EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated December 15, 2005 by and between NexMed, Inc., a
Nevada corporation (the "Company") and Mark Westgate (the "Executive").

WHEREAS, the Company desires to continue to employ Executive and to enter into
an agreement (the "Agreement") embodying the terms of such employment;

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

WHEREAS, Executive is willing to accept and continue his employment on the terms
hereinafter set forth in this Agreement.

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

1.
Term of Employment. Subject to earlier termination in accordance with the
provisions of Section 6 of this Agreement, Executive shall be employed by the
Company pursuant to the terms of this Agreement for a period commencing on
December 15, 2005 (the "Effective Date") and ending on December 15, 2008 (the
"Expiration Date"); provided, however, that, the term of employment under this
Agreement (the "Employment Term") shall be automatically extended for one
additional year unless and until either party gives notice to the other, at
least 60 days before the Expiration Date, that the Employment Term should not be
automatically extended.

 

2.
Position.

 

(a)
During the Employment Term, Executive shall be employed as a Vice President of
the Company, and shall have such duties, authority, and responsibility as are
commensurate with his position, subject to the direction of the Company's Acting
Chief Executive Officer (the "Acting CEO"). Executive shall initially have the
title of Vice President of Finance and Chief Financial Officer of the Company.

 

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

 
 
 

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(c)
Executive's duties hereunder shall be performed for the Company worldwide, with
particular emphasis in the Company's headquarters in East Windsor, New Jersey.

 

3.
Compensation.

 

(a)
Base Salary. During the Employment Term, the Company shall pay Executive a base
salary, subject to increase at the discretion of the Board of Directors of the
Company (the "Board"), at the annual rate of $160,000 (the "Base Salary"),
payable in regular installments in accordance with the Company's usual payroll
practices.

 

(b)
Bonus. With respect to each calendar year during the Employment Term, Executive
shall be eligible to earn an annual bonus award (the "Bonus"). The amount of the
Bonus shall be determined by the Board, or the Compensation Committee of the
Board (the "Compensation Committee"), in its sole discretion, based upon the
achievement by the Company of objective financial targets established and
determined by the Board or the Compensation Committee in consultation with
Executive no later than the end of the first month of such calendar year. The
Bonus in respect of each calendar year in the Employment Term shall be paid as
promptly as practicable following the delivery of the Company's audited
financial statements for such year or, if later, by April 30 of the calendar
year following such year. Unless otherwise stated herein, the Bonus shall not
accrue until the date on which it is paid, and Executive must be employed on the
date the Bonus is paid in order to receive the Bonus.

 

(c)
Stock Option Grants.

 

(i)
On December 15, 2005, the Compensation Committee approved a grant to Executive
of an option to purchase an aggregate of 75,000 shares of the Company's common
stock (the "Option") based on the closing price of the Company’s Common Stock on
December 14, 2005, of ninety-two cents ($.92) per share. The Option shall vest
in three equal installments (33.33% of the Stock Option Shares, which represents
25,000 Stock Option Shares) on December 31, 2006, December 31, 2007, and
December 31, 2008, respectively, assuming continuous and uninterrupted
employment until such dates. The Company will provide the Executive the ability
to perform a cashless exercise of all Stock Options, in accordance with the
vesting schedule.

 

(ii)
The Option shall be subject to The NexMed, Inc. Stock Option and Long-Term
Incentive Compensation Plan (the "Option Plan") and the applicable stock option
agreement.

 

(iii)
In addition to the foregoing, the Compensation Committee may recommend to the
Board that additional stock options be granted to Executive in accordance with
the terms and subject to the conditions of the Option Plan.

 
 
 

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

 

4.
Employee Benefits. During the Employment Term, Executive shall be eligible for
inclusion, to the extent permitted by law, as a full-time employee of the
Company or any of its subsidiaries, in any and all of the following plans,
programs, and policies in effect at the time: (i) pension, profit sharing,
savings, and other retirement plans and programs, (ii) life and health (medical,
dental, hospitalization, short-term and long-term disability) insurance plans
and programs, (iii) stock option and stock purchase plans and programs, (iv)
accidental death and dismemberment protection plans and programs, (v) travel
accident insurance plans and programs, (vi) vacation policy (Executive shall
have four weeks of vacation per calendar year), and (vii) other plans and
programs sponsored by the Company or any subsidiary for employees or executives
generally, including any and all plans and programs that supplement any or all
of the foregoing types of plans or programs.

 

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

 

6.
Termination.

 

(a)
By the Company for Cause. The Company may, for Cause, terminate Executive's
employment hereunder at any time by written notice to Executive. For purposes of
this Agreement, the term "Cause" shall mean Executive's (i) engaging in fraud
against the Company or misappropriation of funds of the Company, (ii) disregard
or failure to follow specific and reasonable directives of the Board, (iii)
willful failure to perform his duties as Vice President of Finance and Chief
Financial Officer of the Company, (iv) willful misconduct resulting in material
injury to the Company, (v) violation of the terms of the Confidential
Information and Intellectual Property Agreement between Executive and NexMed
(U.S.A.), Inc., a wholly-owned subsidiary of the Company, dated March 5, 2002
(the "Intellectual Property Agreement") attached hereto as Exhibit "A", (vi)
conviction of, or Executive's plea of guilty or no contest to, a felony or any
crime involving as a material element fraud or dishonesty, or (vii) material
breach (not covered by clauses (i) through (vi) of this paragraph) of any of the
other provisions of this Agreement; provided, that, in the case of subclauses
(ii), (iii) or (vii), Cause shall not exist if the act or omission deemed to
constitute Cause is cured (if curable) by Executive within thirty (30) days
after written notice thereof to Executive by the Company. For purposes of the
foregoing, no act, or failure to act, on Executive's part shall be considered
"willful" unless done, or omitted to be done, by Executive other than in good
faith, and without reasonable belief that his action or omission was in
furtherance of the interests of the Company.

 
 
 

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In the event of the termination of Executive's employment under this Section
6(a) for Cause, the Employment Term shall end on the day of such termination and
the Company shall pay to Executive, no later than the payroll cycle following
Executive’s termination, in one lump sum: (i) any accrued but unpaid Base
Salary, less applicable deductions, including salary in respect of any accrued
and accumulated vacation due to Executive at the date of such termination; and
(ii) any amounts owing, but not yet paid, pursuant to Section 5 hereof.

Except as specifically set forth in Section 8 hereof, the Company shall have no
further obligations to Executive under this Agreement.

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

 
In addition, upon a termination under this Section 6(b), and upon the
satisfaction of the conditions set forth herein: (1) Executive shall receive a
pro rata Bonus for the calendar year in which such termination occurs, equal to
the Bonus he would have received, to the extent all criteria for such a Bonus
have been met (with the exception of the Executive being employed of the date
the Bonus is to be paid), for the calendar year of said termination multiplied
by a fraction, the numerator of which is the number of days in such year
preceding and including the date of termination, and the denominator of which is
365. Said pro-rata Bonus shall be paid at the same time as the Bonus would have
been paid had Executive remained employed by the Company through the date of
payment; (2) Executive shall receive any unpaid Bonus for the calendar year
preceding his termination, to the extent that all criteria for such bonus have
been met (with the exception of the Executive being employed on the date the
Bonus is to be paid). Said Bonus shall be paid at the same time as the Bonus
would have been paid had Executive remained employed by the Company through the
date of payment; and (3) all of Executive's outstanding but unvested stock
options granted pursuant to Section 3(c) of this Agreement shall vest
immediately. The payment of the Bonuses and the acceleration of Executive’s
options are conditioned upon Executive (or his legal representative) signing a
release in favor of the Company, as provided for in Section 6(f).
 
 
 

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Except as specifically set forth in Section 8 hereof, the Company shall have no
further obligations to Executive under this Agreement.

(c)
By the Company without Cause. The Company may, without Cause, terminate
Executive's employment hereunder at any time upon ten (10) or more days' written
notice to Executive. The Company, in its sole discretion, may provide the
Executive with ten (10) days’ pay in lieu of notice. In the event Executive's
employment is terminated pursuant to this Section 6(c), the Employment Term
shall end on the day of such termination and the Company shall pay to Executive,
no later than the payroll cycle following Executive’s termination, in one lump
sum: (i) any accrued but unpaid Base Salary, less applicable deductions,
including salary in respect of any accrued and accumulated vacation, due to
Executive at the date of such termination, and (ii) any amounts owing, but not
yet paid, pursuant to Section 5 hereof.

 
In addition, upon a termination under this Section 6(c), and upon the
satisfaction of the conditions set forth herein: (1) Executive shall receive a
pro rata Bonus for the calendar year in which such termination occurs, equal to
the Bonus he would have received, to the extent all criteria for such a Bonus
have been met (with the exception of the Executive being employed of the date
the Bonus is to be paid), for the calendar year of said termination multiplied
by a fraction, the numerator of which is the number of days in such year
preceding and including the date of termination, and the denominator of which is
365. Said pro-rata Bonus shall be paid at the same time as the Bonus would have
been paid had Executive remained employed by the Company through the date of
payment; (2) Executive shall receive any unpaid Bonus for the calendar year
preceding his termination, to the extent that all criteria for such bonus have
been met (with the exception of the Executive being employed on the date the
Bonus is to be paid). Said Bonus shall be paid at the same time as the Bonus
would have been paid had Executive remained employed by the Company through the
date of payment; (3) all of Executive's outstanding but unvested stock options
granted pursuant to Section 3(c) of this Agreement shall vest immediately; and
(4) Executive shall receive severance payments (the “Severance”) in an amount
equal to the Executive's annual Base Salary at the time of such termination of
six months plus one week for every fully completed year of service, up to one
year. The payment of the Bonuses and the Severance, as well as the acceleration
of Executive’s options, are conditioned upon Executive signing a release in
favor of the Company, as provided for in Section 6(f).
 
 
 

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Except as specifically set forth in Section 8 hereof, the Company shall have no
further obligations to Executive under this Agreement.

(d)
By Executive for Good Reason. If any of the events described below occurs during
the Employment Term, Executive may terminate Executive's employment hereunder
for Good Reason by written notice to the Company identifying the event or
omission constituting Good Reason not more than one (1) month following the
occurrence of such event and, in the case of subclauses (ii), (iii), or (iv)
below, a failure by the Company to cure such act or omission within thirty (30)
days after receipt of such written notice. In such event, the Employment Term
and Executive's employment hereunder will be terminated effective as of the
later of thirty-one (31) days after the Company's receipt of Executive's notice
of termination or thirty-one (31) days after the event, and Executive's
termination for Good Reason pursuant to this Section 6(d) shall be treated for
all purposes as a termination without Cause pursuant to Section 6(c) and the
provisions of Section 6(c) shall apply to such termination. The occurrence of
any of the following events without Executive's consent shall permit Executive
to terminate Executive's employment for "Good Reason" pursuant to this Section
6(d):

 

(i)
A "Change in Control" (as defined in Appendix A hereto) occurs;

 

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

 

(iii)
A material diminution in Executive's duties.

 

(iv)
The assignment to Executive of duties that are materially inconsistent with
Executive’s duties or that materially impair executive’s ability to function as
the Vice President of Finance and Chief Financial Officer.

 

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

 
Except as specifically set forth in Section 8 hereof, the Company shall have no
further obligations to Executive under this Agreement.

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

 
 
 

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Except as specifically set forth in Section 8 hereof, the Company shall have no
further obligations to Executive under this Agreement.

(f)
Release. Notwithstanding any other provision of this Agreement to the contrary,
Executive acknowledges and agrees that any and all payments and benefits to
which Executive is entitled under this Section 6(b), 6(c), or 6(d), with the
exception of accrued salary, accrued vacation payments, and payments pursuant to
Section 5 of this Agreement, are conditioned upon and subject to Executive's
first executing a Confidential Separation Agreement including a general waiver
and release (and the expiration of any associated revocation period), in such
reasonable and customary form as shall be prepared by the Company, of all claims
Executive may have against the Company, and related entities and individuals.

 

7.
No Mitigation; Employee Benefit Plans. Executive shall not be required to
mitigate amounts payable to him under this Agreement by seeking other employment
or otherwise, and there shall be no offset against amounts payable to Executive
under this Agreement on account of Executive's subsequent employment. Amounts
payable to Executive under this Agreement shall not be offset by any claims that
the Company may have against Executive, and such amounts payable to Executive
under this Agreement shall not be affected by any other circumstances,
including, without limitation, any counterclaim, recoupment, defense, or other
right that the Company may have against Executive or others. Provided, however,
that, payments made to Executive as a result of the termination of Executive's
employment hereunder shall not be considered as includible compensation with
respect to any employee benefit plans maintained by the Company, except to the
extent otherwise required by law.

 
 
 

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8.
Indemnification. In the event that Executive is made a party or threatened to be
made a party to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (a "Proceeding"), by reason of Executive's
employment with, or serving as an officer of, the Company, the Company shall
indemnify and hold Executive harmless, and defend Executive to the fullest
extent authorized by the laws of the state in which the Company is incorporated,
as the same exist and may hereafter be amended, against any and all claims,
demands, suits, judgments, assessments, and settlements (collectively the
"Claims"), including all expenses incurred or suffered by Executive in
connection therewith (excluding, however, any legal fees incurred by Executive
for Executive's own counsel, except as otherwise provided in this Section 8, and
excluding any Proceedings initiated by executive), and such indemnification
shall continue as to Executive even after Executive is no longer employed by the
Company hereunder, and shall inure to the benefit of Executive's heirs,
executors, and administrators; provided, however, that, Executive promptly gives
written notice to the Company of any such Claims (although Executive's failure
to promptly give notice shall not affect the Company's obligations under this
Section 8 except to the extent that such failure prejudices the Company or its
ability to defend such Claims). The Company shall have the right to undertake,
with counsel or other representatives of its own choosing, the defense or
settlement of any Claims. In the event that the Company shall fail to notify
Executive, within ten days of its receipt of Executive's written notice, that
the Company has elected to undertake such defense or settlement, or if at any
time the Company shall otherwise fail to diligently defend or pursue settlement
of such Claims, then Executive shall have the right to undertake the defense,
compromise, or settlement of such Claims, in which event the Company shall hold
Executive harmless from any legal fees incurred by Executive for Executive's
counsel. Neither Executive nor the Company shall settle any Claims without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed. In the event that the Company submits to Executive a bona
fide settlement offer from the claimant of Claims (which settlement offer shall
include as an unconditional term thereof the giving by the claimant or the
plaintiff to Executive a release from all liability in respect of such Claims),
and Executive refuses to consent to such settlement, then thereafter the
Company's liability to Executive for indemnification hereunder with respect to
such Claims shall not exceed the settlement amount included in such bona fide
settlement offer, and Executive shall either assume the defense of such Claims
or pay the Company's attorneys' fees and other out-of-pocket costs incurred
thereafter in continuing the defense of such Claims. Regardless of which party
is conducting the defense of any such Claims, the other party, with counsel or
other representatives of its own choosing and at its sole cost and expense,
shall have the right to consult with the party conducting the defense of such
Claims and its counsel or other representatives concerning such Claims and
Executive and the respective counsel or other representatives shall cooperate
with respect to such Claims. The party conducting the defense of any such Claims
and its counsel shall in any case keep the other party and its counsel (if any)
fully informed as to the status of such Claims and any matters relating thereto.
Executive and the Company shall provide to the other such records, books,
documents, and other materials as shall reasonably be necessary for each to
conduct or evaluate the defense of any Claims, and will generally cooperate with
respect to any matters relating thereto. This Section 8 shall remain in effect
after this Agreement is terminated, regardless of the reasons for such
termination. The indemnification provided to Executive pursuant to this Section
8 shall not supersede or reduce any indemnification provided to Executive under
any separate agreement, or the By-Laws of the Company; in this regard, it is
intended that this Agreement shall expand and extend Executive's rights to
receive indemnification.

 

9.
Withholding. The Company shall have the right to deduct and withhold from all
payments to Executive hereunder all payroll taxes, income tax withholding and
other federal, state and local taxes and charges which currently are or which
hereafter may be required by law to be so deducted and withheld.

 

10.
Non-Solicitation of Employees. Executive recognizes and acknowledges that it is
essential for the proper protection of the business of the Company that
Executive be restricted during the term of Executive’s employment and for a
one-year period following the termination of Executive’s employment with the
Company from soliciting or inducing any employee of the Company to leave the
employ of the Company or to encourage any other business entity to solicit or
seek to hire any employee of the Company. Therefore, during the term of the
Executive’s employment with the Company and for a period of one (1) year
following the termination of such employment, Executive agrees that he shall
not, directly or indirectly, hire or seek to hire any employee of the Company or
assist or influence any business entity to hire or solicit for employment or
take any other action which would encourage any such employee to terminate such
employee’s employment by the Company. For purposes of this Section 11,
“employee” shall include any former employee of the Company whose employment
with the Company terminated less than one (1) year prior to the termination of
the employment with the Company of the Executive.

 
 
 

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11.
Confidentiality. The confidentiality provisions contained in the Confidential
Information Agreement, signed by Executive on March 25, 2002 and attached hereto
as Appendix B, including but not limited to, Section (2) (Confidential
Information), are incorporated by reference as if fully set forth herein.
Executive hereby reaffirms his obligations under that agreement.

 

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

 

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

 

14.
Entire Agreement; Modification.

 

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

 

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

 
 
 

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

 
To the Company:

NexMed, Inc.
89 Twin Rivers Drive
East Windsor, NJ 08520
Fax: 609-426-9116
Attention: Executive Vice President and Acting Chief Executive Officer

To Executive:

Mark Westgate
292 White Road
Little Silver, NJ 07739
Fax: 609-426-9116

16.
Governing Law; Jurisdiction. This Agreement shall be governed by, and construed
and enforced according to, the domestic laws of the State of New Jersey without
giving effect to the principles of conflict of laws thereof, or such principles
of any other jurisdiction, which could cause the application of the substantive
law of any jurisdiction other than the State of New Jersey. The Company and
Executive agree that the state or federal courts of New Jersey shall have
exclusive jurisdiction to hear and determine any dispute which may arise under
this Agreement.

 

17.
Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, and each other provision of the Agreement shall be severable
and enforceable to the extent permitted by law.

 

18.
Headings. The headings of the Sections hereof are provided for convenience only
and are not to serve as a basis for interpretation or construction, and shall
not constitute a part, of this Agreement.

 
 
 

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19.
Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

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

 
/s/ Mark Westgate
Mark Westgate

NEXMED, INC.

By:/s/                                                                
Title:

 

 
 

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Appendix A
Change in Control

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

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

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

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

 
 

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

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

F. Such other events as the Board may designate.

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

 
 

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