Document:

INVESTOR RIGHTS AGREEMENT

      This Investor Rights Agreement (this "Agreement") is made and entered into
as of May 16, 2005 among NexMed, Inc., a Nevada corporation (the "Company"), and
each of the purchasers executing this Agreement and listed on Schedule 1
attached hereto (collectively, the "Purchasers").

      This Agreement is being entered into pursuant to the Preferred Stock and
Warrant Purchase Agreement, dated as of the date hereof, by and among the
Company and the Purchasers (the "Purchase Agreement").

      The Company and the Purchasers hereby agree as follows:

      1. Definitions.

      Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:

      "Advice" shall have the meaning set forth in Section 3(m).

      "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.

      "Blackout Period" shall have the meaning set forth in Section 3(n).

      "Board" shall have the meaning set forth in Section 3(n).

      "Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New Jersey generally are authorized or required by law or other government
actions to close.

      "Commission" means the Securities and Exchange Commission.

      "Common Stock" means the Company's Common Stock, par value $0.001 per
share.

      "Effectiveness Period" shall have the meaning set forth in Section 2.

      "Event" shall have the meaning set forth in Section 8(e).

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Filing Date" means the twentieth (20th) day following the Closing Date.

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      "Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities, including without limitation the
Purchasers and their assignees.

      "Indemnified Party" shall have the meaning set forth in Section 5(c).

      "Indemnifying Party" shall have the meaning set forth in Section 5(c).

      "Losses" shall have the meaning set forth in Section 5(a).

      "Nasdaq" shall mean The Nasdaq Stock Market.

      "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

      "Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

      "Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.

      "Registrable Securities" means (a) the Conversion Shares and the Warrant
Shares (without regard to any limitations on beneficial ownership or issuance
contained in the Certificate of Designation or Warrants) or other securities
issued or issuable to each Purchaser or its transferee or designee (i) upon
conversion or exchange of the Preferred Stock and/or as dividends on the
Preferred Stock and/or upon exercise of the Warrants, or (ii) upon any
distribution with respect to, any exchange for or any replacement of such
Preferred Stock or Warrants or (iii) upon any conversion, exercise or exchange
of any securities issued in connection with any such distribution, exchange or
replacement; (b) securities issued or issuable upon any stock split, stock
dividend, recapitalization or similar event with respect to the foregoing; and
(c) any other security issued as a dividend or other distribution with respect
to, in exchange for, in replacement or redemption of, or in reduction of the
liquidation value of, any of the securities referred to in the preceding
clauses; provided, however, that such securities shall cease to be Registrable
Securities when such securities have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction or
when such securities may be sold without any restriction pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company's transfer agent to such effect as described in
Section 2 of this Agreement.

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      "Registration Statement" means the registration statements and any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such registration
statement.

      "Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

      "Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Special Counsel" means Peter J. Weisman, P.C.

      "Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the warrants issued or to be issued to the Purchasers or their
assignees or designees in connection with the offering consummated under the
Purchase Agreement.

      2. Registration. As soon as possible following the Closing Date (but not
later than the Filing Date), the Company shall prepare and file with the
Commission a "shelf" Registration Statement covering all Registrable Securities
for a secondary or resale offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (or if such form is
not available to the Company on another form appropriate for such registration
in accordance herewith). The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act not
later than sixty (60) days after the Closing Date (including filing with the
Commission a request for acceleration of effectiveness in accordance with Rule
461 promulgated under the Securities Act within five (5) Business Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
by the Commission that a Registration Statement will not be "reviewed," or not
be subject to further review) and to keep such Registration Statement
continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which all Registrable
Securities may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness

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Period"). Upon the initial filing thereof, the Registration Statement shall
cover at least 200% of the shares of Common Stock for issuance upon the
conversion of the Preferred Stock and 100% of the shares of Common Stock for
issuance upon the exercise of the Warrants. If the Commission informs the
Company that it will not allow the Registration Statement to cover at least 200%
of the shares of Common Stock for issuance upon the conversion of the Preferred
Stock, then the Registration Statement shall cover the highest percentage of
such Common Stock that the Commission will allow. Such Registration Statement
also shall cover, to the extent allowable under the Securities Act and the Rules
promulgated thereunder (including Securities Act Rule 416), such indeterminate
number of additional shares of Common Stock resulting from stock splits, stock
dividends or similar transactions with respect to the Registrable Securities.

      3. Registration Procedures.

      In connection with the Company's registration obligations hereunder, the
Company shall:

      (a) Prepare and file with the Commission on or prior to the Filing Date, a
Registration Statement on Form S-3 (or if such form is not available to the
Company on another form appropriate for such registration in accordance
herewith) (which shall include a Plan of Distribution substantially in the form
of Exhibit A attached hereto), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such Special Counsel, and (ii) at
the request of any Holder cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of counsel to such Holders, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or the Special Counsel shall reasonably object in writing
within three (3) Business Days after their receipt thereof, unless counsel to
the Company determines in writing that such objection is without merit.

      (b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and to the extent any
Registrable Securities are not included in such Registration Statement for
reasons other than the failure of the Holder to comply with Section 3(m) hereof,
shall prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions then in

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force) promulgated under the Securities Act; (iii) respond as promptly as
possible, and in no event later than 10 Business Days, to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

      (c) Notify the Holders of Registrable Securities to be sold and the
Special Counsel as promptly as possible (A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed (but in no event in the case of this subparagraph (A), less than
three (3) Business Days prior to date of such filing); (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement; and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective (which notice shall
be delivered to the Lead Investor and Special Counsel on the same day as such
effectiveness), and after the effectiveness thereof: (i) of any request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to the Registration Statement or Prospectus or for additional
information; (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (iv) if the financial
statements included in the Registration Statement become ineligible for
inclusion therein or of the occurrence of any event that makes any statement
made in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Without limitation to any remedies to which the
Holders may be entitled under this Agreement, if any of the events described in
clauses (i) through (iv) of Section 3(c)(C) occurs, the Company shall use its
best efforts to respond to and correct the event.

      (d) Use its best efforts to avoid the issuance of, or, if issued, use best
efforts to obtain the withdrawal of, (i) any order suspending the effectiveness
of the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

      (e) If requested by any Holder of Registrable Securities, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the

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Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the written opinion of counsel for the Company (addressed to the
Special Counsel), violate applicable law.

      (f) Furnish to each Holder and the Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, and all exhibits to the
extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

      (g) Promptly deliver to each Holder and the Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.

      (h) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders and the
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any jurisdiction where it is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.

      (i) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to a Registration Statement, which certificates shall be free, to the extent
permitted by applicable law and the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any Holder may request at least two (2) Business
Days prior to any sale of Registrable Securities. In connection therewith, the
Company shall promptly after the effectiveness of the Registration Statement
(but no later than one day thereafter) cause an opinion of counsel to be
delivered to and maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the transfer agent,

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which authorize and direct the transfer agent to issue such Registrable
Securities without legend upon sale by the Holder of such shares of Registrable
Securities under the Registration Statement.

      (j) Upon the occurrence of any event contemplated by Section 3(c)(C)(iii)
or (iv), as promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

      (k) Cause all Registrable Securities relating to such Registration
Statement to be listed on NASDAQ and any other United States securities
exchange, quotation system, market or over-the-counter bulletin board, if any,
on which similar securities issued by the Company are then listed.

      (l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 3-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.

      (m) Request each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as is
required by law or the Commission to be disclosed in the Registration Statement
by sending to each selling Holder a Selling Shareholder Questionnaire, the form
of which is attached as Exhibit B, and the Company may exclude from such
registration the Registrable Securities of any such Holder who fails (i) to
furnish such information or (ii) to agree to furnish, upon request, such
additional information regarding such Holder as may later be required by law to
be disclosed, in each case, within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.

      If the Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.

      Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(c)(i), 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Section 3(j), or until it is advised in writing (the "Advice") by the Company

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that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.

      (n) If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "Board") reasonably determines not
to be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company's best
interest to disclose and which the Company would be required to disclose under
the Registration Statement, then the Company may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed 30
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 12 month period (each, a "Blackout Period").

      4. Registration Expenses.

      All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with Nasdaq
and each other securities exchange, quotation system, market or over-the-counter
bulletin board on which Registrable Securities are required hereunder to be
listed, (B) with respect to filings required to be made with the Commission, and
(C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of Special Counsel in connection with Blue
Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv) Securities
Act liability insurance, if the Company so desires such insurance, (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including, in
the case of an underwritten offering, the expenses of any comfort letters or
costs associated with the delivery by independent public accountants of a
comfort letter or comfort letters) and legal counsel, and (vi) fees and expenses
of the Special Counsel in connection with any Registration Statement hereunder.
In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by

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this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.

      5. Indemnification.

      (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained or incorporated by reference in
the Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or amendment or supplement thereto, in the
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to (x) such Holder and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus or in any amendment or supplement thereto
or (y) such Holder's proposed method of distribution of Registrable Securities
as set forth in Exhibit A (or as such Holder otherwise informs the Company in
writing); or (ii) in the case of an occurrence of an event of the type described
in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), the use by a Holder of an
outdated or defective Prospectus after the delivery to the Holder of written
notice from the Company that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 3(m). The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 5(c) to this Agreement) and shall
survive the transfer of the Registrable Securities by the Holders.

      (b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any

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form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that (i) such untrue statement or omission is contained in
or omitted from any information so furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus, or in any amendment or
supplement thereto, or to the extent that such information relates to (x) such
Holder and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus, or such form
of prospectus or in any amendment or supplement thereto or (y) such Holder's
proposed method of distribution of Registrable Securities as set forth in
Exhibit A (or as such Holder otherwise informs the Company in writing) or (ii)
in the case of an occurrence of an event of the type described in Section
3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), the use by a Holder of an outdated or
defective Prospectus after the delivery to the Holder of written notice from the
Company that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 3(m); provided, however, that
the indemnity agreement contained in this Section 5(b) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Holder, which consent shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained herein, the Holder
shall be liable under this Section 5(b) for only that amount as does not exceed
the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

      (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

      An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party

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shall have been advised by counsel in writing (with a copy to the Indemnifying
Party) that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the reasonable expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not impose any monetary
or other obligation or restriction on the Indemnified Party.

      All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on a
monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).

      (d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be

                                       11
<PAGE>

required to contribute under this Section 5(d) for only that amount as does not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

      The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

      The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. The indemnity and contribution agreements herein are in
addition to and not in diminution or limitation of any indemnification
provisions under the Purchase Agreement.

      6. Rule 144.

      As long as any Holder owns any Preferred Stock, Conversion Shares,
Warrants or Warrant Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act. As long as any Holder owns any
Preferred Stock, Conversion Shares, Warrants or Warrant Shares, if the Company
is not required to file reports pursuant to Section 13(a) or 15(d) of the
Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Conversion Shares and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including compliance with the provisions
of the Purchase Agreement relating to the transfer of the Conversion Shares and
Warrant Shares. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.

      7. Covenants of Purchasers.

      In connection with the Registration Statement, each of the Purchasers
covenants as follows:

      (a) Unless and until such Purchaser has provided written notice to the
Company to the contrary, all sales of Registrable Securities by such Purchaser
shall be made without payment of underwriting discounts or commissions except
for the usual and customary commission paid to brokers or dealers.

                                       12
<PAGE>

      (b) Such Purchaser shall advise the Company of any arrangement with a
broker or dealer for the sale of such Purchaser's Registrable Securities through
a block trade, special offering, exchange or secondary distribution or a
principal purchase by a broker or dealer, and the details of such transaction.

      (c) Such Purchaser shall comply with all prospectus delivery requirements
with respect to sales of the Registrable Securities to the extent required by
the Securities Act and other applicable law.

      (d) Such Purchaser shall report to the Company, upon written request of
the Company, whether all Registrable Securities held by such Purchaser have been
sold or otherwise transferred.

      8. Miscellaneous.

      (a) Remedies. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

      (b) No Inconsistent Agreements. Except as otherwise disclosed in the
Purchase Agreement, neither the Company nor any of its subsidiaries is a party
to an agreement currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, without the written consent of
the Holders of a majority of the then outstanding Registrable Securities, the
Company shall not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act unless the
rights so granted are subject in all respects to the prior rights in full of the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.

      (c) Notice of Effectiveness. Within two (2) Business Days after the
Registration Statement which includes the Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that the Registration Statement has
been declared effective by the Commission in the form attached hereto as Exhibit
C. On the day that such Registration Statement is declared effective, the
Company shall furnish to the Investors for completion the investor
representation letter attached as Annex I to Exhibit C.

                                       13
<PAGE>

      (d) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering all of the Registrable Securities, the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or its then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within seven (7) Business Days after receipt of such
notice, any such Holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Holder), the
Company will cause the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holder, to
the extent required to permit the disposition of the Registrable Securities so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 8(d) for the
same period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 8(d) that are eligible for sale pursuant to Rule 144(k) of the
Securities Act. In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the managing underwriter should reasonably determine
that the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).

                                       14
<PAGE>

      (e) Failure to File Registration Statement and Other Events. The Company
and the Holders agree that the Holders will suffer damages if the Registration
Statement is not filed on or prior to the thirty-fifth (35th) day following the
Closing Date and maintained in the manner contemplated herein during the
Effectiveness Period. The Company and the Holders further agree that it would
not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or prior to the
thirty-fifth (35th) day following the Closing Date, or (ii) the Company fails to
file with the Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within five (5) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or not subject
to further review, or (iii) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all Registrable Securities at any time prior to the expiration of the
Effectiveness Period, without being succeeded promptly by a subsequent
Registration Statement filed with the Commission, except as otherwise permitted
by this Agreement, including pursuant to Section 3(n), or (iv) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from Nasdaq
or any other securities exchange, quotation system, market or over-the-counter
bulletin board on which Registrable Securities are required hereunder to be
listed (each an "Exchange"), without immediately being listed on any other
Exchange, for any reason for more than one (1) Business Day, other than pursuant
to Section 3(n), or (v) the conversion or redemption rights of the Holders, or
the exercise rights of the Holders under the Warrants, are suspended for any
reason without the consent of the particular Holder other than as set forth in
the Certificate of Designation, or (vi) the Company has breached Section 3(n) of
this Agreement (any such failure or breach being referred to as an "Event"), the
Company shall pay in cash as liquidated damages for such failure and not as a
penalty to each Holder an amount equal to two percent (2%) of such Holder's pro
rata share of the purchase price paid by all Holders for Preferred Stock
purchased and then outstanding pursuant to the Purchase Agreement for the
initial thirty (30) day period until the applicable Event has been cured or
until the Preferred Stock has been redeemed (whichever is earlier), which shall
be pro rated for such periods less than thirty (30) days and two percent (2%) of
such Holder's pro rata share of the purchase price paid by all Holders for
Preferred Stock purchased and then outstanding pursuant to the Purchase
Agreement for each subsequent thirty (30) day period until the applicable Event
has been cured which shall be pro rated for such periods less than thirty days
(the "Periodic Amount"). Payments to be made pursuant to this Section 8(e) shall
be due and payable immediately upon demand in immediately available cash funds.
The parties agree that the Periodic Amount represents a reasonable estimate on
the part of the parties, as of the date of this Agreement, of the amount of
damages that may be incurred by the Holders if the Registration Statement is not
filed on or prior to the thirty-fifth (35th) day following the Closing Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if any other Event as described herein has occurred. Notwithstanding the
foregoing, the Company shall remain obligated to cure the breach or correct the
condition that caused the Event, and the Holder shall have the right to take any
action necessary or desirable to enforce such obligation.

                                       15
<PAGE>

      (f) Specific Enforcement, Consent to Jurisdiction.

            (i) The Company and the Holders acknowledge and agree that
      irreparable damage would occur in the event that any of the provisions of
      this Agreement were not performed in accordance with their specific terms
      or were otherwise breached. It is accordingly agreed that the parties
      shall be entitled to an injunction or injunctions to prevent or cure
      breaches of the provisions of this Agreement and to enforce specifically
      the terms and provisions hereof, this being in addition to any other
      remedy to which any of them may be entitled by law or equity.

            (ii) Each of the Company and the Holders (i) hereby irrevocably
      submits to the exclusive jurisdiction of the state and federal courts
      located in New York City, New York for the purposes of any suit, action or
      proceeding arising out of or relating to this Agreement and (ii) hereby
      waives, and agrees not to assert in any such suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of such
      court, that the suit, action or proceeding is brought in an inconvenient
      forum or that the venue of the suit, action or proceeding is improper.
      Each of the Company and the Holders consents to process being served in
      any such suit, action or proceeding by mailing a copy thereof to such
      party at the address in effect for notices to it under this Agreement and
      agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing in this Section 8(f) shall affect or
      limit any right to serve process in any other manner permitted by law.

      (g) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of at least 75% of the Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of the Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.

      (h) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) the next Business Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Business Day or later than 5:00
p.m., New York City time, on any date and earlier than 11:59 p.m., New York City
time, on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service such as Federal Express
or (iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to each Holder at
its address set forth under its name on Schedule 1 attached hereto, or with

                                       16
<PAGE>

respect to the Company, addressed to:

                                    NexMed, Inc.
                                    350 Corporate Boulevard
                                    Robbinsville, NJ  08691
                                    Attention:  Chief Financial Officer
                                    Facsimile No.:  609-208-1621

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Katten Muchin
Rosenman LLP, 575 Madison Avenue, New York, NY 10022, Attn: Robert Kohl, Esq.,
Facsimile No. (212) 940-8776. Copies of notices to any Holder shall be sent to
the addresses, if any, listed on Schedule 1 attached hereto.

      (i) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns and
shall inure to the benefit of each Holder and its successors and assigns;
provided, that the Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder; and
provided, further, that each Holder may assign its rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.

      (j) Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the Preferred Stock, the Warrants or the Registrable Securities
if: (i) the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment the further disposition of such
securities by the transferee or assignees is restricted under the Securities Act
and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section 8(j),
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions of this Agreement, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holders (and to subsequent) successors
and assigns.

      The Company may require, as a condition of allowing such assignment in
connection with a transfer of Preferred Stock, Warrants or Registrable
Securities (i) that the Holder or transferee of all or a portion of the
Preferred Stock, the Warrants or the Registrable Securities as the case may be,
furnish to the Company a written opinion of counsel that is reasonably
acceptable to the Company to the effect that such transfer may be made without

                                       17
<PAGE>

registration under the Securities Act, (ii) that the Holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities Act.

      (k) Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by electronic image or
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such electronic image or facsimile
signature were the original thereof.

      (l) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law thereof.

      (m) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

      (n) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable in any respect, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

      (o) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

      (p) Registrable Securities Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its Affiliates (other than any Holder or transferees or successors or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

      (q) Obligations of Purchasers. The Company acknowledges that the
obligations of each Purchaser under this Agreement, are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to enter into to

                                       18
<PAGE>

this Agreement has been made by such Purchaser independently of any other
Purchaser. The Company further acknowledges that nothing contained in this
Agreement, and no action taken by any Purchaser pursuant hereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

      Each Purchaser acknowledges and agrees that it has been represented by its
own separate legal counsel in their review and negotiation of this Agreement and
with respect to the transactions contemplated hereby. For reasons of
administrative convenience only, this Agreement has been prepared by Special
Counsel (counsel for The Tail Wind Fund Ltd. ("TWF")) and the Special Counsel
will perform certain duties under this Agreement. Such counsel does not
represent all of the Purchasers but only TWF. The Company has elected to provide
all Purchasers with the same terms and Agreement for the convenience of the
Company and not because it was required or requested to do so by the Purchasers.
The Company acknowledges that such procedure with respect to this Agreement in
no way creates a presumption that the Purchasers are in any way acting in
concert or as a group with respect to this Agreement or the transactions
contemplated hereby or thereby.

                                                  [signature page follows]

                                       19
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.

COMPANY:

NEXMED, INC.

By: /s/ Y. Joseph Mo, Ph.D.
    -----------------------
Name:  Y. Joseph Mo, Ph.D.
Title: President & C.E.O.

<PAGE>

PURCHASERS:

Print Exact Name:    THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY & MANAGEMENT LTD., as investment manager

                     By:
                         -------------------------------------------------------
                     Name:        David Crook
                     Title:       CEO

Print Exact Name:    SOLOMON STRATEGIC HOLDINGS, INC.

                     By:
                         -------------------------------------------------------
                     Name:      Andrew P. MacKellar
                     Title:     Director

Print Exact Name:    Regions Bank as Custodian for Arkansas Knee Clinic, Profit
                     Sharing Plan acct# 91-0445-02-2

                     By:
                         -------------------------------------------------------
                     Name:      C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:     President

Print Exact Name:    Union Bank of California fbo Eva B. Buck Charitable Trust
                     "B"

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

Print Exact Name:    Caeser's Riverboat Casino Foundation

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

Print Exact Name:    Compass Bank, Custodian fbo Ray C. Fish Foundation

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

Print Exact Name:    Fiserv as Custodian for Hill Family Partnership acct #529
                     39008

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

Print Exact Name:    Fiserv as Cutodian for Hytrol Conveyor Company Pension Plan
                     acct # 529 40988

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

Print Exact Name:    Fiserv as Custodian for George D. Nagrodsky acct# 529 57752

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

<PAGE>

PURCHASERS:

Print Exact Name:    M & I Trust Company, N.A. as trustee of the Thrift and
                     Profit Sharing Retirement Plan of Latham & Watkins, LLP for
                     J. Thomas Bosch

                     By:
                         -------------------------------------------------------
                     Name:     Stephanie Napier/Lori Harding (subject to the
                               attached addendum)
                     Title:    Vice President/Officer

Print Exact Name:    Poterbaugh Foundation dated 10/31/49

                     By:
                         -------------------------------------------------------
                     Name:     C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President

Print Exact Name:    Cherrytrust & Co.

                     By:
                         -------------------------------------------------------
                     Name:      C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:     President

Print Exact Name:    Tax Equity Partners I, Inc.
                     a Partnership

                     By:
                         -------------------------------------------------------
                     Name:      C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:     President

Print Exact Name:    Charles W. Edwards, Jr.

                     By:
                         -------------------------------------------------------
                     Name:      Charles W. Edwards, Jr.
                     Title:

Print Exact Name:    The Leonard J. Sojka, Jr. Revocable Trust
                     (Trust Date: 2 Feb. 2001)

                     By:
                         -------------------------------------------------------
                     Name:      Leonard J. Sojka
                     Title:     Trustee

Print Exact Name:    Andrew S. Troob Revocable Trust
                     UAD 6/26/92

                     By:
                         -------------------------------------------------------
                     Name:      Andrew S. Troob
                     Title:     Trustee

Print Exact Name:    FAN Associates LLC

                     By:
                         -------------------------------------------------------
                     Name:      Wen Ling Lee Fan
                     Title:     Manager

Print Exact Name:    John R. and Tristen M. Green
                     By:
                         -------------------------------------------------------
                     Name:      Tristen M. Green
                     Title:

<PAGE>

PURCHASERS:

Print Exact Name:    Akros Capital Fund, L.P.

                     By:
                         -------------------------------------------------------
                     Name:      Brady T. Lipp
                     Title:     Managing Member of Akros Capital, LLC
                                (management company)

Print Exact Name:    Brady T. Lipp
                     By:
                         -------------------------------------------------------
                     Name:      Brady T. Lipp
                     Title:

Print Exact Name:    Mark S. Ain

                     By:
                         -------------------------------------------------------
                     Name:      Mark S. Ain
                     Title:

Print Exact Name:    Omicron Master Trust
                     By:
                         -------------------------------------------------------
                     Name:      Bruce Bernstein
                     Title:     Managing Partner

Print Exact Name:    Robert C. Ciricillo
                     By:
                         -------------------------------------------------------
                      Name:       Robert C. Ciricillo
                      Title:

Print Exact Name:    Iroquois Master Fund Ltd.
                     By:
                         -------------------------------------------------------
                     Name:      Joshua Silverman
                     Title:     Authorized Signatory

Print Exact Name:    SDS Capital Group SPC, Ltd.
                     By:
                         -------------------------------------------------------
                     Name:      Scott E. Derby
                     Title:     General Counsel1. TITLE

The title of this Agreement is the Integrated Forest Products Pty Ltd
Canberra/C.F.M.E.U. Agreement 2004 - 2005.

2. ARRANGEMENT

1 Title
2 Arrangement
3 Application and Parties Bound
4 Relationship to Parent Award
5 Period of Operation
6 Objectives
7 Definitions
8 Consultative Mechanisms and Procedures in the Workplace
9 Introduction of Major Change in the Workplace
10 Procedures for the Avoidance of Industrial Disputes
11 Employment Categories
12 Outsourcing
13 Utilisation of Skills, Competence and Training
14 Equal Employment Opportunity
15 Anti-Discrimination
16 Workplace Harassment
17 Redundancy
18 Termination of Employment
19 Abandonment of Employment
20 Emergency Provisions
21 Time and Wage Records
22 Hot Work Arrangements
23 Skill Based Grade Structure
24 Wages
25 Hours of Work
26 Breaks
27 Shift Work
28 Annual Leave
29 Personal/Carers Leave
30 Public Holidays
31 Blood Donors
32 Jury Service
33 Union Training Leave
34 Training and Skill Development
35 Literacy and Numeracy
36 Accident Pay
37 Toxic Substances
38 Amenities
39 Clothing, Equipment and Tools
40 First Aid
41 Right of Entry
42 Union Delegates
43 Signatures

<PAGE>

3. APPLICATION AND PARTIES BOUND

This Agreement shall apply at:

Integrated Forest Products Pty Ltd, Tralee Street, Hume, ACT, 2607

and shall be binding upon:

      o     Integrated  Forest Products Pty Ltd, Tralee Street,  Hume, ACT, 2607
            in  respect  of all  employees  and  all  new  employees,  including
            clerical/office employees,  maintenance employees,  electricians and
            fitters, employed at the site listed above and working in activities
            covered by the Timber and Allied  Industries  Award 1999,  and other
            activities covered by this Agreement, and;

      o     The  Construction,  Forestry,  Mining and Energy  Union -  Forestry,
            Furnishing,   Building  Products  and  Manufacturing  Division,  NSW
            Divisional  Branch,  its officers and members employed at Integrated
            Forest Products Pty Ltd, Tralee Street,  Hume, ACT, 2607 and working
            in activities,  including  clerical/office  work,  maintenance work,
            electrical work and fitter work and activities covered by the Timber
            and Allied  Industries  Award 1999 and other  activities  covered by
            this Agreement, and;

      o     All  employees  and new  employees  employed  at  Integrated  Forest
            Products Pty Ltd,  Tralee  Street,  Hume,  ACT,  2607 and working in
            activities,   including   clerical/office  work,  maintenance  work,
            electrical work and fitter work and activities covered by the Timber
            and Allied  Industries  Award 1999 and other  activities  covered by
            this Agreement.  The terms and conditions of this Agreement shall be
            a condition of employment  and  explained to all existing  employees
            and all new employees prior to commencement.

4 RELATIONSHIP TO PARENT AWARD

The Integrated Forest Products Pty Ltd  Canberra/C.F.M.E.U.  Agreement 2004-2005
shall  be read  and  interpreted  in  conjunction  with the  Timber  and  Allied
Industries Award 1999, including all subsequent  variations,  which is agreed to
incorporate  the provisions of that Award as it was formally known as the Forest
and Building Products,  Manufacturing and Merchandising (General) Award 1996, as
it existed at 30 June 1998,  where such provisions are not contained  within the
Timber  and  Allied  Industries  Award  1999.   Provided  that  where  there  is
inconsistency  between  the  before  mentioned  Awards,  the  Integrated  Forest
Products Pty Ltd Canberra/C.F.M.E.U.  Agreement 2004-2005 shall take precedence,
except where the overall benefits of the Awards, for a particular case, are more
advantages to the employee in which case the Award shall apply.

<PAGE>

5 PERIOD OF OPERATION

This Agreement shall operate from the date of certification  and shall remain in
force until 31 March 2006.

This Agreement  shall be  re-negotiated  no later than three months prior to the
ending of this Agreement.

This  Agreement  shall remain in force until such time as it is  superseded by a
new agreement.

6 OBJECTIVES

The aim of this  Agreement  is to promote  through  consultation,  real gains on
productivity  and/or  efficiency  and/or  flexibility  in  the  work  place.  It
facilitates continued progress on Award restructuring and training initiatives.

The parties recognise that work place reform is necessary to improve Australia's
economic  performance  generally  and that of the  Forest  and  Forest  Products
particularly.

The parties agree that the provisions for reform set out in the Agreement should
result in the  unlocking  of  significant  mid and  long-term  productivity  and
efficiency benefits at the enterprise level.

The  parties  also  recognise  the  necessity  of  adopting a  consultative  and
participative approach to work place reform in order to achieve a genuine change
in the industrial culture at all levels within the industry.

The parties' objective is to achieve real sustainable improvements by way of;

a]  Simultaneous  improvements  of all the work place  issues  such as  quality,
technology,  work  organisation,  management  practices,  product  delivery  and
education/training through continuous learning.

b] Reduction of lost time through  injury by the promotion of a safer and better
working environment.

c] The  establishment of closer links with customers and suppliers to ensure all
aspects of the service chain are focused on customer needs and improved customer
satisfaction through appropriate training.

7. DEFINITIONS

7.1 In this Agreement, unless contrary, intention appears.

7.1.1 "Employer" means Integrated Forest Products Pty Ltd.

<PAGE>

7.1.2 " Union"  means  the  Construction,  Forestry,  Mining  and  Energy  Union
-Forestry,   Furnishing,  Building  Products  and  Manufacturing  Division,  NSW
Divisional Branch.

7.1.3 "Leading hand" means an employee who, while working, has charge or control
of any adult person or persons not being  apprentices and who has been appointed
by the employer to take such charge or control.

7.1.4  "Actual  rate of pay" is defined as the total  amount an  employee  would
normally  receive for performing 38 hours of ordinary  work.  Provided that such
rate shall expressly exclude  overtime,  penalty rates,  disability  allowances,
shift  allowance,  special rates,  fares and  travelling  time allowance and any
other ancillary payments of a like nature. Provided further that this definition
shall not include  production  bonuses and other  methods of payment by results,
which by  virtue of their  basis of  calculation  already  produce  the  results
intended by this clause.

8. CONSULTATIVE MECHANISMS AND PROCEDURES IN THE WORKPLACE

8.1 It is agreed  between  management  and  employees to establish an Enterprise
Consultative  Committee  (hereinafter known as the ECC) , in line with the terms
outlined in the Timber and Allied  Industries  Award 1999 clauses 12,  12.1,12.2
(hereinafter known as the Award).

The development of effective  participation/consultative  practices is important
in the  process  of  award  restructuring  and can lead to  advantages  for both
employers  and  employees.   To  ensure  that  workplace  reform  through  Award
restructuring continues consultative  mechanisms/practices  shall be established
within each  enterprise.  This workplace  consultation is to be fostered through
the ECC.

8.2 Role/Relevant Issues

The role of the ECC is to consider all issues relevant to the enterprise,  which
affects employees and management,  and to determine through consultation between
employee and management representatives how these issues should be dealt with.

The ECC will not deal with:

      o     Matters  that  should be dealt with by the  Occupational  Health and
            Safety Committee.
      o     Industrial relations issues.

All parties  will  provide all  information  to the ECC that it needs to operate
effectively.  Reasons for  non-disclosure  of confidential  information shall be
explained.

Employee  representatives will consult with, and report back to all employees on
issues  dealt with by the ECC and take to ECC meetings the views gained from the
members.

<PAGE>

8.3 Aims

The aims of the ECC are to improve:

      o     Productivity  within the enterprise where productivity is considered
            within a broad framework.
      o     The quality of working life for workers.
      o     Skills of workers through  training,  which will result in access to
            more rewarding and satisfying jobs.

8.4 Functions, Methods, Decisions and Implementations

To be agreed by the ECC as  required  to fulfill  the ECC aims (per 8.3  above).
This  is  to  be   achieved   in  the  manner   outlined   in  the  Award  by  a
consensus-negotiated process.

8.4.1  The   form,   structure   and   method   of   implementing   consultative
mechanisms/practices  shall be determined at the  enterprise  level by agreement
between the employer, employees and the union.

8.4.2 The  process  of  consultative  practices  is a  mechanism  through  which
employees  can be involved in and  positively  contribute  towards  management's
decision-making  process.   Decisions  are  encouraged  to  be  reached  through
consultative   mechanisms/   practices,   however,   managerial  prerogative  is
acknowledged.

8.4.3 In enterprises where agreed  participative/consultative  mechanisms are in
place the  parties  may vary the  application  of  designated  Award  conditions
referred to in the Award providing  two-thirds of those affected employees agree
to such change.

8.4.4  Agreements  reached on the application of more flexible  designated Award
conditions shall be approved by the employees affected and the ECC.

8.4.5 The union  reserves  the right to advise its members on award issues under
discussion.

8.5 Structure

The ECC Canberra will have six members, three management and three employees.

The committee shall elect a Chairperson as organiser and coordinator.

The ECC members may nominate proxies in advance.

Employees  shall elect two  representatives  and the union shall  appoint  their
on-site union delegate as third employee representative.

<PAGE>

The union  representative  shall  cease to be on the ECC if they resign as union
delegate. All employee representatives shall cease to be on the ECC if they take
up management positions.

Employee  representatives may be removed from the committee if their performance
has been judged unsatisfactory, the union office has been consulted and a ballot
of employees has been held which endorses this course of action.

Management shall control the appointment and removal of their representatives.

Representatives shall be elected annually.

ECC jobs will be rotated quarterly and workload shall be shared equitably.

8.6 Meetings and Decision Making

Will be arranged by the ECC both regularly and as required (normally monthly.

A quorum shall be at least two management and two employee representatives.

An agenda shall be prepared by ECC member input and finalised and  distributed a
week before the meeting to all ECC  members  and to employee  notice  boards and
lunchrooms. New matters may be raised at meetings as the majority see fit.

Minutes will be taken by an agreed upon committee  member and distributed to all
ECC members and to employee notice boards and lunchrooms.  All ECC members shall
agree upon all minutes before they are issued.

The ECC  shall be run  on-site  with the  right to  consult  the  union or upper
management as ECC members see fit.

The ECC will  discuss  issues  and  make  decisions.  Decisions  will be made by
consensus. Where consensus cannot be reached the dispute settling procedure will
apply.

The ECC should evaluate its operations from time to time in order to improve its
effectiveness.

8.7 Facilities

Non-management  members of the ECC involved in the  consultative  mechanism will
have reasonable  accessibilities in the conduct of their role as a member of the
ECC.

o     A lockable filing cabinet
o     Typing services
o     Photocopying
o     Telephone
o     Office accommodation
o     Meeting room
o     Facsimile service where available, and
o     Transport where needed

<PAGE>

Where the  facilities  set out above do not exist at the  enterprise,  agreement
shall be reached  between  the parties  for the  exemption  of any or all of the
facilities  being  provided  for such  period  that may be  agreed  between  the
parties.

The parties  shall not  unreasonably  withhold any such  agreement and will have
regard to the nature and size of the enterprise.

ECC representatives  must be provided with paid time during normal working hours
to prepare for consult with and report back to members on ECC issues.

The ECC will determine by consensus the timing of these consultations and report
backs with will be arranged for every ECC meeting.

8.8 Discrimination

No  person  shall  be  discriminated  against  in any way as a  result  of their
involvement in ECC activities.

8.9 Observers

Observers and advisers may be invited to attend ECC meetings by agreement of the
Committee.

NOTE -  Accredited  union  and  management  officials  have the  right to attend
meetings.

8.10 Training

ECC  members  will be  entitled  to  training to help them carry out their role.
Training will be carried out during normal working hours and  participants  will
be paid at their usual rate for that time.  This training  shall be conducted as
per clause 13 of the Award.

8.11 Dispute Settlement Procedure

If the committee is unable to reach a decision on a matter it may be referred to
the union and senior  management for resolution.  If no resolution is achievable
normal industrial  relations procedures apply. Refer to clause 10 Procedures for
the Avoidance of Industrial Disputes.

8.12 An Environment Agreement

An  environment  agreement  will be developed  to provide a means of  addressing
environmental issues which arise in or impact the workplace. This agreement will
be discussed and approved by the ECC.

<PAGE>

9 INTRODUCTION OF MAJOR CHANGE IN THE WORKPLACE

9.1 Employees duty to notify

9.1.1 Where the employer has made a definite decision to introduce major changes
in production program, organisation,  structure or technology that are likely to
have  significant  effects on employees,  the employer will notify the employees
who may be affected by the proposed changes and their union.

9.1.2 "Significant effects" include termination of employment,  major changes in
the composition,  operation or size of the employer's workforce or in the skills
required,   the   elimination   or   diminution  of   opportunities,   promotion
opportunities  or job  tenure,  the  alteration  of hours of work,  the need for
retraining  or  transfer  of  employees  to  other  work  or  locations  and the
restructuring  of jobs.  Provided that where the Agreement  makes  provision for
alteration of any of the matters referred to herein an alteration will be deemed
not to have significant effect.

9.2 Employer's duty to discuss change

9.2.1 The  employer  will discuss with  affected  employees  and their union the
introduction  of the changes  referred to in clause 9.1, the effects the changes
are likely to have on  employees,  measures  to avert or  mitigate  the  adverse
effects of such  changes on  employees  and will give  prompt  consideration  to
matters raised by the employees and/or their union in relation to the changes.

9.2.2 The  discussions  will commence as early as  practicable  after a definite
decision has been made by the employer to make the changes referred to in clause
9.1.

9.2.3 For the purposes of such discussion,  the employer will provide in writing
to the employees  concerned and their union, all relevant  information about the
changes including the nature of the changes proposed and the expected effects of
the  chances  on  employees  and any other  matters  likely to affect  employees
provided that the employer is not required to disclose confidential  information
the disclosure of which would be inimical to the employer's interests.

10 PROCEDURES FOR AVOIDANCE OF INDUSTRIAL DISPUTES

Any issue that  arises  between  the  parties  whether in relation to any matter
covered by this Agreement  including a breach or failure to implement any matter
covered by this Agreement or any matter covered by the appropriate Award will be
dealt with in the following manner:

10.1 A  dispute  that  affects  one or  more  employees  but  not a  significant
proportion  of  the  worksite  will  be  raised  by  an  individual  or a  union
representative or other employee  representative to the immediate supervisor for
resolution.  If resolution of the issue does not result the parties will involve
higher levels of management and higher levels of union representation (including
the site union committee) or other  representation  where  established until the
dispute is resolved or the  dispute is  referred  to the  Australian  Industrial
Relations Commission and dealt with as per clause 10.5.

<PAGE>

10.2 A dispute  affecting  a  significant  proportion  of the  employees  in the
worksite will in the first instance be raised at the site ECC for resolution. If
this  will  or  does  result  in a  delay  special  meetings  of  the  ECC  or a
subcommittee  that is  representative  of the ECC  will be held to  resolve  the
issue.  A dispute  is not  resolved  until a full time union  official  or other
employee representative has examined the proposed resolution.

10.3 A dispute effecting a proposed  reduction in employment  numbers,  wages or
conditions of employees  covered by this  Agreement will be raised by contacting
the relevant state branch of the union (where the dispute involves employees who
are members of the union) and  establishing  a process to resolve the dispute by
involving full time union officials and/or other employee representatives,  site
union delegates, employees and relevant management representatives.

10.4 No employee will lose any income as a result of being  involved in attempts
to resolve disputes under this clause and this Agreement.

10.5 If the dispute is not resolved in accordance  through the above  procedures
one or both of the parties may refer the  dispute to the  Australian  Industrial
Relations  Commission for  conciliation in order to resolve the dispute.  If the
dispute is not resolved by conciliation and in the view of the Commission cannot
be resolved by conciliation  the parties agree to have the dispute dealt with by
arbitration by the Australian  Industrial Relations Commission and such decision
will be accepted.

10.6  Without  prejudice to either party and except where a bona fide health and
safety issue is involved  work shall  continue and the status quo will remain as
existed either prior to the dispute or any changes made that caused the dispute,
while  matters  in  dispute  are  being  dealt  with in  accordance  with  these
procedures.  Any unnecessary delays as a result of management's  approach in the
resolution of a dispute may lead to industrial  action being taken by members of
the union in order to encourage a positive response from management.  Management
will not take any legal  action in  response  to such  action  taken  under this
clause.

11 EMPLOYMENT CATEGORIES

11.1 Probationary Employment

Employment during the first six weeks will be from day to day at the weekly rate
prescribed  except  in the case of  re-engagement  within  one  month  after the
termination  of a  previous  service  of the  employee  with the  employer.  Any
extension of the probation  period for any individual  person will only occur by
agreement between the parties.

<PAGE>

11.2 Full Time

All full time employees are employed on a weekly basis.

11.3 Casual Employment

11.3.1 A casual employee shall be paid per hour one  thirty-eighth  of the award
rate applicable for the work performed plus a loading of 20 percent.

11.3.2 The number of casual employees shall not exceed a ratio of one to ten (or
part  thereof) of the total number of full time  employees  employed  under this
agreement.

11.3.3  Notwithstanding  the  prescribed  number  of casual  employees  fixed in
accordance with clause 11.3.2.

11.3.2 Hereof,  additional casual employees may be employed to cover the absence
of full  time  employee  during a period  of long  service  leave,  sickness  or
accident.

11.3.4  A  casual  employee  who is  engaged  in  excess  of 30  hours  per week
continuously  for a three month  period shall be deemed to be a full time weekly
employee and shall be entitled to long service  leave  entitlements  as from the
commencement of the casual employment date.

11.3.5 A casual  employee  who works in excess of the  ordinary  hours fixed for
weekly  employees  on any day  shall be paid at the  appropriate  overtime  rate
provided  in this  agreement  on the casual  employees  actual rate of pay (i.e.
including casual loading).

11.3.6 A casual  employee  engaged  for a part of any day shall be entitled to a
minimum of four hours pay per day  whether  the casual  employee  is required to
work for four hours or not.

11.3.7 Casual  employees  shall be engaged in accordance with clause 15.4 of the
Award.

11.3.8  Casual  employees  shall not continue in  employment  in  preference  to
full-time  weekly paid employees as a result of  retrenchments or redundancy for
any reason other than as agreed by the ECC.

11.3.9 A casual  employee may apply for a full time  position  with the employer
should a vacancy  occur and  subject  to the casual  being  able to perform  the
duties required or undertake training to acquire the skills required to fill the
vacant position in a period  acceptable to the employer then the casual employee
shall have preference of employment for the vacant position.

<PAGE>

11.4 Part Time employment

11.4.1  Except where  agreement is reached in accordance  with the  facilitative
provisions  of the Award part time  employment  will not be offered  without the
prior agreement of the ECC.

11.4.2 The agreed weekly and daily ordinary hours of work once  determined  will
not be altered without the written consent of the employee.

11.4.3 Except where agreement is reached in the ECC a part time employee will be
employed for not less than 16 hours or in excess of 32 hours per week.

11.4.4. A part time employee will be paid for each hour worked one thirty-eighth
of the weekly wage prescribed by the Skill Based Structure of this Agreement for
the grade of work performed.

11.4.5 A part time  employee  who works in  excess of the daily  hours  fixed in
accordance  with clause 25 of this Agreement will be paid overtime in accordance
with clause 31 of the Award.

11.5 Leave Provisions

11.5.1 A part  time  employee  is  entitled  to annual  leave and sick  leave in
accordance with this Agreement in proportion to ordinary hours worked.

11.5.2  Where the normal  paid hours  fall on a public  holiday  and work is not
performed by the employee, such employee will not lose pay for the day.

11.5.3 Where a part time employee  would  normally work on either or both of the
two working days  following the death of a close relative which would entitle an
employee on weekly hiring to bereavement  leave in accordance  with clause 29 of
this Agreement,  the employee is entitled to be absent on personal/carers  leave
on either or both of those two working  days  without loss of pay for the day or
days concerned.

Subject to clause 11.5 all  provisions  of this  Agreement  will apply to a part
time employee.

11.6 Apprentices

The  regulations of the  Vocational  Education and Training Act 2003 will apply.
Apprentices will be paid the following percentages of the weekly rate prescribed
for Level 5 of the skill based grade structure expressed in the Award.

<PAGE>

Year of Apprenticeship

1             50%
2             60%
3             75%
4             90%

11.7 Subject to the  possession of an  appropriate  license or  certificate  and
competency an employee eighteen years of age or over can operate a chainsaw.

11.8 Trainees

Entry  level  trainees  may be employed  on terms and  conditions  agreed by the
employer,  employees and union  consistent  with  provisions  of the  Vocational
Education and Training Act 2003.

12. OUTSOURCING

Outsourcing of work currently done by the site will not be introduced without in
the  first  instance  consulting  and  reaching  agreement  with the ECC.  These
discussions  will  occur  at  least 2 months  prior  to any  discussions  with a
potential outsourcing.

The employer will not vary any existing  outsourcing  arrangements without prior
agreement  with  the  ECC.  The  employer  will  supply  a  list  of  outsourced
operations.

13 UTILISATION OF SKILLS, COMPETENCE AND TRAINING

13.1 The  employer may direct an employee to carry out such duties as are within
the limits of the employee's skill,  competence and training consistent with the
classification  structure of this  Agreement  provided  that such duties are not
designed to promote deskilling.

13.2 The  employer  may direct an employee to carry out such duties and use such
tools and  equipment  as may be required  provided  that the  employee  has been
properly trained in the use of such tools and equipment.

13.3  Cross-skilling  between  maintenance  and production  functions will occur
provided that  employees  required to perform any given task are fully  trained,
competent and able to comply with all regulatory and safety  requirements  (e.g.
limited electrical licenses for electrical isolations).

13.4 Any direction issued by the employer pursuant to clauses 13.1 and 13.2 will
be consistent with the employer's responsibilities to provide a safe and healthy
working environment.

13.5 The parties agree to observe the requirements of Quality Accreditation.

<PAGE>

13.6 A continuous  improvement  programme  (`CIP') will be  established in which
employees will  participate in CIP teams jointly with  management.  The employer
will provide appropriate training.

14 EQUAL EMPLOYMENT OPPORTUNITY

The  employer is an equal  opportunity  employer  and has a policy  statement as
required by  legislation.  The ECC will review  existing equal  opportunity  and
affirmative  action  provisions during the life of this Agreement with a view to
breaking down any existing barriers and to ensure that individuals have the same
rights and  opportunities  to  training,  job access and  advancement.  Disabled
people will continue to be employed provided their employment is consistent with
safety and productivity objectives.

15 ANTI-DISCRIMINATION

15.1 It is the  intention of the  respondents  to this  Agreement to achieve the
principal  object in Section 3 of Part I of the Workplace  Relations Act 1996 by
helping to prevent and eliminate  discrimination  on the basis of race,  colour,
sex, sexual  preference,  age,  physical or mental  disability,  marital status,
family  responsibilities,   pregnancy,  religion,  political  opinion,  national
extraction or social origin.

15.2 Accordingly,  in fulfilling their obligations under the disputes  avoidance
and settling  clause,  the respondents  must make every endeavour to ensure that
neither the Award  provisions  nor their  operation  are directly or  indirectly
discriminatory in their effects.

15.3 Nothing in this clause is to be taken to affect;

15.3.1 any different  treatment (or treatment having different effects) which is
specifically exempted under the Commonwealth anti-discrimination legislation,

15.3.3 an employee,  employer or registered  organisation,  pursuing  matters of
discrimination in any state or federal jurisdiction, including by application to
the Human Rights and Equal Opportunity Commission.

16 WORKPLACE HARASSMENT

In line  with  legislative  requirements  the  employer  will  ensure  that  all
employees work in an environment,  which is free from harassment of any kind. To
ensure this occurs,  a policy and procedures  statement will be developed by the
ECC including a grievance procedure to handle all complaints of harassment.

The  employer  will  ensure  that  all  employees  are  aware  of the need for a
harassment free workplace.

1. Joint responsibility of the parties to stop workplace harassment.

<PAGE>

17. REDUNDANCY

17.1 Application and Definition

This clause applies in the case of:

17.1.1 a general downturn in activities brought about by a decline in demand for
the employer's products or unavailability of resource or materials.

17.1.2   restructuring  of  the  business,   reorganisation   of  work  systems,
introduction of technology or machinery which impacts on staffing levels.

17.1.3 Permanent closure of the plant or part thereof.

17.2 Consultation and Selection Process

17.2.1 In  determining  the employees to be retrenched the employer will consult
with the ECC and the union.  The selection  criteria will be primarily  based on
the following:

17.2.1 (a) skills required to ensure the efficient operation of the enterprise.

17.2.1 (b) voluntary retrenchments.

17.2.2 All parties will adhere to the requirements of the Worker's  Compensation
Act 1951 as amended in relation to employees suffering work related incapacities
and disabilities.

17.2.3 This clause does not apply to casual employees.

17.3 Period of Notice

17.3.1  The  employer  will  consult  with the  employees  and the  union at the
earliest opportunity should the circumstances provided for in clauses 17.1.1 and
17.1.2 arise.

17.3.2 The employer  will give a minimum of four (4) weeks formal  notice or pay
in lieu of notice to affected employees.

17.3.3 The  employer  will not,  within the period of twelve (12) weeks prior to
any  retrenchments,  transfer  an employee  into a position,  which is to become
redundant.

17.4 Employees Under Notice

17.4.1 The employer  will  provide an itemised  statement of all payments due to
each employee who is under notice of redundancy.

17.4.2 An employee who has been given notice of retrenchment may elect to resign
prior to the  effective  date of the  employee's  retrenchment  notice.  In such
cases, any payments arising under this clause will be calculated to the date the
resignation takes effect.

<PAGE>

17.4.3  Should an employee  under  notice die,  prior to the  nominated  date of
termination,  all benefits of this Agreement to which such employee was entitled
shall be paid directly to the employee's  legal dependent or if the employee had
no legal dependents, benefits will be paid to the estate of the employee.

17.5 Assistance

17.5.1 The employer  will make every  endeavour  to assist an employee,  who has
been made  redundant,  to find  suitable  employment.  From the time an employee
receives notice of retrenchment and up to the date of termination,  a reasonable
amount of time off work will be granted to the employee without deduction of pay
to attend employment interviews.

17.5.2  The  employer  will  give to the  employee,  no  later  than  the day of
termination,   a  written  certificate  of  service  indicating  the  period  of
employment,  the reason for  termination,  and if requested by the  employee,  a
written reference.

17.6 Alternative Position

17.6.1  Where the  employer,  on  account  of  redundancy,  offers  an  employee
employment at a lower rate of pay, or work that is of a significantly  different
capacity or character and the employee  declines the offer,  the  termination of
employment  will be deemed to have been made by the employer and the employee is
entitled to the benefits provided by this clause.

17.6.2 Where an employee accepts an alternative position of different character,
a one (1) month trial period will be observed to determine  the  suitability  of
the new  position  and the employee  will not be denied the  provisions  of this
clause should the position be unsuitable.

17.7 Re-Employment

17.7.1 Employees who are retrenched may apply for any subsequent vacancies which
may arise and will  receive  priority  of  consideration  for  re-engagement  in
positions  for  which  they  have the  appropriate  skill  level,  provided  the
retrenched employee applies for a vacant position within,  twelve (12) months of
their retrenchment date.

17.8 Long Service Leave

Entitlement  to long service leave or payment in lieu thereof will be determined
in accordance with the Long Service Leave Act 1976 (ACT) with the exception that
the  qualifying  period for pro-rata  entitlements  will be after five (5) years
service.

<PAGE>

17.9 Sick Leave

All outstanding sick leave  entitlements  accrued to an employee will be paid on
termination.

17.10 Superannuation

Superannuation  benefits  will  not be  limited  or  offset  against  redundancy
payments provided in this clause.

17.11 Retrenchment Pay

17.11.1  Employees who are retrenched  will be paid three (3) weeks pay for each
year of  service or part  thereof to a maximum of fifty two (52) weeks pay.  For
example with 5.3 years of service an employee would receive a payment equivalent
to 5.3 x 3 weeks pay.  Provided that the minimum payment for an employee with up
to and including one (1) year of service will be three (3) weeks pay.

17.11.2  The rate of pay on which these  entitlements  will be based will be the
employee's ordinary time weekly rate (38 hours).

17.12 This clause does not apply when industrial action occurs.

18. TERMINATION OF EMEPLOYMENT

Subject  to the  provisions  of  clause  19 of  the  Agreement  `Abandonment  of
employment'  and  clause  18 of the  Award  -  `Stand  down of  employees';  the
following provisions relating to termination shall apply:

18.1 Notice of termination by the employer

18.1.1 In order to terminate the employment of an employee the employer shall
give to the employee the following notice:

Period of continuous service                                      Period of
                                                                  notice

Up to 1 year                                                      1 week
More than 1 year and up to the completion of 3                    2 weeks
years
More than 3 years and up to the completion of 5                   3 weeks
years
More than 5 years                                                 4 weeks

18.1.2 In  addition to the notice in clause  18.1.1  hereof,  employees  over 45
years of age at the time of the  giving  of the  notice  with not less  than two
years continuous service, shall be entitled to an additional week's notice.

18.1.3  Payment in lieu of the notice  prescribed in clause 18.1.1 and/or 18.1.2
hereof shall be made if the  appropriate  notice  period is not given.  Provided
that employment may be terminated by part of the period of notice  specified and
part payment in lieu thereof.

<PAGE>

18.1.4 In calculating any payment in lieu of notice, the wages an employee would
have  received in respect of the ordinary  time the  employee  would have worked
during the period of notice had employment not been terminated shall be used.

18.1.5  The  period  of  notice  in this  clause  shall not apply in the case of
dismissal for conduct that justifies instant dismissal,  including  malingering,
inefficiency  or  neglect  of  duty,  or  in  the  case  of  casual   employees,
pieceworkers,  special workers,  support staff, apprentices or employees engaged
for a specific period of time or for a specific task or tasks.

18.1.6  For  the  purposes  of this  clause,  continuity  of  service  shall  be
calculated in the manner prescribed by clause 28 of this Agreement.

18.2 Notice of termination by employee

18.2.1 The notice of  termination  required to be given by an employee  shall be
the same as that required of the  employer,  save and except that there shall be
no additional notice based on the age of the employee concerned.

18.2.2 If any employee  fails to give notice,  the employer shall have the right
to  withhold  moneys  due to the  employee  with a maximum  amount  equal to the
ordinary time rate of pay for the period of notice.

18.3 Time Off During Notice Period

Where the employer has given  notice of  termination  to an employee an employee
will be allowed up to one day's time off without  loss of pay for the purpose of
seeking  other  employment.  The  time  off  must be  taken  at  times  that are
convenient to the employee after consultation with the employer.

18.4 Statement of Employment

The employer  will upon receipt of a request from an employee  whose  employment
has been terminated  provide to the employee a written statement  specifying the
period of employment and the  classification of or the type of work performed by
the employee.

18.5 Unfair Dismissals

Termination  of  employment  by the  employer  must  not  be  harsh,  unjust  or
unreasonable.

For  the  purposes  of this  clause,  termination  of  employment  will  include
termination with or without notice.

Without limiting the above,  except where a distinction  exclusion or preference
is based on the inherent  requirements of a particular position,  termination on
the  ground of race,  colour,  sex,  marital  status,  family  responsibilities,
pregnancy,  religion,  political opinion,  national extraction and social origin
will constitute a harsh, unjust or unreasonable termination of employment.

<PAGE>

18.6 Disputes Settlement Procedures - Unfair Dismissal

18.6.1 Subject to the provisions of sections 170CE, 170CK, 170CL or 170CM of the
Workplace  Relations  Act 1996,  any dispute or claim  arising under clause 18.5
hereof should be dealt with in the following manner:

18.6.2 As soon as is  practicable  after the  dispute  or claim has  arisen  the
employee  concerned  will  take  the  matter  up with the  immediate  supervisor
affording the opportunity to remedy the cause of the dispute or claim.

18.6.3 Where any such attempt at settlement has failed,  or where the dispute or
claim is of such a nature that a direct discussion  between the employee and the
immediate  supervisor  would be  inappropriate,  the employee will notify a duly
authorised  representative of the union or other employee representative who, if
the  representative  considers  that there is some  substance  in the dispute or
claim,  must  forthwith  take the matter up with the employer or the  employer's
representative.

18.6.4 If the  matter is not  settled  it will be  submitted  to the  Australian
Industrial  Relations  Commission  to endeavour to resolve the issue between the
parties by  conciliation.  Subject to the provisions of the Workplace  Relations
Act  1996  the  Commission  may if  necessary  arbitrate  this  matter  and such
decisions will be accepted subject to the parties' normal rights of appeal.

18.6.5  Without  prejudice to either party,  work should  continue in accordance
with the Award while the  matters in dispute are being dealt with in  accordance
with this clause.

18.7 Summary Dismissal

The employer has the right to dismiss any  employee  without  notice for conduct
that  justifies  instant  dismissal  including  gross  misconduct,  malingering,
inefficiency  or  neglect of duty and in such cases the wages will be paid up to
the time of dismissal only.

Clarification  for gross  misconduct  would  include  but not be  limited to the
following:

GROSS MISCONDUCT

      o     Physical Abuse

In the event of, each  instance  will be decided on a case by case.  In general,
both parties will be immediately  dismissed,  but taken into account will be the
instigator and cause.

      o     Workplace Harassment - including personal threats

<PAGE>

      o     Horseplay creating unsafe conditions

      o     Wilful damage to equipment or property - (employer or personal)

      o     Theft from employer or workmates

      o     Defecating/urinating in inappropriate places

      o     Industrial sabotage

      o     Attending for work under the influence of drugs or alcohol

      o     Consuming alcohol on the premises

      o     Indecent exposure

Clarification  for  inefficiency and neglect would include but not be limited to
the following:

INEFFICIENCY AND NEGLECT

      o     Poor workmanship conducted by an appropriately trained and competent
            person causing loss of production and re-work

      o     Causing   excessive   damage  to  equipment  and  property   through
            carelessness

      o     Sleeping during working hours

      o     Leaving the workplace unauthorised

      o     Leaving the workstation unattended while still operating, to perform
            a non-work related function

      o     Failing  to follow  company  policy  and  procedure  causing  unsafe
            conditions,  injury  to self or  others or  substandard  product  or
            excessive downtime/damage

      o     Failing  to  follow   supervisor's   instructions,   provided   that
            instructions are not unsafe

      o     Failing to follow safety rules

      o     Lying about  sickness or death,  whether it is self or other person,
            as an excuse for inability to attend for work

<PAGE>

19 ABANDONMENT OF EMPLOYMENT

Notwithstanding anything elsewhere contained in this clause.

19.1 The  absence of an employee  from work for a  continuous  period  exceeding
three working days without the consent of the employer and  notification  to the
employer  shall be prima facie  evidence  that the  employee has  abandoned  the
employment.

19.2 Provided that if within a period of fourteen days from the last  attendance
at work or the date of the last  absence in respect  of which  notification  has
been given or consent has been  granted an employee has not  established  to the
satisfaction  of the employer  that the  employee was absent for the  reasonable
cause, the employee shall be deemed to have abandoned the employment.

19.3  Termination of employment by  abandonment  in accordance  with this clause
shall operate as from the date of the last  attendance at work or the last day's
absence in respect of which  consent was granted or the date of the last absence
in respect of which  notification  was given to the  employer  whichever  is the
later.

20 EMERGENCY PROVISIONS

20.1 Despite other provisions of this Agreement,  the following will apply where
the  employer  is  subjected  to   restrictions,   rationing  or  the  emergency
disconnection  of those  services  in  accordance  with  orders  or  regulations
approved by the lawful authority.

20.1.1 if by reason of such restriction or rationing or emergency  disconnection
the  employer is unable  usefully to employ an employee for the whole or part of
any day or shift,  the  employer  may  deduct  from the  wages of that  employee
payment  for any part of the day or  shift  such  employee  cannot  be  usefully
employed, provided that:

20.1.1.1 if the  employer  requires  the  employee to attend for work but is not
able to employ that  employee  usefully the employee will be entitled to be paid
for two hours work.

20.1.1.2 where an employee commences work he/she will be entitled to be paid for
four hours work.

20.1.1.3 this clause does not apply to apprentices.

20.1.2 The employer may require any day worker to perform their  ordinary  hours
of work (or any such ordinary hours of work) at any time on any day other than a
Sunday on the basis of  thirty-eight  hours per week. The following rates of pay
shall apply for such work.

20.1.2.1  for work  performed  on Mondays to Fridays from 6.30 a.m. to 6.00 p.m.
and on Saturdays from 7 a.m. to noon payment shall be at ordinary time.

<PAGE>

20.1.2.2 for work performed between noon and midnight on Saturdays payment shall
be at ordinary rates plus 25 per cent.

20.1.2.3 for work  performed  at all other times other than on a Sunday  payment
shall be at ordinary rates plus 15 per cent.

Provided that when an employee is required to commence work between the hours of
9.30 p.m. and 6.00 a.m. the amount he/she shall receive will be not less than 50
per cent more than the  amount  he/she  would  receive if paid at  ordinary  day
rates.

20.1.3 The employer may require any shift worker to perform  their hours of work
at any time other than on a Sunday on the basis of thirty-eight hours per week.

The following rates of pay shall apply for such work.

20.1.3.1 for day or shift work - ordinary time.

20.1.3.2  for work  performed  between noon and midnight on Saturdays - ordinary
rates plus 25 per cent.

20.1.3.3 for  afternoon  shifts - ordinary  rates plus 15 per cent and for night
shift - 30 per cent.

Provided that when a shift worker is required to commence work between the hours
of 9.30 p.m. and 6.00 a.m. the amount the employee will receive will not be less
than 50 per cent more than the amount  he/she would  receive if paid at ordinary
rates.

20.1.3.4  Nothing in this  clause  will  operate  to reduce  the shift  premiums
payable to  employees  who were shift  workers  working on  afternoon  and night
shifts only at the date of such  interference  as aforesaid  and who continue to
work on such shifts.

20.1.4 The  employer  may alter the time at which meal breaks are usually  taken
and/or the  duration of them,  in order to avoid or mitigate the effects of such
interference, without being liable to pay penalty rates for work done during the
normal meal breaks  provided that the  commencing  time of any meal break is not
made more than one hour  earlier or later than usual and that a meal break of at
least  twenty  minutes is allowed  and  provided  also that the  employer  does,
whenever it is  practicable,  consult with the parties  before acting under this
clause.

20.2 Despite anything elsewhere  contained in this Agreement,  the provisions of
this clause will apply in the case of the employer using  auxiliary  power plant
for the purpose of providing employment for employees whilst such restriction or
rationing or emergency disconnection is in force and who:

20.2.1 is unable  usefully  to  employ an  employee  for the whole of any day or
shift by reason of a breakdown in such plant  through no fault of the  employer,
or

<PAGE>

20.2.2 because of the inability of the auxiliary  power plant to meet the normal
demands for power:

20.2.2.1  finds it necessary to require any employee to perform  their  ordinary
hours of work (or any of such ordinary hours of work) outside the hours normally
worked by such employee, or

20.2.2.2  finds it  necessary to alter the time at which meal breaks are usually
taken and/or the duration of them.

20.3 Leave is  reserved  to the parties to apply in this matter upon two days in
writing.

21. TIME AND WAGES RECORD

21.1 Duty to Maintain

The  employer  will keep a time  and/or  wage  book or sheets or cards  with the
entries  typed or  perforated or recorded in ink showing the names of employees,
the daily number of hours worked by each  employee and the rate of pay and wages
payable  and  paid to each  employee.  A  permanent  record  of each  employee's
classification will be similarly kept.

21.2 Inspection

The Federal Secretary or Secretary of a State Branch of the union or any officer
thereof  authorised  in  writing  by one of them  will be, on  production  of an
authority to the employer, the local manager or the person who purports to be in
charge,  be allowed at all reasonable times to inspect such time book, sheets or
cards and to make a copy of them. Such time books,  sheets or cards for the last
preceding six years will be kept  available for this  purpose;  however  records
more than two years old may be kept at an alternative location provided they are
produced for inspection  within 48 hours of a notice  requiring their inspection
being given by a duly authorised union official.

21.3 Authorisation

The Federal  Secretary  or Secretary of a State Branch of the union or any other
officer  thereof  authorised in writing by one of them will, on production of an
authority to the employer, the local manager or the person who purports to be in
charge,  be allowed at all reasonable times to inspect any part of an employer's
works where it is suspected  that a breach of this  Agreement has occurred or is
occurring but such inspection will be carried out in the company of the employer
or someone on the  employer's  behalf.  The employer  will provide the necessary
facilities for the  investigation of the supposed breach including access to the
time book,  sheets or cards  referred  to herein.  The union  officers  will not
interfere  with or the work and duties of the employees  more than is absolutely
necessary for the proper investigation of the breach or supposed breach.

<PAGE>

22. HOT & COLD WORK ARRANGEMENTS

The parties to this  Agreement  recognize  that working in severely hot and cold
conditions  is a  recognized  health  hazard that can lead to serious  injury or
death in the workplace or following  work as a result of exposure to severe heat
or cold during work hours. As such it is the employer's  responsibility  to take
reasonable steps to ensure that workers are not unduly exposed to these hazards.
It is agreed by the parties that the union Safety  Organiser  will meet with the
site O.H.S  committee  to outline  steps  required to ensure that no employee is
placed at risk due to climactic conditions.

23. SKILL BASED GRADE STRUCTURE

The parties support the existing skill based grade structure.

24. WAGE INCREASES

The pay  increase of 4% will be paid on the first full pay period to commence on
or after 28.3.05.

                             CURRENT          CURRENT          PLUS       PLUS
WAGE                         WEEKLY           HOURLY           4%         4%
RATE                         WAGE             RATE             WEEKLY     HOURLY
CODE      WAGENAME           (2003-2004)      (2003-2004)      WAGE       RATE

001       Level 1            525.05           13.81            546.05     14.37
002       Level 2            545.74           14.36            567.57     14.94
003       Level 3            573.94           15.10            596.90     15.71
004       Level 4            599.95           15.70            623.95     16.42
005       Level 5            639.14           16.82            664.71     17.49
006       Level 6            665.11           17.50            691.71     18.20
013       Level I Casual     613.15           16.14            637.68     16.78
014       Level 2 Casual     637.36           16.77            662.85     17.44
015       Level 3 Casual     670.40           17.64            697.22     18.35
016       Level 4 Casual     700.79           18.44            728.82     19.18
017       Level 5 Casual     746.61           19.65            776.47     20.43
018       Level 6 Casual     776.56           20.44            807.62
21.25

All work and  expense  related  allowances  will  increase  by 4% per year as of
28.3.05.

<PAGE>

25. HOURS OF WORK

25.1 Methods of working 38-hour week

25.1.1 The 38-hour week maybe implemented by one of the following methods:

25.1.1.1 by employees working less than eight ordinary hours each day, or

25.1.1.2 by  employees  working less than eight  ordinary  hours on one day each
week, or

25.1.1.3 by  employees  working less than eight  ordinary  hours on one day each
fortnight, or

25.1.1.4  by fixing  one  weekday  on which all  employees  will be off during a
particular four week work cycle, or

25.1.1.5  by  fostering  employees  off on  various  days of the  week  during a
particular four-week work cycle so that each employee in the section has one day
off during that cycle.

25.2 Method to be determined by agreement

25.2.1  The  method  of  implementation  to be  applied  will be  determined  by
agreement between the employer and the majority of employees in the workplace.

25.2.2 Should agreement not be reached then:

      o     the matter will be referred to the ECC, and

      o     where the matter is not  resolved  the matter  will be referred to a
            member  of  the  Australian   Industrial  Relations  Commission  for
            resolution.

25.3 Notice of Rostered Days off

In cases  where due to the  arrangement  of their  ordinary  working  hours,  an
employee in accordance  with clauses  30.1.1 (c) and 30.1.1 (d) is entitled to a
day off during the work cycle, such employee shall be advised by the employer at
least four weeks in advance of the day to be taken off by written  notice posted
by the employer on the notice  board.  The rostered day off cycle will  coincide
where possible with the building industry's RDO calendar.

25.4 Substitute days

25.4.1 The employer,  with the agreement of the majority of employees concerned,
may  substitute  the day an employee or employees  concerned  are to take off in
accordance with clauses 25.1.1.3 and  25.1.1.4(for  another day in the case of a
breakdown  in  machinery  or  failure or  shortage  of  electric  power or other
situation of emergency that could arise.

<PAGE>

25.4.2 An individual  employee with the agreement of the employer may substitute
the day the employee is to take off for another day.

25.5 Work on rostered day off

25.5.1  Unless  a  rostered  day  off is  substituted  for  another  day  off in
accordance with clauses 25.4.1, or

25.4.2 work  performed on the rostered day off will be paid in  accordance  with
clause 31 `Overtime' of the Award.

25.6 Rostered Days Off

25.6.1 Notwithstanding  provisions elsewhere in this Agreement, the employer and
the majority of employees  may agree to establish a system of rostered  days off
(`RDO')to provide that:

25.6.1.1  An  employee  may elect  with the  consent of the  employer  to take a
rostered day off at any time.

25.6.1.2  An  employee  may elect,  with the  consent of the  employer,  to take
rostered days off in part day amounts.

25.6.1.3 An employee may elect, with the consent of the employer, to accrue some
or all rostered  days off for the purpose of creating a bank to be drawn upon by
the employee at times  mutually  agreed by the employer or subject to reasonable
notice by the employee or the employer.

25.6.1.4 clause 25.6.1 may apply subject to the employer  informing the union of
its intention to introduce an enterprise system of RDO flexibility and providing
a reasonable opportunity for the union to participate in negotiations.

25.6.1.5 Once a decision has been taken to introduce an enterprise system of RDO
flexibility,  in accordance  with this clause,  its terms must be set out in the
time and  wages  records  kept  pursuant  to  regulations  131 A to 131 R of the
Workplace Relations Regulations 1996.

25.6.1.6 The employer  will record RDO  arrangements  in the time and wages book
each time this provision in used.

26. BREAKS

26.1 A half hour  break  will be  allowed  for a lunch  break  provided  than an
employee is not required to work more than five  ordinary  hours without a break
for a meal.

26.2 Except as provided in clause 26.3, all work done during an employee's lunch
break will be paid at double time rates of pay.  For work  performed  thereafter
until a lunch break is allowed time and one half rates shall be paid.

<PAGE>

26.3 An employee's  lunch break,  once fixed will only be altered (except in the
case of a breakdown or emergency) by mutual  agreement or by at least seven days
notice of the intended change given to the parties concerned.

26.4  Continuous  Shift  workers  will be allowed a crib time of 20 minutes  per
shift  without  loss of pay to be taken at an agreed  upon time and so as not to
disrupt the work process.

26.5 A fifteen (15) minute paid tea break will apply to all day work employees.

The time of taking  this break will be flexible in  recognition  of  operational
needs.

27. SHIFT WORK

27.1 Definitions

"Afternoon shift" means any shift finishing after 6 p.m. and at or before 1 a.m.

"Night shift" means any shift finishing after midnight and at or before 8 a.m.

"Continuous shift" workers are shift workers rostered to work regularly over the
seven days of the week.

27.2  Payments to shift  workers at  commencement  and  conclusion of summertime
period

Notwithstanding anything contained elsewhere in this Award, in any area where by
reason of the  legislation  of the state summer time is  prescribed  as being in
advance of the standard time of the state, the length of any shift:

27.2.1 commencing before the time prescribed by the relevant legislation for the
commencement of a summer time period, and

27.2.2  commencing on or before the time prescribed by such  legislation for the
termination  of a  summer  time  period  is  deemed  to be the  number  of hours
represented  by the  difference  between  the time  recorded by the clock at the
beginning  of the shift and the time so  recorded  at the end of the shift,  the
time of the  clock in each  case to be set to the  time  fixed  pursuant  to the
relevant state legislation.

In this clause the  expressions  'standard time' and 'summer time' will bear the
same meanings as are prescribed by the relevant State legislation.

27.3 Payment for Shift Work

27.3.1  Shift  workers on afternoon or night shift will be paid 15 per cent more
than  the  employee's  ordinary  rate  of pay  per  shift.  Work  may be done on
non-rotating  afternoon or night shifts if such shifts are worked for at least 4
consecutive shifts.

<PAGE>

27.3.2 Provided that the allowance for such  non-rotating  afternoon shifts will
be 15 per cent more than the  employees  ordinary  rate of pay per shift and the
allowance  for  non-rotating  night  shift  will be 30 per  cent  more  than the
employees ordinary rate of pay in lieu of the above shift allowances.

27.3.3 A shift  allowance of 15 per cent will be paid to  maintenance  employees
who work shifts which commence at midday and finish at or after 6.00 p.m.

27.4 Shift Work on Saturdays, Sundays or Public Holidays

27.4.1  Continuous Shift workers for all work performed in accordance with their
roster on a  Saturday  will be paid at the rate of time and a half for the first
two hours and double rate thereafter.  Work on a Sunday will be paid at the rate
of double time, and for rostered work on a public  holiday  prescribed by clause
30 - Public Holidays will be paid at the rate of double time and a half.

27.4.2 Where the first shift of the week commences not later than 8 a.m. Monday,
any  ordinary  time  worked on night  shift up to 8 a.m.  on a Saturday  will be
regarded as ordinary  time.  Where a Sunday or holiday  occurs  during any shift
roster, that shift the major portion of which is worked on the Sunday or holiday
will be regarded as a Sunday or holiday shift and paid for at the rate of double
time for the Sunday and double time and a half for the holiday.

27.4.3 In the case of a continuous  shift worker,  where a public holidays falls
on all  employee's  rostered day off, the employee will receive for that holiday
one day's pay in addition to the weekly wage.

27.4.4  Shift  workers  recognise  their  obligations  to continue it work until
relieved,  provided that they are not required to work more than two consecutive
shifts  provided that  employees  working on a twelve hour shift roster will not
work more than sixteen  consecutive hours. The employer will avoid double shifts
as far as possible by using every endeavour to arrange relief workers.

27.5 Arrangement of Shifts

27.5.1 After reasonable notice employees may be required to work shift work.

27.5.2 A shift  roster  will be drawn up and will  provide  for the  rotation of
shifts except as prescribed by clauses 27.3.1 and 27.3.2.

27.5.3 Shift rosters will specify the commencing and finishing times of ordinary
working hours of the respective shifts.

28. ANNUAL LEAVE

28.1 Annual Leave Entitlement - General

28.1.1 A period of 28  consecutive  days leave will be  allowed  annually  to an
employee after 12 months continuous service.

<PAGE>

28.1.2  Annual leave is exclusive of public  holidays as prescribed in clause 30
of this Agreement.

28.1.3 If after two weeks  continuous  service an  employee  other than a casual
employee leaves  employment or is terminated by the employer,  the employee will
be paid 2.925  hours at the  ordinary  rate of wage for each  completed  week of
continuous service.

28.1.4 After the  completion  of the first 12 months  employment an employee who
leaves their  employment or whose  employment  is terminated  will be paid 2.925
hours at the ordinary rate of wage for each  completed week of five working days
for which leave has not been granted under this clause.

28.1.5 The ordinary  rate of wage  referred to in this clause means the ordinary
time rate of pay fixed by the terms of this Agreement excluding any amounts paid
in respect of shift work, overtime or other penalty rates except where otherwise
indicated.

28.2 Annual Leave Entitlement - Continuous shift workers

28.2.1 In addition to the leave  prescribed  by clause 28.1.1  continuous  shift
workers will be allowed seven consecutive days leave including non working days.

28.2.2 Where an employee with 12 months  continuous  service is engaged for part
of the 12 monthly  period as a continuous  shift worker he/she shall be entitled
to have the period of 28  consecutive  days leave  prescribed  in clause  28.1.1
increased by half a day for each month the employee is continuously engaged as a
continuous shift worker.

28.3 Payment for annual leave

28.3.1 Each employee other than a continuous  shift worker before going on leave
will be paid for the  period of leave at the  employee's  ordinary  rate of wage
plus 17-1/2 per cent of that amount.

28.3.2 Each  continuous  shift work employee  before going on leave will be paid
for the period of leave for the ordinary time the employee would have worked had
he/she not been on leave plus the appropriate shift allowances.

28.4 Taking of Leave

28.4.1 Broken Leave

The  leave  will be given and  taken in a  continuous  period or in two or three
separate periods of which one period will be at least one fortnight.

Provided  that where annual  leave is given in two parts,  the first part of off
the leave will be given within a period not  exceeding  six months from the date
the right to annual leave accrued, and after not less than one month's notice to
the  employee.  The second part of the leave shall be given  within a period not
exceeding  five  months  from the last day of the first  part of the leave (or a
longer  period  agreed upon by the employer and the employee and notified by the
employer to the  Secretary  of the State  Branch of the union when the  employee
concerned  is a member of the union) and after not less than one month's  notice
to the  employee.  Provided  however,  that the second part of the leave will be
given  within a period not  exceeding 9 months from the date the right to annual
leave accrued.

<PAGE>

The month's notice to the employee required by this clause may be dispensed with
by agreement  between the employer and the majority of employees  concerned  and
endorsed by the ECC.

Provided  further that except  where an employee  makes  application  for annual
leave,  no employee  will be given  annual  leave  during a period in respect of
which the employee is entitled to be paid workers' compensation.

28.4.2  Notwithstanding  any other  provisions of this  Agreement,  where annual
leave is not taken at mill close downs,  but leave is taken on a rostered basis,
then such rostering, will be through the 12 months of the year.

Provided  that  leave  will be taken  within  12 months  of it  failing  due and
employees  will be given at least three months  notice of the taking of rostered
leave.

28.4.3 By agreement between the employer, employee or group of employees, annual
leave may be taken on a rostered basis,  close down basis or part  rostered/part
close down basis in three separate periods.

28.4.4  Any  unpaid  leave  hours are to be made up during  overtime  periods at
normal  hourly rates until 38 hours normal is reached then  overtime  rates will
apply.

28.5 Leave taken as a single day

28.5.1 Notwithstanding  provisions elsewhere in this Agreement, the employer and
the majority of  employees  may agree to establish a system of single day annual
leave absences provided that:

28.5.1.1 An employee may elect, with the consent of the employer, to take annual
leave in single day  periods or part of a single  day not  exceeding  a total of
five days in any calendar year at a time or times agreed between them.

28.5.1.2  Access to annual leave,  in accordance with clause 28.5.1 is exclusive
of any shutdown period provided for elsewhere under this Agreement.

28.5.1.3 An employee and employer may agree to defer payment of the annual leave
loading in respect of single day absences  until at least 5  consecutive  annual
leave days are taken.

<PAGE>

28.5.1.4 clause 28.5.1 may apply subject to the employer  informing the union of
its intention to introduce an enterprise  system of annual leave flexibility and
providing a reasonable opportunity for the union to participate in negotiations.

28.5.1.5  Once a decision has been taken to introduce  an  enterprise  system of
single day annual leave in  accordance  with this clause,  its terms must be set
out in the and wage records kept pursuant to  regulations  131 A to 131 R of the
Workplace Relations Regulations.

28.5.1.6 The employer will record these short term annual leave  arrangements in
the time and wages book.

28.6 Close Down

28.6.1 The  employer  may close down the plant or a section or sections  thereof
wholly or partly  for the  purpose of  allowing  leave to all or the bulk of the
employees in the plant or section or sections  concerned in accordance  with the
following provisions.

28.6.1.1 In  accordance  with clause 8 of this  Agreement  the employer  may, by
giving not less than three months  notice (or an agreed lesser period of notice)
of the  intention to do so, either close down for one period or for two separate
periods  (hereinafter  referred to as the first or second  close down)  provided
that in lieu of a second close down the employer may grant any leave due and not
taken at the first close down within a period not exceeding  five months,  or an
agreed longer period and after not less than one month's notice to the employee.
Provided  however,  that the  second  part of the leave  will be given  within a
period not exceeding 9 months from the date the right to annual leave accrued.

28.6.1.2 Each employee  affected will be credited with 2.925 hours in respect of
each week of five working days  completed in respect of  continuous  service for
which leave has not already  been given  during the 12 months  ending on the day
immediately preceding the re-opening of the plant after each first close down.

28.6.1.3  Except to the extent  that an  employee  has  accrued  leave under the
provisions  of clause  28.1 at the date of the close down the  employee  will be
stood off without pay during the period of any close down.

28.6.1.4 Any employee who at the date of the first close down has  qualified for
four  full  weeks  leave  and  has  also  completed  a  further  week or more of
continuous  service will also be paid 2.925 hours leave for each  completed week
of five working days of continuous  service plus 17 1/2 per cent since the close
of his last 12-monthly qualifying period.

28.6.1.5 The next  12-monthly  qualifying  period for each employee  affected by
such  close  downs will  commence  from the day on which the plant or section or
sections  concerned is re-opened  for work after the first close down.  Provided
that all time during which an employee is stood off without pay for the purposes
of that  subclause  will be deemed to be time of service in the next  12-monthly
qualifying period.

<PAGE>

28.6.1.6 If in the first year of service with an employer an employee is allowed
proportionate  annual leave under this  subclause and  subsequently  within such
year leaves  employment or their  employment is terminated by the employer,  the
employee will be entitled to the benefit of clause 28.1.3  subject to adjustment
for any proportionate leave which he may have been allowed as aforesaid.

28.7 Calculation of continuous service

28.7.1 For the purposes of this clause service will be continuous despite:

28.7.1.1 any  interruption  or  termination of the employment by the employer if
such  interruption  or  termination  has been made merely with the  intention of
avoiding obligations hereunder in respect of leave of absence, or

28.7.1.2 any absence from work on account of personal sickness or accident or on
account of leave lawfully granted by the employer, or

28.7.1.3  any absence  with  reasonable  cause proof  whereof  shall be upon the
employee.

28.7.2 In cases of personal  sickness or  accident or absences  with  reasonable
cause the employee to become  entitled to the benefit of this clause will inform
the employer in writing, if practicable,  within 48 hours of the commencement of
such absence of the inability to attend for duty, and as far as practicable  the
nature of the  illness,  injury  or cause,  and the  estimated  duration  of the
absence.  A  notification  given by an employee  pursuant to clause 29.4 of this
Agreement will be accepted as notification under this sub-clause.

28.7.3 Any absence from work by reason of any cause not being a cause  specified
in this  clause  will not be deemed to break the  continuity  of service for the
purposes  of this  clause  unless  the  employer  during  the  absence or within
fourteen days of the termination of the absence notifies the employee in writing
that such absence will be regarded as having broken the continuity of service.

28.7.4 In cases of individual  absenteeism  such notice will be given in writing
to the employee concerned,  but in cases of concerted or collective  absenteeism
notice may be given to  employees  by the  posting up of a  notification  in the
plant,  in the manner in which  general  notifications  to employees are usually
made in that plant and by posting to the union whose  members have  participated
in such concerted or collective  absenteeism,  a copy of such  notification  not
later than the day it is posted up in the plant.

28.7.5 A notice to an  individual  employee may be given by delivering it to the
employee  personally or by posting it to the last recorded address in which case
it will be deemed to have reached the employee in due course by post.

28.7.6 In  calculating  the  qualifying  period of  continuous  service any such
absence as aforesaid will not be taken into account except:

28.7.6.1 28 days or less in the case of sickness or accident.

<PAGE>

28.7.6.2 Annual leave or long service leave granted to the employee.

29. PERSONAL OR CARERS LEAVE

For the  purposes of this clause  "employee"  includes a part-time  employee but
does not include an employee engaged as a casual.

29.1 Amount of Paid Personal or Carers Leave

An  employee  is entitled  to the  following  amount of paid  personal or carers
leave:

29.1.1 56 hours in the first year of  service  (40 hours sick leave and 16 hours
bereavement leave on each occasion)

29.1.2 80 hours from the  commencement  of the second and each following year of
service (64 hours sick leave plus 16 hours bereavement leave on each occasion)

29.2 Immediate Family or Household

The  entitlement to use  bereavement  leave and carer's leave in accordance with
this clause is subject to:

29.2.1 the person being either

29.2.1.1 a member of the employee's immediate family: or

29.2.1.2 a member of the employee's household

29.2.2 the term "immediate family" includes:

29.2.2.1.  spouse  or de facto  spouse  of the  employee.  A de facto  spouse in
relation to a person means a person of the  opposite sex to the first  mentioned
person who lives with the first mentioned  person as the husband or wife of that
person on a bona fide domestic basis although not legally married to that person
and

29.2.2.2.  child or an adult child  (Including an adopted child. A step child or
an ex nuptial child) parent, grandparent,  grandchild or sibling of the employee
or spouse of the employee.

29.3 Personal Sick Leave

29.3.1 Entitlement and Accumulation

29.3.1.1 The  employee is not entitled  during the first 12 months of any period
of service to leave in excess of 40 hours of working  time nor in any year after
completion  of such 12 months  service to leave in excess of 64 hours of working
time. Sick leave will  accumulate  from year to year of continuous  service with
the employer except as provided in clause 28.7 of this Agreement.

<PAGE>

29.3.1.2  Leave taken by an employee  under clause  29.3.1 is deducted  from the
amount of personal or caress leave available within clause 29.1.

29.3.1.3 An employee is  entitled  to use  accumulated  sick leave for  personal
sickness if the employee has already used:

(i) the current  year's sick leave  component  of the  personal/  carer's  leave
entitlement as personal sick leave, or

(ii) the current year's aggregated personal/carer's leave entitlement.

29.3.1.4 The employee is not entitled to paid leave in excess of 10 hours during
the first  three  months of  employment  with the  employer,  a further 10 hours
during the second three months of such  employment  and an  additional  20 hours
between the seventh and twelfth months of service.  Provided that should his/her
employment  continue  beyond six months the employee  will be paid for the leave
for which they would  otherwise  have been  entitled  to be paid  except for the
limitations  prescribed by this clause and for which payment has not  previously
been made

29.3.1.5 On the employee's  anniversary date of starting work, 64 hours (8 days)
sick  leave is accrued  for use over the  following  12  months.  For every year
worked, the employee receives another 64 hours (8 days) sick leave.

29.3.1.6  In the  event of an  employee  dying,  the  employer  will pay to such
deceased  employee's estate the monetary value of all sick leave standing to the
employees credit.

29.3.1.7  Where an employee  retires  because of age or  incapacity,  or his/her
services  terminate  after ten years  continuous  service for any reason  except
misconduct  the  monetary  value  of  any  unused  sick  leave  standing  to the
employee's credit will be paid.

29.3.1.8  For the  purpose of this clause the rate of pay for sick leave will be
the ordinary time rate of pay fixed by the terms of this Agreement.

29.4 Notification and Proof of Sickness

29.4.1 Day shift  employees  must  notify a manager no later than one and a half
(1.5) hours after commencement of shift. Afternoon shift employees must notify a
manager one (1) hour before shift starts.  The abandonment of employment  clause
then takes effect if they do not notify within time period.

29.4.2 One day off requires a phone call and may require a statutory declaration
or a doctor's  certificate.  More than one day off will require a phone call and
will require a statutory declaration or a doctor's certificate.

29.4.3 Should an employee use up all their  available  sick leave any additional
time off work will be  unpaid.  The  employee  is still  required  to notify the
employer  before  the  start or as soon as  practicable  after  the start of the
working day that they are sick. If the employee provides a doctor's  certificate
the time off will be deemed unpaid sick leave.  If the employee does not provide
a doctor's certificate the time off will be deemed unauthorised absence.

<PAGE>

29.4.3.1 It is the employee's  responsibility to submit an application for sick/
annual leave forms prior to the commencement of the following pay week, with the
exception of leave taken on the last day of the pay week, where the employee has
until  8.30  am on the  first  day of the  following  pay  week  to  submit  the
application  for leave  forms.  If the  payroll  officer  does not  receive  the
appropriate  application  for  leave  form by the time  pay  details  are  being
calculated  and  processed,  payment will not be given until the  following  pay
period.

29.4.4 Unsatisfactory Attendance

Unsatisfactory attendance is where an employee exceeds one of the following:

29.4.4.1 More than 8 days sick leave taken.

29.4.4.2 More than 4 unpaid sick leave days taken, or

29.4.4.3 More than 2 unauthorised absences.

The employer is entitled to issue  warnings as outlined in the agreed  format to
any employee who has an unsatisfactory attendance record.

29.5 Methods of payment

The  following  methods  of taking  accrued  sick  leave are  available  to each
employee.

29.5.1 Pay out at anniversary of service all sick leave credits in excess of 104
hours, or

29.5.2 Unlimited  accrual and pay out on termination of all credits in excess of
104 hours where the employee has less than 10 years  service,  or pay out of all
credits where the employee has in excess of 10 years service, or

29.5.3 Pay at  anniversary  of service  all sick leave  credits in excess of 104
hours into the employee's superannuation fund.

29.5.4 Payment will be made at the  employee's  ordinary rate of pay at the time
of taking accrued sick leave.

29.5.5  Sick  leave paid by one of the  methods  prescribed  by clauses  29.5.1,
29.5.2 or 29.5.3 is in lieu of any accrual.

29.6 Where a business is transmitted from the employer to another, an employee's
service  with the  transmitter  shall for the  purpose of sick leave  payment be
taken as service with the  transmittee  provided that the employee's  employment
with the transmitter is continued with the transmittee.

<PAGE>

29.6.1 the continuity of the employment of the worker will be deemed not to have
been broken by reason of such transmission.

29.6.2 the period of employment,  which the worker has had with the  transmitter
or any prior transmitter, will be deemed to be employment of the worker with the
transmittee.

29.7  Notwithstanding  an employee  suffering injury through an accident arising
out of and in the course of employment  (not being an injury in respect of which
the employee is entitled to workers'  compensation)  which in the opinion of the
employer or the representative at the place of work,  necessitates attendance by
the employee during working hours at a doctor,  chemist or trained nurse or at a
hospital will not suffer any  deduction  from pay for the time on the day of the
accident and will be reimbursed by the employer all expenses reasonably incurred
in connection with such attendance but in no case will such reimbursement exceed
$10.30.

29.8 Bereavement Compassionate Leave

29.8.1 An employee is entitled to two days paid leave on each occasion that if a
member of the employee's immediate family or household in Australia dies.

29.8.2  Proof of death must be provided to the  satisfaction  of the employer if
requested.

29.8.3 This clause has no operation  while the periods of  entitlement  to leave
under it coincides with any other period of leave.

29.8.4 Death Outside Australia - Funeral/Service Overseas

The provisions of this sub-clause  shall apply upon the death outside  Australia
of a member of the employee's  immediate family or household upon the production
of  satisfactory  evidence of the death and  evidence of the  employee's  travel
outside of Australia to attend the deceased's funeral/service.

29.8.5 Death Outside Australia - Service Locally

Where any member of the  employee's  immediate  family or household dies outside
Australia  and a weekly  employee  with three  month's  service  does not travel
outside  Australia to attend the funeral service such employee shall be entitled
to leave not  exceeding  the  number  of hours  worked  by the  employee  on one
ordinary  day's  work for the  purpose  of  attending  a local  service  for the
deceased.  Evidence  of the  death and the  service  shall be  furnished  by the
employee to the satisfaction of the employer.

29.8.6 Carers Leave

29.8.6.1  An  employee  with  responsibilities  in relation to a member of their
immediate  family or  household  who needs their care and support is entitled to
use up to 5 days per annum of their personal/carers leave entitlement to provide
care and support for such persons when they are ill. Leave may be taken for part
of a single day.

<PAGE>

29.8.6.2  The  entitlement  to use  personal/carer's  leave  is  subject  to the
employee being responsible for the care of the person concerned.

29.8.6.3 The employee must, if required by the employer, establish by production
of a medical  certificate  or statutory  declaration,  the illness of the person
concerned and that the illness is such as to require care by another.

29.8.6.4 In normal  circumstances  an employee must not take carer's leave under
this clause where another person has taken leave to care for the same person.

29.8.6.5 The employee must, where practicable, give the employer notice prior to
the absence of their intention to take leave,  the name of the person  requiring
care and their  relationship to the employee,  the reasons for taking such leave
and the estimated  length of absence.  If it is not practicable for the employee
to give prior  notice of  absence,  the  employee  must  notify the  employer by
telephone of such absence at the first opportunity on the day of absence.

29.8.6.6  Each day or part of a day of carer's  leave taken in  accordance  with
clause  29.8.6.1 is to be  deducted  from the amount of  personal/carer's  leave
provided in clause 29.1 of this clause up to a maximum of 5 days per annum.

29.8.6.7 An employee  is entitled to use  accumulated  sick leave as paid carers
leave if the  employee  has  used  the  current  year's  personal/carers,  leave
entitlement.  An exception to this is where an employee has already taken 5 days
carer's leave in the current year.

29.8 Unpaid Carers Leave

An employee may elect,  with the consent of the  employer,  to take unpaid leave
for the purpose of providing care to a family or household member who is ill.

29.9 Grievance Process

Clause 10 - Procedures  for Avoidance of Industrial  Disputes of this  Agreement
applies to a dispute about the effect or operation of his clause.

30. PUBLIC HOLIDAYS

30.1 All  weekly  employees  will be  entitled  to be absent  from work  without
deduction of pay on the following holidays:

30.1.1 New Years Day,  Australia  Day,  Union  Picnic day,  Canberra  Day,  Good
Friday, Easter Saturday, Easter Monday, Anzac Day, Queen's Birthday, Labour Day,
Christmas Day and Boxing Day

30.1.2  When  Christmas  Day is a Saturday or a Sunday a holiday in lieu will be
observed on 27 December.

<PAGE>

30.1.3  When  Boxing  Day is a Saturday  or a Sunday,  a holiday in lieu will be
observed on 28 December.

30.1.4 When New Year's Day or Australia  Day is a Saturday or a Sunday a holiday
in lieu will be observed on the next Monday

30.2 Where public holidays are declared or prescribed by the state, territory or
locality,  on days  other than  those set out in clause  30.1.1  those days will
constitute additional public holidays for the purpose of this Agreement.

Changing public holidays by agreement

30.3 In  accordance  with clause 10 -  Facilitative  Provisions of the Award the
employer and  employees or a group of employees at a site or work area may agree
to substitute another day for any day prescribed in clause 30.1

Rostered day off/Programmed day off or accumulated time off falling on a holiday

30.4 In the case of an employee  whose  ordinary  hours of work are  arranged in
such a manner as to entitle the employee to a rostered day off the weekday to be
taken off will not coincide with a holiday fixed in accordance with this clause.
Provided  that, in the event that a holiday is prescribed  after an employee has
been  given or gives  notice  of a  weekday  off and the  holiday  falls on such
weekday the employer will allow the employee to take up an  alternative  weekday
off in lieu of the holiday.

Termination within 14 Days of a Holiday

30.5 In the case of an employee  with at least  three  months  service  with the
employer,  whose services are terminated by the employer through no fault of the
employee  within  fourteen  days prior to a holiday or, in the case of an annual
leave closedown within fourteen days after resumption of work, the employee will
be paid for any such holiday the amount the employee would have received had the
employee not been terminated.

Full-time employees working non-standard hours

30.6 This  subclause  applies to full-time  workers who do not regularly  work a
five day Monday to Friday week.

30.6.1 When a prescribed holiday falls upon a day when the employee would not be
working in any event the employee will receive:

30.6.1.1 A day's paid leave to be taken on another day or added to annual  leave
(to be mutually agreed between the employer and employee) or

30.6.1.2 An additional day's wage

30.6.2  If an  employee  is  rostered  to  work  on the  public  holiday  or its
substitute day (except Christmas Day) the employee is entitled to;

<PAGE>

30.6.2.1  If not  required  to work on the public  holiday,  the  employee  will
receive the payment the employee  would  ordinarily  receive for that day and is
not entitled to a substitute day off.

30.6.2.2 If required to work on the public  holiday the  employee is entitled to
receive the normal rates of pay for working that day and the substitute day as a
holiday  (if the  substitute  day is a  non-working  day for  the  employee  the
employee would receive the compensation provided by clause 30.6.2.1).

30.6.2.3 If the  employee is required to work on the  substituted  day they will
receive the rates of pay for working on a public holiday.

30.6.3 If an  employee  is rostered  and  required  to work a both the  `actual'
public  holiday  and its  substituted  day (this would only occur if the holiday
were to fall on a Saturday or a Sunday) the employee is entitled to:

30.6.3.1 A day's paid leave to be taken on another day or added to annual  leave
(to be mutually agreed between the employer and employee) or

30.6.3.2  Payment at public holiday rates for the day's work for the substituted
day and payment at normal  rates for  Saturday  or Sunday for the actual  public
holiday.

Christmas Day Loading

30.7 If  employees  are  rostered  to work on a  Saturday  or Sunday  which is a
Christmas  day and are required to work,  the  employee  will receive the normal
Saturday or Sunday rate plus a loading of one half of a normal day's wages for a
full day's work and be entitled to a substitute day

Non-casual part-time Employees

30.8 Where the normal  roster of a part-time  employee  includes a day that is a
public  holiday the  employees  will  receive  the normal pay he/she  would have
received  on that day and enjoy the holiday or receive  the  appropriate  public
holiday rate for working whatever hours they work during it.

30.8.1 For  part-time  employees  whose  normal  roster  includes a Saturday  or
Sunday,  which would be a prescribed  holiday,  but for the  substitution  of an
alternative day the following will apply:

30.8.1.1 The employee will be granted leave with pay on the `actual day' without
substitution, or

30.8.1.2  The employee  works on the `actual  day' at normal  Saturday or Sunday
rates (if the Saturday or Sunday is Christmas  Day,  the  Christmas  Day loading
will apply) and is allowed to take  another day with pay which may or may not be
the prescribed substitute day, as a holiday, or

<PAGE>

30.8.1.3 The employee works the `actual day' at normal  Saturday or Sunday rates
(if the  Saturday or Sunday is  Christmas  Day the  Christmas  Day loading  will
apply)  and  receives  in  addition,  payment  at  ordinary-time  rates  for  an
additional day of equal length (with no substitution of an alternative day).

30.8.2 If any of these benefits applies the employee who works on the prescribed
substitute day will be paid at ordinary time rates.

30.9.3 Any  circumstances  for part-time  workers not covered by this  subclause
should be the subject of negotiations  between the parties concerned,  using the
principles of this clause to resolve the issues.

Payment for casual employees working on public holidays

30.9 A casual  employee who works on the day  prescribed  as the public  holiday
will be paid the appropriate  public holiday pay as described  elsewhere in this
Agreement.  The  employee  should  receive  the  ordinary  casual  rate plus the
applicable  penalty.  That  is,  the  causal  loading  of 20 per  cent  and  the
prescribed  holiday rate for non-casual workers of 2.5 times ordinary rates. The
casual will be paid 2.7 times the ordinary time rate for non-casual workers.

Absences before or after public holidays

30.10 Where an employee  is absent  from  employment  on the working day after a
public holiday or group of public holidays to which the employee is entitled and
such  absence  is  without  reasonable  cause,  proof  whereof  will be upon the
employee,  the  employee  is not  entitled  to payment  for the  public  holiday
immediately succeeding or immediately preceding the absence as the case may be.

30.11 Employees will, when required to do so, work during weekends and on any of
the public holidays specified in clause 30.1 provided that the employer will not
require  more  than a  reasonable  amount of  overtime  of any  employee  during
weekends.

31. BLOOD DONORS

A weekly  employee  who,  with the  consent  of the  employer  is absent  during
ordinary  working  hours for the purpose of  donating  blood will not suffer any
deduction of pay up to a maximum of two hours on each  occasion and subject to a
maximum  of four  separate  absences  each  calendar  year.  Provided  that such
employee  will arrange as far as  practicable  for the absence to be as close as
possible to the beginning or ending of the employee's ordinary working hours.

Provided  further the  employee  will notify the employer as soon as possible of
the time and date upon which the  employee  is  requesting  to be absent for the
purpose of donating blood.

Proof of the attendance of the employee at a recognised place for the purpose of
donating  blood and the  duration of such  attendance  will be  furnished to the
satisfaction of the employer.

<PAGE>

32. JURY SERVICE

A weekly employee  required to attend for jury service during  ordinary  working
hours will be  reimbursed  by the  employer  an amount  equal to the  difference
between that amount paid in respect of attendance  for such jury service and the
amount of wage the employee  would have received in respect of the ordinary time
the employee would have worked had the employee not been on jury service.

An employee  will notify the employer as soon as possible of the date upon which
the employee is required to attend for jury  service.  Further the employee will
give the employer proof of such attendance,  the duration of such attendance and
the amount received in respect of such jury service.

33. UNION TRAINING LEAVE

A weekly  employee  nominated by the union will be allowed leave without loss of
pay to attend union training courses subject to the following conditions:

33.1 An accredited union representative  shall, upon application in writing from
the  union,  be  granted  up to five  days  leave  with pay each  calendar  year
non-cumulative to attend union training. Not all union representatives are to be
absent for  training  at the same  time.  A maximum  of four  employees  will be
granted union training leave each calendar year.

33.2 The application for leave must contain the following details:

33.2.1 The period of time for which leave is sought

33.2.2 The  description  and content of the course (if available) to be attended
and where the course is to be conducted

33.3.1 the  granting of leave will be subject to the union  giving not less than
six weeks  notice in writing of any lesser  period  agreed by the  employer  and
union.

33.3.2 An employee  who has  completed  six months with the  employer (or lesser
period of service as may be agreed upon by the  employer  and the union) will be
eligible for such leave.

33.4 The time of taking leave will be arranged to minimise any adverse effect on
the employers operations.

33.5 The  employer  is not liable for  additional  expenses  associated  with an
employee's  attendance  at a course  other  than the  payment of  ordinary  time
earnings for the absence. For the purposes of this clause ordinary time earnings
are defined as the  relevant  skill  grade rate plus  shiftwork  loadings  where
applicable

33.6 Leave rights  granted in accordance  with this clause will not result in an
additional  payment  or  alternative  time off to the  extent  that  the  course
attended  coincides with an employee's day off in the 19-day month work cycle or
with any other confessional leave.

<PAGE>

33.7 Leave of absence granted pursuant to this clause will count as services for
all purposes.

34. TRAINING AND SKILLS DEVELOPMENT

34.1 The  parties to this  Agreement  recognise  that in order to  increase  the
efficiency,  productivity and international  competitiveness of the enterprise a
greater commitment to training and skilled development is required.  Accordingly
they commit to:

34.1.1 Developing a more highly skilled and flexible workforce

34.1.2  Providing   suitable   employees  with  career   opportunities   through
appropriate training to acquire additional skill and

34.1.3 Removing barriers to the utilisation of skills acquired

34.1.4 Developing skills in teamwork and continuous improvement

34.2 Following consultation through the ECC the employer will develop a training
programme, consistent with:

34.2.1 The current and future skill needs of the enterprise

34.2.2 The size, structure and nature of the operations of the enterprise

34.2.3 The need to develop  vocational  skills  relevant to the  enterprise  and
consistent  with  the  National  Forest  Industry  Competency   Standards  where
applicable through courses conducted by accredited educational  institutions and
providers

34.3 The ECC will ensure that the following is implemented:

34.3.1  Formulation of a training programme and availability of training courses
and career opportunities to employees

34.3.2  Dissemination of information on the training  programme and availability
of training courses and career opportunities to employees

34.3.3   The   recommending   of   individual   employees   for   training   and
reclassification

34.3.4   Monitoring  and  advising   management  and  employees-on  the  ongoing
effectiveness of the training

34.3.5 Each area will develop training plans in conjunction with the ECC

<PAGE>

34.3.6  Training  may be  conducted  either  on or  off  the  job  and as far as
practicable  during paid  working  hours.  The  employer  will not  unreasonably
withhold paid training leave

34.3.7  Employees who participate in work and grade structure  related  training
will be paid in  accordance  with clause 25 Hours of Work of this  Agreement and
clause 31 Overtime of the Award

34.3.8 Each employee will receive no less than one week of direct  training each
year

34.4 Training Costs

34.4.1 Any costs  associated  with  standard  fees for  prescribed  courses  and
prescribed  text books  (excluding  those text books which are  available in the
employer's  technical  library)  incurred in connection  with the undertaking of
training will be  reimbursed by the employer upon the  production of evidence of
such  expenditure  provided that  reimbursement  will also be on an annual basis
subject to the presentation of reports of satisfactory progress.

34.4.2 Travel costs incurred by an employee  undertaking  training in accordance
with this clause which exceed those normally  incurred in travelling to and from
work will be reimbursed by the employer.

35. LITERACY AND NUMERACY

The  success of the  enterprise  and  opportunities  for  employees  is directly
related to improvement of English language literacy and numeracy.

In  conjunction  with the ECC  management  will implement a program of workforce
literacy and numeracy.

36. ACCIDENT PAY - A.C.T.

36.1 An employer will pay and a weekly employee is entitled to receive  accident
pay in accordance with this clause.

36.2  "Accident  Pay" means a weekly  payment of an amount being the  difference
between the weekly amount of  compensation  paid to an employee  pursuant to the
Workers  Compensation  Act 1951  (ACT) and the  weekly  Award rate to which such
employee is entitled in the classification  under which the employee is employed
at the date of injury or where the  incapacity  is for a lesser  period than one
week, the difference  between the amount of compensation and the said Award rate
for that period.

36.3 An employer must pay an employee  accident pay where the employee  receives
an injury for which  compensation  is  payable  by or on behalf of the  employer
pursuant to the provision of the said Act.

36.4 An  employer  will  pay,  or cause  to be paid,  accident  pay  during  the
incapacity  of the  employee  within  the  meaning  of the said Act  until  such
incapacity  ceases or until the expiration of a period of 39 weeks from the date
of the injury, whichever event shall first occur.

<PAGE>

36.5 The  termination  of the  employee's  employment  for any reason during the
period of any  incapacity  does not affect the  liability of the employer to pay
accident pay as herein before provided.

36.6 An employee is not entitled to any payment  under this clause in respect of
any period of paid  annual  leave or long  service  leave or for any paid public
holiday.

36.7 In the event that an employee  receives a lump sum in  redemption or weekly
payment  under the said Act the liability of the employer to pay accident pay as
herein provided ceases from the date of such redemption.

36.8 Where the employee recovers damages from the employer or from a third party
in respect of the said  injury  independently  of the said Act the  employee  is
liable to repay to the  employer  the amount of accident  pay which the employer
has paid under this  clause and the  employee  is not  entitled  to any  further
accident pay in respect of that injury.

36.9 This  clause  does not apply to any injury  occurring  during the first two
weeks of the employment  unless such  incapacity  continue  beyond the first two
weeks in which case accident pay applies only to that period of incapacity after
the first two weeks.

36.10 Accident pay does not apply in respect of any injury during the first five
normal working days of incapacity.

37. TOXIC SUBSTANCES

37.1  Employees  who  are  required  to  work  on  duties  of  employment  which
necessitate  the  handling  of timber  treated  with  toxic  substances  will be
informed by the  employer of the nature of the toxicity of such  substances  and
the necessary precautions and safeguards to be observed in their use.

37.2 The  employer  will  provide  employees  with a  printed  copy of the heath
regulations that are appropriate to the toxic substances, which are utilised.

38. AMENITIES

38.1 Except as otherwise  provided by state law  employers  will provide free of
charge to the employees:

38.1.1 At each workplace  where living  accommodation  is not provided and where
ten or more employees are engaged,  suitable dining accommodation  wherein there
will be a radiator or other suitable heater.

38.1.2 Suitable lockers and suitable clothes hanging facilities.

<PAGE>

38.1.3 Where practicable, boiling water at meal times.

38.1.4 At each workplace  reasonable and sufficient  conveniences  to enable the
employees to wash themselves.

38.1.5 At each workplace at some convenient place, suitable cool drinking water.

38.1.6 At each  workplace  where a female or females  are  employed,  a restroom
suitably furnished (including suitable couch).

38.2 Provided that the provisions of clauses 38.1.1 and 38.1.2 of this clause do
not for such period or periods as may be agreed apply if the employer  proves to
the satisfaction of the ECC or failing that the Australian  Industrial Relations
Commission,  that the employer is unable by reason of lack of space, shortage of
material or labour or any other  difficulties to provide dining,  accommodation,
lockers or clothes  hanging  facilities  as  aforesaid.  In cases  where  dining
accommodation,  lockers or  clothes  hanging  facilities  are not  provided  the
Australian  Industrial  Relations  Commission  may extend the time for providing
such dining  accommodation or lockers as aforesaid.  Provided further,  however,
that where employees do not desire dining  accommodation an employer will not be
compelled to provide such accommodation.

39. CLOTHING, EQUIPMENT AND TOOLS

39.1  Compensation  to the extent of the damage  sustained will be made where in
the  course of  performing  normal  duties at work,  the work  clothing,  tools,
spectacles,  hearing  aids and  dentures  are  damaged or  destroyed  by fire or
corrosive substance.  Provided that the employer's liability in respect of tools
is limited to such tools of trade as are ordinarily required for the performance
of the employee's duties. Provided further that this clause does not apply to an
employee who is entitled to compensation  under any workers  compensation or any
other Act in respect of damage to clothing or tools,  spectacles,  hearing  aids
and dentures.

39.2 Supply of clothing

39.2.1 If an  employee is required  to work in the rain,  the  employee  will be
provided with oilskins or other suitable waterproof clothing and upon request by
the employee with suitable wet weather footwear.

39.2.2  All  employees  while  working  under  overhead  cranes  will  wear head
protective  helmets  of a  type  mutually  approved  by  the  employer  and  the
appropriate state branch of the union.

Such head  protective  helmets will be supplied by the employer to each employee
so engaged.

39.2.3 The employer  may deduct from the pay of any  employee to whom  oilskins,
aprons,  overalls,  waterproof clothing,  wet weather footwear,  head protective
helmets or  protective  gloves have been supplied with the cost of such articles
as are not returned in good order and condition, fair wear and tear excepted, on
demand being made by the employer.

<PAGE>

39.2.4 An employee  required to handle  poles or timber  whilst  still wet after
impregnation  or  immunisation  shall be supplied by the employer  with suitable
protective clothing.

39.2.5 An employee  who is required to handle  materials  whilst  still wet with
glue from a glue  spreading  machine will be supplied with  suitable  gloves and
apron.

39.2.6 An employee who is required to prime paint  timber or timber  articles by
any method or handle  same  whilst  still wet with paint will be  supplied  with
suitable protective clothing.

39.2.7.1 An employee who takes  timber by hand from a conveyor or sorting  table
or a docker  person who takes  timber by hand  "green off saw" will be  supplied
with a protective apron.

39.2.7.2.  Sawyers,  and A and B grade wood  machinists  will be supplied with a
protective apron upon request of the employee.

39.2.8 Upon request by a saw sharpener, saw doctor or saw doctor apprentice, the
employer will supply such employees with two pairs of overalls per annum free of
charge.

39.2.9 Supply of safety footwear

The employer will provide free of charge one pair of safety  boots/shoes to each
employee and thereafter on a replacement  basis.  New employees will be supplied
safety footwear at the commencement of employment.  The wearing of such supplied
footwear will be a condition of  employment  except in relation to employees who
are unable to wear such  footwear for medical  reasons and who produce a medical
certificate  of that fact.  Any person who leaves the  employment  within  three
months of such issue will be charged half the cost of the footwear so provided.

The employer will not be required to supply safety footwear to employees to whom
a weekly  allowance  or a lump amount is paid by the  employer to cover the full
cost of safety footwear supplied by the employee.

The terms of this clause will not apply to employees in circumstances  where the
employer and an employee and the State Branch of the union agree that the nature
of work  performed  by the  employee  does not  warrant  the  wearing  of safety
footwear.

39.2.10 Case hardened glasses

The employer will reimburse an employee who requires  prescription  lenses to be
case  hardened  the  amount  necessary  to have  the  prescription  lenses  case
hardened.

<PAGE>

39.2.11 Protective gloves

Where an employee is  performing  manual  tasks such as the  handling of timber,
metal,  cable or other  materials,  which would warrant the supply of protective
gloves such employees will be supplied gloves by the employer. Protective gloves
will not be supplied in circumstance where it would be hazardous if they were to
be worn nor will they be supplied in  circumstances  where the employer deems it
inappropriate.

39.3 Supply of Tools

Employees  and other  millwrights  will be provided by the employer with all the
necessary tools, implements,  measuring instruments and plant. The employee will
replace or pay for any tools etc so provided which are lost, wilfully damaged or
destroyed through the employee's negligence.

40. FIRST AID

40.1 First Aid Outfit

The employer  will supply and  maintain a first aid outfit at each  workplace as
prescribed by the ACT First Aid in the Workplace Code of Practice 1994.

40.2 First Aid Employee

Where the employer has appointed an employee who holds a certificate  as a first
aid attendant the allowance  prescribed by clause 27.8 of the Award will be paid
to such  employee  for each week in which  three days or more have been  worked.
That amount will be payable in  addition to any amounts  paid for annual  leave,
sick leave, and public holidays provided that this allowance will not subject to
any premium or penalty additions.

Provided  that  nothing  in this  sub-clause  will be taken as  meaning  that an
employer will be required to make such an appointment.

40.3 Special transport of injured

In the event of an injury to an employee requiring medical attention that cannot
be provided by the employer or on the employers  premises the employer  will, as
soon as is reasonably possible,  supply free of charge such means to convey such
an employee to the nearest  hospital or doctor at which or by whom the  employee
is to be treated.

41. RIGHT OF ENTRY

41.1  On   production   of  an  authority  to  the  employer  or  the  employers
representative  a duly accredited  union  representative  will have the right to
visit and  inspect any job at any time when work is being  carried  on,  whether
during or outside ordinary working hours, to interview employees covered by this
Agreement  provided that the  representative  does not unduly interfere with the
work in progress.

<PAGE>

Entry of a duly accredited union representative will be subject to the following
conditions:

41.1.1 That the representative  complies with all safety  requirements whilst on
the premises.

41.1.2 That if the employer alleges that an accredited union  representative  is
unduly interfering with the performance of work or is committing a breach of the
previous condition the employer may refuse the right of entry but the union will
have the right to bring the refusal before the Australian  Industrial  Relations
Commission and the Commission may deal with the matter.

41.2 Any unreasonable delay in allowing a duly accredited  representative of the
union entry into the premises is a breach of the Agreement.

41.3 A representative  of the union will be a duly accredited  representative if
holding a permit issued by the Australian Industrial Relations Commission.

42. UNION DELEGATES

42.1 An accredited  union  delegate will have the right to discuss  work-related
matters of concern of any  employee  or to convey  information  relating  to the
workplace  to  employees  provided  that the  union  delegate  does  not  unduly
interfere  with the work in progress and the  supervisor of the shift or section
is given prior notice of the union delegate's intention.

42.2 The union  delegate  will have access to a  telephone  to contact the union
office or to progress enquires on behalf of an employee on work related matters.
The union  delegate will be provided with a suitable  cupboard and facilities to
enable the union delegate to keep records,  union circulars and documentation to
efficiently carry out their responsibilities.

42.3 The union  delegate  will have the right to place  notices on notice boards
within the  enterprise.  Such notices or matters of interest  will be within the
policy of and authorised by the union.

42.4 With the  agreement of the employer the union  delegate will have the right
to have a guest  speaker  authorised  by the state  branch  of the union  attend
meetings within the enterprise for the purpose of discussing  issues relating to
this agreement and to the workplace.

42.5 The employer  will not dismiss or injure a union  delegate in employment or
alter the employee's  position to the employee's  prejudice because the employee
is a union delegate.

42.6 The employer will supply the union  delegate with a copy of this  Agreement
and with all subsequent variations.

<PAGE>

43. SIGNATURES

The following employees and union and employer representatives sign this
Agreement on behalf of the employees and the employer on this
       day of                  2005.

Employee Representative                         Employer Representative
CFMEU                                           Integrated Forest Products

Employee Representative
CFMEU

Craig Smith
Divisional Branch Secretary                     Manager
CFMEU- Forestry, Furnishing, Building           Integrated Forest
Products and Manufacturing Division             Products Pty Ltd
NSW Divisional Branch

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