COMMON
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    by
      and
      among

     

    NexMed,
      Inc., as Issuer and Seller

     

    and

     

    the
      Purchasers named herein, as Purchasers

     

    


    
 

     

    


     

    


     

    December
      20, 2006

     

      
        

      

    

    


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


     

    Table
      of Exhibits and Schedules

     

    
      	
              Exhibit
                A

            	
              Form
                of Warrant

            
	
              Exhibit
                B

            	
              Form
                of Registration Rights Agreement

            
	
              Exhibit
                C

            	
              Form
                of Opinion of Seller’s Counsel

            
	
              Exhibit
                D

            	
              Form
                of Opinion of Nevada Counsel

            


    

     

    
      	
              Schedule
                1

            	
              Purchasers
                and Shares of Common Stock and Warrants Purchased

            
	
              Schedule
                3.10

            	
              Litigation

            
	
              Schedule
                3.11

            	
              Absence
                of Certain Changes

            
	
              Schedule
                3.15

            	
              Intellectual
                Property

            
	
              Schedule
                3.17

            	
              Preemptive
                Rights

            
	
              Schedule
                3.19

            	
              Subsidiaries
                and Investments

            
	
              Schedule
                3.20

            	
              Capitalization

            
	
              Schedule
                3.21

            	
              Options,
                Warrants, Rights

            
	
              Schedule
                3.22

            	
              Employees,
                Employment Agreements and Employee Benefit
                Plans

            


    

    


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    COMMON
      STOCK AND WARRANT PURCHASE AGREEMENT (the “Agreement”) dated as of December 20,
      2006, by and among NexMed, Inc., a Nevada corporation (the “Seller”), and each
      of the persons listed on Schedule
      1
      hereto
      (each is individually referred to as a “Purchaser” and collectively, the
“Purchasers”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      each of the Purchasers is willing to purchase from the Seller, and the Seller
      desires to sell to the Purchasers, shares of the Seller’s common stock, $0.001
      par value (the “Common Stock”), and Common Stock Purchase Warrants in the form
      of Exhibit A hereto (the “Warrants”) entitling the holders thereof to purchase
      additional shares of Common Stock, for an aggregate purchase price of up to
      $10
      million, as more fully set forth herein.

     

    NOW
      THEREFORE, in consideration of the mutual promises and representations,
      warranties, covenants and agreements set forth herein, the parties hereto,
      intending to be legally bound, hereby agree as follows: 

     

    ARTICLE
      I
      - PURCHASE AND SALE

     

    1.1 Purchase
      and Sale.

     

    (a) On
      the
      terms and subject to the conditions set forth in this Agreement, at the Closing
      (as defined in Section 2.2), the Seller will sell and each of the Purchasers
      will purchase the number of shares of Common Stock set forth on Schedule
      1
      hereto
      at a price per share equal to $0.6501. In addition, each Purchaser shall
      receive at the Closing Warrants to purchase the number of shares (rounded to
      the
      nearest whole share) of Common Stock equal to 40% of the number of Shares
      purchased by such Purchaser at Closing hereunder as set forth on Schedule
      1
      hereto.

     

    (b) The
      shares of Common Stock to be issued upon Closing hereunder are referred to
      herein as the “Shares,” and the shares of Common Stock issuable upon exercise of
      the Warrants are referred to herein as the “Warrant Shares.”

     

    1.2 Terms
      of the Warrants.
      The
      terms and provisions of the Warrants are more fully set forth in the form of
      Common Stock Purchase Warrant, attached hereto as Exhibit
      A.

     

    1.3 Transfers;
      Legends.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a) Except
      as
      required by federal securities laws and the securities law of any state or
      other
      jurisdiction within the United States or as otherwise set forth in this
      Agreement or the Related Documents, the Shares, Warrants and Warrant Shares
      (collectively, the “Securities”) may be transferred, in whole or in part, by any
      of the Purchasers at any time. Any such transfer shall be made by a Purchaser
      in
      accordance with applicable law. In connection with any transfer of Securities
      other than pursuant to an effective registration statement under the Securities
      Act of 1933, as amended (the “Securities Act”), or to the Seller, the Seller may
      require the transferor thereof to furnish to the Seller an opinion of counsel
      selected by the transferor, such counsel and the form and substance of which
      opinion shall be reasonably satisfactory to the Seller and Seller’s counsel, to
      the effect that such transfer does not require registration under the Securities
      Act; provided, that in the case of a transfer pursuant to Rule 144 under the
      Securities Act, no opinion shall be required if the transferor provides the
      Seller with a customary seller’s representation letter, and if such sale is not
      pursuant to subsection (k) of Rule 144, a customary broker’s representation
      letter and Form 144. 
      Notwithstanding the foregoing, the Seller hereby consents to and agrees to
      register on the books of the Seller and with any transfer agent for the
      securities of the Seller, without any such legal opinion, any transfer of
      Securities by a Purchaser to an Affiliate of such Purchaser, provided that
      the
      transferee certifies to the Seller that it is an Affiliate of such Purchaser
      and
      an “accredited investor” as defined in Rule 501(a) under the Securities Act and
      that it is acquiring the Securities solely for investment purposes (subject
      to
      the qualifications hereof) and not with a view to, or for, resale, distribution
      or fractionalization thereof in whole or in part in violation of the Securities
      Act. Any transferee shall agree to be bound by the terms of the Registration
      Rights Agreement and this Agreement. The Seller shall reissue certificates
      evidencing the Securities upon surrender of certificates evidencing the
      Securities being transferred in accordance with this Section 1.3(a). In
      connection with any transfer of Warrants after the Registration Statement (as
      defined in the Registration Rights Agreement) is declared effective under the
      Securities Act, the transferor of such Warrants shall reimburse the Seller
      for
      its reasonable out of pocket costs in connection with such transfer (including
      without limitation the reasonable attorneys fees for preparing and filing a
      prospectus supplement with the SEC and/or delivering an updated opinion letter
      to the Seller’s transfer agent). An “Affiliate” means any Person (as such term
      is defined below) that, directly or indirectly through one or more
      intermediaries, controls or is controlled by or is under common control with
      a
      Person, as such terms are used in and construed under Rule 144 under the
      Securities Act. With respect to a Purchaser, any investment fund or managed
      account that is managed on a discretionary basis by the same investment manager
      as such Purchaser will be deemed to be an Affiliate of such Purchaser. A
“Person” means any individual or corporation, partnership, trust, incorporated
      or unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision of any thereof) or other
      entity of any kind.

     

    (b) The
      certificates representing the Securities shall bear the following
      legends:

     

    “THE
      SHARES REPRESENTED BY, OR ACQUIRABLE UPON EXERCISE OF SECURITIES EVIDENCED
      BY,
      THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO NEXMED, INC. (THE “COMPANY”), SUCH REGISTRATION IS
      NOT REQUIRED.” 

     

    “THE
      SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS
      AGREEMENT DATED AS OF DECEMBER 20, 2006, AS AMENDED FROM TIME TO TIME, AMONG
      THE
      COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
      AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
      OF
      RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

     

    
      
         

      

      
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    ARTICLE
      II - PURCHASE PRICE AND CLOSING

     

    2.1 Purchase
      Price.
      The
      aggregate purchase price (the “Purchase Price”) to be paid by each Purchaser to
      the Seller to acquire the Shares and the applicable Warrants shall be the total
      amounts set forth opposite such Purchaser’s name on Schedule
      1
      hereto.

     

    2.2 The
      Closing.
      The
      closing of the transactions contemplated under this Agreement (the “Closing”)
      will take place as promptly as practicable, but no later than five (5) business
      days following satisfaction or waiver of the conditions set forth in Sections
      6.1(a) and 6.2(a) (other than those conditions which by their terms are not
      to
      be satisfied or waived until the Closing), at the offices of Seller’s counsel.
      The date on which the Closing occurs is the “Closing Date.”

     

    ARTICLE
      III - REPRESENTATIONS AND WARRANTIES OF THE SELLER

     

    The
      Seller represents and warrants to the Purchasers as follows:

     

    3.1 Corporate
      Existence and Power; Subsidiaries.
      The
      Seller and its Subsidiaries are corporations duly incorporated, validly existing
      and in good standing under the laws of the state in which they are incorporated,
      and have all corporate powers required to carry on their business as now
      conducted. The Seller and its Subsidiaries are duly qualified to do business
      as
      a foreign corporation and are in good standing in each jurisdiction where the
      character of the property owned or leased by them or the nature of their
      activities makes such qualification necessary, except for those jurisdictions
      where the failure to be so qualified would not have a Material Adverse Effect
      on
      the Seller or any of its Subsidiaries. For purposes of this Agreement, the
      term
“Material Adverse Effect” means, with respect to any person or entity, a
      material adverse effect on its and its Subsidiaries’ condition (financial or
      otherwise), business, properties, assets, liabilities (including contingent
      liabilities) or results of operations taken as a whole. True and complete copies
      of the Seller’s Articles of Incorporation, as amended, and Bylaws, as amended,
      as currently in effect and as will be in effect on the Closing Date
      (collectively, the “Articles and Bylaws”), have previously been provided to the
      Purchasers. For purposes of this Agreement, the term “Subsidiary” or
“Subsidiaries” means, with respect to any entity, any corporation or other
      organization of which securities or other ownership interests having ordinary
      voting power to elect a majority of the board of directors or other persons
      performing similar functions are directly or indirectly owned by such entity
      or
      of which such entity is a partner or is, directly or indirectly, the beneficial
      owner of 50% or more of any class of equity securities or equivalent profit
      participation interests. The Seller has no Subsidiaries other than the
      following, each of which, unless otherwise indicated, is wholly-owned by the
      Seller:

     

    (a) NexMed
      Holdings, Inc., a Delaware corporation,

     

    (b) NexMed
      (U.S.A.), Inc., a Delaware corporation,

     

    
      	 	
              (c)

            	
              NexMed
                International Limited, organized under British Virgin Islands
                law,

            


    

     

    
      	 	
              (1)

            	
              NexMed
                (Americas) Limited, organized under Nova Scotia law and a wholly-owned
                subsidiary of NexMed International Limited,
                and

            


    

     

    
      
         

      

      
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              (2)

            	
              NexMed
                International (Hong Kong) Ltd. organized under Hong Kong law and
                a
                wholly-owned subsidiary of NexMed International
                Limited.

            


    

     

    3.2 Corporate
      Authorization.
      The
      execution, delivery and performance by the Seller of this Agreement, the
      Warrants and the Registration Rights Agreement, and each of the other documents
      executed pursuant to and in connection with this Agreement (collectively, the
      “Related Documents”), and the consummation of the transactions contemplated
      hereby and thereby (including, but not limited to, the sale and delivery of
      the
      Shares and the Warrants, and the subsequent issuance of the Warrant Shares
      upon
      exercise of the Warrants) have been duly authorized, and, subject to obtaining
      the Shareholder Rights Agreement Amendment (as defined below), no additional
      corporate or stockholder action is required for the approval of this Agreement.
      The Warrant Shares have been duly reserved for issuance by the Seller. This
      Agreement and the Related Documents have been or, to the extent contemplated
      hereby or by the Related Documents, will be duly executed and delivered and
      constitute the legal, valid and binding agreement of the Seller, enforceable
      against the Seller in accordance with their terms, except as may be limited
      by
      bankruptcy, reorganization, insolvency, moratorium and similar laws of general
      application relating to or affecting the enforcement of rights of creditors,
      and
      except as enforceability of its obligations hereunder are subject to general
      principles of equity (regardless of whether such enforceability is considered
      in
      a proceeding in equity or at law).

     

    3.3 Charter,
      Bylaws and Corporate Records.
      The
      minute books of the Seller and its Subsidiaries contain complete and accurate
      records of all meetings and other corporate actions of the board of directors,
      committees of the board of directors, incorporators and stockholders of the
      Seller and its Subsidiaries from September 15, 1995 to the date hereof. All
      material corporate decisions and actions have been validly made or taken. All
      corporate books, including without limitation the share transfer register,
      comply with applicable laws and regulations and have been regularly updated.
      Such books fully and correctly reflect all the decisions of the
      stockholders.

     

    3.4 Governmental
      Authorization.
      Except
      as otherwise specifically contemplated in this Agreement and the Related
      Documents, and except for: (i) the filing of a Form D with respect to the Shares
      and Warrants under Regulation D under the Securities Act; (ii) the filing of
      the
      Registration Statement with the Commission; (iii) the application(s) to each
      trading market for the listing of the Shares and the Warrant Shares for trading
      thereon; and (iv) any filings required under state securities laws that are
      permitted to be made after the date hereof, the execution, delivery and
      performance by the Seller of this Agreement and the Related Documents, and
      the
      consummation of the transactions contemplated hereby and thereby (including,
      but
      not limited to, the sale and delivery of the Shares and Warrants and the
      subsequent issuance of the Warrant Shares upon exercise of the Warrants, as
      applicable) by the Seller require no action by or in respect of, or filing
      with,
      any governmental body, agency, official or authority. Notwithstanding the
      foregoing, the Seller makes no representation or warranty with respect to the
      compliance of the transactions contemplated by this Agreement with Rule 4350(i)
      of the National Association of Securities Dealers, Inc. (“NASD”).

    


    
      
         

      

      
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    3.5 Non-Contravention.
      The
      execution, delivery and performance by the Seller of this Agreement and the
      Related Documents, and the consummation by the Seller of the transactions
      contemplated hereby and thereby (including the issuance of the Shares and
      Warrant Shares) do not and will not (a) contravene or conflict with the Articles
      and Bylaws of the Seller and its Subsidiaries or any material agreement to
      which
      the Seller is a party or by which it is bound; (b) contravene or conflict with
      or constitute a violation of any provision of any law, regulation, judgment,
      injunction, order or decree binding upon or applicable to the Seller or its
      Subsidiaries; (c) constitute a default (or would constitute a default with
      notice or lapse of time or both) under or give rise to a right of termination,
      cancellation or acceleration or loss of any benefit under any material
      agreement, contract or other instrument binding upon the Seller or its
      Subsidiaries or under any material license, franchise, permit or other similar
      authorization held by the Seller or its Subsidiaries; or (d) result in the
      creation or imposition of any Lien (as defined below) on any asset of the Seller
      or its Subsidiaries. For purposes of this Agreement, the term “Lien” means, with
      respect to any asset, any mortgage, lien, pledge, charge, security interest,
      claim or encumbrance of any kind in respect of such asset.

     

    3.6 SEC
      Documents.
      The
      Seller is obligated under the Securities Exchange Act of 1934, as amended (the
      “Exchange Act”) to file reports pursuant to Sections 13 or 15(d) thereof (all
      such reports filed or required to be filed by the Seller, including all exhibits
      thereto or incorporated therein by reference, and all documents filed by the
      Seller under the Securities Act hereinafter called the “SEC Documents”). The
      Seller has filed all reports or other documents required to be filed under
      the
      Exchange Act. All SEC Documents filed by the Seller as of or for any period
      beginning on or after January 1, 2003, (i) were prepared in all material
      respects in accordance with the requirements of the Exchange Act and (ii) did
      not at the time they were filed (or, if amended or superseded by a filing prior
      to the date hereof, then on the date of such filing) contain any untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. The Seller has
      previously delivered to the Purchaser a correct and complete copy of each report
      (including, without limitation, the Seller’s 2005 Proxy Statement) which the
      Seller filed with the Securities and Exchange Commission (the “SEC” or the
“Commission”) under the Exchange Act for any period ending on or after December
      31, 2004 (the “Recent Reports”) to the extent not available via EDGAR. None of
      the information about the Seller or any of its Subsidiaries which has been
      disclosed to the Purchasers herein or in the course of discussions and
      negotiations with respect hereto which is not disclosed in the Recent Reports
      is
      or was required to be so disclosed, and no material non-public information
      has
      been disclosed to the Purchasers.

     

    3.7 Financial
      Statements.
      Each of
      the Seller’s audited consolidated balance sheet and related consolidated
      statements of income, cash flows and changes in stockholders’ equity (including
      the related notes) as of and for the years ended December 31, 2005, December
      31,
      2004 and December 31, 2003, as contained in the Recent Reports (collectively,
      the “Seller’s Financial Statements” or the “Financial Statements”) (x) present
      fairly in all material respects the financial position of the Seller and its
      Subsidiaries on a consolidated basis as of the dates thereof and the results
      of
      operations, cash flows and stockholders’ equity as of and for each of the
      periods then ended, and (y) were prepared in accordance with generally accepted
      accounting principals (“GAAP”) applied on a consistent basis throughout the
      periods involved, in each case, except as otherwise indicated in the notes
      thereto.

     

    
      
         

      

      
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    3.8 Compliance
      with Law.
      The
      Seller and its Subsidiaries are in compliance and have conducted their business
      so as to comply with all laws, rules and regulations, judgments, decrees or
      orders of any court, administrative agency, commission, regulatory authority
      or
      other governmental authority or instrumentality, domestic or foreign, applicable
      to their operations, the violation of which would cause a Material Adverse
      Affect. There are no judgments or orders, injunctions, decrees, stipulations
      or
      awards (whether rendered by a court or administrative agency or by arbitration),
      including any such actions relating to affirmative action claims or claims
      of
      discrimination, against the Seller or its Subsidiaries or against any of their
      properties or businesses.

     

    3.9 No
      Defaults.
      The
      Seller and its Subsidiaries are not, nor have they received notice that they
      would be with the passage of time, giving of notice, or both, (i) in violation
      of any provision of their Articles and Bylaws (ii) in default or violation
      of
      any term, condition or provision of (A) any judgment, decree, order, injunction
      or stipulation applicable to the Seller or its Subsidiaries or (B) any material
      agreement, note, mortgage, indenture, contract, lease or instrument, permit,
      concession, franchise or license to which the Seller or its Subsidiaries are
      a
      party or by which the Seller or its Subsidiaries or their properties or assets
      may be bound, and no circumstances exist which would entitle any party to any
      material agreement, note, mortgage, indenture, contract, lease or instrument
      to
      which such Seller or its Subsidiaries are a party, to terminate such as a result
      of such Seller or its Subsidiaries, having failed to meet any material provision
      thereof including, but not limited to, meeting any applicable milestone under
      any material agreement or contract.

     

    3.10 Litigation.
      Except
      as disclosed in the Recent Reports or on Schedule
      3.10,
      there
      is no action, suit, proceeding, judgment, claim or investigation pending or,
      to
      the best knowledge of the Seller, threatened against the Seller and its
      Subsidiaries which could, individually or in the aggregate, reasonably be
      expected to have a Material Adverse Effect on the Seller or its Subsidiaries
      or
      which in any manner challenges or seeks to prevent, enjoin, alter or materially
      delay any of the transactions contemplated hereby, and there is no basis for
      the
      assertion of any of the foregoing. Each Purchaser acknowledges that it is aware
      that the Company has received notice from The Nasdaq Capital Market that the
      Common Stock is not in compliance with applicable listing requirements, and
      that
      such Purchaser has reviewed the Company’s disclosure regarding such
      non-compliance in the Recent Reports.

     

    There
      are
      no claims or complaints existing or, to the knowledge of the Seller or its
      Subsidiaries threatened, for product liability in respect of any product of
      the
      Seller or its Subsidiaries, and the Seller and its Subsidiaries are not aware
      of
      any basis for the assertion of any such claim.

     

    3.11 Absence
      of Certain Changes.
      Since
      December 31, 2005, the Seller has conducted its business only in the ordinary
      course and there has not occurred, except as set forth in the Recent Reports
      or
      any exhibit thereto or incorporated by reference therein:

     

    (a) Any
      event
      that could reasonably be expected to have a Material Adverse Effect on the
      Seller or any of its Subsidiaries;

     

    (b) Any
      amendments or changes in the Articles or Bylaws of the Seller and its
      Subsidiaries.

     

    
      
         

      

      
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    (c) Any
      damage, destruction or loss, whether or not covered by insurance, that would,
      individually or in the aggregate, have or would be reasonably likely to have,
      a
      Material Adverse Effect on the Seller and its Subsidiaries;

     

    (d) Except
      as
      set forth in the Recent Reports or on Schedule
      3.11(d),
      any

     

    (i) incurrence,
      assumption or guarantee by the Seller or its Subsidiaries of any debt for
      borrowed money other than for equipment leases; 

     

    (ii) issuance
      or sale of any securities convertible into or exchangeable for securities of
      the
      Seller other than to directors, employees and consultants pursuant to existing
      equity compensation or stock purchase plans of the Seller; 

     

    (iii) issuance
      or sale of options or other rights to acquire from the Seller or its
      Subsidiaries, directly or indirectly, securities of the Seller or any securities
      convertible into or exchangeable for any such securities, other than options
      issued to directors, employees and consultants in the ordinary course of
      business in accordance with past practice; 

     

    (iv) issuance
      or sale of any stock, bond or other corporate security, other than upon the
      exercise or conversion of convertible securities;

     

    (v) discharge
      or satisfaction of any material Lien, other than current liabilities incurred
      since December 31, 2005 in the ordinary course of business; 

     

    (vi) declaration
      or making any payment or distribution to stockholders or purchase or redemption
      of any share of its capital stock or other security; 

     

    (vii) sale,
      assignment or transfer any of its intangible assets except in the ordinary
      course of business, or cancellation of any debt or claim except in the ordinary
      course of business;

     

    (viii) waiver
      of
      any right of substantial value whether or not in the ordinary course of
      business;

     

    (ix) material
      change in officer compensation except in the ordinary course of business and
      consistent with past practices; or 

     

    (x) other
      commitment (contingent or otherwise) to do any of the foregoing.

     

    (e) Any
      creation, sufferance or assumption by the Seller or any of its Subsidiaries
      of
      any Lien on any asset (other than Liens existing on the date hereof or in
      connection with equipment leases and working capital lines of credit set forth
      on Schedule
      3.11(e))
      or any
      making of any loan, advance or capital contribution to or investment in any
      Person in an aggregate amount which exceeds $25,000 outstanding at any
      time;

     

    
      
         

      

      
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    (f) Any
      entry
      into, amendment of, relinquishment, termination or non-renewal by the Seller
      or
      its Subsidiaries of any material contract, license, lease, transaction,
      commitment or other right or obligation, other than in the ordinary course
      of
      business; or

     

    (g) Any
      transfer or grant of a right with respect to the trademarks, trade names,
      service marks, trade secrets, copyrights or other intellectual property rights
      owned or licensed by the Seller or its Subsidiaries, except as among the Seller
      and its Subsidiaries. 

     

    3.12 No
      Undisclosed Liabilities.
      Except
      as set forth in the Recent Reports, and except for liabilities and obligations
      incurred in the ordinary course of business since December 31, 2005, as of
      the
      date hereof, (i) the Seller and its Subsidiaries do not have any material
      liabilities or obligations (absolute, accrued, contingent or otherwise) which,
      and (ii) there has not been any aspect of the prior or current conduct of the
      business of the Seller or its Subsidiaries which may form the basis for any
      material claim by any third party which if asserted could result in any such
      material liabilities or obligations which, are not fully reflected, reserved
      against or disclosed in the balance sheet of the Seller as at December 31,
      2005.

     

    3.13 Taxes.
      All tax
      returns and tax reports required to be filed with respect to the income,
      operations, business or assets of the Seller and its Subsidiaries have been
      timely filed (or appropriate extensions have been obtained) with the appropriate
      governmental agencies in all jurisdictions in which such returns and reports
      are
      required to be filed, and all of the foregoing as filed are correct and complete
      and, in all material respects, reflect accurately all liability for taxes of
      the
      Seller and its Subsidiaries for the periods to which such returns relate, and
      all amounts shown as owing thereon have been paid. All income, profits,
      franchise, sales, use, value added, occupancy, property, excise, payroll,
      withholding, FICA, FUTA and other taxes (including interest and penalties),
      if
      any, collectible or payable by the Seller and its Subsidiaries or relating
      to or
      chargeable against any of its material assets, revenues or income or relating
      to
      any employee, independent contractor, creditor, stockholder or other third
      party
      through the Closing Date, will have been fully collected and paid by such date
      if due by such date or provided for by adequate reserves in the Financial
      Statements as of and for the periods ended December 31, 2005 (other than taxes
      accruing after such date) and all similar items due through the Closing Date
      will have been fully paid by that date or provided for by adequate reserves,
      whether or not any such taxes were reported or reflected in any tax returns
      or
      filings. No taxation authority has sought to audit the records of the Seller
      or
      any of its Subsidiaries for the purpose of verifying or disputing any tax
      returns, reports or related information and disclosures provided to such
      taxation authority, or for the Seller’s or any of its Subsidiaries’ alleged
      failure to provide any such tax returns, reports or related information and
      disclosure. No material claims or deficiencies have been asserted against or
      inquiries raised with the Seller or any of its Subsidiaries with respect to
      any
      taxes or other governmental charges or levies which have not been paid or
      otherwise satisfied, including claims that, or inquiries whether, the Seller
      or
      any of its Subsidiaries has not filed a tax return that it was required to
      file,
      and, to the best of the Seller’s knowledge, there exists no reasonable basis for
      the making of any such claims or inquiries. Neither the Seller nor any of its
      Subsidiaries has waived any restrictions on assessment or collection of taxes
      or
      consented to the extension of any statute of limitations relating to
      taxation.

     

    3.14 Interests
      of Officers, Directors and Other Affiliates.
      The
      description of any interest held, directly or indirectly, by any officer,
      director or other Affiliate of Seller (other than the interests of the Seller
      and its Subsidiaries in such assets) in any property, real or personal, tangible
      or intangible, used in or pertaining to Seller’s business, including any
      interest in the Intellectual Property (as defined in Section 3.15 hereof),
      as
      set forth in the Recent Reports, is true and complete, and no officer, director
      or other Affiliate of the Seller has any interest in any property, real or
      personal, tangible or intangible, used in or pertaining to the Seller’s
      business, including the Seller’s Intellectual Property, other than as set forth
      in the Recent Reports.

     

    
      
         

      

      
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    3.15 Intellectual
      Property.
      Other
      than as set forth in the Recent Reports: 

     

    (a) the
      Seller or a Subsidiary thereof has the right to use or is the sole and exclusive
      owner of all right, title and interest in and to all foreign and domestic
      patents, patent rights, trademarks, service marks, trade names, brands and
      copyrights (whether or not registered and, if applicable, including pending
      applications for registration) owned, used or controlled by the Seller and
      its
      Subsidiaries (collectively, the “Rights”) and in and to each material invention,
      software, trade secret, technology, product, composition, formula, method of
      process used by the Seller or its Subsidiaries (the Rights and such other items,
      the “Intellectual Property”), and, to the Seller’s knowledge, has the right to
      use the same, free and clear of any claim or conflict with the rights of others;
      

     

    (b) no
      royalties or fees (license or otherwise) are payable by the Seller or its
      Subsidiaries to any Person by reason of the ownership or use of any of the
      Intellectual Property except as set forth on Schedule
      3.15;
      

     

    (c) there
      have been no claims made against the Seller or its Subsidiaries asserting the
      invalidity, abuse, misuse, or unenforceability of any of the Intellectual
      Property, and, to its knowledge, there are no reasonable grounds for any such
      claims; 

     

    (d) neither
      the Seller nor its Subsidiaries have made any claim of any violation or
      infringement by others of its rights in the Intellectual Property, and to the
      best of the Seller’s knowledge, no reasonable grounds for such claims exist; and


     

    (e) neither
      the Seller nor its Subsidiaries have received notice that it is in conflict
      with
      or infringing upon the asserted rights of others in connection with the
      Intellectual Property.

     

    3.16 Restrictions
      on Business Activities.
      Other
      than as set forth in the Recent Reports, there is no agreement, judgment,
      injunction, order or decree binding upon the Seller or its Subsidiaries which
      has or could reasonably be expected to have the effect of prohibiting or
      materially impairing any business practice of the Seller or its Subsidiaries,
      any acquisition of property by the Seller or its Subsidiaries or the conduct
      of
      business by the Seller or its Subsidiaries as currently conducted or as
      currently proposed to be conducted by the Seller.

     

    3.17 Preemptive
      Rights.
      Except
      as set forth in Schedule
      3.17,
      none of
      the stockholders of the Seller possess any preemptive rights in respect of
      the
      Shares or Warrant Shares to be issued to the Purchasers upon exercise of the
      Warrants, as applicable. 

     

    3.18 Insurance.
      The
      insurance policies providing insurance coverage to the Seller or its
      Subsidiaries including for product liability are adequate for the business
      conducted by the Seller and its Subsidiaries (currently limited to the testing
      phase) and are sufficient for compliance by the Seller and its Subsidiaries
      with
      all requirements of law and all material agreements to which the Seller or
      its
      Subsidiaries are a party or by which any of their assets are bound. All of
      such
      policies are in full force and effect and are valid and enforceable in
      accordance with their terms, and the Seller and its Subsidiaries have complied
      with all material terms and conditions of such policies, including premium
      payments. None of the insurance carriers has indicated to the Seller or its
      Subsidiaries an intention to cancel any such policy.

     

    
      
         

      

      
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    3.19 Subsidiaries
      and Investments.
      Except
      as set forth in the Recent Reports or on Schedule
      3.19,
      the
      Seller has no Subsidiaries or Investments. For purposes of this Agreement,
      the
      term “Investments” shall mean, with respect to any Person, all advances, loans
      or extensions of credit to any other Person, all purchases or commitments to
      purchase any stock, bonds, notes, debentures or other securities of any other
      Person, and any other investment in any other Person, including partnerships
      or
      joint ventures (whether by capital contribution or otherwise) or other similar
      arrangement (whether written or oral) with any Person, including but not limited
      to arrangements in which (i) the Person shares profits and losses, (ii) any
      such
      other Person has the right to obligate or bind the Person to any third party,
      or
      (iii) the Person may be wholly or partially liable for the debts or obligations
      of such partnership, joint venture or other arrangement.

     

    3.20 Capitalization.
      The
      authorized capital stock of the Seller consists of 120,000,000 shares of common
      stock, $0.001 par value per share, of which 66,919,589 shares are issued and
      outstanding as of the date hereof, and 10,000,000 shares of preferred stock,
      issuable in one or more classes or series, with such relative rights and
      preferences as the Board of Directors may determine, none of which has been
      authorized for issuance other than 1,000,000 shares of Series A Junior
      Participating Preferred Stock, $0.001 par value per share, none of which,
      immediately prior to the Closing, has been issued or is outstanding, 800 shares
      of the Company’s Series B 8% Cumulative Convertible Preferred Stock, 800 of
      which have been issued and none of which, immediately prior to the Closing,
      are
      outstanding and 600 shares of the Company’s Series C Stock, 445 of which have
      been issued and none of which, immediately prior to Closing, are outstanding.
      All shares of the Seller’s issued and outstanding capital stock have been duly
      authorized, are validly issued and outstanding, and are fully paid and
      nonassessable. No securities issued by the Seller from the date of its
      incorporation to the date hereof were issued in violation of any statutory
      or
      common law preemptive rights. There are no dividends which have accrued or
      been
      declared but are unpaid on the capital stock of the Seller. All taxes required
      to be paid by Seller in connection with the issuance and any transfers of the
      Seller’s capital stock have been paid. Except as set forth on Schedule
      3.20,
      all
      permits or authorizations required to be obtained from or registrations required
      to be effected with any Person in connection with any and all issuances of
      securities of the Seller from the date of the Seller’s incorporation to the date
      hereof have been obtained or effected, and all securities of the Seller have
      been issued and are held in accordance with the provisions of all applicable
      securities or other laws. 

     

    3.21 Options,
      Warrants, Rights.
      Except
      as set forth in the Recent Reports or on Schedule
      3.21,
      there
      are no outstanding (a) securities, notes or instruments convertible into or
      exercisable for any of the capital stock or other equity interests of the Seller
      or its Subsidiaries; (b) options, warrants, subscriptions or other rights to
      acquire capital stock or other equity interests of the Seller or its
      Subsidiaries; or (c) commitments, agreements or understandings of any kind,
      including employee benefit arrangements, relating to the issuance or repurchase
      by the Seller or its Subsidiaries of any capital stock or other equity interests
      of the Seller or its Subsidiaries, any such securities or instruments
      convertible or exercisable for securities or any such options, warrants or
      rights. Except as set forth on Schedule
      3.21,
      neither
      the Seller nor the Subsidiaries have granted anti-dilution rights to any person
      or entity in connection with any outstanding option, warrant, subscription
      or
      any other instrument convertible or exercisable for the securities of the Seller
      or any of its Subsidiaries. Other than the rights granted to the Purchasers
      under the Registration Rights Agreement, there are no outstanding rights which
      permit the holder thereof to cause the Seller or the Subsidiaries to file a
      registration statement under the Securities Act or which permit the holder
      thereof to include securities of the Seller or any of its Subsidiaries in a
      registration statement filed by the Seller or any of its Subsidiaries under
      the
      Securities Act, and there are no outstanding agreements or other commitments
      which otherwise relate to the registration of any securities of the Seller
      or
      any of its Subsidiaries for sale or distribution in any jurisdiction, except
      as
      set forth on Schedule
      3.21.

     

    
      
         

      

      
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    3.22 Employees,
      Employment Agreements and Employee Benefit Plans.
      Except
      as set forth in the Recent Reports or on Schedule
      3.22,
      there
      are no employment, consulting, severance or indemnification arrangements,
      agreements, or understandings between the Seller and any officer, director,
      consultant or employee of the Seller or its Subsidiaries (the “Employment
      Agreements”). Except as set forth in the Recent Reports or on Schedule
      3.22,
      no
      Employment Agreement provides for the acceleration or change in the award,
      grant, vesting or determination of options, warrants, rights, severance
      payments, or other contingent obligations of any nature whatsoever of the Seller
      or its Subsidiaries in favor of any such parties in connection with the
      transactions contemplated by this Agreement. Except as disclosed in the Recent
      Reports or on Schedule
      3.22,
      the
      terms of employment or engagement of all directors, officers, employees, agents,
      consultants and professional advisors of the Seller and its Subsidiaries are
      such that their employment or engagement may be terminated upon not more than
      two weeks’ notice given at any time without liability for payment of
      compensation or damages and the Seller and its Subsidiaries have not entered
      into any agreement or arrangement for the management of their business or any
      part thereof other than with their directors or employees.

     

    3.23 Absence
      of Certain Business Practices.
      Neither
      the Seller, nor any Affiliate of the Seller, nor to the knowledge of the Seller,
      any agent or employee of the Seller, any other Person acting on behalf of or
      associated with the Seller, or any individual related to any of the foregoing
      Persons, acting alone or together, has: (a) received, directly or indirectly,
      any rebates, payments, commissions, promotional allowances or any other economic
      benefits, regardless of their nature or type, from any customer, supplier,
      trading company, shipping company, governmental employee or other Person with
      whom the Seller has done business directly or indirectly; or (b) directly or
      indirectly, given or agreed to give any gift or similar benefit to any customer,
      supplier, trading company, shipping company, governmental employee or other
      Person who is or may be in a position to help or hinder the business of the
      Seller (or assist the Seller in connection with any actual or proposed
      transaction) which (i) may subject the Seller to any damage or penalty in any
      civil, criminal or governmental litigation or proceeding, (ii) if not given
      in
      the past, may have had an adverse effect on the Seller or (iii) if not continued
      in the future, may adversely affect the assets, business, operations or
      prospects of the Seller or subject the Seller to suit or penalty in any private
      or governmental litigation or proceeding.

     

    3.24 Products
      and Services.
      To the
      knowledge of the Seller and except as disclosed in the Recent Reports, there
      exists no set of facts (i) which could furnish a basis for the withdrawal,
      suspension or cancellation of any registration, license, permit or other
      governmental approval or consent of any governmental or regulatory agency with
      respect to any product or service developed or provided by the Seller or its
      Subsidiaries, (ii) which could furnish a basis for the withdrawal, suspension
      or
      cancellation by order of any state, federal or foreign court of law of any
      product or service, or (iii) which could have a Material Adverse Effect on
      the
      continued operation of any facility of the Seller or its Subsidiaries or which
      could otherwise cause the Seller or its Subsidiaries to withdraw, suspend or
      cancel any such product or service from the market or to change the marketing
      classification of any such product or service. Each product or service provided
      by Seller or its Subsidiaries has been provided in accordance in all material
      respects with the specifications under which such product or service normally
      is
      and has been provided and the provisions of all applicable laws or regulations.
      

     

    
      
         

      

      
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    3.25 Environmental
      Matters.
      None of
      the premises or any properties owned, occupied or leased by the Seller or its
      Subsidiaries (the “Premises”) has been used by the Seller or the Subsidiaries
      or, to the Seller’s knowledge, by any other Person, to manufacture, treat,
      store, or dispose of any substance that has been designated to be a “hazardous
      substance” under applicable Environmental Laws (hereinafter defined) (“Hazardous
      Substances”) in violation of any applicable Environmental Laws. To its
      knowledge, the Seller has not disposed of, discharged, emitted or released
      any
      Hazardous Substances which would require, under applicable Environmental Laws,
      remediation, investigation or similar response activity. No Hazardous Substances
      are present as a result of the actions of the Seller or, to the Seller’s
      knowledge, any other Person, in, on or under the Premises which would give
      rise
      to any liability or clean-up obligations of the Seller under applicable
      Environmental Laws. The Seller and, to the Seller’s knowledge, any other Person
      for whose conduct it may be responsible pursuant to an agreement or by operation
      of law, are in compliance with all laws, regulations and other federal, state
      or
      local governmental requirements, and all applicable judgments, orders, writs,
      notices, decrees, permits, licenses, approvals, consents or injunctions in
      effect on the date of this Agreement relating to the generation, management,
      handling, transportation, treatment, disposal, storage, delivery, discharge,
      release or emission of any Hazardous Substance (the “Environmental Laws”).
      Neither the Seller nor, to the Seller’s knowledge, any other Person for whose
      conduct it may be responsible pursuant to an agreement or by operation of law
      has received any written complaint, notice, order, or citation of any actual,
      threatened or alleged noncompliance with any of the Environmental Laws, and
      there is no proceeding, suit or investigation pending or, to the Seller’s
      knowledge, threatened against the Seller or, to the Seller’s knowledge, any such
      Person with respect to any violation or alleged violation of the Environmental
      Laws, and, to the knowledge of the Seller, there is no basis for the institution
      of any such proceeding, suit or investigation. 

     

    3.26 Licenses;
      Compliance With FDA and Other Regulatory Requirements.
      

     

    (a) General.
      Except
      as disclosed in the Recent Reports, the Seller holds all material
      authorizations, consents, approvals, franchises, licenses and permits required
      under applicable law or regulation for the operation of the business of the
      Seller and its Subsidiaries as currently operated (the “Governmental
      Authorizations”). All the Governmental Authorizations have been duly issued or
      obtained and are in full force and effect, and the Seller and its Subsidiaries
      are in material compliance with the terms of all the Governmental
      Authorizations. The Seller and its Subsidiaries have not engaged in any activity
      that, to their knowledge, would cause revocation or suspension of any such
      Governmental Authorizations. The Seller has no knowledge of any facts which
      could reasonably be expected to cause the Seller to believe that the
      Governmental Authorizations will not be renewed by the appropriate governmental
      authorities in the ordinary course. Neither the execution, delivery nor
      performance of this Agreement shall adversely affect the status of any of the
      Governmental Authorizations.

     

    
      
         

      

      
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    (b) FDA.
      Without
      limiting the generality of the representations and warranties made in paragraph
      (a) above, the Seller represents and warrants that (i) the Seller and each
      of
      its Subsidiaries is in material compliance with all applicable provisions of
      the
      United States Federal Food, Drug, and Cosmetic Act (the “FDC Act”), (ii) its
      products and those of each of its Subsidiaries that are in the Seller’s control
      are not adulterated or misbranded and are in lawful distribution, (iii) the
      United States Food and Drug Administration (the “FDA”) has not initiated legal
      action with respect to the manufacturing of the Seller’s products, such as
      seizures or FDA-required recalls, and Seller uses best efforts to comply with
      applicable FDA good manufacturing practice regulations, (iv) all adverse events
      that were known to and required to be reported by Seller to the FDA have been
      reported to the FDA in a timely manner, (v) neither the Seller nor any of its
      Subsidiaries is, to their knowledge, employing or utilizing the services of
      any
      individual who has been debarred under the FDC Act, (vi) all stability studies
      required to be performed for products distributed by the Seller or any of its
      Subsidiaries have been completed or are ongoing in material compliance with
      the
      applicable FDA requirements, and (vii) the Seller and its Subsidiaries are
      in
      compliance in all material respects with all applicable provisions of the
      Controlled Substances Act.

     

    3.27 Brokers.
      No
      broker, finder or investment banker is entitled to any brokerage, finder’s or
      other fee or commission in connection with the transactions contemplated by
      this
      Agreement, based upon any arrangement made by or on behalf of the Seller, which
      would make any Purchaser liable for any fees or commissions. 

     

    3.28 Securities
      Laws.
      Neither
      the Seller nor its Subsidiaries nor any agent acting on behalf of the Seller
      or
      its Subsidiaries has taken or will take any action which might cause this
      Agreement or the Warrants to violate the Securities Act or the Exchange Act
      or
      any rules or regulations promulgated thereunder, as in effect on the Closing
      Date. Assuming that all of the representations and warranties of the Purchasers
      set forth in Article IV are true, all offers and sales of capital stock,
      securities and notes of the Seller were conducted and completed in compliance
      with the Securities Act. All shares of capital stock and other securities issued
      by the Seller and its Subsidiaries prior to the date hereof have been issued
      in
      transactions that were either registered offerings or were exempt from the
      registration requirements under the Securities Act and all applicable state
      securities or “blue sky” laws and in compliance with all applicable corporate
      laws.

     

    3.29 Disclosure.
      No
      representation or warranty made by the Seller in this Agreement, nor in any
      document, written information, financial statement, certificate, schedule or
      exhibit prepared and furnished by the Seller or the representatives of the
      Seller pursuant hereto or in connection with the transactions contemplated
      hereby, contains or will contain any untrue statement of a material fact, or
      omits to state a material fact necessary to make the statements or facts
      contained herein or therein not misleading in light of the circumstances under
      which they were furnished.

     

    
      
         

      

      
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    ARTICLE
      IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     

    Each
      Purchaser, for itself only, hereby severally and not jointly, represents and
      warrants to the Seller as follows:

     

    4.1 Existence
      and Power.
      The
      Purchaser is duly organized, validly existing and in good standing under the
      laws of the jurisdiction of such Purchaser’s organization. The Purchaser has all
      powers required to carry on such Purchaser’s business as now
      conducted.

     

    4.2 Authorization.
      The
      execution, delivery and performance by the Purchaser of this Agreement, the
      Related Documents to which such Purchaser is a party, and the consummation
      by
      the Purchaser of the transactions contemplated hereby and thereby have been
      duly
      authorized, and no additional action is required for the approval of this
      Agreement or the Related Documents. This Agreement and the Related Documents
      to
      which the Purchaser is a party have been or, to the extent contemplated hereby,
      will be duly executed and delivered and constitute valid and binding agreements
      of the Purchaser, enforceable against such Purchaser in accordance with their
      terms, except as may be limited by bankruptcy, reorganization, insolvency,
      moratorium and similar laws of general application relating to or affecting
      the
      enforcement of rights of creditors and except that enforceability of their
      obligations thereunder are subject to general principles of equity (regardless
      of whether such enforceability is considered in a proceeding in equity or at
      law).

     

    4.3 Investment.
      The
      Purchaser is acquiring the securities described herein for its own account
      and
      not with a view to, or for sale in connection with, any distribution thereof,
      nor with the intention of distributing or reselling the same, provided, however,
      that by making the representation herein, the Purchaser does not agree to hold
      any of the securities for any minimum or other specific term and reserves the
      right to dispose of the securities at any time in accordance with or pursuant
      to
      a registration statement or an exemption under the Securities Act. The Purchaser
      is aware that none of the securities has been registered under the Securities
      Act or under applicable state securities or blue sky laws. The Purchaser is
      an
“Accredited Investor” as such term is defined in Rule 501 of Regulation D, as
      promulgated under the Securities Act (including, without limitation, if the
      Purchaser is an employee benefit plan within the meaning of the Employee
      Retirement Income Security Act of 1974 and a self-directed plan, then investment
      decisions are made solely by persons that are “Accredited
      Investors”).

     

    4.4 Reliance
      on Exemptions.
      The
      Purchaser understands that the Shares and Warrants are being offered and sold
      to
      such Purchaser in reliance upon specific exemptions from the registration
      requirements of United States federal and state securities laws and that the
      Seller is relying upon the truth and accuracy of, and such Purchaser’s
      compliance with, the representations, warranties, agreements, acknowledgments
      and understandings of such Purchaser set forth herein in order to determine
      the
      availability of such exemptions and the eligibility of such Purchaser to acquire
      the securities.

     

    4.5 Experience
      of the Purchaser.
      The
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      The Purchaser is able to bear the economic risk of an investment in the
      securities and, at the present time, is able to afford a complete loss of such
      investment.

     

    
      
         

      

      
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    4.6 General
      Solicitation.
      The
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    ARTICLE
      V
      - COVENANTS OF THE SELLER AND PURCHASERS

     

    5.1 Insurance.
      The
      Seller and its Subsidiaries shall, from time to time upon the written request
      of
      the Purchasers, promptly furnish or cause to be furnished to the Purchasers
      evidence, in form and substance reasonably satisfactory to the Purchasers,
      of
      the maintenance of all insurance maintained by it for loss or damage by fire
      and
      other hazards, damage or injury to persons and property, including from product
      liability, and under workmen’s compensation laws. 

     

    5.2 Reporting
      Obligations.
      So long
      as any portion of the Warrants has not been exercised and has not expired by
      its
      terms, the Seller shall furnish to the Purchasers, or any other persons who
      hold
      any of the Warrants (provided that such subsequent holders give notice to the
      Seller that they hold Warrants and furnish their addresses) promptly upon their
      becoming available one copy of (A) each report, notice or proxy statement sent
      by the Seller to its stockholders generally, and of each regular or periodic
      report (pursuant to the Exchange Act) and (B) any registration statement,
      prospectus or written communication pursuant to the Securities Act relating
      to
      the issuance or registration of the Shares and the Warrant Shares and filed
      by
      the Seller with the Commission or any securities market or exchange on which
      shares of Common Stock are listed; provided, however, that the Seller shall
      have
      no obligation to deliver reports or schedules or statements (pursuant to the
      Exchange Act) under this Section 5.2 to the extent such reports are publicly
      available via EDGAR.

     

    The
      Purchasers are hereby authorized to deliver a copy of any financial statement
      or
      any other information relating to the business, operations or financial
      condition of the Seller which may have been furnished to the Purchasers
      hereunder, to any regulatory body or agency having jurisdiction over the
      Purchasers or to any Person which shall, or shall have right or obligation
      to
      succeed to all or any part of the Purchasers’ interest in the Seller or this
      Agreement.

     

    5.3 Investigation.
      The
      representations, warranties, covenants and agreements set forth in this
      Agreement shall not be affected or diminished in any way by any investigation
      (or failure to investigate) at any time by or on behalf of the party for whose
      benefit such representations, warranties, covenants and agreements were made.
      Without limiting the generality of the foregoing, the inability or failure
      of
      the Purchasers to discover any breach, default or misrepresentation by the
      Seller under this Agreement or the Related Documents (including under any
      certificate furnished pursuant to this Agreement), notwithstanding the exercise
      by the Purchasers or other holders of the Shares of their rights hereunder
      to
      conduct an investigation shall not in any way diminish any liability
      hereunder.

     

    
      
         

      

      
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    5.4 Further
      Assurances.
      The
      Seller shall, at its cost and expense, upon written request of the Purchasers,
      duly execute and deliver, or cause to be duly executed and delivered, to the
      Purchasers such further instruments and do and cause to be done such further
      acts as may be necessary, advisable or proper, at the reasonable request of
      the
      Purchasers, to carry out more effectually the provisions and purposes of this
      Agreement. The parties shall use their best efforts to timely satisfy each
      of
      the conditions described in Article VI of this Agreement.

     

    5.5 Use
      of
      Proceeds.
      The
      Seller covenants and agrees that the proceeds of the Purchase Price shall be
      used by the Seller for working capital and general corporate purposes; under
      no
      circumstances shall any portion of the proceeds be applied to:

     

    (i) accelerated
      repayment of debt existing on the date hereof; 

     

    (ii) the
      payment of dividends or other distributions on any capital stock of the Seller
      other than the Seller’s Series C 6% Cumulative Convertible Preferred Stock;


     

    (iii) increased
      executive compensation or loans to officers, employees, stockholders or
      directors, unless approved by a disinterested majority of the Board of
      Directors; 

     

    (iv) the
      purchase of debt or equity securities of any person, including the Seller and
      its Subsidiaries, except in connection with investment of excess cash in high
      quality (A1/P1 or better) money market instruments having maturities of one
      year
      or less; or

     

    (v) any
      expenditure not directly related to the business of the Seller.

     

    5.6 Corporate
      Existence.
      So long
      as a Purchaser owns Shares, Warrants or Warrant Shares, the Seller shall
      preserve and maintain and cause its Subsidiaries to preserve and maintain their
      corporate existence and good standing in the jurisdiction of their incorporation
      and the rights, privileges and franchises of the Seller and its Subsidiaries
      (except, in each case, in the event of a merger or consolidation in which the
      Seller or its Subsidiaries, as applicable, is not the surviving entity) in
      each
      case where failure to so preserve or maintain could have a Material Adverse
      Effect on the financial condition, business or operations of the Seller and
      its
      Subsidiaries taken as a whole.

     

    5.7 Licenses.
      The
      Seller shall, and shall cause its Subsidiaries to, maintain at all times all
      material licenses or permits necessary to the conduct of its business and as
      required by any governmental agency or instrumentality thereof, including
      without limitation all FDA clearances and approvals. 

     

    5.8 Taxes
      and Claims.
      The
      Seller and its Subsidiaries shall duly pay and discharge (a) all material taxes,
      assessments and governmental charges upon or against the Seller or its
      properties or assets prior to the date on which penalties attach thereto, unless
      and to the extent that such taxes are being diligently contested in good faith
      and by appropriate proceedings, and appropriate reserves therefor have been
      established, and (b) all material lawful claims, whether for labor, materials,
      supplies, services or anything else which might or could, if unpaid, become
      a
      lien or charge upon the properties or assets of the Seller or its Subsidiaries
      unless and to the extent only that the same are being diligently contested
      in
      good faith and by appropriate proceedings and appropriate reserves therefor
      have
      been established.

     

    
      
         

      

      
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    5.9 Perform
      Covenants.
      The
      Seller shall duly comply with all the terms and covenants contained herein
      and
      in each of the instruments and documents given to the Purchasers in connection
      with or pursuant to this Agreement, all at the times and places and in the
      manner set forth herein or therein.

     

    5.10 Additional
      Covenants.
      

     

    (a) Except
      for transactions approved by a majority of the disinterested directors of the
      Board of Directors, neither the Seller nor any of its Subsidiaries shall enter
      into any transaction with any director, officer, employee or holder of more
      than
      5% of the outstanding capital stock of any class or series of capital stock
      of
      the Seller or any of its Subsidiaries, member of the family of any such person,
      or any corporation, partnership, trust or other entity in which any such person,
      or member of the family of any such person, is a director, officer, trustee,
      partner or holder of more than 5% of the outstanding capital stock thereof,
      with
      the exception of transactions which are consummated upon terms that are no
      less
      favorable than would be available if such transaction had been effected at
      arms-length, in the reasonable judgment of the Board of Directors.

     

    (b) The
      Seller shall timely prepare and file with the Securities and Exchange Commission
      the form of notice of the sale of securities pursuant to the requirements of
      Regulation D regarding the sale of the Shares and Warrants under this
      Agreement.

     

    (c) The
      Seller shall timely prepare and file such applications, consents to service
      of
      process (but not including a general consent to service of process) and similar
      documents and take such other steps and perform such further acts as shall
      be
      required by the state securities law requirements of each jurisdiction where
      a
      Purchaser resides as indicated on Schedule
      1
      with
      respect to the sale of the Shares and Warrants under this
      Agreement.

     

    (d) Neither
      the Seller nor any of its Affiliates, nor any Person acting on its or their
      behalf, shall directly or indirectly make any offers or sales of any securities
      or solicit any offers to buy any securities under circumstances that would
      cause
      the loss of the 4(2) exemption under the Securities Act for the transactions
      contemplated hereby. 

     

    5.11 Securities
      Laws Disclosure; Publicity.
      The
      Seller shall (i) on or promptly after the Closing Date, issue a press release
      disclosing the transactions contemplated hereby, and (ii) after the Closing
      Date, timely file with the Commission a Report on Form 8-K disclosing the
      transactions contemplated hereby. Except as provided in the preceding sentence,
      neither the Seller nor the Purchasers shall make any press release or other
      publicity about the terms of this Agreement or the transactions contemplated
      hereby without the prior approval of the other unless otherwise required by
      law
      or the rules of the Commission or Nasdaq. 

     

    5.12 Like
      Treatment of Purchasers and Holders.
      Neither
      the Seller nor any of its affiliates shall, directly or indirectly, pay or
      cause
      to be paid any consideration (immediate or contingent), whether by way of
      interest, fee, payment for redemption, conversion or exercise of the Securities,
      or otherwise, to any Purchaser or holder of Securities, for or as an inducement
      to, or in connection with the solicitation of, any consent, waiver or amendment
      to any terms or provisions of this Agreement or the Related Documents, unless
      such consideration is required to be paid to all Purchasers or holders of
      Securities bound by such consent, waiver or amendment. The Seller shall not,
      directly or indirectly, redeem any Securities unless such offer of redemption
      is
      made pro rata to all Purchasers or holders of Securities, as the case may be,
      on
      identical terms.

     

    
      
         

      

      
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    5.13 Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under this Agreement or any Related Documents
      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 any such agreement. Nothing contained herein or
      in
      any Related Documents, and no action taken by any Purchaser pursuant hereto
      or
      thereto, shall be deemed to constitute any of 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 or
      thereby. Each Purchaser confirms that it has independently participated in
      the
      negotiation of the transaction contemplated hereby with the advice of its own
      counsel and advisors. Each Purchaser shall be entitled to independently protect
      and enforce its rights, including, without limitation, the rights arising out
      of
      this Agreement or out of any other document contemplated hereby, and it shall
      not be necessary for any other Purchaser to be joined as an additional party
      in
      any proceeding for such purpose.

     

    5.14 Application
      of Takeover Protections; Rights Agreement.

     

    (a) The
      Company and its board of directors will take all necessary action in order
      to
      render inapplicable to the beneficial ownership of Common Stock by the
      Purchasers immediately after the Closing (including the full number of shares
      acquirable by the Purchasers pursuant to the Warrants (without taking into
      account any provisions of the Warrants preventing exercise by the Purchasers))
      any control share acquisition, business combination, poison pill (including
      any
      distribution under a rights agreement) or other similar anti-takeover provision
      under the Articles of Incorporation, as amended or the laws of the state of
      its
      incorporation which is or could become applicable to any Purchaser as a result
      of the transactions contemplated by this Agreement, including, without
      limitation, the Company’s issuance of the Securities and any Purchaser’s
      ownership of the Securities. The Company and its board of directors will take
      all necessary action in order to render inapplicable to the beneficial ownership
      of Common Stock by the Purchasers immediately after the Closing (including
      the
      full number of shares acquirable by the Purchasers pursuant to the Warrants
      (without taking into account any provisions of the Warrants preventing exercise
      by the Purchasers)) that certain Shareholder Rights Agreement, dated as of
      April
      3, 2000 between the Company and Norwest Bank Minnesota, N.A., as Rights Agent,
      or any other stockholder rights plan or similar arrangement relating to
      accumulations of beneficial ownership of Common Stock or a change in control
      of
      the Company Date (the “Rights Agreement Amendment”) within thirty (30) business
      days following the Closing Date (the “Rights Agreement Amendment
      Deadline”).

     

    (b) The
      Company and its board of directors shall be obligated to seek to obtain the
      Rights Agreement Amendment by the Rights Agreement Amendment Deadline. If,
      despite the Company’s best efforts the Rights Agreement Amendment is not
      obtained on or prior to the Rights Agreement Amendment Deadline (the “Rights
      Agreement Amendment Failure”), the Company shall, as partial relief for the
      damages to any holder by reason of any such Rights Agreement Amendment Failure
      (which remedy shall not be exclusive of any other remedies available at law
      or
      in equity), pay to the affected Purchaser(s) an amount equal to two percent
      (2.0%) of the aggregate Purchase Price of such Purchaser’s Registrable
      Securities on the day of such Rights Agreement Amendment Failure and on every
      thirtieth day (pro rated for periods totaling less than thirty days) thereafter
      until such Rights Agreement Amendment Failure is cured by obtaining the Rights
      Agreement Amendment.

     

    
      
         

      

      
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    ARTICLE
      VI - CONDITIONS TO CLOSING

     

    6.1 Conditions
      to Obligations of Purchasers to Effect the Closing.
      The
      obligations of a Purchaser to effect the Closing and the transactions
      contemplated by this Agreement shall be subject to the satisfaction at or prior
      to the Closing, of each of the following conditions, any of which may be waived,
      in writing, by a Purchaser:

     

    (a) The
      Seller shall deliver or cause to be delivered to each of the Purchasers the
      following: 

     

    1. (i) (A)
      One
      or more certificates evidencing the aggregate number of Shares of the Common
      Stock, duly authorized, issued, fully paid and non-assessable, as is indicated
      on Schedule
      1
      to be
      purchased at the Closing by such Purchaser, registered in the name of such
      Purchaser, in such denominations as are indicated on Schedule
      1
      for such
      Purchaser (“Share Certificates”) or (B) a copy of irrevocable transfer agent
      instructions (I) that have been delivered to the Seller’s transfer agent and
      (II) instruct the Seller’s transfer agent to issue the Share Certificates, (III)
      that are acknowledged in writing by the Company’s transfer agent; provided that,
      in any case, the Company shall deliver or cause to be delivered the original
      Share Certificates as soon as practicable following the Closing;

     

    (ii) One
      or
      more certificates evidencing the Warrants, registered in the name of such
      Purchaser, in such denominations as is indicated on Schedule
      1
      for such
      Purchaser, pursuant to which such Purchaser shall be initially entitled to
      purchase that number of shares of Common Stock as is indicated on Schedule
      1
      or a
      facsimile copy of such Warrant Certificates, provided that, in any case, the
      Company shall deliver or cause to be delivered the original Warrant Certificates
      as soon as practicable following the Closing.

     

    2. The
      Registration Rights Agreement, in the form attached hereto as Exhibit
      B
      (the
“Registration Rights Agreement”), duly executed by the Seller.

     

    3. A
      legal
      opinion of Katten Muchin Rosenman LLP (“Seller’s Counsel”), counsel to the
      Seller, in the form attached hereto as Exhibit
      C.

     

    4. A
      legal
      opinion of Schreck Brignone (“Nevada Counsel”), Nevada counsel to the Seller, in
      the form attached hereto as Exhibit
      D.

     

    5. A
      certificate of the Secretary of the Seller (the “Secretary’s Certificate”), in
      form and substance satisfactory to the Purchasers, certifying as follows:


     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (i) that
      attached to the Secretary’s Certificate is a true and complete copy of the
      Articles of Incorporation of the Seller, as amended, including any and all
      certificates of designation;

     

    (ii) that
      a
      true copy of the Bylaws of the Seller, as amended to the Closing Date, is
      attached to the Secretary’s Certificate;

     

    (iii) that
      attached thereto are true and complete copies of the resolutions of the Board
      of
      Directors of the Seller authorizing the execution, delivery and performance
      of
      this Agreement and the Related Documents, instruments and certificates required
      to be executed by it in connection herewith and approving the consummation
      of
      the transactions in the manner contemplated hereby including, but not limited
      to, the authorization and issuance of the Shares and Warrants; 

     

    (iv) the
      names
      and true signatures of the officers of the Seller signing this Agreement and
      all
      other documents to be delivered in connection with this Agreement;

     

    (v) such
      other matters as required by this Agreement; and

     

    (vi) such
      other matters as the Purchasers may reasonably request.

     

    6. Seller
      shall have applied to each U.S. securities exchange, interdealer quotation
      system and other trading market where its Common Stock is currently listed
      or
      qualified for trading or quotation for the listing or qualification of the
      Shares and the Warrant Shares for trading or quotation thereon in the time
      and
      manner required thereby.

     

    7. Such
      other documents as the Purchasers shall reasonably request.

     

    6.2 Conditions
      to Obligations of the Seller to Effect the Closing.
      The
      obligations of the Seller to effect the Closing and the transactions
      contemplated by this Agreement shall be subject to the satisfaction at or prior
      to the Closing of each of the following conditions, any of which may be waived,
      in writing, by the Seller:

     

    (a) Each
      of
      the Purchasers shall deliver or cause to be delivered to the Seller (i) payment
      of the Purchase Price set forth opposite each Purchaser’s name on Schedule
      1,
      in cash
      by wire transfer of immediately available funds to an account designated in
      writing by Seller prior to the date hereof; (ii) an executed copy of this
      Agreement; (iii) an executed copy of the Registration Rights Agreement; and
      (iv)
      such other documents as the Seller shall reasonably request.

     

    ARTICLE
      VII - INDEMNIFICATION, TERMINATION AND DAMAGES

     

    7.1 Survival
      of Representations.
      Except
      as otherwise provided herein, the representations and warranties of the Seller
      and the Purchasers contained in or made pursuant to this Agreement shall survive
      the execution and delivery of this Agreement and the Closing Date and shall
      continue in full force and effect for a period of three (3) years from the
      Closing Date; provided, however, that the Seller’s warranties and
      representations under Sections 3.13 (Taxes), 3.19 (Subsidiaries and
      Investments), 3.20 (Capitalization), and 3.21 (Options, Warrants, Rights),
      shall
      survive the Closing Date and continue in full force and effect until the
      expiration of all applicable statutes of limitation; and further provided that
      the Seller’s warranties and representations under Section 3.25 (Environmental
      Matters) shall survive the Closing Date and continue in full force and effect
      for a period of six (6) years from the Closing Date. The Seller’s and the
      Purchasers’ warranties and representations shall in no way be affected by any
      investigation of the subject matter thereof made by or on behalf of the Seller
      or the Purchasers.

     

    
      
         

      

      
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    7.2 Indemnification.

     

    (a) The
      Seller agrees to indemnify and hold harmless the Purchasers, their Affiliates,
      each of their officers, directors, employees and agents and their respective
      successors and assigns, from and against any losses, damages, or expenses which
      are caused by or arise out of (i) any breach or default in the performance
      by
      the Seller of any covenant or agreement made by the Seller in this Agreement
      or
      in any of the Related Documents; (ii) any breach of warranty or representation
      made by the Seller in this Agreement or in any of the Related Documents (iii)
      any and all third party actions, suits, proceedings, claims, demands, judgments,
      costs and expenses (including reasonable legal fees and expenses) incident
      to
      any of the foregoing.

     

    (b) Each
      Purchaser, severally and not jointly, agrees to indemnify and hold harmless
      the
      Seller, its Affiliates, each of their officers, directors, employees and agents
      and their respective successors and assigns, from and against any losses,
      damages, or expenses which are caused by or arise out of (A) any breach or
      default in the performance by such Purchaser of any covenant or agreement made
      by such Purchaser in this Agreement or in any of the Related Documents; (B)
      any
      breach of warranty or representation made by such Purchaser in this Agreement
      or
      in any of the Related Documents; and (C) any and all third party actions, suits,
      proceedings, claims, demands, judgments, costs and expenses (including
      reasonable legal fees and expenses) incident to any of the foregoing; provided,
      however, that such Purchaser’s liability under this Section 7.2(b) shall not
      exceed the Purchase Price paid by such Purchaser hereunder.

     

    7.3 Indemnity
      Procedure.
      A party
      or parties hereto agreeing to be responsible for or to indemnify against any
      matter pursuant to this Agreement is referred to herein as the “Indemnifying
      Party” and the other party or parties claiming indemnity is referred to as the
“Indemnified Party”. An Indemnified Party under this Agreement shall, with
      respect to claims asserted against such party by any third party, give written
      notice to the Indemnifying Party of any liability which might give rise to
      a
      claim for indemnity under this Agreement within sixty (60) business days of
      the
      receipt of any written claim from any such third party, but not later than
      twenty (20) days prior to the date any answer or responsive pleading is due,
      and
      with respect to other matters for which the Indemnified Party may seek
      indemnification, give prompt written notice to the Indemnifying Party of any
      liability which might give rise to a claim for indemnity; provided, however,
      that any failure to give such notice will not waive any rights of the
      Indemnified Party except to the extent the rights of the Indemnifying Party
      are
      materially prejudiced.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    The
      Indemnifying Party shall have the right, at its election, to take over the
      defense or settlement of such claim by giving written notice to the Indemnified
      Party at least fifteen (15) days prior to the time when an answer or other
      responsive pleading or notice with respect thereto is required. If the
      Indemnifying Party makes such election, it may conduct the defense of such
      claim
      through counsel of its choosing (subject to the Indemnified Party’s approval of
      such counsel, which approval shall not be unreasonably withheld), shall be
      solely responsible for the expenses of such defense and shall be bound by the
      results of its defense or settlement of the claim. The Indemnifying Party shall
      not settle any such claim without prior notice to and consultation with the
      Indemnified Party, and no such settlement involving any equitable relief or
      which might have an adverse effect on the Indemnified Party may be agreed to
      without the written consent of the Indemnified Party (which consent shall not
      be
      unreasonably withheld). So long as the Indemnifying Party is diligently
      contesting any such claim in good faith, the Indemnified Party may pay or settle
      such claim only at its own expense and the Indemnifying Party will not be
      responsible for the fees of separate legal counsel to the Indemnified Party,
      unless the named parties to any proceeding include both parties or
      representation of both parties by the same counsel would be inappropriate due
      to
      conflicts of interest or otherwise. If the Indemnifying Party does not make
      such
      election, or having made such election does not, in the reasonable opinion
      of
      the Indemnified Party proceed diligently to defend such claim, then the
      Indemnified Party may (after written notice to the Indemnifying Party), at
      the
      expense of the Indemnifying Party, elect to take over the defense of and proceed
      to handle such claim in its discretion and the Indemnifying Party shall be
      bound
      by any defense or settlement that the Indemnified Party may make in good faith
      with respect to such claim. In connection therewith, the Indemnifying Party
      will
      fully cooperate with the Indemnified Party should the Indemnified Party elect
      to
      take over the defense of any such claim. The parties agree to cooperate in
      defending such third party claims and the Indemnified Party shall provide such
      cooperation and such access to its books, records and properties as the
      Indemnifying Party shall reasonably request with respect to any matter for
      which
      indemnification is sought hereunder; and the parties hereto agree to cooperate
      with each other in order to ensure the proper and adequate defense
      thereof.

     

    With
      regard to claims of third parties for which indemnification is payable
      hereunder, such indemnification shall be paid by the Indemnifying Party upon
      the
      earlier to occur of: (i) the entry of a judgment against the Indemnified Party
      and the expiration of any applicable appeal period, or if earlier, five (5)
      days
      prior to the date that the judgment creditor has the right to execute the
      judgment; (ii) the entry of an unappealable judgment or final appellate decision
      against the Indemnified Party; or (iii) a settlement of the claim.
      Notwithstanding the foregoing, the reasonable expenses of counsel to the
      Indemnified Party shall be reimbursed on a current basis by the Indemnifying
      Party. With regard to other claims for which indemnification is payable
      hereunder, such indemnification shall be paid promptly by the Indemnifying
      Party
      upon demand by the Indemnified Party.

     

    ARTICLE
      VIII - MISCELLANEOUS

     

    8.1 Further
      Assurances.
      Each
      party agrees to cooperate fully with the other parties and to execute such
      further instruments, documents and agreements and to give such further written
      assurances as may be reasonably requested by any other party to better evidence
      and reflect the transactions described herein and contemplated hereby and to
      carry into effect the intents and purposes of this Agreement, and further agrees
      to take promptly, or cause to be taken, all actions, and to do promptly, or
      cause to be done, all things necessary, proper or advisable under applicable
      law
      to consummate and make effective the transactions contemplated hereby, to obtain
      all necessary waivers, consents and approvals, to effect all necessary
      registrations and filings, and to remove any injunctions or other impediments
      or
      delays, legal or otherwise, in order to consummate and make effective the
      transactions contemplated by this Agreement for the purpose of securing to
      the
      parties hereto the benefits contemplated by this Agreement.

     

    
      
         

      

      
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    8.2 Fees
      and Expenses.
      The
      parties hereto shall pay their own costs and expenses in connection
      herewith.

     

    8.3 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 earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      prior to 5:00 p.m. (New York City time) on a business day, (b) 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 business
      day, (c) the business day following the date of mailing, if sent by U.S.
      nationally recognized overnight courier service such as Federal Express, or
      (d)
      actual receipt by the party to whom such notice is required to be given. The
      address for such notices and communications shall be as follows:

     

    If
      to the
      Purchasers at each Purchaser’s address set forth under its name on Schedule
      1
      attached
      hereto, or with respect to the Seller, addressed to: 

     

    NexMed,
      Inc.

    350
      Corporate Boulevard

    Robbinsville,
      NJ 08691

    Attention:
      Chief Financial Officer 

    Facsimile
      No.: 609-208-1622

    


    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 Seller 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 Purchaser shall be sent to the
      addresses, if any, listed on Schedule
      1
      attached
      hereto.

     

    Unless
      otherwise stated above, such communications shall be effective when they are
      received by the addressee thereof in conformity with this Section. Any party
      may
      change its address for such communications by giving notice thereof to the
      other
      parties in conformity with this Section.

     

    8.4 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and enforced in accordance with the
      laws
      of the State of New York without reference to the conflicts of laws principles
      thereof.

     

    
      
         

      

      
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    8.5 Jurisdiction
      and Venue.
      This
      Agreement shall be subject to the exclusive jurisdiction of the Federal District
      Court, Southern District of New York and if such court does not have proper
      jurisdiction, the State Courts of New York County, New York. The parties to
      this
      Agreement agree that any breach of any term or condition of this Agreement
      shall
      be deemed to be a breach occurring in the State of New York by virtue of a
      failure to perform an act required to be performed in the State of New York
      and
      irrevocably and expressly agree to submit to the jurisdiction of the Federal
      District Court, Southern District of New York and if such court does not have
      proper jurisdiction, the State Courts of New York County, New York for the
      purpose of resolving any disputes among the parties relating to this Agreement
      or the transactions contemplated hereby. The parties irrevocably waive, to
      the
      fullest extent permitted by law, any objection which they may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      relating to this Agreement, or any judgment entered by any court in respect
      hereof brought in New York County, New York, and further irrevocably waive
      any
      claim that any suit, action or proceeding brought in Federal District Court,
      Southern District of New York and if such court does not have proper
      jurisdiction, the State Courts of New York County, New York has been brought
      in
      an inconvenient forum. Each of the parties hereto 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 8.5 shall affect or limit any right
      to
      serve process in any other manner permitted by law.

     

    8.6 Successors
      and Assigns.
      This
      Agreement is personal to each of the parties and may not be assigned without
      the
      written consent of the other parties; provided, however, that any of the
      Purchasers shall be permitted to assign this Agreement to any Person to whom
      it
      assigns or transfers securities issued or issuable pursuant to this Agreement.
      Any assignee must be an “accredited investor” as defined in Rule 501(a)
      promulgated under the Securities Act.

     

    8.7 Severability.
      If any
      provision of this Agreement, or the application thereof, shall for any reason
      or
      to any extent be invalid or unenforceable, the remainder of this Agreement
      and
      application of such provision to other persons or circumstances shall continue
      in full force and effect and in no way be affected, impaired or
      invalidated.

     

    8.8 Entire
      Agreement.
      This
      Agreement and the other agreements and instruments referenced herein constitute
      the entire understanding and agreement of the parties with respect to the
      subject matter hereof and supersede all prior agreements and
      understandings.

     

    8.9 Other
      Remedies.
      Except
      as otherwise provided herein, any and all remedies herein expressly conferred
      upon a party shall be deemed cumulative with and not exclusive of any other
      remedy conferred hereby or by law, or in equity on such party, and the exercise
      of any one remedy shall not preclude the exercise of any other.

     

    8.10 Amendment
      and Waivers.
      Subject
      to Section 5.12, any term or provision of this Agreement may be amended, and
      the
      observance of any term of this Agreement may be waived (either generally or
      in a
      particular instance and either retroactively or prospectively) only by a writing
      signed by the Seller and the Purchasers purchasing at least 75% of the Shares
      hereunder, and such waiver or amendment, as the case may be, shall be binding
      upon all Purchasers. The waiver by a party of any breach hereof or default
      in
      the performance hereof shall not be deemed to constitute a waiver of any other
      default or any succeeding breach or default. This Agreement may not be amended
      or supplemented by any party hereto except pursuant to a written amendment
      executed by the Seller and the Purchasers purchasing at least 75% of the Shares
      hereunder. No amendment shall be effected to impact a holder of Securities
      in a
      disproportionately adverse fashion without the consent of such individual
      holder.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    8.11 No
      Waiver.
      The
      failure of any party to enforce any of the provisions hereof shall not be
      construed to be a waiver of the right of such party thereafter to enforce such
      provisions.

     

    8.12 Construction
      of Agreement; Knowledge.
      For
      purposes of this Agreement, the term “knowledge,” when used in reference to a
      corporation means the knowledge of the directors and executive officers of
      such
      corporation (including, if applicable, any person designated as a chief
      scientific, medical or technical officer) assuming such persons shall have
      made
      inquiry that is customary and appropriate under the circumstances to which
      reference is made, and when used in reference to an individual means the
      knowledge of such individual assuming the individual shall have made inquiry
      that is customary and appropriate under the circumstances to which reference
      is
      made.

     

    8.13 Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original as against any party whose signature appears thereon and all of
      which together shall constitute one and the same instrument. This Agreement
      shall become binding when one or more counterparts hereof, individually or
      taken
      together, shall bear the signatures of all of the parties reflected hereon
      as
      signatories. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    8.14 No
      Third Party Beneficiary.
      Nothing
      expressed or implied in this Agreement is intended, or shall be construed,
      to
      confer upon or give any person other than the parties hereto and their
      respective heirs, personal representatives, legal representatives, successors
      and permitted assigns, any rights or remedies under or by reason of this
      Agreement.

     

    8.15 Waiver
      of Trial by Jury.
      THE
      PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
      RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     

    [Signature
      Page Follows]

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      first above written.

     

     

    SELLER:

     

    NEXMED,
      INC.

    


    


    By:/s/
      Mark Westgate

    Name:
      Mark Westgate

    Title:
      Vice President and Chief Financial Officer

    


     

    PURCHASER:

    


    SOUTHPOINT
      MASTER FUND, LP

    


    By:
      Southpoint GP, LP, its general partner

    


    By:
      Southpoint Capital Advisors LLC, its general partner

    


    By:/s/                                                                
      

    Name:
      Robert W. Butts

    Title:
      Member

    


    


    


    PURCHASER:

    


    RA
      CAPITAL BIOTECH FUND, L.P.

    


    By:
      RA
      Capital Management, LLC, its general partner

    


     

    By:/s/                                                         
        

    Name:

    Title:

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
 

    Schedule
      1 to Common Stock and Warrant Purchase Agreement

     

    


     

    Purchasers
      and Shares of Common Stock and Warrants

     

    
      	
              Name,
                Address and Fax Number of Purchaser

            	
              Copies
                of 

              Notices
                to

            	
              Shares
                of 

              Common
                Stock 

              Purchased

            	
              Common
                Stock 

              Underlying
                Warrants

            	
              Purchase
                Price

            
	
              Southpoint
                Master Fund, LP

              c/o
                Southpoint Capital Advisors LLC

              623
                Fifth Avenue, Suite 2503

              New
                York, NY 10022

              Fax:
                (212) 692-6355

            	 	
              6,658,500

            	
              2,663,400

            	
              $4,328,690.85

            
	
              RA
                Capital Biotech Fund, L.P.

              c/o
                RA Capital Management, LLC

              111
                Huntington Ave, Suite 610

              Boston,
                MA 02199

              Office:
                617-778-2513

              Fax:
                (617) 778-2510

            	 	
              6,658,500

            	
              2,663,400

            	
              $4,328,690.85