500,000.00
               reference  member  state  subsequent  to the  reference  member state for
               indication moderate to severe ED without specific tox warning
 ------------- -------------------------------------------------------------------------- ------------------
      6        Marketing  Authorization  in the  fourth  Major  Country  other  than the  2,500,000.00
               reference  member  state  subsequent  to the  reference  member state for
               indication moderate to severe ED without specific tox warning
 ------------- -------------------------------------------------------------------------- ------------------
      7        One time  payment  if  Schering  sells  _____*______units  or more of the  3,000,000.00
               Product in a calendar year
 ------------- -------------------------------------------------------------------------- ------------------
</TABLE>

                                   ARTICLE VII

                                COMMERCIALIZATION

7.1   Schering as Sole Marketing Party. Subject to Section 2.1(d), Schering
      shall have the exclusive right to Commercialize the Product, either by
      itself or through its Affiliates or sublicensees, in the Territory.

7.2   Commercialization Efforts. Schering agrees to use commercially reasonable
      efforts with respect to the Commercialization of the Product in the
      Territory as provided hereunder. Commercialy reasonable efforts means the
      same efforts like for other propriatary products with the same commercialy
      potential. Such commercially reasonable efforts will be consistent with
      the efforts used by Schering in preparing commercialization plans and
      commercializing its own pharmaceutical products, and may include
      sub-licensing, subject to Section 2.1(d). Without limiting the generality
      of the foregoing, Schering shall determine the pricing and marketing
      strategy for the Product in its sole discretion, provided, however, that
      Schering shall not sell the Product as a loss leader and shall not set the
      price of the Product at less than fair market price.

7.3   Schering shall not be obligated to Commercialize the Product in any non
      EU-country where Schering does not believe on reasonable commercial
      grounds, that it would be commercially reasonable to do so; provided that
      in such circumstance, all rights to the Product in such country shall on
      request of NexMed revert to NexMed and Schering shall transfer all
      Regulatory Approvals and applications in such country to NexMed. NexMed
      shall reimburse to Schering all external costs to obtain and maintain
      Regulatory Approval in such countries.

                                       11
<PAGE>

7.4   In addition to and without limiting, defining or otherwise qualifying the
      standards of conduct set forth elsewhere in this Agreement, Schering
      shall: (i) use its commercially reasonable efforts to launch the Product
      in each country as soon as practicable following receipt of Regulatory
      Approval for the Product in such country; (ii) conduct Commercialization
      in compliance with all requirements of applicable laws, rules and
      regulations; (iii) consult with and keep NexMed and the Steering Committee
      informed of all such activities; and (iv) assure appropriate reporting of
      adverse events.

                                  ARTICLE VIII

                             MANUFACTURE AND SUPPLY

8.1      Manufacture and Supply

8.1.1    Subject to the following terms and conditions, NexMed will manufacture
         the Product and shall supply Schering with all of Schering's
         requirements of the Product for sale in the Territory and Schering
         shall purchase its requirements of the Product exclusively from NexMed.
         Product shall be supplied by NexMed as Bulk Product.

8.1.2    NexMed will manufacture the Bulk Product pursuant to the processes
         described in the relevant documents provided for in the Regulatory
         Approval and in accordance with the Quality Assurance Agreement (the
         "QAA") attached hereto as Schedule 3, which forms an integral part of
         this Agreement. NexMed will adhere to these processes and instructions.

8.1.3    NexMed represents and warrants that it will obtain all material
         approvals of Regulatory Authorities necessary for the manufacture of
         Product prior to the first delivery of the Bulk Product. Each Party
         covenants that during the term of this Agreement, it shall comply in
         all material respects with all applicable laws and regulations in
         carrying out its obligations pursuant to this Agreement. A Party will
         inform the other Party if it happens that the competent Health
         Authorities notify to such Party any non compliance with applicable
         laws and regulations.

8.2      Manufacturing and Supply Team

8.2.1    The Steering Committee shall form as a sub-committee, the Manufacturing
         and Supply Team, to act as a forum for effectively addressing issues
         brought to the attention of the Steering Committee by either Party
         relating to the manufacture and supply of the Product, the failure to
         supply Product in a timely manner resulting from increases in demand
         that exceed manufacturing capacities, quality issues or other
         logistical issues.

8.2.2    The Manufacturing and Supply Team shall consist of 2 (two)
         representatives from each Party. Substitutes may be appointed at any
         time upon written notice. The Manufacturing and Supply Team shall meet
         at mutually agreed dates and places. Additional representatives of
         Schering and NexMed or both, in addition to members of the
         Manufacturing and Supply Team, may attend such meetings at the
         invitation of either Party. Schering and NexMed shall bear all expenses
         of their respective members related to the participation in meetings of
         the Manufacturing and Supply Team.

8.2.3    The Manufacturing and Supply Team shall serve as an advisor to the
         Steering Committee with respect to issues described in Section 8.2.1
         and shall have no right to exercise the rights of the Parties under
         this Agreement. The Manufacturing and Supply Team shall not have the
         power to amend or modify this Agreement, which may be amended or
         modified only as provided in Section 16.13.

8.2.4    Advice given by the Manufacturing and Supply Team to the Steering
         Committee shall only be given following unanimous agreement of the
         members of the Manufacturing and Supply Team. Should it prove
         impossible to obtain such agreement then the disputed matter will be
         referred to the Steering Committee for resolution.

                                       12
<PAGE>

8.3      Ordering and Forecast

8.3.1    At least six (6) months prior to the first distribution of the Product
         in a country of the Territory, and once per calendar quarter
         thereafter, by the last day of such calendar quarter at the latest,
         Schering will provide NexMed with:

         (a)      an order for Product for each month of the three-month period
                  commencing on the first day of the over-next calendar quarter
                  ("Firm Order"),

         (b)      a non-binding forecast ("First Forecast") for Product for each
                  month of the three-month period immediately following the over
                  next calendar quarter,

         (c)      a non-binding month-by-month forecast of anticipated orders
                  for the Product (a "Second Forecast"), for the three (3) month
                  period following the period covered by the Firm Order plus the
                  First Forecast.

         Schering will take into consideration the batch sizes and minimum order
         sizes as set forth in Exhibit 2. Each Firm Order will be binding on
         Schering and Schering shall be obligated to purchase those amounts set
         forth in each Firm Order.

8.3.2    The operation of the foregoing provisions is illustrated in the
         following example:

         Example: On March 31, 2005, at latest, Schering shall place its Firm
         Order for Product to be delivered in July, August and September 2005,
         and shall provide: a First Forecast on a monthly basis from October to
         December 2005 and a Second Forecast on a monthly basis from January
         2006 up to March 2006.

8.3.3    Within two (2) weeks upon receipt of the First Forecast, NexMed will
         submit to Schering a written confirmation that it is able to supply
         Schering with its requirements according to the First Forecast. If no
         confirmation is given by NexMed within the two (2) weeks period, the
         Forecast shall be deemed to have been accepted.

8.3.4    NexMed is obliged to reserve manufacturing capacities and materials
         sufficient to fulfill the Firm Orders. NexMed is obliged to fulfil the
         Firm Orders. However, Schering's Firm Orders should not exceed by more
         than 30% or be less than 30% of the First Forecast of this quarter. In
         case of greater variations between Firm Order and Forecast, the Parties
         will meet and negotiate in good faith in order to find a suitable
         solution.

8.3.5    The Firm Orders shall specify the Arrival Dates for each month of the
         Firm Order. The Arrival Dates and quantities specified in Firm Orders
         will be confirmed by NexMed in writing within two (2) weeks of receipt.
         If no confirmation is given by NexMed within the two (2) weeks period,
         the Firm Orders shall be deemed to have been accepted. NexMed shall use
         the Schering item number and the purchase order system for all
         deliveries. All invoices, delivery documentation and delivery notes
         have to contain the corresponding purchase order number and P.O.
         position.

8.3.6    If Schering desires to alter any quantities set forth in a Firm Order
         or to accelerate the Shipment Dates, then NexMed shall undertake, but
         shall be under no obligation to do so, to use its commercially
         reasonable efforts to comply with any changes of ordered quantities or
         acceleration of Shipment Dates, especially with regard to changes to
         prevent the interruption of market supply or to cuts in ordered
         quantities or cancellations where the non-fulfillment of changes would
         require to destroy or re-pack the Product.

8.3.7    In case that Schering rejects a lot of Bulk Product, NexMed will
         provide a replacement lot within four (4) weeks of written notice from
         Schering of such a rejection, subject to the provisions of Section 8.6.
         This replacement shipment will be made independent of a final agreement
         on the rejection.

                                       13
<PAGE>

8.3.8    NexMed shall maintain continuously a safety stock of the starting
         materials including active pharmaceutical ingredients equal to the
         average of three (3) months Firm Order for the applicable period or
         capacity of three (3) months.

8.3.9    Schering shall provide at least six (6) months prior to the first
         distribution of the Product in a country of the Territory, and annually
         thereafter, by the end of June, a long-term requirements plan for the
         Product to NexMed covering the next two (2) years. NexMed shall confirm
         in writing to Schering, the existence of capacity sufficient for
         manufacturing in accordance with the long-term requirement plan, or if
         the existing capacity is incompatible with meeting the long-term
         requirements, NexMed will use commercially reasonable efforts to
         increase its capacity accordingly.

8.4      Packaging

         The packaging of the Bulk Product shall be consistent with the
         Specifications.

8.5      Shipment

8.5.1    NexMed will prepare the Bulk Product for shipment to Schering according
         to the shipping instructions set forth in the QAA, as amended from time
         to time. Shipments will be made FCA as defined in INCOTERMS 2000, at
         NexMed's designated shipment point in a country in the EU. Carrier will
         be chosen by Schering and coordinated by NexMed.

8.5.2    Shipment will be made early enough to meet the arrival date specified
         in the Firm Orders (the "Arrival Date"), and in the quantities
         specified in the Firm Orders. Quantities shipped may vary within the
         range of +/- 10% of the quantities specified in the Firm Orders. NexMed
         will immediately inform Schering of any circumstances that could result
         in any shipment delay or a significant variation (greater than +/- 10%)
         of the quantities set forth in the Firm Orders. Shipment delays which
         exceeds 15/30/45 days will allow Schering to deduct 2/5/10% of the
         invoiced amount. This compensation does not replace any further rights
         of Schering.

8.5.3    Unless otherwise agreed in writing the manufacturing date of the
         Product shall not be more than four (4) months prior to the Shipment
         Date. Product shall not have a remaining shelf life of less than twenty
         (20) months upon shipment unless Schering has requested delayed
         delivery.

8.5.4    Should any quantities of the Product supplied by NexMed, in Schering's
         opinion not conform with the Specifications, Schering will notify
         NexMed in writing within thirty (30) days from the date of delivery of
         the Product. Schering will supply NexMed with details of the allegedly
         non-conforming Product including samples thereof and will cooperate in
         any investigation NexMed should wish to carry out. Even if such
         determination is disputed by NexMed, NexMed shall as soon as possible
         and not later than thirty (30) days, subject to availability, replace
         such non-conforming Products free of charge, provided Schering has paid
         for the rejected Product.

8.5.5    Notwithstanding the above, if a dispute arises between NexMed and
         Schering concerning the non-conformity of the Product to the
         Specifications, and said dispute is not resolved within thirty (30)
         days from the receipt by NexMed of the notification mentioned in
         Section 8.5.4, the matter shall be submitted to an independent
         laboratory chosen in common agreement between the Parties (or,
         failing such agreement, by the Chamber of Commerce and Industry of
         Frankfurt am Main, Germany) whose decision will be final. The
         expenses incurred for said determination shall be paid by the Party
         whose position is found erroneous by the said decision and if the
         Products are found to be conforming, Schering shall immediately pay
         NexMed for all Product that was shipped to Schering.

8.5.6    NexMed represents and warrants to manufacture the Product in the
         quality according to the QAA. The Product will conform in all material
         respects to the Quality Specifications as set forth in the QAA. Product
         found not to be manufactured in accordance with the QAA will not
         satisfy the obligations of NexMed as set forth in this Agreement.

                                       14
<PAGE>

8.5.7    In the event rejected Bulk Product can not be reworked and must be
         destroyed, all destruction shall be performed by NexMed or, if mutually
         agreeable, by Schering. The Party, which has caused the defective or
         otherwise nonconforming Bulk Product will pay the costs of such rework
         and destruction. Following destruction, the applicable Party will send
         to the other a certificate of destruction indicating the following:
         name of the Bulk Product, batch number, quantity, and name of the
         company that destroyed the Bulk Product.

                                       15
<PAGE>

8.6      Shortage of Supply

         If there is any shortage in the supply of the Product, NexMed shall
         deliver the Product to Schering at least at the same level as to
         NexMed's other customers or NexMed themselves resulting in a similar
         (then percentile) reduction of the Product supply in relation to the
         forecasted amounts for Schering and NexMed's other customers.

8.7      Alternative Manufacturing

8.7.1    Should NexMed be unable to supply (i) at least seventy-five percent
         (75%) of Schering's Firm Orders for three (3) consecutive calendar
         months or (ii) should NexMed fail to supply Schering in six (6)
         calendar months within the immediately preceding, consecutive
         twenty-four (24) calendar months at least seventy-five percent (75%) of
         Schering's Firm Order in accordance with the terms of this Agreement,
         NexMed shall inform Schering without delay and discuss with it about
         said inability and shall authorize Schering to manufacture or have
         manufactured quantities of the Product and shall provide Schering with
         all necessary know-how, technology, information and assistance for such
         manufacturing.

8.7.2    If Schering assumes the manufacturing of the Product in accordance with
         the terms of Section 8.7.1 hereof, Schering shall pay NexMed for each
         unit manufactured an amount equal to * less Schering's Cost of
         Manufacturing.

8.7.3    NexMed shall organize an alternative supplier for the Product prior to
         the first delivery of the Bulk Product to Schering. Schering shall have
         the right of first refusal to be the alternative supplier on the same
         terms and conditions as a commercially reasonable third party
         alternative supplier.

                                   ARTICLE IX

                             SUPPLY PRICE, PAYMENTS

9.1       Supply Price. NexMed will supply all of Schering's Product
          requirements as Bulk Product at the price of * per single
          dose unit ("Supply Price"). This Supply Price represents NexMed's
          total share in the sales of the Product.

9.2      Samples. NexMed will supply clinical samples at * per single
         dose unit and commercial samples at * per single dose unit.

9.3      NexMed shall not supply Third Parties for countries reverted to
         NexMed according to Section 7.3 at more favorable supply price
         conditions than Schering.

9.4      Invoice; Payments. NexMed shall invoice to Schering upon delivery of
         the Product. Schering shall pay to NexMed the invoices within thirty
         (30) days from the date such invoices are received by Schering.

9.5      Payments; Interest. Payments due under this Agreement shall be due on
         such date as specified in this Agreement and, in the event such date is
         not a Business Day, then the next succeeding Business Day, and shall be
         made by wire transfer of immediately available funds to a bank account
         designated by NexMed, at least ten (10) days before payment is due. Any
         failure by a Party to make a payment within ten (10) Business Days
         after the date when due shall obligate such Party to pay computed
         interest to the receiving Party, the interest period commencing on the
         due date and ending on the payment day, to the other Party, at a rate
         per annum equal to the one month EURIBOR as quoted on the due date on
         REUTERS screen (EURIBOR01). The interest calculation shall be based on
         the act/360 computation method. The interest rate shall be adjusted and
         interest shall be compounded monthly in arrears. Such interest shall be
         due and payable on the tender of the underlying principal payment.

9.6      Taxes. NexMed shall pay any and all taxes levied on account of all
         payments it receives under this Agreement. If laws or regulations
         require that taxes be withheld, Schering will (i) deduct those taxes
         from all remittable payments, (ii) timely pay the taxes to the proper
         taxing authority, and (iii) send proof of payment to NexMed within
         thirty (30) days of receipt of confirmation of payment from the
         relevant taxing authority. Schering agrees to make all lawful and
         reasonable efforts to minimize such taxes to NexMed.

                                       16
<PAGE>

9.7      Payment Currency. Payments by Schering under this Agreement shall be
         paid to NexMed in Euro by wire transfer of immediately available funds
         to an account at a commercial bank such bank account being designated
         by NexMed at least ten (10) Business Days before payment is due.

                                    ARTICLE X

                                 CONFIDENTIALITY

10.1     Confidentiality; Exceptions. Except to the extent expressly authorized
         by this Agreement or otherwise agreed in writing, the Parties agree
         that the receiving Party shall keep confidential and shall not publish
         or otherwise disclose or use for any purpose other than as provided for
         in this Agreement any Information and other information and materials
         furnished to it by the other Party pursuant to this Agreement or any
         Information developed during the course of the collaboration hereunder,
         or any provisions of this Agreement that are the subject of an
         effective order of the Securities Exchange Commission granting
         confidential treatment pursuant to the Securities Act of 1934 as
         amended (collectively "Confidential Information"), except to the extent
         that it can be established by the receiving Party that such
         Confidential Information:

(a)               was already known to the receiving Party, other than under an
                  obligation of confidentiality, at the time of disclosure by
                  the other Party; or

(b)               was generally available to the public or otherwise part of the
                  public domain at the time of its disclosure to the receiving
                  Party; or

(c)               became generally available to the public or otherwise part of
                  the public domain after its disclosure and other than through
                  any act or omission of the receiving Party in breach of this
                  Agreement.

(d)               was disclosed to the receiving Party, other than under an
                  obligation of confidentiality, by a Third Party who had no
                  obligation to the disclosing Party not to disclose such
                  information to others; or

(e)               was independently discovered or developed by the receiving
                  Party as documented in its corporate records.

10.2     Authorized Disclosure. Each Party may disclose Confidential Information
         hereunder to the extent such disclosure is reasonably necessary in
         filing or prosecuting patent applications, prosecuting or defending
         litigation, filing or updating any Marketing Authorization Application,
         complying with applicable governmental laws, rules and regulations or
         conducting Development, provided that, if a Party is required by law or
         regulation to make any such disclosures of the other Party's
         Confidential Information it will, except where impracticable for
         necessary disclosures, for example in the event of medical emergency,
         give reasonable advance notice to the other Party of such disclosure
         requirement and, except to the extent inappropriate in the case of
         patent applications, will use its reasonable efforts to secure
         confidential treatment of such Confidential Information required to be
         disclosed. In addition, and with prior written notice to the other
         Party of each Third Party with whom a confidential disclosure agreement
         is being entered into, each Party shall be entitled to disclose, under
         a binder of confidentiality, Confidential Information to any Third
         Party for the purpose of carrying out the purposes of this Agreement.
         Nothing in this Article X shall restrict any Party from using for any
         purpose any Confidential Information independently developed by it
         during the course of the collaboration hereunder, or from using
         Confidential Information that is specifically derived from pre-clinical
         or clinical trials to carry out Regulatory Approval, marketing, sales
         or professional services support functions as is customary in the
         pharmaceutical industry. Where materiality of disclosure requires a
         press release or other disclosure pertaining to this Agreement by one
         Party, the disclosing Party shall give at least three (3) Business
         Days' advance notice to the other Party.

                                       17
<PAGE>

10.3     Survival. This Article X shall survive the termination or expiration
         of this Agreement.

                                   ARTICLE XI

        OWNERSHIP OF INTELLECTUAL PROPERTY, PATENT RIGHTS AND USE OF NAME

11.1     Ownership. Each Party shall solely own, and it alone shall have the
         right to apply for, Patents within and outside of the Territory for any
         inventions made solely by that Party's employees or consultants in the
         course of performing work under this Agreement; provided, however, if
         Schering is the owner of any inventions relating to the Product,
         Schering shall grant NexMed a non-exclusive and royalty-free license to
         use the invention during the term of the Agreement. If Schering decides
         not to apply for a patent, Schering shall assign these invention to
         NexMed, and NexMed shall have the right to apply for Patents relating
         to any such inventions subject to the applicable German statute for
         employee inventions.

         To the extent NexMed has not obtained the Patents necessary for
         Schering's license pursuant to Article II 1 (a) ("Necessary Patents")
         at the time of first commercialization, NexMed shall continue to use
         all commercially reasonable efforts to obtain these outstanding
         Patents.

11.2     Third Party Patent  Rights.  Each Party agrees to bring to the
         attention of the other Party any Third Party Patent it discovers, or
         has discovered, and which relates to the subject matter of this
         Agreement.

11.3     Enforcement Rights.

            (a)   Notification of Infringement. If either Party learns of any
                  infringement or threatened infringement by a Third Party of
                  the NexMed Patents such Party shall promptly notify the other
                  Party and shall provide such other Party with all available
                  evidence of such infringement.

            (b)   Enforcement in the Territory. NexMed shall have the right, but
                  not the obligation, to institute, prosecute and control at its
                  own expense any action or proceeding with respect to
                  infringement of any NexMed Patents covering the manufacture,
                  use, importation, sale or offer for sale of the Product being
                  developed or marketed in the Territory, by counsel of its own
                  choice. Schering shall have the right, at its own expense, to
                  be represented in any action by counsel of its own choice. If
                  NexMed fails to bring an action or proceeding or otherwise
                  take appropriate action to abate such infringement within a
                  period of one hundred eighty (180) days of notice by Schering
                  to NexMed requesting action, Schering will have the right to
                  bring and control any such action or proceeding relating to
                  NexMed Patents by counsel of its own choice and NexMed will
                  have the right to be represented in any such action by counsel
                  of its own choice and at its own expense. If one Party brings
                  any such action or proceeding, the other Party agrees to be
                  joined as a party plaintiff if necessary to prosecute the
                  action or proceeding and to give the first Party commercially
                  reasonable assistance and authority to file and prosecute the
                  suit. Any damages or other monetary awards recovered pursuant
                  to this Section 11.3(b) shall be allocated first to the costs
                  and expenses of the Party bringing suit, then to the costs and
                  expenses, if any, of the other Party. In the event that
                  Schering brings such action, any amounts remaining shall be
                  distributed as follows: compensatory damages seventy percent
                  (70%) shall be payable to Schering and the remaining thirty
                  percent (30%) to NexMed, and punitive and exemplary damages
                  shall be paid equally to Schering and NexMed. In the event
                  that NexMed brings such action, seventy percent (70%) of any
                  amounts remaining shall be payable to NexMed and the remaining
                  thirty percent (30%) to Schering.

                                       18
<PAGE>

            (c)   Settlement with a Third Party. The Party that controls the
                  prosecution of a given action shall also have the right to
                  control settlement of such action, provided however, that if
                  one Party controls, no settlement shall be entered into
                  without the written consent of the other Party (which consent
                  shall not be unreasonably withheld or delayed) if such
                  settlement would materially and adversely affect the interests
                  of such other Party.

11.4     Defense and Settlement of Third Party Claims. If a Third Party asserts
         that a patent or other intangible right owned by it is infringed by any
         Product in the Territory, NexMed will be solely responsible for
         defending against any such assertions at its cost and expense (subject
         to the provisions of Section 11.3(b)), and if a Third Party asserts
         that a trademark owned by it is infringed by any Product in the
         Territory, Schering will be solely responsible for defending against
         any such assertions at its cost and expense. No settlement may be
         entered into without the written consent of the other Party, which
         shall not be unreasonably withheld. The costs of any such settlement
         (including, without limitation, damages, expense reimbursements,
         compliance, future royalties or other amounts) shall be paid by the
         Party defending such action. If any Third Party is successful in any
         such claim and the non-defending Party is ordered to make any payments
         to such Third Party in connection therewith, any such payments shall be
         promptly paid by the defending Party.

11.5     Licenses under Third Party Patents.

                  (a) Determination. Upon mutual agreement, the Parties may seek
         to obtain a license or right under one or more Third Party Patents
         covering any Product in the Territory in order to avoid infringement.
         In the event that Schering determines that it is beneficial for the
         Parties to obtain a license or right under one or more Third Party
         Patents covering any Product in the Territory and NexMed objects to
         such determination within thirty (30) days after such determination is
         made, the Parties shall suspend action for a period of one (1) month
         (the "Deferral Period") to allow NexMed to present its position to and
         discuss its position with Schering. Such discussion shall involve
         senior management of each Party.

                  (b) NexMed may present such facts, findings, conclusions and
         other information as it deems necessary to Schering during the Deferral
         Period. Upon the earlier of the end of the Deferral Period or NexMed's
         presentation of all of its information, Schering shall evaluate such
         information and make a final determination, in its reasonable judgment,
         as to the desirability of obtaining a license or right under such Third
         Party Patents. The decision reached by Schering shall thereafter be
         final and binding on the Parties.

                  (c) Licensing. In the event that the Parties agree to seek to
         obtain a license or right under any Third Party Patents or in the event
         of final determination by Schering of the desirability to obtain a
         license or right under any Third Party Patents, Schering and NexMed
         will make reasonable efforts to obtain such license or right.

                  (d) Royalties. Any royalties and fees to be paid to the Third
         Party in consideration of the license or right under the Third Party
         Patents with respect to the Product sold by Schering, its Affiliates or
         its sublicensees shall be shared equally by the Parties.

11.6     Patent Expenses.  All Patent Expenses with respect to NexMed Patents
         shall be borne by NexMed.

11.7     Use of Names. Neither Party shall use the name of the other Party in
         relation to this transaction in any public announcement, press release
         or other public document without the written consent of such other
         Party, which consent shall not be unreasonably withheld or delayed;
         provided however, that either Party may use the name of the other Party
         in any document filed with any Health Regulatory Authority, including
         the FDA and the Securities and Exchange Commission, in which case
         Schering shall be referred to as "Schering AG, Germany". Each Party
         agrees not to use the other Party's name in relation to this
         transaction in any press release, public announcement or other public
         document without the approval of the other Party, which approval shall
         not be unreasonably withheld or delayed.

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                                   ARTICLE XII

                       TRADE MARK RIGHTS AND INFRINGEMENT

12.1     Trademarks.

12.1.1   Schering shall be responsible for the selection, registration,
         maintenance and defense of all Schering Trademarks, which are employed
         in connection with the marketing and selling of the Product in the
         Territory and shall own and control such Schering Trademarks and pay
         any costs in connection therewith.

12.1.2   Each Party recognizes the exclusive ownership by the other Party of any
         proprietary name, logotype or trademark furnished by such Party
         (including Affiliates) for use in connection with the marketing, sale
         or distribution of the Product. Neither Party shall, either while this
         Agreement is in effect, or at any time thereafter, register, use or
         challenge or assist others to challenge the trademarks of the other
         Party or attempt to obtain any right in or to any such name, logotype
         or trademark or in and to any name, logotype or trademarks confusingly
         similar to the Product or any other goods and products, notwithstanding
         that such goods or products have a different use or are dissimilar to
         the Product.

12.1.3   Schering shall be responsible for the registration, hosting,
         maintenance and defense of the Schering Trademarks as domain names.
         NexMed shall empower Schering to act on behalf for filing and
         maintaining the NexMed-Trademarks and Domain Names during the term of
         this Agreement and in connection with the marketing and selling of the
         Product in the Territory.

12.2.1   NexMed hereby grants to Schering the right to use the NexMed Trademark
         in the Territory for the duration of this Agreement free of charge.
         Schering may use the NexMed Trademark or any other Schering Trademark
         in connection with the marketing, sale or distribution of the Product.

12.2.2   In the event that Schering decides to use the NexMed Trademark, the
         Parties shall discuss the transfer to Schering of all domain names
         similar to the NexMed Trademark ("NexMed Domain Names"). If, however,
         NexMed is using or plans to use the NexMed Trademark outside the
         Territory, the NexMed Domain Names shall not be transferred to
         Schering. In that event
         (i) Nexmed shall be responsible for the registration, hosting,
         maintenance and defense of a switching internet page with one of the
         NexMed Domain Names; and
         (ii) NexMed shall grant Schering a right to link to such switching
         internet page; and
         (iii) the Parties will discuss allowing Schering to use a domain name
         similar to the NexMed Domain Names (e.g., "NexMed Trademark
         Europe.com").

12.2.3   The Parties agree that the ownership and use of the NexMed Trademark
         shall be governed by the following provisions:

         (a)      NexMed shall retain any and all rights, title and interests in
                  and to the NexMed Trademarks, and no rights therein are
                  licensed and/or transferred to Schering hereunder, except as
                  expressly set forth in this Agreement.

         (b)      NexMed shall, at its costs and expenses, and whenever
                  necessary for the performance of the terms of this Agreement,
                  (i) file and undertake in good faith to obtain and then
                  maintain the NexMed Trademarks' registration in the Territory,
                  and (ii) inform Schering of the status of such NexMed
                  Trademarks. A list on the legal status of the Trademarks and
                  domain names for all countries of the Territory is attached as
                  of Effective Date as Schedule 5.

12.3     Trademarks infringement:

         (a)      Upon being aware of any of the following within the Territory,
                  either Party shall promptly notify the other of, (i) any
                  infringement, (ii) threatened infringement, (iii) deceptive
                  use of any Trademarks, (iii) any adverse claim asserted by a
                  Third Party with respect to the NexMed Trademark or Schering
                  Trademarks and/or to any labels affixed to any of the Product,

                                       20
<PAGE>

                 and the Parties shall render each other any assistance as may
                  be requested for the purpose of restraining such infringement
                  or deceptive use and for taking any other appropriate action.
                  NexMed and Schering shall consult at to possible courses of
                  action, but NexMed hereby agrees that Schering's final
                  determination with respect to such courses of action shall be
                  final. In the event Schering or any of its Affiliates
                  institute any proceedings for the infringement or deceptive
                  use of any NexMed Trademark or Schering Trademark in the
                  Territory, NexMed hereby agrees that it shall, at Schering's
                  cost and expense, assist Schering or its Affiliates with any
                  assistance that may be reasonably requested.

         (b)      In the event of any Third Party claim that any trademarks
                  utilized by Schering infringe such Third Party's intellectual
                  property right in the Territory, Schering and/or its
                  Affiliates shall, at their own costs and expenses, do what
                  they consider appropriate and necessary to defend such claim
                  and NexMed hereby agrees that, upon Schering's request, it
                  shall provide Schering with full assistance. Schering hereby
                  agrees to indemnify NexMed including reasonable attorneys fees
                  in case of any Third Party claiming that any trademarks
                  utilized by Schering infringe such Third Party's right in the
                  Territory.

12.4     In the event that this Agreement is terminated in its entirety in
         accordance with Article XIV or in the event that Schering reverts a
         country upon NexMed's request in accordance with Section 7.3, Schering
         shall, upon NexMed's request, transfer any rights it may have in the
         NexMed Trademark to NexMed. In addition, Schering shall, at NexMed's
         request, transfer any Schering or NexMed Trademark used in connection
         with the Product to NexMed, and NexMed shall pay for such transfer a
         royalty in the amount of fifty percent (50%) of the total sales of
         Product under the Schering Trademark in the Territory during the last
         full calendar month preceding the effective date of expiration or
         termination. NexMed has the right but not the obligation to pay such
         royalties by installments extending up to one year after such transfer.

                                  ARTICLE XIII

                         REPRESENTATIONS AND WARRANTIES

13.1     Representations and Warranties

(a)   Each of the Parties represents and warrants to the other Party as follows:

            (i)   The Agreement is a legal and valid obligation binding upon
                  such Party and enforceable in accordance with its terms. The
                  execution, delivery and performance of the Agreement by such
                  Party does not conflict with any agreement, instrument or
                  understanding, oral or written, to which it is a party or by
                  which it is bound, nor to such Party's knowledge, violate any
                  law or regulation of any court, governmental body or
                  administrative or other agency having jurisdiction over it.

            (ii)  NexMed has not granted, and during the term of this Agreement
                  neither Party will grant, any right to any Third Party
                  relating to the NexMed Patents and/or NexMed Information which
                  would conflict with the rights granted to either Party
                  hereunder.

            (iii) There are no actions, suits, proceedings or unsatisfied
                  judgments outstanding, pending or threatened against or
                  affecting either Party, which may impair the ability of this
                  Party to perform its obligations under this Agreement, and
                  this Party is not aware of any existing ground on which any
                  such action, suit or proceeding might be commenced with any
                  reasonable likelihood of success.

(b)   NexMed hereby represents and warrants to Schering that NexMed:

                                       21
<PAGE>

            (i)   To the best of its knowledge, it has provided to Schering all
                  material information in its possession or control or of which
                  it is aware as of the Effective Date, concerning efficacy,
                  side effects, injury, toxicity, or sensitivity, reaction and
                  incidents or severity thereof, associated with any clinical
                  use, studies, investigations or tests with the Product (animal
                  or human), whether or not determined to be attributable to the
                  Product.

            (ii)  To the best of its knowledge, NexMed has not employed, or used
                  a contractor or consultant that employs, any individual or
                  entity debarred by the FDA (or subject to a similar sanction
                  of EMEA), or, to the best knowledge of NexMed, any individual
                  who or entity which is the subject of an FDA debarment
                  investigation or proceeding (or similar proceeding of EMEA),
                  in the conduct of the preclinical or clinical studies of the
                  Product.

            (iii) As of the Effective Date, except as it may have previously
                  disclosed to Schering in writing, NexMed has not received any
                  notices of infringement or any written communications relating
                  in any way to a possible infringement with respect to the
                  Product, and, to its knowledge, it is not aware that the
                  manufacture, use or sale of the Product infringes any Third
                  Party patent rights.

            (iv)  As of the Effective Date, NexMed is not aware of any prior act
                  or any fact which causes it to conclude that any NexMed Patent
                  is invalid or unenforceable.

            (v)   As of the Effective date, NexMed has not received any notice
                  that any opposition or cancellation proceedings or other legal
                  disputes have been initiated against the NexMed Trademark in
                  any country in the Territory where applications for
                  registration of the NexMed Trademark have been filed and/or
                  where the NexMed Trademark has been registered.

            (vi)  To the best of its knowledge, NexMed has obtained all right,
                  title and interest in and to all rights to the NexMed Patents
                  and NexMed Information, free and clear of any liens,
                  encumbrances or rights to repurchase; and

            (vii) NexMed has conducted, or has caused its contractors or
                  consultants to conduct, and will in the future conduct, the
                  preclinical and clinical studies for the Product, in all
                  material respects in accordance with applicable laws,
                  published standards of the FDA and the European Commission,
                  and regulatory standards applicable to the conduct of studies
                  in the United States and the EU, including without limitation,
                  GMPs, GLPs and GCPs.

            (viii) During the term hereof, NexMed will not take any action or
                  enter into any agreements that may affect Schering's rights
                  under this Agreement.

(c)   Schering hereby represents and warrants to NexMed that Schering:

            (i)   As of the Effective Date, except as it may have previously
                  disclosed to NexMed in writing, Schering has not received any
                  notices of infringement or any written communications relating
                  in any way to a possible infringement with respect to the
                  Product, and that it is not aware that the manufacture, use or
                  sale of the Product infringes any Third Party patent rights.

            (ii)  During the term hereof, Schering will not take any action or
                  enter into any agreements that may affect NexMed's rights
                  under this Agreement or affect the NexMed Patents, NexMed
                  Trademark or NexMed Information.

                                       22
<PAGE>

                                       XIV

                              TERM AND TERMINATION

14.1     Term. This Agreement shall commence as of the Effective Date and,
         unless sooner terminated as provided herein, shall continue in effect
         on a country-by-country basis until the last Patent protection of the
         Product expires or ten (10) years after the First Commercial Sale of
         the Product in such country, whichever is longer. Schering will notify
         NexMed about the First Commercial Sale of the Product in each country.
         This Agreement will automatically extend for periods of one (1) year
         unless either Party give written notice to the other Party of its
         intention not renew at least one (1) year prior to the expiry date. The
         EU is considered to be one country for the purpose of this Section
         14.1.

14.2     Termination

         (a)      In the event that NexMed fails to receive the acceptance of
                  filing of the Product for indication moderate to severe ED by
                  the European Health Authorities in the EU before December 31,
                  2006, Schering has the right to terminate this Agreement and
                  Schering must exercise this termination right on or before
                  March 31, 2007.

         (b)      Schering may terminate this Agreement in case that NexMed
                  fails to receive the unconditional Regulatory Approval of the
                  Product for indication moderate to severe ED by the European
                  Health Authorities or the Reference Member State before
                  December 31, 2008. Schering must exercise this termination
                  right on or before March 31, 2009.

         (c)      In the event that NexMed fails to obtain the Necessary Patents
                  in a Major Country and because of such failure Schering is
                  unable to achieve a market share in such country which is
                  equivalent to Schering's market share in the remainder of the
                  Territory for two (2) consecutive years after Mutual
                  Recognition has been obtained, Schering shall have the right
                  to terminate the contract in its entirety, upon six (6) months
                  prior written notice to NexMed.

                  In case of market changes which lead to margins which are
                  below a level acceptable for Schering the Parties shall meet
                  and negotiate in good faith in order to find a suitable
                  solution. In case no solution has been found, Schering is
                  entitled to terminate the Agreement with six (6) months
                  notice. All open Firm Orders have to be fulfilled by NexMed
                  and to be paid by Schering.

         (d)      Failure of Schering or NexMed to comply with any of their
                  respective material obligations and conditions contained in
                  this Agreement shall entitle the other Party to give the Party
                  in default notice requiring it to cure such default. If such
                  default is not cured within sixty (60) days after receipt of
                  such notice, the notifying Party shall be entitled (without
                  prejudice to any of its other rights conferred on it by this
                  Agreement) to terminate this Agreement. Notwithstanding the
                  foregoing, in the event of a non-monetary default, if the
                  default is not reasonably capable of being cured within the
                  sixty (60) day cure period by the defaulting Party and such
                  defaulting Party is making a good faith effort to cure such
                  default, the notifying Party may not terminate this Agreement,
                  provided however, that the notifying Party may terminate this
                  Agreement if such default is not cured within one hundred
                  eighty (180) days of such original notice of default. The
                  right of either Party to terminate this Agreement as
                  hereinabove provided shall not be affected in any way by its
                  waiver of, or failure to take action with respect to any
                  previous default.

         (e)      In the event that one of the Parties hereto shall go into
                  liquidation, a receiver or a trustee be appointed for the
                  property or estate of that Party and said receiver or trustee
                  is not removed within thirty (30) days, or the Party makes an
                  assignment for the benefit of creditors (collectively, a
                  "Bankruptcy Event"), and whether any of the aforesaid
                  Bankruptcy Events be the outcome of the voluntary act of that
                  Party, or otherwise, the other Party shall be entitled to
                  terminate this Agreement.

                                       23
<PAGE>

         (f)      In the event that this Agreement expires or is terminated by
                  Schering in accordance with Section 14.2 (a) or (b) above or
                  by either Party in its entirety in accordance with Sections
                  14.2 (c) or (d) hereof, Schering will, with respect to each
                  country for which the termination applies entirely: (i) not
                  use the NexMed Information or any other Confidential
                  Information of NexMed as long as it has to be kept
                  confidential pursuant to Article X hereof in such country;
                  (ii) not infringe any of the NexMed Patents in such country;
                  (iii) make all payments accrued under this Agreement with
                  respect to such country prior to the effective termination or
                  expiration date; (vi) transfer all Marketing Authorizations,
                  regulatory filings and approvals related to the Product in
                  such country to NexMed, in accordance with the following
                  provisions: (a) Schering or the relevant Affiliate or
                  sublicensee of Schering shall perform all necessary activities
                  to complete the transfer of all Marketing Authorizations,
                  regulatory filings and/or approvals as promptly as practicable
                  after the expiration or the termination of this Agreement to
                  the benefit of NexMed or NexMed's designee; (b) NexMed shall
                  accept or cause each NexMed designee to accept the transfer of
                  the corresponding Marketing Authorizations, regulatory filings
                  and/or approvals and shall cooperate with Schering or
                  Schering's Affiliate or sublicensees to effect such transfer;
                  and (c) the costs for the transfer of all Marketing
                  Authorizations, regulatory filings and/or approvals or for a
                  new registration shall be borne by NexMed; (vii) the licenses
                  granted by NexMed to Schering shall terminate; and (viii) sell
                  to NexMed, at any time within ninety (90) days of such
                  termination, at NexMed's election, all or any portion of the
                  inventory of the Product owned by Schering or its Affiliates
                  which are intended for sale in such country at a price equal
                  to Schering's or its Affiliate's fully burdened costs for such
                  inventory. Such election shall be made by NexMed in writing
                  and within thirty (30) days of such termination or expiration.
                  If NexMed elects to purchase such Schering inventory, then
                  Schering shall ship at NexMed's cost and direction such
                  inventory to NexMed. NexMed shall pay for such inventory in
                  advance of receipt of such inventory.

         (g)      Except where expressly provided for otherwise in this
                  Agreement, termination of this Agreement shall not relieve the
                  Parties hereto of any liability, including any obligation to
                  make payments hereunder, which accrued hereunder prior to the
                  effective date of such termination, nor preclude either Party
                  from pursuing all rights and remedies it may have hereunder or
                  at law or in equity with respect to any breach of this
                  Agreement nor prejudice any Party's right to obtain
                  performance of any obligation.

         (h)      In the event that Schering is not actively Commercializing the
                  Product in any three (3) of the Major Countries, by the
                  earlier of the dates contemplated by the launch sequence
                  agreed to by the Parties or three (3) years after Marketing
                  Authorization for the Product has been granted in the
                  Reference Member State, then NexMed shall have the right to
                  terminate this Agreement upon six (6) months prior written
                  notice to Schering.

        (i)       In the event that (A) Schering ceases to actively
                  Commercialize the Product in any European Union country and
                  (B) the Non-Commercialization Ratio for any year after the
                  third anniversary of the First Commercial Sale of the Product
                  is greater than 1.0, NexMed shall have the right to terminate
                  this Agreement in its entirety upon six (6) months prior
                  written notice to Schering. For the purpose of assessing
                  whether this termination right exists, the Parties shall,
                  beginning the earlier of (i) the third anniversary of the
                  First Commercial Sale of the Product, and (ii) the year
                  following the cessation of significant marketing activities in
                  any Non-Commercialized Country, and continuing for the
                  remainder of the term of this Agreement within 30 days of the
                  end of each calendar year, evaluate the Non-Commercialization
                  Ratio.

14.3     Termination without cause. Schering may terminate this Agreement at any
         time. In case that Schering exercises this termination right within 12
         months after the Effective Date Schering shall pay Euro 500.000 to
         NexMed. In case that Schering exercises this termination right between
         12 months after the Effective Date and the first Marketing
         Authorization in the EU as defined in Section 6.1, Schering shall pay
         Euro 1.000.000 to NexMed. In case that Schering exercises this
         termination right after the achievement of the first Marketing
         Authorization in the EU as defined in 6.1, Schering may exercise this
         termination right with 180 days notice to the end of a calendar year.

                                       24
<PAGE>

14.4     Surviving Rights. The rights and obligations set forth in this
         Agreement shall extend beyond the termination of the Agreement only to
         the extent expressly provided for herein, or to the extent that the
         survival of such rights or obligations are necessary to permit their
         complete fulfillment or discharge.

                                       25
<PAGE>

                                   ARTICLE XV

                                 INDEMNIFICATION

15.1     Indemnification. Schering hereby agrees to save, defend and hold NexMed
         and its officers, directors, consultants, agents and employees harmless
         from and against any and all Third Party suits, claims, actions,
         demands, liabilities, expenses or losses, including reasonable legal
         expenses and attorneys' fees (collectively "Losses") resulting from or
         arising out of the use, sale or Commercialization of the Product except
         to the extent such Losses result from or arise out of breach by NexMed
         of this Agreement, including without limitation the inaccuracy of any
         representation of NexMed set forth in this Agreement or breach of any
         of NexMed's warranties set forth in Article XIII, or resulting from
         NexMed's manufacture of the Product not in accordance with the Quality
         Specifications or the gross negligence or any negligence in connection
         with a material breach of this Agreement or willful misconduct of
         NexMed, in which case NexMed hereby agrees to save, defend and hold
         Schering and its directors, officers, agents and employees harmless
         from any and all such Third Party Losses.

15.2     Each indemnified Party agrees to give the indemnifying Party prompt
         written notice of any Loss or discovery of fact upon which such
         indemnified Party intends to base a request for indemnification under
         Section 15.1. Each Party shall furnish promptly to the other copies of
         all papers and official documents received in respect of any Loss. With
         respect to any Loss relating solely to the payment of money damages and
         which will not result in the indemnified Party becoming subject to
         injunctive or other relief or otherwise adversely affecting the
         business of the indemnified Party in any manner, and as to which the
         indemnifying Party shall have acknowledged in writing the obligation to
         indemnify the indemnified Party hereunder, the indemnifying Party shall
         have the sole right to defend, settle or otherwise dispose of such
         Loss, on such terms as the indemnifying Party, in its sole discretion,
         shall deem appropriate. The indemnifying Party shall obtain the written
         consent of the indemnified Party, which shall not be unreasonably
         withheld or delayed, prior to ceasing to defend, settling or otherwise
         disposing of any Loss if as a result thereof the indemnified Party
         would become subject to injunctive or other equitable relief, or any
         remedy other than the payment of money which is the responsibility of
         the indemnifying Party. The indemnifying Party shall not be liable for
         any settlement or other disposition of a Loss by the indemnified Party
         which is reached without the consent of the indemnifying Party. The
         reasonable costs and expenses, including reasonable fees and
         disbursements of counsel incurred by any indemnified Party in
         connection with any Loss, shall be reimbursed on a quarterly basis by
         the indemnifying Party, without prejudice to the indemnifying Party's
         right to contest the indemnified Party's right to indemnification and
         subject to refund in the event the indemnifying Party is ultimately
         held not to be obligated to indemnify the indemnified Party.

15.3     In the event any Party becomes liable to pay any damages to a Third
         Party with respect to any matter related to the Product, the Parties
         hereby agree that any such damages shall be borne by the Party in whose
         sphere of responsibility lays the responsibility for the damage, and,
         to that effect, the Parties further agree to define sphere of
         responsibilities with respect to the manufacture and quality control as
         laid out in Appendix 7 to the QAA of this Agreement. In the event
         either Party fails to fulfil its obligations pursuant to this Article,
         the other Party shall be entitled to notify it and such failure shall
         be deemed a default as more fully described in Section 14.2 (d) of this
         Agreement.

15.4     Insurance. NexMed agrees and warrants that, beginning with the First
         Commercial Sale and continuing during the term of this Agreement and
         for a period of five (5) years thereafter, it shall obtain and maintain
         at its own expenses, product liability insurance from a recognized
         insurance carrier providing liability coverage in the aggregate, per
         occurrence and per year, with coverage limits of not less than fifteen
         million Euro ((euro)15,000,000). NexMed will prove this insurance cover
         by furnishing Schering with copies of the relevant insurance
         documentation.

15.5     This Article XV shall survive the termination or expiration of this
         Agreement.

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                                   ARTICLE XVI

                                  MISCELLANEOUS

16.1     Assignment.

         (a)      Each Party may assign this Agreement or any of its rights or
                  obligations under this Agreement to any of its Affiliates;
                  provided, however, that such assignment shall not relieve the
                  Party of its responsibilities for performance of its
                  obligations under this Agreement.

         (b)      The Parties may not assign this Agreement to any Third Party
                  without the prior written consent of the other Party, such
                  consent not to be unreasonably withheld or unduly delayed,
                  except in connection with a sale of all or substantially all
                  of the assets to which this Agreement relates.

         (c)      This Agreement shall be binding upon and inure to the benefit
                  of the permitted assigns of the Parties. Any purported
                  assignment not in accordance with this Agreement shall be
                  void.

16.2     Force Majeure. Neither Party shall lose any rights hereunder or be
         liable to the other Party for damages or losses on account of failure
         of performance by the defaulting Party if the failure is occasioned by
         government action, war, fire, explosion, flood, strike, lockout,
         embargo, act of God or any other cause beyond the control of the
         defaulting Party,.; provided that the Party claiming force majeure has
         extended all reasonable efforts to avoid or remedy any such force
         majeure, continues to employ such efforts and promptly notifies the
         other Party of such force majeure event.

16.3     Lost Profits. Neither party shall be responsible or liable with respect
         to any subject matter of this Agreement to the other Party for any
         indirect, incidental, consequential, exemplary or punitive damages
         including, but not limited to, loss of profits, even if such Party is
         made aware of the possibility of such damages.

16.4     Further Actions. Each Party agrees to execute, acknowledge and deliver
         such further instruments and to do all such other acts, as may be
         necessary or appropriate in order to carry out the purposes and intent
         of this Agreement.

16.5     No Trademark Rights. Except as otherwise provided herein, no right,
         express or implied, is granted by this Agreement to use in any manner
         the names "Schering" or "NexMed" or any other trade name or trademark
         of the other Party or its Affiliates in connection with the performance
         of this Agreement.

16.6     Notices. All notices hereunder shall be in writing, effective upon
         receipt, and shall be delivered personally, mailed by registered or
         certified mail (return receipt requested, postage prepaid), or sent by
         express courier service, to the other Party at the following addresses
         (or at such other address for a Party as shall be specified by like
         notice):

(a) If to Schering:

                  13442 Berlin, Germany

(b) If to NexMed :

                  350 Corporate Boulevard
                  Robbinsville, NJ 08691, USA

16.7     Waiver. Except as specifically provided herein, the waiver from time to
         time by either of the Parties of any of their rights or their failure
         to exercise any right or remedy shall not operate or be construed as a
         continuing waiver of same or of any other of such Party's rights or
         remedies provided in this Agreement.

16.8     Severability. Each Party hereby agrees that it does not intend, by its
         execution hereof, to violate any public policies, statutory or common
         laws, rules, regulations, treaties or decisions of any government
         agency or executive body thereof of any country or community or
         association of countries. Should one or more provisions of this
         Agreement be or become invalid, the Parties hereto shall substitute, by
         mutual consent, valid provisions for such invalid provisions, which

                                       27
<PAGE>

         valid provisions in their economic and other effects are sufficiently
         similar to the invalid provisions that it can be reasonably assumed
         that the Parties would have entered into this Agreement with such valid
         provisions. In case such valid provisions cannot be agreed upon, the
         invalidity of one or several provisions of this Agreement shall not
         affect the validity of this Agreement as a whole or the validity of any
         portions hereof, unless the invalid provisions are of such essential
         importance to this Agreement that it is to be reasonably assumed that
         the Parties would not have entered into this Agreement without the
         invalid provision.

16.9     Ambiguities. The Parties acknowledge and agree that: (a) each Party and
         its counsel reviewed and negotiated the terms and provisions of this
         Agreement and have contributed to its revision; (b) the rule of
         construction to the effect that any ambiguities are resolved against
         the drafting Party shall not be employed in the interpretation of this
         Agreement; and (c) the terms and provisions of this Agreement shall be
         construed fairly as to the Parties hereto and not in favor of or
         against any Party, regardless of which Party was generally responsible
         for the preparation of this Agreement.

16.10    Governing Law and Place of  Jurisdiction.  This Agreement  shall be
         governed by and interpreted in accordance with the laws of Germany.
         Place of jurisdiction shall be Frankfurt.

16.11    Headings. The section and paragraph headings contained herein are for
         the purposes of convenience only and are not intended to define or
         limit the contents of said sections or paragraphs.

16.12    Counterparts. This Agreement may be executed by the Parties in one or
         more counterparts. Such counterparts may be exchanged by facsimile
         (provided that each executed counterpart is transmitted in one complete
         transmission). Where there is an exchange of executed counterparts,
         each Party shall be bound by this Agreement notwithstanding that
         original copies of this Agreement may not be exchanged immediately. The
         Parties shall cooperate after execution of this Agreement and exchange
         by facsimile to ensure that each Party obtains an original, executed
         copy of this Agreement.

16.13    Entire Agreement; Amendments. This Agreement, including all Schedules
         attached hereto, all documents and things incorporated herein by
         reference and all of the documents delivered concurrently herewith set
         forth all the covenants, promises, agreements, warranties,
         representations, conditions and understandings between the Parties
         hereto and supersede and terminate all prior agreements and
         understandings between the Parties. No subsequent alteration,
         amendment, change or addition to this Agreement shall be binding upon
         the Parties hereto unless reduced to writing and signed by the
         respective authorized officers of the Parties.

16.14    Expenses. Except as otherwise specified in this Agreement, all costs
         and expenses, including, without limitation, fees and disbursements of
         counsel, financial advisers and accountants, incurred in connection
         with this Agreement and the transactions contemplated hereby shall be
         paid by the Party incurring such costs and expenses.

16.15    Independent Contractors. The status of the Parties under this Agreement
         shall be that of independent contractors. Neither Party shall have the
         right to enter into any agreements on behalf of the other Party, nor
         shall it represent to any person that it has any such right or
         authority. Nothing in this Agreement shall be construed as establishing
         a partnership or joint venture relationship between the Parties.

                                       28
<PAGE>

         IN WITNESS WHEREOF, Schering and NexMed have caused this Agreement to
be executed as of the Effective Date by their respective duly authorized
representatives.

Berlin, ...................                     Robbinsville,...................
Schering Aktiengesellschaft                     NexMed, Inc.

/s/               /s/                              /s/
................   .................                .............................
       ..................

Stefan Seeger                 Dr. Daniel Horn      Dr. Y. Joseph Mo

                                                   Hong Kong, ..................

                                                   NexMed International Limited

                                                   Vivian Liu

                                                   /s/
                                                   ..........................
                                                   .............................

                                       29
<PAGE>

List of Schedules
Schedule 1 - Countries of Territory
Schedule 2 - Existing Preclinical Development and the Existing Trials
Schedule 3 - Quality Assurance Agreement
Schedule 4 - Development plan
Schedule 5 - List of NexMed's Trademark and Domain Names
Schedule 6 - NexMed Patents

                                       30
<PAGE>

Schedule 1 - Countries of Territory

1.       European Union

         Austria                                           Italy
         Belgium                                           Latvia
         Czech Republic                                    Lithuania
         Cyprus                                            Luxemburg
         Denmark                                           Malta
         Estonia                                           Netherlands
         Finland                                           Poland
         France                                            Portugal
         Germany                                           Slovakia
         Great Britain                                     Slovenia
         Greece                                            Spain
         Hungary                                           Sweden
         Ireland

2.       European Union and European Economic Area

         European Union
         Iceland
         Liechtenstein
         Norway
         Switzerland

3.       Eastern Europe and Middle East

         Albania                                           Afghanistan
         Armenien                                          Bahrain
         Azerbaijan                                        Bangladesh
         Belarus                                           Egypt
         Bosnia-Herzog.                                    India
         Bulgaria                                          Iran
         Croatia                                           Iraq
         Georgia                                           Israel
         Kazakhstan                                        Jordan
         Kirghizia                                         Kuwait
         Macedonia                                         Lebanon
         Mongolia                                          Libya
         Moldavia                                          Oman
         Montenegro                                        Qatar
         Romania                                           Pakistan
         Russia                                            Saudi Arabia
         Serbia                                            South Africa
         Tadzhikistan                                      Sri Lanka
         Turkey                                            Syria
         Turkmenistan                                      United Arab Emirates
         Ukraine                                           Yemen
         Uzbekistan

4.       Region Asia/Pacific
         Australia
         New Zealand

                                       31
<PAGE>

Schedule 2 - Existing Preclinical Development and the Existing Trials

                              NEXMED (U.S.A.), INC.

                  ALPROX-TD(R) PRECLINICAL DEVELOPMENT PROGRAM

                  [Background information: Comprehensive preclinical development
programs have been completed on both the Alprox-TD alprostadil cream and the
NexACT-88 enhancer. Both the HCl salt and the free base forms of DDAIP have been
studied and summarized below as NexACT-88 HCl and NexACT-88 Base, respectively.
NexACT-88 HCl is currently contained in the current formulation of Alprox-TD.]

                     TOXICITY STUDIES WITH ALPROSTADIL CREAM

                             Acute Toxicity Studies

Acute Oral Toxicity Study of Alprostadil, 0.4%, w/w, Topical Cream in the Rat
(F. Gorgone Study Number 483/Innapharma Study Number CNNX9702 4602, date:
7-17-1997)

Primary Penile Irritation in the Rat with Alprostadil, 0.4%, w/w, Topical Cream
(F. Gorgone Study Number 494/Innapharma Study Number CNNX9702 4807, date:
7-22-1997)

Primary Skin Irritation in the Rat with Alprostadil, 0.4%, w/w, Topical Cream
(F. Gorgone Study Number 484/Innapharma Study Number CNNX9702 4804, date:
7-17-1997)

Acute Intravaginal Toxicity Study of Alprostadil, 0.4%, w/w, Topical Cream in
Rabbits (F. Gorgone Study Number 486/Innapharma Study Number CNNX9702 4803,
date: 7-22-1997)

Acute Intravaginal Tolerance Study of Alprostadil, 0.4%, w/w, Topical Cream in
Rabbits (F. Gorgone Study Number 493/Innapharma Study Number CNNX9702 4808,
date: 7-22-1997)

Primary Eye Irritation Study in the Rabbit with Alprostadil, 0.4%, w/w, Topical
Cream (F. Gorgone Study Number 488/Innapharma Study Number CNNX9702 4802, date:
7-22-1997)

                         Repeated Dose Toxicity Studies

Four Day Skin Irritation in the Rat with Alprostadil, 0.4 w/w, Topical Cream (F.
Gorgone Study Number 485/Innapharma Study Number CNNX9702 4806, date: 7-22-1997)

Final Report Enhancer Histopathology Evaluation (KUPM 21-Day Study, date:
5-19-97)

28-Day Penile Toxicity Study in the Male Rabbit (MPI Study Number 818-003, date:
10-12-1999)

28-Day Vaginal Toxicity Study in the Female Rabbit (MPI Study Number 818-004,
date: 10-13-1999)

Topical Application of DDAIP and Prostaglandin to the Canine Penis (KUPM Letter
Report, date: 8-12-1995)

28-Day Topical Penile Toxicity Study in the Dog (MPI Study Number 818-009, date:
10-13-1999)

                                       32
<PAGE>

28-Day Vaginal Toxicity Study in the Female Rabbit (MPI Study Number 818-011,
date: 3-14-2001)

28-Day Intrameatal Irritation Study in Male Dogs (MPI Study Number 818-010,
date: 3-2-2001)

28-Day Intrameatal Irritation Study in Male Dogs (MPI Study Number 818-012,
date: 3-2-2001)

Addendum to the Final Report, Toxicokinetic Analysis For The 28-Day Penile
Toxicity Study in the Male Dog, (MPI Study Number 818-009, date: 2-25-2002)

                              Mutagenicity Studies

Mutagenicity Test with Alprostadil, 0.4% w/w, Topical Cream In the
Salmonella/Mammalian-Microsome Reverse Mutation With a Confirmatory Assay
(Covance Study Number 19025-0-409R/ Innapharma Study Number CNNX9705 5001, date:
2-26-1998)

In Vivo Mouse Micronucleus Assay with Alprox-TD(R) (Covance Study Number
22071-0-455OEC, date: 4-10-2001)

                                In Vitro Studies

Compatibility of Latex Condoms with Alprox-TD(R) (Alprostadil) Cream (SGS U.S.
Testing Company Inc., Report Number 150496, date: 5-16-2001)

Cytotoxicity Agar Diffusion Test of Alprox-TD(R) Placebo Cream Without DDAIP
HCl, pH 5.5, Lot Number 219I0698 (Consumer Product Testing Company V00-0069-2,
date: 7-26-2000)

Cytotoxicity Agar Diffusion Test of Alprox-TD(R) Cream, Alprostadil 0.4% with 5%
DDAIP HCl, pH 5.5, Lot Number NKF018 (Consumer Product Testing Company
V00-0069-1, date: 7-26-2000)

Assessment of Spermicidal Activity of Alprox-TD(R) Cream (Alprostadil 0.4% w/w
and 5% w/w DDAIP HCl); Alprox-TD(R) Placebo Cream (without DDAIP HCl) and DDAIP
HCl 5% w/w in Phosphate Buffer pH 5.5 In Comparison To a Positive Control (CPTC
Number M00-1655, date: 10-25-2000)

Evaluation of the Permeability of Lubricated and Nonlubricated Latex Condoms
Treated with Alprox-TD(R) (alprostadil) Cream: Permeability of Alprostadil and
Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) (Protocol/Study Number:
NEXM-030508, Technical Report Number: TR-029, Revised July 31, 2003)

                     TOXICITY STUDIES WITH NEXACT(R)-88 Base

                             Acute Toxicity Studies

Acute Oral Toxicity of NexACT(R)-88 in Rat (F. Gorgone Study Number
482/Innapharma Study Number CNNX9702 4601, date: 7-17-1997)

                                       33
<PAGE>

Acute Oral Toxicity of NexACT(R)-88 in Rat (F. Gorgone Study Number
524/Innapharma Study Number CNNX9703 4601, date: 3-9-1998)

Acute Intravaginal Tolerance Study of NexACT(R)-88 in Rabbits (F. Gorgone Study
Number 508/Innapharma Study Number CNNX9703 4804, date: 2-27-1998)

Percutaneous Toxicity Study in the Rabbit with NexACT(R)-88 (F. Gorgone Study
Number 523/Innapharma Study Number CNNX9703 4602, date: 5-15-1988)

Primary Skin Irritation in the Rabbit with NexACT(R)-88 (F. Gorgone Study Number
504/Innapharma Study Number CNNX9703 4802, date: 2-17-1998)

Dermal Irritation in Rabbits (KUPM Summary, date: 9-2-1994)

Primary Eye Irritation Study in Rabbits with NexACT(R)-88 (F. Gorgone Study
Number 516/Innapharma Study Number CNNX9703 4801, date: 2-17-1998)

Dermal Sensitization Study in Guinea Pigs with NexACT(R)-88 Modified Buehler
Design (F. Gorgone Study Number 487/Innapharma Study Number CNNX9703 4803, date:
5-15-1998)

Acute Oral Toxicity Limit Test of NexACT(R)-88 Base in The Rat (Celsis Study
Number SA 837201, date: 3-29-2000)

Acute Oral Toxicity Limit Test of NexACT(R)-88 Base in The Mouse (Celsis Study
Number SA 837202, date: 3-29-2000)

Primary Dermal Irritation Test of NexACT(R)-88 Base in The Rabbit (Celsis Study
Number SA 837203, date: 3-9-2000)

A Comparative Acute Oral Toxicity Study of Dodecyl-2-N,N-dimethylaminopropionate
(DDAIP) in CD-1 Mice (MPI Study Number 818-024, date: 6-27-2001)

                         Repeated Dose Toxicity Studies

Dermal Irritation in Rats (KUPM Summary, date: 7-26-1995)

Effect Upon the Rat of Intraperitoneal Injection of Enhancer (KUPM 111, date:
4-20-1995)

Effect Upon the Rat of Intraperitoneal Injection of Enhancer (KUPM 112, date:
5-11-1995)

28-Day Subcutaneous Toxicity Study in the Rat (MPI Study Number 818-001, date:
10-11-1999)

Dermal Irritation in Rabbits (KUPM Summary, date: 11-26-1994)

28-Day Subcutaneous Toxicity Study in the Rabbit (MPI Study Number 818-002,
date: 10-11-1999)

Dermal Irritation in Guinea Pigs (University of Utah Summary, date: 3-1-1995)

                                       34
<PAGE>

Effect of Topical Application of Enhancer Formulation upon Canine Penis (KUPM
Protocol 131 and Summary, date: 5-31-1995)

5-Day Mouse Dose Screening Study to Determine Maximum Tolerated Local and
Systemic Dose of Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) (BioReliance
Study Number AA33KP.1D12.01.BTL, Report Number 18.1D12.01, date: 2-14-2001)

Comparative Toxicity of Five Lots of Dodecyl-2-N,N-dimethyl aminopropionate in
Mice (BioReliance Study Number AA33KP.1D12.02.BTL, Report Number 18.1D12.02,
date: 8-1-2001)

28-Day Repeated Dermal Toxicity Study in Mice: Test Article:
Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) (BioReliance Study Number
AA33KP.2D32.08.BTL, date: 11-15-2001)

28-Day Repeated Dermal Toxicity Study of Dodecyl-2-N,N-dimethylaminopropionate
(DDAIP) in Mice (BioReliance Study Number AA33KP.2D32.10.BTL, date: 1-17-2002)

6-Month Subcutaneous Toxicity Study in the Rat (MPI Study Number 818-015, dated:
2-21-2002)

11-Month Subcutaneous Toxicity Study in the Dogs (MPI Study Number 818-018,
dated: 3-6-2003)

                              Mutagenicity Studies

Ames Test (KUPM Letter, date: 9-21-1995)

Mutagenicity Test with NexACT(R)-88 in the Salmonella/ Mammalian-Microsome
Reverse Mutation Assay with a Confirmatory Assay (Covance Study Number
19026-0-409R/Innapharma Study Number CNNX9703 5001, date: 2-26-1998

Mutagenicity Test on NexACT(R)-88 Measuring Chromosomal Aberrations in Chinese
Hamster Ovary (CHO) Cells (Covance Study Number 19026-0-437OECD; Date:
4-27-1998)

Developmental Preclinical Toxicity Studies with NexACT(R)-88 Base

A Range-Finding Subcutaneous Developmental Toxicity Study in Rabbits (MPI Number
818-017, date: 12-20-2000)

A Range-Finding Embryo-Fetal Developmental Toxicity Study in Rats (MPI Number
818-016, date: 12-20-2000)

A Subcutaneous Developmental Toxicity Study in Rabbits With NexACT(R)-88 (MPI
Study Number 818-020, date: 9-6-2002)

Study of Fertility and Early Embryonic Development to Implantation in Rats with
NexACT(R)-88 (MPI Study Number 818-021, date: 8-6-2001)

A Subcutaneous Developmental Toxicity Study in Rats With NexACT(R)-88 (MPI
Research Study Number 818-019, date: 7-13-2001)

Carcinogenicity Studies with NexACT(R)-88 Base

26-Week Dermal Carcinogenicity Study in Mice (BioReliance Study Number
AA33KP.7D82.04.BTL, Addendum, date: 8-5-2002)

Interim Results: 2-Year Rat Subcutaneous Carcinogenicity Study (MPI Research
Study Number: 818-022, date: 1-6-2003)

Safety Pharmacology Studies with NexACT(R)-88 Base

Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) Cardiovascular and Respiratory
Evaluation in the Anesthetized Dog Following Subcutaneous Administration.
(Huntingdon Life Science Study NXM 001/032342,date: 10-21-2003)

CNS Safety Pharmacology Evaluation of Dodecyl-2-N,N-dimethylaminopropionate
(DDAIP) in the Rat Using the Irwin Multidimensional Observational Assessment
(Huntingdon Life Sciences Study 02-6555, date: 5-15-2003)

                     TOXICITY STUDIES WITH NEXACT(R)-88 HCl

Acute Toxicity Studies

Acute Oral Toxicity Limit Test of NexACT(R)-88 HCl in the Rat (Celsis Study
Number SA 838165, date: 4-4-2000)

Acute Oral Toxicity Limit Test of NexACT(R)-88 HCl in the Mouse (Celsis Study
Number SA 838164, date: 4-13-2000)

Primary Dermal Irritation Test of NexACT(R)-88 HCl in the Rabbit (Celsis Study
Number SA 838166, date: 4-19-2000)

Intravenous Toxicity Study of NexACT(R)-88 HCl in the Mouse (Celsis Study Number
SA 838040, date: 6-22-2000)

Mutagenicity Studies

In Vivo Mouse Micronucleus Assay with Dodecyl-2-N,N-dimethyl aminopropionate
(DDAIP) HCl Salt, Lot Number NXD-M0001-SD-1-7-39 (Covance 21354-0-455OECD, date:
7-28-2000)

                                       35
<PAGE>

Salmonella-Escherichia Coli/ Mammalian-Microsome Reverse Mutation Assay with a
Confirmatory Assay With Dodecyl-2-N,N-dimethylaminopropionate Hydrochloride
(DDAIP HCl) (Covance Study Number 21354-0-409OECD, date: 10-12-2000)

L5178 TK +/- Mouse Lymphoma Forward Mutation Assay with a Confirmatory Assay
with Dodecyl-2-N,N-dimethylamino propionate HCl (DDAIP HCl) (Covance Study
Number 22071-0-455OEC, date: 4-10-2001)

                                In Vitro Studies

Cytotoxicity Agar Diffusion Test of DDAIP HCl 5% w/w in Phosphate Buffer, pH
5.5, Lot Number 3-101-A (Consumer Product Testing Company Number V00-0069-3,
date: 7-26-2000)

           Absorption, Distribution, Metabolism and Excretion Studies

Partition Coefficient, Plasma Stability, Protein Binding and Microsomal
Metabolism of Dodecyl-2-N,N-dimethylamino propionate Hydrochloride (DDAIP HCl)
(Absorption Systems Number 00-NEXM.PO1R1, date: 8-24-2000)

In Vitro Metabolism of Dodecyl-2-N,N-dimethylaminopropionate Hydrochloride
(DDAIP HCl) in Liver Microsomes and Skin Homogenates, (Absorption Systems Report
Number 01-NEXM.PO1R2, date: 10-25-2001)

Effect of Esterase Inhibitors on Dodecyl-2-N,N-dimethylamino propionate
Hydrochloride (DDAIP HCl) Metabolism In Vitro Using Liver Microsomes, Skin
Homogenates and Plasma (Absorption Systems Report Number 01-NEXM.PO4R1, Revised,
date:
3-11-2002)

The Determination of DDAIP in Dog Plasma Using a Liquid Chromatography Method
with MS-MS Detection (Draft Report Huntingdon Report Number 01-8729, 01-8797,
date: 2-20-2002)

Pharmacokinetics, Subcutaneous and Topical Absorption, Mass Balance and Tissue
Distribution of Total Radioactivity in Rats Administered a Single Intravenous,
Subcutaneous, or Topical Dose of Dual-Radiolabeled
Dodecyl-2-N,N-Dimethylaminopropionate (DDAIP) (Calvert Study Number
0830RN19.001, date: 02-25, 2003)

Literature Review and Prediction of Putative Metabolites and Elimination
Pathways of Dodecyl-2-N,N-dimethylamino propionate (DDAIP) (Okerholm Report
Number NEXMED: 111401, date: 7-30-2002)

Mass Spectrometric Investigation of a Metabolite/Degradant of
Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) in Samples of Dog Plasma (From
Protocol 818-023, HLS Study # 01-8729) and Rat Plasma (Protocol 818-015, HLS
Study #00-8670A), (Huntingdon Life Sciences Report Number HUD 022/014234, date:
8-3-2002)

Pharmacokinetic Study of NexACT(R)-88 in Dogs (MPI Report Number: 818-023, date:
10-31- 2002)

Assessment of Lauric Acid Formation Following Incubation of Dodecanol and DDAIP
in Human Microsomes (Absorption Systems Report 02-NEXM.PO4R4-Report 1, Revision
2, date: 11-14-2003)

                                       36
<PAGE>

Human Topical Safety Studies with Alprox-TD(R), NexACT(R)-88 Base and
NexACT(R)-88 HCl

Evaluation of Primary Irritation Potential of
Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) Base in Humans (Single 24-Hour
Application) (HTR Project Number 00-105572-74, date: 10-24-2000)

Evaluation of Primary Irritation Potential of
Dodecyl-2-N,N-dimethylaminopropionate HCl (DDAIP HCl) in Humans (Single 24-Hour
Applications) (HTR Project Number 00-105040-74, date: 10-24-2000)

Evaluation of Primary Irritation Potential of
Dodecyl-2-N,N-dimethylaminopropionate (DDAIP), HCl and Base and Alprostadil,
0.4% w/w Cream with DDAIP HCl and DDAIP Base in Humans (Single 24-Hour
Applications) (HTR Project Number 00-105568-74, date: 10-24-2000)

Evaluation of Primary Irritation Potential of Alprostadil Topical Cream
Formulations After a Single 24-Hour Application in Humans (HTR Project Number
00-105591-74, date: 12-12-2000)

Evaluation of Phototoxicity and Photoallergy of
Dodecyl-2-N,N-dimethylaminopropionate (DDAIP) Base and HCl Salt in Humans (HTR
Project Number 00-105042-74, date: 9-29-2000)

Repeated Insult Patch Test of Dodecyl-2-N,N-dimethyl aminopropionate Base
(DDAIP) and Hydrochloride Salt (DDAIP HCl) in Male and Female Volunteers
(Consumer Product Testing Company Number C00-0649.01-.05, date: 1-9-2001)

Pharmacokinetic Study of Alprox-TD(R) and NexACT(R)-88 Base

An Evaluation of the Pharmacokinetic Profile of Alprox-TD Alprostadil Cream
After Administration of a Single Dose to Patients with Erectile Dysfunction
(Symbiance, Inc. Report MED 2000-003, date: 12-23-2002)

Human Risk Assessment of NexACT(R)-88 Base

Risk Assessment of the Permeation Enhancement Excipient
Dodecyl-2-N,N-dimethyaminopropionate in Alprox-TD(R) (alprostadil) Topical Cream
(Federal Research Consultants, Report Number FRC-NEXM.RPT121902, dated 1-6-2003)

                                       37
<PAGE>

                                   Schedule 2

                              NEXMED (U.S.A.), INC.

                    ALPROX-TD(R) CLINICAL DEVELOPMENT PROGRAM

 Summary of U.S. Clinical Studies Completed on Alprox-TD(R) (alprostadil) Cream

<TABLE>
<CAPTION>
<S>                   <C>                          <C>             <C>                  <C>
--------------------- ----------- ------------------------------ --------- -------------------------------------
      Protocol        Primary           Treatment Groups            N               Status and Results
                      End Points       (mg PGE1) / Dosage/
                                        patients/subjects
--------------------- ----------- ------------------------------ --------- -------------------------------------

Phase 1 Studies
----------------------------------------------------------------------------------------------------------------
NM-AP-001             Safety       400 mcg, 800 mcg, 1600 mcg/      60                 COMPLETED
                                  single dose/ male and female                         ---------
                                            subjects                               Submitted in original IND.
--------------------- ----------- ------------------------------ --------- -------------------------------------
MED 2000-003          Safety      0, 100 mcg, 200 mcg, 300mcg/      20                COMPLETED
                                   single dose/ male patients                        ----------
                                                                                        Study
                                                                                 report submitted S/N 117.
--------------------- ----------- ------------------------------ --------- -------------------------------------
NEXSCIN 2001-001      Safety       100 mg 99mTc sulfur colloid      6                  COMPLETED
                                   cream, 100 mg 99mTc-HMPAO                           ---------
                                   cream/2 doses/ male subjects                   Study report in-progress.
--------------------- ----------- ------------------------------ --------- -------------------------------------

Phase 2 Studies
----------------------------------------------------------------------------------------------------------------
MED 99-001            Efficacy     0, 500 mcg, 1000 mcg, 1500       29                  COMPLETED
                      and              mcg/ male patients                              ----------
                      Safety
--------------------- ----------- ------------------------------ --------- -------------------------------------
MED 99-002A           Efficacy       0, 50 mcg, 100 mcg, or        161                  COMPLETED
                      and         200mcg/11doses/ male patients                        -----------
                      Safety                                                      Integrated report (with 2000-002A)
                                                                                       submitted S/N 101.
--------------------- ----------- ------------------------------ --------- -------------------------------------
MED 2000-002A         Efficacy      0, 100 mcg, 200 mcg, 300       142                  COMPLETED
                      and         mcg/ 11 doses/ male patients                        -------------
                      Safety                                                      Integrated report (with 99-002A)
                                                                                        submitted S/N 101.
--------------------- ----------- ------------------------------ --------- -------------------------------------
MED 2000-007          Efficacy      0, 100 mcg, 200 mcg, 300        24                 COMPLETED
                      and           mcg- four way cross-over/                         -------------
                      Safety             male patients                             Study report in-progress.
--------------------- ----------- ------------------------------ --------- -------------------------------------

Phase 3 Studies
----------------------------------------------------------------------------------------------------------------
MED 2000-004          Efficacy     0, 100 mcg, 200 mcg.,  300       740                 COMPLETED
                      and Safety   mcg/ 25 doses/ male patients                        ------------
                                                                                   Study report in-progress.
--------------------- ----------- ------------------------------ --------- -------------------------------------
MED 2000-005          Efficacy    0, 100 mcg, 200 mcg, 300         740                   COMPLETED
                      and Safety  mcg/ 25 doses/ male patients                         -------------
                                                                                   Study report in-progress.
--------------------- ----------- ------------------------------ --------- -------------------------------------
MED 2000-006          Safety      Open label 100 mcg, 200 mcg,     1000                 INCOMPLETE
                                  300 mcg/ 97 doses/ male                              -------------
                                  patients
--------------------- ----------- ------------------------------ --------- -------------------------------------
</TABLE>

                                       38
<PAGE>

                                   Schedule 2

                               NEXMED (USA), INC.

             ALPROSTADIL CREAM OVERSEAS CLINICAL DEVELOPMENT PROGRAM

       Summary of Overseas Clinical Studies Completed on Alprostadil Cream

<TABLE>
<CAPTION>
<S>                   <C>                          <C>             <C>                  <C>
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
                       Protocol                          Primary     Treatment Groups (mcg     N      Status and
                                                         End             PGE1)/Dosage/                  Results
                                                          Points       Patients/Subjects
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-28-OL                                              Safety     300 mcg/single            79    COMPLETED
(Clinical Study to Investigate the Safety and Efficacy   and        dose/male patients              -----------
of Alprostadil Cream in an Open Label Trial)            Efficacy                                    Submitted in
                                                                                                     China NDA
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-28-DB                                             Safety                                      COMPLETED
(Clinical Study to Investigate the Safety and Efficacy   and        300 mcg/single            64    ---------
of Alprostadil Cream in Double-blind Trial)              Efficacy   dose/male patients              Submitted in
                                                                                                    China NDA
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-36                                                 Safety                                    COMPLETED
(Clinical Study to Investigate the Safety and Efficacy   and        300 mcg/10 doses/male     56   ------------
of Alprostadil Cream in a Multiple Use Open Label        Efficacy   patients                       Submitted in
Trial)                                                                                              China NDA
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-38
(A Multi-center, Randomized, Double-blind, Placebo                                                   COMPLETED
Controlled Clinical Study to Assess the At-home,         Efficacy                                   ------------
Efficacy and Safety of Alprostadil Cream for the         and        300 mcg/10 doses/male     157   Submitted in
Treatment of Erectile Dysfunction)                       Safety     patients                         China NDA
-------------------------------------------------------- ---------- ------------------------- ----- ----------------

NM-AP-38A                                                                                           COMPLETED
(An Open-label Clinical Study to Assess the At-home,                                                -----------
Efficacy and Safety of Alprostadil Cream for the                    300 mcg/16 doses/male           Submitted in
treatment of Erectile Dysfunction)                       Efficacy   patients                  40      China NDA
-------------------------------------------------------- ---------- ------------------------- ----- ----------------

NM-AP-HK                                                                                            COMPLETED
(An Open-label Study of the Efficacy and Safety of       Efficacy   300 mcg/15 doses/male          --------------
Alprostadil Cream in Male Erectile Dysfunction           and        patients                  40    Submitted in
Patients)                                                Safety                                    Hong Kong NDA
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
                                                                    300 mcg with various            COMPLETED
NM-AP-39B-SALT                                           Safety     NEXACT-88                 60    ----------
(Clinical Safety Study of Alprostadil Cream with                    concentrations/Single           Study report
Various NEXACT-88 Concentration)                                    dose/Male patients              in file
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
                                                                   300 mcg with various
NM-AP-40A                                              Efficacy     NEXACT-88                       COMPLETED
(Clinical Double-blind Efficacy and Safety Study of      and        concentrations/Single     91    ----------
Alprostadil Cream in Mild to Moderate ED Patients by     Safety     dose/Male patients              Study report
Using NEVA)                                                                                         in file
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-40C
(A Randomized, Double-Blind, Placebo-Control, Parallel              300 mcg with various             COMPLETED
Design Study to Assess Clinical Efficacy and Safety of   Efficacy   NEXACT-88                 105   -------------
alprostadil Cream with Various NEXACT-88                 and        concentrations/8                Study report
Concentrations)                                          Safety     doses/Male patients               in file
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-42A                                                          100 mcg, 200 mcg, 300
(Comparison Study of Clinical Objective Criteria of      Efficacy   mcg and MUSE 500 mcg,           COMPLETED
Intrameatal Administration of Alprostadil Cream and      and        1000 mcg/ Single          97    -----------
Intrameatal or Intraurethral Administration of MUSE      Safety     dose/Male patients              Study report
Suppository with AVS in Mild to Moderate ED Patients                                                in file
Using NEVA)
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-42C                                                          100 mcg, 200 mcg, 300             COMPLETED
(Comparison of Clinical Objective Criteria of          Efficacy   mcg and MUSE 500 mcg,              -----------
Alprostadil Cream and MUSE in Mild to Moderate ED        and        1000 mcg/ Single          70    Study report
Patients Using Doppler (Duplex Ultrasound)               Safety     dose/Male patients                in file
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
NM-AP-40F                                                          300 mcg with various      280    COMPLETED
(A Randomized, Placebo Controlled, Double-blind,        Efficacy    NEXACT-88                      ------------
Parallel Design Efficacy and Safety Study of             and        concentrations/8                Study report
Alprostadil Cream with Various NEXACT-88)                Safety     doses/Male patients             in file
-------------------------------------------------------- ---------- ------------------------- ----- ----------------
</TABLE>

                                       39
<PAGE>

Schedule 3 - Quality Assurance Agreement

                                                         Preamble

This Quality Assurance Agreement (hereinafter "QAA") defines the conditions to
be fulfilled by NexMed and Schering in order to ensure that all manufacturing
operations subject to an authorization for marketing are carried out in
accordance with the information given in the Marketing Authorization Application
as accepted by the competent authorities.

The QAA is added to the Licence, Supply and Distribution Agreement between the
parties. In case of ambiguities between this QAA and the Licence, Supply and
Distribution Agreement, the latter shall prevail.

ss. 1    Definitions

         "Final Release" shall mean release of Finished Product(s) to the market

         "Finished Product" shall mean the Bulk Product in its final packaged
         and labeled form

         "Manufacturing Documentation" consists of the description of
         manufacturing of Bulk Product(s) including the in-process controls and
         processing instructions including the bill of materials

         "Packaging  Instructions"  describe the procedure of packaging and
         include the bill of materials for the packaging of the Bulk Product(s);

         "Testing Standards" shall mean the written description of the sum of
          testing methods

ss. 2      Subject-matter of the QAA

         The subject-matter of this QAA is to ensure that the manufacturing
         operations during the manufacture of the Bulk Product / Finished
         Product are carried out in accordance with the recognized
         pharmaceutical regulations and other regulations as well as
         requirements of the authorities, the requirements of the EC Directive
         2003/94/EC effective as of Nov. 2003, the requirements of the GMP
         guidelines, the EC GMP Guide and the GMP requirements of the US Food
         and Drug Administration (FDA) each in its current version in so far as
         these affect quality of the Bulk Product(s) / Finished Product.

         This QAA governs the rights, duties and responsibilities of NexMed and
         Schering regarding the manufacture of Bulk Product / Finished Product.

         The appendices mentioned in this QAA, and all documents to which
         reference is made in the appendices shall become an integral part of
         this QAA.

ss. 3      Quality Assurance System

         NexMed will ensure to maintain an effective pharmaceutical quality
         assurance system according to the requirements of the EC Directive
         2003/94/EC at every site at which manufacture (or any part thereof) of
         Bulk Product shall occur, involving the active participation of the
         management and personnel of the different services involved.

         NexMed will ensure to obtain and maintain a manufacturing authorisation
         and any other approvals for the purposes of manufacturing the Bulk
         Product in relation to each and every site at which manufacture (or any
         part thereof) of Bulk Product shall occur, to provide Schering with a
         copy of such manufacturing authorisation(s) and to provide Schering
         with written notice of any proposed change to such manufacturing
         authorisation(s), including all necessary regulatory documentation, in
         order that Schering may make any relevant variations to the Regulatory
         Approval, if necessary.

         NexMed declares to be in compliance with the applicable TSE
         requirements as outlined in EMEA/410/01 revised 1 May 2001 and any
         subsequently revised versions as well as guides from other important
         countries. Also an assessment of any delivered Product regarding
         residual solvents as outlined in ICH/3QC (CPMP/ICH/283/95) and
         belonging regulatory requirements is performed.

                                       40
<PAGE>

ss. 4      Documents provided for the manufacture of the Bulk Product

         NexMed will provide Schering with all neccesary documents required for
         Regulatory Approval of the Product in the Territory as defined in the
         Licence, Supply and Distribution Agreement. NexMed will ensure that the
         Bulk Product(s) will be manufactured in accordance with the Marketing
         Authorization Application. NexMed will strictly adhere to this
         documentation during manufacture and will only deviate from it after
         prior written approval given by Schering. Schering and NexMed will
         ensure that the documentation always corresponds to the approval
         granted for the Bulk Product.

         The following documents are a constituent part for the manufacture of
         the Bulk Product:

         Quality Specification(s) and Testing Standard(s) for the Bulk Product
         as laid out in Appendix 1.

         Manufacturing Description for the Bulk Product as laid out in Appendix
2.

         Quality Specification(s) and Testing Standard(s) for starting and
         packaging materials as laid out in Appendix 3.

         Packaging and batch labeling instructions as laid out in Appendix 4

         Other instructions and information (inc. warning  information,  details
         of storage,  shipment  instructions,  SOPs etc.) as laid out in
         Appendix 5.

ss. 5      Introduction of new procedures / Bulk Product(s)

         In the case that the Bulk Product is to be made for the first time at
         one site, the site which will manufacture the Bulk Product will conduct
         process validation by using the first three consecutive batches of the
         Bulk Product manufactured according to this QAA.

         Validation protocols and reports to be compiled by NexMed will be
         stored by NexMed at least for one year after the expiration date of the
         batches covered in such protocols and reports and will be handed over
         to Schering upon request. NexMed will be exclusively responsible for
         the manufacture of the three validation batches.

         In the case of new test procedures of the Testing Standards or a
         transfer of validated test procedures a (lab-to-lab) validation for
         analytical methods will be conducted, involving that/those function(s)
         or department(s) of NexMed and/or Schering that are responsible for
         quality testing.

         NexMed and/or Schering must confirm the successful completion of the
         (lab-to-Iab) validation in writing. Without this confirmation the use
         of the testing methods for quality testing and the release of Bulk
         Product(s) is not authorized.

         In the case of unforeseen difficulties arising during the manufacture
         of validation batches or during the conduct of lab-to-Iab validation,
         the parties to the QAA will discuss the difficulties in good faith to
         find a mutually agreeable solution.

ss. 6      Manufacture of Bulk Product / Finished Product(s)

         Those employees of the parties named as responsible persons for
         manufacture, quality control and release as well as employees named as
         contact partners in the logistics function are specified in Appendix 6.
         Schering must be informed immediately in writing of any changes in the
         fields of responsibility of NexMed's responsible persons and/or contact
         partner, should these occur.

                                       41
<PAGE>

         Responsibilities of each party regarding the manufacture and quality
         control are defined in Appendix 7 to this QAA.

6.1. Starting and packaging materials

         The supplier of starting and packaging materials must be qualified in a
         way to ensure that only properly suitable suppliers are considered.

         NexMed has to ensure to test the quality of starting and  packaging
         materials as per Testing  Standards / Quality Specifications  including
         in-process controls before releasing them for further manufacture.
         Note: Schering shall be responsible for the final packaging material

6.2. Quality control and sampling

         During manufacture of the Bulk Product NexMed will ensure to perform
         the tests according to the Testing Standards and Quality Specifications
         and will draw samples for testing and reserve samples. Reserve samples
         consists of at least twice the quantity necessary to perfom all the
         requiered tests.

         The reserve samples of starting and packaging materials will be stored
         until at least one year after the expiration date of the last batch of
         the Bulk Product produced of them. The samples of every batch of a Bulk
         Product shall be kept for one year after the expiration date of the
         respective batch. The reserve samples will be transferred to Schering
         on request. NexMed may draw additional reserve samples for his own use.

         All these samples shall be maintained at the disposal of the competent
         authorities.

6.3.     Batch documentation

         NexMed will document all the procedural steps stipulated in the
         Manufacturing Documentation as well as all in-process controls in
         batch-specific records as customarily kept by NexMed and will provide
         Schering with a complete copy of the batch record of the first 3
         (three) batches. The records need to be accompanied by a certificate
         from NexMed stating that the Bulk Product was manufactured as per
         Manufacturing Documentation, that the quality was tested according to
         the Testing Standards and Quality Specifications (giving reference to
         the number and edition of the relevant documents), as well as that the
         results meet the contractually agreed quality (certificate of
         compliance). The records must be accompanied by a certificate of
         analysis and a deviation report, if applicable.

         Any additional batch will be accompanied only by batch record in a
         short form mutually agreed between the parties (unless Schering
         requires a complete batch documentation), a certificate of compliance,
         a certificate of analysis and a deviation report, if applicable.

         NexMed will retain the complete batch documentation for 10 (ten) years
         according to Bulk Product for the market and 30 (thirty) years
         according to Bulk Product for clinical studies.

         NexMed will present copies of the original manufacturing and testing
         documentation to Schering and/or the relevant authorities upon request.

6.4.     Batch labeling

         The batches will be labeled in accordance with the packaging and batch
         labeling instructions as laid out in Appendix 4.

6.5. Manufacturing problems and deviations

         NexMed will without any undue delay communicate to Schering (its
         responsible persons in the quality control and named contact partner in
         the logistics function) details in writing of problems and deviations
         within the manufacturing process, especially deviations from the
         specifications in the in-process control results and in the testing
         results. This duty to provide information will not limit NexMeds
         contractual obligations.

                                       42
<PAGE>

6.6.     Final release of Finished Product

         The Final Release of the Finished Product in the Territory is conducted
         by Schering in accordance with applicable laws.

6.7      Deficient Product(s)

         A Bulk Product is deficient, if it does not comply with the quality as
         described in this QAA, for example but not limited to, the acceptance
         criteria of the in-process-controls and/or the Quality Specifications
         and/or the Bulk Product is not fit for its purpose as intended by this
         QAA.

         If an Intermediate product or a Bulk Product can not be released both
         parties will decide in good faith whether a rework, reprocessing or
         improvement is possible and necessary.

         Should the parties decide that the Intermediate product/ Bulk
         Product(s) is to be destroyed, NexMed will ensure the correct disposal
         of the Intermediate product/ Bulk Product(s). Upon Schering's request
         NexMed will provide a proof of correct disposal according to the
         applicable laws and regulations.

         If the parties can not agree whether a Bulk Product is deficient,
         either party may request that an independent laboratory, determined by
         mutual consent of the parties, be consulted and asked to perform the
         necessary investigations. The parties will accept the results of such
         investigation as binding upon them.

         Representations, warranties and reimbursements are dealt with in the
         Licence, Supply and Distribution Agreement.

6.9      Stability Studies

         NexMed will conduct all necessary stability studies on the Bulk Product
         at its own cost and expense in accordance to apllicable laws. The raw
         data, protocols and reports will be handed over to Schering upon
         request.

ss. 7      Change Management

         NexMed agrees not to use any subcontractor, or change Bulk Product(s)
         composition and characteristics or not to make any other change in
         manufacture, which might have an influence on the quality of Bulk
         Products or regulatory aspects in the Territory (for example but not
         limited to change of the manufacturing site, of the process, of process
         parameters, of in process controls, of Quality Specifications, of
         Testing Standards) without the prior written approval by Schering.

         Each planned change must be submitted to the Schering responsible
         persons in quality management for prior written approval, before being
         put into effect by NexMed.

         Schering agrees that any changes in the manufacture of the Product
         affecting the Marketing Authorization must be previously authorized in
         writing by NexMed within thirty days (30) from receipt hereof, even if
         imposed by the local Health Regulatory Authority.

                                       43
<PAGE>

ss. 8      Complaints from the market

         Scheirng will forward Bulk Product complaints about the quality of the
         Bulk Product after detection. NexMed shall review without undue delay
         the respective batch documentation, carry out tests to clarify the
         cause of such a complaint, its alleged technical defect and present
         Schering with a response summarizing the results of such investigation.
         The final response has to be sent to Schering within twenty-one (21)
         calendar days of receipt of the Bulk Product complaint of risk class
         III. In case of complaints pertaining to risk class I or II preliminary
         investigation statements must be available within three (3) working
         days of receipt, a final statement must be written without any undue
         delay, within thirty (30) calendar days at the latest. (Risk classes
         according to EC Guideline 3351). The final response must also include
         details on the confirmed or assumed causes of technical defect(s).
         NexMed shall be responsible for the appropriate measures to prevent the
         re-occurrence of any such defects and report such measures in the final
         response.

         If for any reasons items remain outstanding, Schering requests a
         written, periodic progress update forwarded by a pre-designated company
         representative of NexMed.

ss. 9      Recall

         NexMed and Schering shall notify each other within twenty-four (24)
         hours if any batch of Product is, or is likely to be, subject to
         actions such as recalls by a Regulatory Authority. Schering shall be
         responsible for notifying the proper authorities in the Territory
         according to the Licence, Supply and Distribution Agreement of
         information that make affect the marketability, safety, and
         effectiveness of the product. Schering and NexMed shall consult with
         each other regarding notification of product failure but Schering shall
         make final decision regarding withdrawals or recall from the market.

ss. 10     Inspections and Quality Audits

         Schering is entitled to conduct inspections and audits of the
         facilities in which starting materials, packaging materials and Bulk
         Product are being (or are due to be) manufactured at normal business
         hours upon prior announcement.

         NexMed will permit audits and/or inspections by the relevant national
         or international authorities or official institutions to take place.

ss. 11     Annual Product Review

         The total number of batches produced and/or tested during the past
         calendar year will be evaluated and summarized in a written report to
         Schering concerning the main production and quality characteristics
         such as in-process control results, deviations, changes in production
         and testing, out of specification results, results of release and
         stability testing as well as concerning reserve samples, complaints and
         recalls. If necessary, corrective measures have to be presented in a
         conclusion.

                                       44
<PAGE>

================================================================================
Berlin, ............                                Robbinsville,............
================================================================================

Schering Aktiengesellschaft                         NexMed, Inc.

================================================================================

                                       45
<PAGE>

Dr. Verena Lehne Dr. Alfred Merz Dr. Y. Joseph Mo

Schedule 4 - Development plan

Final clinical development plan will be determined after meetings are held with
European Regulatory Groups.

                                       46
<PAGE>

Schedule 5 - List of NexMed Trademarks and Domain Names

1. Alprox-TD Trademark names

Alprox-TD Trademark registered in Class 5 (pharmaceutical preparations for
the treatment of sexual dysfunction):

Community Trademark Reg. No: 585,711, registered on February 1, 1999
Australia No: 876155, registered on May 9, 2003
New Zealand No: 637729, registered on August 7, 2003 with effect from May 14,
2001

2. Alprox-TD Domain Names

Registered:
Alprox-TD.com
AlproxTD.com
Alprox-TD.org
AlproxTD.org

Domain Names Not Available:
AlproxTD.net
AlproxTD.info
Alprox-TD.net
Alprox-TD.info

                                       47
<PAGE>

                                                Schedule 6 - NexMed Patents

  =================== ================== ============== ========== =============
      DOCKET NO.           COUNTRY          SERIAL/       FILED    PATENT/ PUB.
      ==========           =======          =======       =====    =============
                                            APP. NO.                   NO.
  ------------------- ------------------ -------------- ---------- -------------
  301888.3001-100     PCT                PCT/US99/      05/13/99   PUB # WO
  ===============     ===                =========      ========   =========
  (NMD-102-CIP)                           10596                    00/69469

  ------------------- ------------------ -------------- ---------- -------------
  301888.3001-101     AUSTRALIA          39891/99       05/13/99   757086
  ===============     =========          ========       ========   ======

  ------------------- ------------------ -------------- ---------- -------------
  301888.3001-105     EPC                99 923 024.6   05/13/99
  ===============     ===                ============   ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3001-106     HUNGARY            P0201145       05/13/99
  ===============     =======            ========       ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3001-107     ISRAEL             146470         05/13/99
  ===============     ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3001-112     TURKEY             2002/00146     05/13/99   *TR 2002
  ===============     ======             ==========     ========   =========
                                                                   00146B
                                                                   ======
  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-101     PCT                PCT/US01/      01/10/01   PUB # WO
  ===============     ===                =========      ========   =========
   (NMD-118)                              00852                    01/51053A1
                                                                   ==========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-104     AUSTRALIA          29349/01       01/10/01   760576
  ===============     =========          ========       ========   ======

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-108     EPC                01 942 300.3   01/10/01   PUB #
  ===============     ===                ============   ========   ======
                                                                   1 255 552
                                                                   =========

  ------------------- ------------------ -------------- ---------- -------------

= ============= ================ ========================== ==============
    GRANTED        INVENTORS               TITLE               STATUS
    =======        =========               =====               ======

- ------------- ---------------- -------------------------- --------------
                J. Yeager        Topical Composition for
                =========        ========================
                N. Buyuktimkin   Prostaglandin E1 Delivery
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
  10/12/02      J. Yeager        Topical Composition for    Granted
  ========      =========        ========================   =======
                N. Buyuktimkin   Prostaglandin E1 Delivery  Annuity due
                S. Buyuktimkin                               5/24/04
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Topical Composition for    Print &
                =========        ========================   =======
                N. Buyuktimkin   Prostaglandin E1 Delivery  Grant fees
                S. Buyuktimkin                              due 4/9/04
                                                            Annuity due
                                                            5/13/04
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Topical Composition for    Pending
                =========        ========================   =======
                N. Buyuktimkin   Prostaglandin E1 Delivery  Annuity due
                S. Buyuktimkin                              5/13/04
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Topical Composition for    Pending
                =========        ========================   =======
                N. Buyuktimkin   Prostaglandin E1 Delivery
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
  09/23/02      J. Yeager        Topical Composition for    Granted
  ========      =========        ========================   =======
                N. Buyuktimkin   Prostaglandin E1 Delivery  Annuity due
                S. Buyuktimkin   =========================  5/13/04
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              National
                =========        ==============             =========
                N. Buyuktimkin   Compositions and Methods   Phase; see
                S. Buyuktimkin   =========================  ==========
                                 of Treatment for Male      below
                                 Erectile Dysfunction
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Accepted
                =========        ==============             ========
                N. Buyuktimkin   Compositions and Methods
                S. Buyuktimkin   of Treatment for Male
                                 Erectile Dysfunction
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Pending
                =========        ==============             =======
                N. Buyuktimkin   Compositions and Methods
                ==============   of Treatment for Male
                S. Buyuktimkin   Erectile Dysfunction
                                 ====================
- ------------- ---------------- -------------------------- --------------

                                       48
<PAGE>

  =================== ================== ============== ========== =============
      DOCKET NO.           COUNTRY          SERIAL/       FILED    PATENT/ PUB.
      ==========           =======          =======       =====    =============
                                            APP. NO.                   NO.
  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-109     HUNGARY            P0204159       01/10/01
  ===============     =======            ========       ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-110     ISRAEL             150306         01/10/01
  ===============     ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-115     SOUTH AFRICA       2002/5433      01/10/01
  ===============     ============       =========      ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-116     TURKEY             2002/01769     01/10/01
  ===============     ======             ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-118     PCT                PCT/US02/      09/06/02   PUB # WO
  ===============     ===                =========      ========   =========
                                         28507                     03/022310
                                         =====                     =========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-121     PCT                PCT/US03/27885 09/05/03
  ===============     ===                ============== ========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-124     EUROPE             02757647.9
  ===============     ======             ==========

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-128     AUSTRALIA          2002323650     2/10/04
  ===============     =========          ==========     =======

  ------------------- ------------------ -------------- ---------- -------------

= ============= ================ ========================== ==============
    GRANTED        INVENTORS               TITLE               STATUS
    =======        =========               =====               ======

- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Pending
                =========        ==============             =======
                                 Compositions and Methods
                                 of Treatment for Male
                N. Buyuktimkin   Erectile Dysfunction
               S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Pending
                =========        ==============             =======
                                 Compositions and Methods
                                 of Treatment for Male
                N. Buyuktimkin   Erectile Dysfunction
               S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Pending
                =========        ==============             =======
                                 Compositions and Methods
                                 of Treatment for Male
                N. Buyuktimkin   Erectile Dysfunction
               S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Pending
                =========        ==============             =======
                                 Compositions and Methods
                                 of Treatment for Male
                N. Buyuktimkin   Erectile Dysfunction
               S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Pending:
                =========        ==============             ========
                N. Buyuktimkin   Compositions and Methods   Entered
                ==============   ========================   =======
                S. Buyuktimkin   of Treatment for Male      National
                                 Erectile Dysfunction       Reg. Phase
                                 ====================
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Methods of Treatment of    Pending:
                =========        ========================   ========
                S. Buyuktimkin   Male Erectile Dysfunction  Still
                                                            waiting for
                                                            N.Buyuktimkin
                                                            POA from Drs. B
                                                            Demand due
                                                            4/6/04
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              National
                =========        ==============             ========
                                 Compositions And Methods   Stage filing
                                 Of Treatment For Male      2/10/04.
                N. Buyuktimkin   Erectile Dysfunction
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Appn. Mailed
                =========        ==============             ============
                                 Compositions And Methods   2/10/04
                                 Of Treatment For Male
                N. Buyuktimkin   Erectile Dysfunction
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------

                                       49
<PAGE>

  =================== ================== ============== ========== =============
      DOCKET NO.           COUNTRY          SERIAL/       FILED    PATENT/ PUB.
      ==========           =======          =======       =====    =============
                                            APP. NO.                   NO.
  ------------------- ------------------ -------------- ---------- -------------

  301888.3002-129     SOUTH AFRICA                      2/10/04
  ===============     ============                      =======

  ------------------- ------------------ -------------- ---------- -------------
  301888.3002-134     ISRAEL                            2/10/04
  ===============     ======                            =======

  ------------------- ------------------ -------------- ---------- -------------
  301888.3006-102     PCT                PCT/US03/04560 02/14/03
  ===============     ===                ============== ========
  (NMD-120)

  ------------------- ------------------ -------------- ---------- -------------
  301888.3014-102     PCT
  ===============     ===

  ------------------- ------------------ -------------- ---------- -------------
  NMD-100             Europe (EPO)       94930744.1     10/07/94
  =======             ============       ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-100             Russian            96113047       10/07/94   2165265
  =======             ========           ========       ========   =======
                      Federation
                      ==========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-102             Europe (EPO)       98957603.8     11/05/98
  =======             ============       ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-102             Israel             135914         11/05/98
  =======             ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-102             Turkey             2000/02158     11/05/98
  =======             ======             ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-107             Australia          50232/00       05/18/00
  =======             =========          ========       ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-107             Europe             00932524.2     05/18/00   (1097126)
  =======             ======             ==========     ========   =========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-107             Europe (Div. 1)
  =======             ===============

  ------------------- ------------------ -------------- ---------- -------------

= ============= ================ ========================== ==============
    GRANTED        INVENTORS               TITLE               STATUS
    =======        =========               =====               ======

- ------------- ---------------- -------------------------- --------------

                J. Yeager        Prostaglandin              Appn. Mailed
                =========        ==============             ============
                                 Compositions And Methods   2/10/04
                                 Of Treatment For Male
                N. Buyuktimkin   Erectile Dysfunction
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Prostaglandin              Appn. Mailed
                =========        ==============             ============
                                 Compositions And Methods   2/11/04
                                 Of Treatment For Male
                N. Buyuktimkin   Erectile Dysfunction
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                K. Okada         Treatment of Erectile      Pending
                ========         ======================     =======
                N. Buyuktimkin   Dysfunction
                S. Buyuktimkin                              J.Yeager
                                                            CH.II
                                                            DOR'S
                                                            due
                                                            8/15/04.
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Treatment of Erectile      PCT Filing
                =========        ======================     ==========
                                 Dysfunction                due 6/27/04
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Absorption Enhancers for   Pending
                ==============   =========================  =======
                                 Topical Pharmaceutical
                                 Formulations
                S. Buyuktimkin
                H. Rytting
- ------------- ---------------- -------------------------- --------------
  04/20/01      N. Buyuktimkin   Absorption Enhancers for   Granted
  ========      ==============   =========================  =======
                                 Topical Pharmaceutical
                                 ======================
                                 Formulations
                S. Buyuktimkin
                H. Rytting
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions for   Pending
                ==============   =========================  =======
                                 Prostaglandin E1 Delivery

                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions for   Pending
                ==============   =========================  =======
                                 Prostaglandin E1 Delivery

                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions for   Pending
                ==============   =========================  =======
                                 Prostaglandin E1 Delivery

                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Crystalline Salts of       Pending
                ==============   =====================      =======
                                 Dodecyl
                                 2-(N,N-Dimethylamino)-Propionate
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Crystalline Salts of       Allowed
                ==============   =====================      =======
                                 Dodecyl
                                 2-(N,N-Dimethylamino)-Propionate
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Crystalline Salts of       Authorized
                ==============   =====================      ==========
                                 Dodecyl
                                 2-(N,N-Dimethylamino)-Propionate
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------

                                       50
<PAGE>

  =================== ================== ============== ========== =============
      DOCKET NO.           COUNTRY          SERIAL/       FILED    PATENT/ PUB.
      ==========           =======          =======       =====    =============
                                            APP. NO.                   NO.
  ------------------- ------------------ -------------- ---------- -------------

  NMD-107             Hungary            P 02 02090     05/18/00
  =======             =======            ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-107             Israel             140569         05/18/00
  =======             ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-107             South Africa       2001/0142      05/18/00   2001/0142
  =======             ============       =========      ========   =========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-110             Europe             00903301.0     01/14/00
  =======             ======             ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-110             Hungary            P 01 04901     01/14/00
  =======             =======            ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-110             Israel             143914         01/14/00
  =======             ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-110             South Africa       2001/5220      01/14/00   2001/5220
  =======             ============       =========      ========   =========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-110             Turkey             64896          01/14/00
  =======             ======             =====          ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-110             Yugoslavia         P-508/2001     01/14/00
  =======             ==========         ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-113             Australia          2001249792     04/04/01
  =======             =========          ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-113             Europe             01923062.2     04/04/01
  =======             ======             ==========     ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-113             Hungary            P 03 02452     04/04/01
  =======             =======            ==========     ========

  ------------------- ------------------ -------------- ---------- -------------

= ============= ================ ========================== ==============
    GRANTED        INVENTORS               TITLE               STATUS
    =======        =========               =====               ======

- ------------- ---------------- -------------------------- --------------

                N. Buyuktimkin   Crystalline Salts of       Pending
                ==============   =====================      =======
                                 Dodecyl
                                 2-(N,N-Dimethylamino)-Propionate
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Crystalline Salts of       Pending
                ==============   =====================      =======
                                 Dodecyl
                                 2-(N,N-Dimethylamino)-Propionate
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
  03/27/02      N. Buyuktimkin   Crystalline Salts of       Granted
  ========      ==============   =====================      =======
                                 Dodecyl
                                 2-(N,N-Dimethylamino)-Propionate
                S. Buyuktimkin
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Medicament Dispenser       Pending
                =========        ====================       =======
                Y. Mo
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Medicament Dispenser       Pending
                =========        ====================       =======
                Y. Mo
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Medicament Dispenser       Pending
                =========        ====================       =======
                Y. Mo
- ------------- ---------------- -------------------------- --------------
  06/25/03      J. Yeager        Medicament Dispenser       Granted
  ========      =========        ====================       =======
                Y. Mo
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Medicament Dispenser       Pending
                =========        ====================       =======
                Y. Mo
- ------------- ---------------- -------------------------- --------------
                J. Yeager        Medicament Dispenser       Pending
                =========        ====================       =======
                Y. Mo
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------

                                       51
<PAGE>

  =================== ================== ============== ========== =============
      DOCKET NO.           COUNTRY          SERIAL/       FILED    PATENT/ PUB.
      ==========           =======          =======       =====    =============
                                            APP. NO.                   NO.
  ------------------- ------------------ -------------- ---------- -------------

  NMD-113             Israel             152084         04/04/01
  =======             ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-113             New Zealand        522363         04/04/01
  =======             ===========        ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-113             South Africa       2002/8803      04/04/01
  =======             ============       =========      ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-113             Turkey             108965         04/04/01
  =======             ======             ======         ========

  ------------------- ------------------ -------------- ---------- -------------
  NMD-125             PCT                PCT/US03/      12/31/03
  =======             ===                =========      ========

                                         41658
  =================== ================== ============== ========== =============

= ============= ================ ========================== ==============
    GRANTED        INVENTORS               TITLE               STATUS
    =======        =========               =====               ======

- ------------- ---------------- -------------------------- --------------

                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                N. Buyuktimkin   Topical Compositions       Pending
                ==============   =====================      =======
                                 Containing
                                 Prostaglandin E1
                S. Buyuktimkin
                J. Yeager
- ------------- ---------------- -------------------------- --------------
                Y. Mo            Topical Stabilized         Pending
                =====            ===================        =======
                                 Prostaglandin E Compound
                                 Dosage Forms
                D. Frank
= ============= ================ ========================== ==============

                                       52NEXMED, INC.

                       AGREEMENT EVIDENCING THE GRANT OF A
                      NON-QUALIFIED STOCK OPTION UNDER THE
                     NEXMED, INC. RECOGNITION AND RETENTION
                  STOCK INCENTIVE PLAN TO LEONARD A. OPPENHEIM

      Agreement (this "Agreement") effective as of November 1, 2004 (the "Grant
Date"), between NexMed, Inc., a Nevada corporation (the "Company"), and Leonard
A. Oppenheim ("Grantee").

      1. Grant of Option. Pursuant to the NexMed, Inc. Recognition and Retention
Stock Incentive Plan (the "Plan"), the Company hereby grants to Grantee, as of
the Grant Date, a non-qualified stock option (the "Option"), to purchase an
aggregate of 40,000 shares (the "Option Shares") of Common Stock of the Company
(the "Common Stock") at a price of $1.40 per share subject to adjustment and the
other terms and conditions set forth herein and in the Plan.

      2. Grantee Bound by Plan. Enclosed is a copy of the Plan, which is
incorporated herein by reference and made a part hereof. The Plan shall govern
all aspects of this Agreement except as otherwise specifically stated herein.
Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound
by all the terms and provisions thereof. Unless otherwise defined herein,
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan. The Plan should be carefully examined before any decision
is made to exercise this Option.

      3. Exercise of Option. (a) Vesting. Subject to the earlier termination of
the Option as provided herein and in the Plan, the Option may be exercised, by
written notice to the Company at any time and from time to time after the Grant
Date, but, except as otherwise provided below, such Option shall not be
exercisable for more than the number of Option Shares which are then vested.
This Option shall vest in two (2) installments as follows:

            (i) 50% of the Stock Option Shares (which represents 20,000 Stock
      Option Shares) shall vest immediately;

            (ii) 50% of the Stock Option Shares (which represents 20,000 Stock
      Option Shares) shall vest on the date of the 2005 Annual Meeting of
      Shareholders.

      (b) Early Expiration of Option. (i) Upon the termination of the Grantee's
service with the Company (including any subsidiary thereof) for any reason,
including death, any portion of the Option granted hereunder that is not vested
and exercisable on the date of such termination shall automatically expire and
be forfeited as of such date and the vested portion of the Option shall expire
in accordance with subsections (ii) and (iii) of Section 3(b), or, in the event
of the Grantee's death, Section 5, as applicable;

                                       1
<PAGE>

         (ii) In the event that the Grantee's service with the Company
(including any subsidiary thereof) is terminated for Cause, the Grantee shall
automatically forfeit his right to exercise any portion of the Option granted
hereunder which shall automatically be cancelled effective on the date of such
termination.

         (iii) If, however, the Grantee's service is terminated for any reason
other than for Cause, any portion of the Option granted hereunder that is vested
but has not been exercised as of the date of such termination shall
automatically expire, if not exercised, on the ninetieth (90th) day following
Grantee's termination of service with the Company, provided, however, that if
the Grantee's service terminates due to his retirement or permanent disability,
the portion of the Option that is vested but has not been exercised as of the
date of the Grantee's termination of service due to retirement or permanent
disability shall remain exercisable, subject to the terms and conditions of
Section 3 (c) of this Agreement, for a period of one year following the date of
the Grantee's termination of service with the Company.

      (c) Normal Expiration of Option. This Option shall not be exercisable
after the tenth anniversary of the Grant Date. This Option may not be exercised
for a fraction of a share of Common Stock. Unvested Options are subject to
cancellation as provided in the Plan.

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

      4. Conditions to Exercise. This Option may not be exercised by Grantee
unless the following conditions are met:

         (a) Securities Requirements. Legal counsel for the Company must be
satisfied at the time of exercise that the issuance of Option Shares upon
exercise will be in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and applicable United States federal, state, local and foreign
laws; and

         (b) Payment of Exercise Price. At the time of exercise of all or any
portion of the Option, the Grantee must pay the full purchase price for the
Option Shares being purchased hereunder (i) in cash (or by certified check) or
(ii) by delivery of shares of Common Stock previously acquired by the Grantee or
(iii) through a combination of option (i) and (ii). Details with respect to the
methods for exercise, payment and delivery of Option Shares, including
requirements for the payment of withholding taxes applicable thereto are as set
forth in the Plan.

      5. Transferability. This Option may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of by Grantee, except by will or the
laws of descent and distribution (in which case, such transferee shall succeed
to the rights and obligations of Grantee hereunder). During Grantee's lifetime,
the Option shall only be exercisable by Grantee. If Grantee or anyone claiming
under or through Grantee attempts to violate this Section 5, such attempted
violation shall be null and void and without effect, and the Company's
obligation hereunder shall terminate. If at the time of Grantee's death this
Option has not been fully exercised, Grantee's estate or any person who acquires
the right to exercise this Option by bequest or inheritance or by reason of
Grantee's death may, at any time within one year after the date of Grantee's
death (but in no event after the expiration of two years from the Grant Date),
exercise this Option with respect to the number of shares, determined under
Section 3 above, as to which Grantee could have exercised the Option at the time
of Grantee's death. The applicable requirements of Section 4 above must be
satisfied in full at the time of such exercise.

                                       2
<PAGE>

      6. Administration. Any action taken or decision made by the Company, the
Board or the Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding on Grantee and all persons claiming
under or through Grantee. By accepting this grant or other benefit under the
Plan, Grantee and each person claiming under or through Grantee shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.

      7. No Rights as Stockholder. Unless and until a certificate or
certificates representing shares of Common Sock shall have been issued to
Grantee (or any person acting under Section 5 above), Grantee shall not be or
have any of the rights or privileges of a stockholder of the Company with
respect to shares of Common Stock acquirable upon exercise of the Option.

      8. Investment Representation. Grantee hereby acknowledges that the shares
of Common Stock which Grantee may acquire by exercising the Option shall be
acquired for investment without a view to distribution, within the meaning of
the Securities Act, and shall not be sold, transferred, assigned, pledged or
hypothecated in the absence of an effective registration statement for the
shares of Common Stock under the Securities Act and applicable state securities
laws or an applicable exemption from the registration requirements of the
Securities Act and any applicable state securities laws. Grantee also agrees
that the shares of Common Stock which Grantee may acquire by exercising the
Option will not be sold or otherwise disposed of in any manner which would
constitute a violation of any applicable securities laws, whether federal or
state.

      9. Listing and Registration of Common Stock. The Company, in its
discretion, may postpone the issuance and/or delivery of shares of Common Stock
upon an exercise of this Option until registration, or other qualification of
such shares under any state and/or federal law, rule or regulation as the
Company may reasonably in good faith consider appropriate.

      10. Notices. Any notice hereunder to the Company shall be addressed to the
Company, NexMed, Inc., 350 Corporate Blvd., Robbinsville, NJ 08691, Attention:
Secretary, and any notice hereunder to Grantee shall be addressed to Grantee at
Grantee's last address on the records of the Company, subject to the right of
either party to designate at any time hereafter in writing some other address.
Any notice shall be deemed to have been duly given when delivered personally,
one day following dispatch if sent by reputable overnight courier, fees prepaid,
or three days following mailing if sent by registered mail, return receipt
requested, postage prepaid and addressed as set forth above.

                                       3
<PAGE>

      11. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Grantee.

      12. Governing Law. The validity, construction, interpretation
administration and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Nevada.

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

                                        NexMed, Inc.

                                        /s/ Vivian H. Liu
                                        ------------------------------
                                        Vivian Liu
                                        Vice-President & Secretary

                                       4
<PAGE>

GRANTEE ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
NEXMED, INC. RECOGNITION AND RETENTION STOCK INCENTIVE PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON GRANTEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF SERVICE BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY
WAY WITH GRANTEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE SERVICE AT ANY
TIME, WITH OR WITHOUT CAUSE.

Grantee acknowledges receipt of a copy of the Plan and represents that he is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions of the Plan thereof except as
otherwise specifically stated in this Option Agreement. Grantee has reviewed the
Plan and this Option Agreement in this entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully
understands all provisions of this Option Agreement. Grantee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.

                                                GRANTEE

                                                /s/ Leonard A. Oppenheim
                                                ------------------------
                                                Leonard A. Oppenheim

                                       5
<PAGE>

                                   Appendix A
                                Change in Control

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

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

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

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

                                       6
<PAGE>

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

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

F. Such other events as the Board may designate.

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

                                       7

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