Document:

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT
REQUIRED.

                                                                Warrant No. C-__

                          COMMON STOCK PURCHASE WARRANT

To Purchase ____________(1) Shares of Common Stock of NEXMED, INC.

      THIS IS TO CERTIFY THAT _______________, or registered assigns (the
"Holder"), is entitled, during the Exercise Period (as hereinafter defined), to
purchase from NexMed, Inc., a Nevada corporation (the "Company"), the Warrant
Stock (as hereinafter defined and subject to adjustment as provided herein), in
whole or in part, at a purchase price of $1.43 per share, all on and subject to
the terms and conditions hereinafter set forth.

      1. Definitions. As used in this Warrant, the following terms have the
respective meanings set forth below:

      "Affiliate" means any person or entity that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a person or entity, as such terms are used in and construed
under Rule 144 under the Securities Act. With respect to a Holder of Warrants,
any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as such Holder will be deemed to be an Affiliate
of such Holder.

      "Appraised Value" means, in respect of any share of Common Stock on any
date herein specified, the fair saleable value of such share of Common Stock
(determined without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that the Company
may have no class of equity registered under the Exchange Act) as of the last
day of the most recent fiscal month ending prior to such date specified, based
on the value of the Company on a fully-diluted basis, as determined by a
nationally recognized investment banking firm selected by the Company's Board of
Directors and having no prior relationship with the Company.

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

__________________________________
(1) Insert 35% of Purchase Price divided by $1.31.

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      "Change of Control" means the (i) acquisition by an individual or legal
entity or group (as set forth in Section 13(d) of the Exchange Act) of more than
one-half of the voting rights or equity interests in the Company; or (ii) sale,
conveyance, or other disposition of all or substantially all of the assets,
property or business of the Company or the merger into or consolidation with any
other corporation (other than a wholly owned subsidiary corporation) or
effectuation of any transaction or series of related transactions where holders
of the Company's voting securities prior to such transaction or series of
transactions fail to continue to hold at least 50% of the voting power of the
Company (or, if other than the Company, the successor or acquiring entity)
immediately following such transaction.

      "Closing Date" means May 17, 2005.

      "Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.

      "Common Stock" means (except where the context otherwise indicates) the
Common Stock, $0.001 par value per share, of the Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may thereafter
be changed or converted, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets on liquidation over any other class of stock
of the Company and which is not subject to redemption and (ii) shares of common
stock of any successor or acquiring corporation received by or distributed to
the holders of Common Stock of the Company in the circumstances contemplated by
Section 4.5.

      "Current Market Price" means, in respect of any share of Common Stock on
any date herein specified,

      (1)   if there shall not then be a public market for the Common Stock, the
            higher of

            (a) the book value per share of Common Stock at such date, and

            (b) the Appraised Value per share of Common Stock at such date,

      or

      (2) if there shall then be a public market for the Common Stock, the
higher of (x) the book value per share of Common Stock at such date, and (y) the
average of the daily market prices for the five (5) consecutive Trading Days
immediately before such date. The daily market price for each such Trading Day
shall be (i) the closing bid price on such day on the principal stock exchange
(including Nasdaq) on which such Common Stock is then listed or admitted to
trading, or quoted, as applicable, (ii) if no sale takes place on such day on
any such exchange, the last reported closing bid price on such day as officially
quoted on any such exchange (including Nasdaq), (iii) if the Common Stock is not
then listed or admitted to trading on any stock exchange, the last reported
closing bid price on such day in the over-the-counter market, as furnished by
the National Association of Securities Dealers Automatic Quotation System or the
National Quotation Bureau, Inc., (iv) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished by any similar

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firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the holder of this
Warrant and the Company or, if they cannot agree upon such selection, as
selected by two such members of the NASD, one of which shall be selected by
holder of this Warrant and one of which shall be selected by the Company.

      "Current Warrant Price" means, in respect of a share of Common Stock at
any date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant on such date. Unless and until the Current
Warrant Price is adjusted pursuant to the terms herein, the initial Current
Warrant Price shall be $ 1.43 per share of Common Stock.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.

      "Exercise Period" means the period during which this Warrant is
exercisable pursuant to Section 2.1.

      "Expiration Date" means May 17, 2009.

      "GAAP" means generally accepted accounting principles in the United States
of America as from time to time in effect.

      "NASD" means the National Association of Securities Dealers, Inc., or any
successor corporation thereto. ----

      "Other Property" has the meaning set forth in Section 4.5.

      "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, incorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).

      "Preferred Stock Purchase Agreement" means that certain Preferred Stock
and Warrant Purchase Agreement dated as of May 16, 2005 among the Company and
the other parties named therein, pursuant to which this Warrant was originally
issued.

      "Preferred Stock" means the Convertible Preferred Stock as defined in and
issued pursuant to the Preferred Stock Purchase Agreement.

      "Restricted Common Stock" means shares of Common Stock which are, or which
upon their issuance upon the exercise of any Warrant would be required to be,
evidenced by a certificate bearing the restrictive legend set forth in Section
3.2.

      "Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

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<PAGE>

      "Trading Day" means any day on which the primary market on which shares of
Common Stock are listed is open for trading.

      "Transfer" means any disposition of any Warrant or Warrant Stock or of any
interest in either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.

      "Warrants" means this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.

      "Warrant Price" means an amount equal to (i) the number of shares of
Common Stock being purchased upon exercise of this Warrant pursuant to Section
2.1, multiplied by (ii) the Current Warrant Price.

      "Warrant Stock" means the [____________] shares of Common Stock to be
purchased upon the exercise hereof, subject to adjustment as provided herein.

      2. Exercise of Warrant.

      2.1. Manner of Exercise. From and after the date that is six (6) months
after the date of issuance hereof and until 5:00 P.M., New York time, on the
Expiration Date (the "Exercise Period"), the Holder may exercise this Warrant,
on any Business Day, for all or any part of the number of shares of Warrant
Stock purchasable hereunder.

      In order to exercise this Warrant, in whole or in part, the Holder shall
deliver to the Company at its principal office or at the office or agency
designated by the Company pursuant to Section 12, (i) a written notice of
Holder's election to exercise this Warrant, which notice shall specify the
number of shares of Warrant Stock to be purchased, (ii) payment of the Warrant
Price as provided herein, and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by the Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within three Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to the Holder a certificate or certificates
representing the aggregate number of full shares of Warrant Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as the Holder
shall request in the notice and shall be registered in the name of the Holder or
such other name as shall be designated in the notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other Person so designated to
be named therein shall be deemed to have become a Holder of record of such
shares for all purposes, as of the date when the notice, together with the
payment of the Warrant Price and this Warrant, is received by the Company as
described above. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of the

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Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.

      Payment of the Warrant Price may be made at the option of the Holder by:
(i) certified or official bank check payable to the order of the Company, (ii)
wire transfer to the account of the Company or (iii) the surrender and
cancellation of a portion of shares of Common Stock then held by the Holder or
issuable upon such exercise of this Warrant, which shall be valued and credited
toward the total Warrant Price due the Company for the exercise of the Warrant
based upon the Current Market Price of the Common Stock. All shares of Common
Stock issuable upon the exercise of this Warrant pursuant to the terms hereof
shall be validly issued and, upon payment of the Warrant Price, shall be fully
paid and nonassessable and not subject to any preemptive rights.

      2.2. Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay an amount in cash equal to
the Current Market Price per share of Common Stock on the date of exercise
multiplied by such fraction.

      2.3. Continued Validity. A Holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a Holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as the Holder under Sections 10 and
13 of this Warrant.

      2.4. Restrictions on Exercise Amount.

      (i) Unless a Holder delivers to the Company irrevocable written notice
prior to the date of issuance hereof or sixty-one days prior to the effective
date of such notice that this Section 2.4(i) shall not apply to such Holder, the
Company shall not issue to the Holder, and the Holder may not acquire, a number
of shares of Warrant Stock to the extent that, upon such exercise, the number of
shares of Common Stock then beneficially owned by such holder and its Affiliates
and any other persons or entities whose beneficial ownership of Common Stock
would be aggregated with the Holder's for purposes of Section 13(d) of the
Exchange Act (including shares held by any "group" of which the holder is a
member, but excluding shares beneficially owned by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right to
convert, exercise or purchase similar to the limitation set forth herein) would
exceed 9.9% of the total number of shares of Common Stock of the Company then
issued and outstanding. For purposes hereof, "group" has the meaning set forth
in Section 13(d) of the Exchange Act and applicable regulations of the
Commission, and the percentage held by the holder shall be determined in a
manner consistent with the provisions of Section 13(d) of the Exchange Act. Each
delivery of a notice of exercise by a Holder will constitute a representation by
such Holder that it has evaluated the limitation set forth in this paragraph and

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<PAGE>

determined, based on the most recent public filings by the Company with the
Commission, that the issuance of the full number of shares of Warrant Stock
requested in such notice of exercise is permitted under this paragraph.

      (ii) In the event the Company is prohibited from issuing shares of Warrant
Stock as a result of any restrictions or prohibitions under applicable law or
the rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization, the Company shall as soon as practicable
seek the approval of its stockholders and take such other action to authorize
the issuance of the full number of shares of Common Stock issuable upon full
exercise of this Warrant but in any event the Board of Directors shall call a
special meeting of the stockholders of the Corporation in the manner set forth
in the By-laws of the Corporation to be held within ninety (90) days following
the inception of such occurrence, which inception shall occur at such time as
the Company is not able to honor the full exercise of all outstanding Warrants
and the full conversion of all outstanding shares of Preferred Stock, without
regard to any cap limitations or issuance restrictions, due to such law, rule or
regulation, whether or not any such conversion or exercise is actually
attempted. For clarification purposes, shares of Common Stock otherwise reserved
for issuance upon exercise of unexercised Warrants shall be utilized for
conversion of Preferred Stock to the extent necessary to avoid any issuance in
excess of the maximum permissible amount of shares permitted to be issued under
the rules and regulations of the Nasdaq Stock Market (or any other principal
securities exchange, market, interdealer quotation system or other
self-regulatory organization) as they apply to the Company.

      3. Transfer, Division and Combination.

      3.1. Transfer. The Warrants and the Warrant Stock shall be freely
transferable, subject to compliance with all applicable laws, including, but not
limited to the Securities Act. If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant or the resale of the Warrant
Stock, this Warrant or the Warrant Stock, as applicable, shall not be registered
under the Securities Act, the Company may require, as a condition of allowing
such transfer (i) that the Holder or transferee of this Warrant or the Warrant
Stock as the case may be, furnish to the Company a written opinion of counsel
that is reasonably acceptable to the Company to the effect that such transfer
may be made without registration under the Securities Act, (ii) that the Holder
or transferee execute and deliver to the Company an investment letter in form
and substance acceptable to the Company and substantially in the form attached
as Exhibit C hereto and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act. Transfer of this
Warrant and all rights hereunder, in whole or in part, in accordance with the
foregoing provisions, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company referred to in Section 2.1 or the office or agency
designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Following a transfer that complies
with the requirements of this Section 3.1, the Warrant may be exercised by a new
Holder for the purchase of shares of Common Stock regardless of whether the

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Company issued or registered a new Warrant on the books of the Company. In
connection with any transfer of this Warrant after the Registration Statement
(as defined in the Investor Rights Agreement) is declared effective under the
Securities Act, the Holder or transferee of this Warrant shall reimburse the
Company 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).

      3.2. Restrictive Legends. Each certificate for Warrant Stock initially
issued upon the exercise of this Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, unless, in each
case, such Warrant Stock is eligible for resale without registration pursuant to
Rule 144(k) under the Exchange Act, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT 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 INVESTOR RIGHTS
AGREEMENT DATED AS OF APRIL ___, 2005, 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."

      3.3. Division and Combination; Expenses; Books. This Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3. The Company agrees to
maintain, at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.

      4. Adjustments. The number of shares of Common Stock for which this
Warrant is exercisable, and the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time as
set forth in this Section 4. The Company shall give the Holder notice of any
event described below which requires an adjustment pursuant to this Section 4 in
accordance with Sections 5.1 and 5.2.

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      4.1. Stock Dividends, Subdivisions and Combinations. If at any time while
this Warrant is outstanding the Company shall:

            (i) declare a dividend or make a distribution on its outstanding
shares of Common Stock in shares of Common Stock,

            (ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or

            (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then:

      (1) the number of shares of Common Stock acquirable upon exercise of this
Warrant immediately after the occurrence of any such event shall be adjusted to
equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock that would have been acquirable under this
Warrant immediately prior to the record date for such dividend or distribution
or the effective date of such subdivision or combination would own or be
entitled to receive after such record date or the effective date of such
subdivision or combination, as applicable, and

      (2) the Current Warrant Price shall be adjusted to equal:

            (A) the Current Warrant Price in effect at the time of the record
      date for such dividend or distribution or of the effective date of such
      subdivision or combination, multiplied by the number of shares of Common
      Stock into which this Warrant is exercisable immediately prior to the
      adjustment, divided by

            (B) the number of shares of Common Stock into which this Warrant is
      exercisable immediately after such adjustment.

      Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

      4.2. Certain Other Distributions. If at any time while this Warrant is
outstanding the Company shall cause the holders of its Common Stock to be
entitled to receive any dividend or other distribution of:

            (i) cash,

            (ii) any evidences of its indebtedness, any shares of stock of any
class or any other securities or property or assets of any nature whatsoever
(other than cash or additional shares of Common Stock as provided in Section 4.1
hereof), or

            (iii) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property or assets of any nature whatsoever, then:

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            (1) the number of shares of Common Stock acquirable upon exercise of
      this Warrant shall be adjusted to equal the product of the number of
      shares of Common Stock acquirable upon exercise of this Warrant
      immediately prior to the record date for such dividend or distribution,
      multiplied by a fraction (x) the numerator of which shall be the Current
      Warrant Price per share of Common Stock at the date of taking such record
      and (y) the denominator of which shall be such Current Warrant Price minus
      the amount allocable to one share of Common Stock of any such cash so
      distributable and of the fair value (as determined in good faith by the
      Board of Directors of the Company) of any and all such evidences of
      indebtedness, shares of stock, other securities or property or warrants or
      other subscription or purchase rights so distributable; and

            (2) the Current Warrant Price in effect immediately prior to the
      record date fixed for determination of stockholders entitled to receive
      such distribution shall be adjusted to equal (x) the Current Warrant Price
      multiplied by the number of shares of Common Stock acquirable upon
      exercise of this Warrant immediately prior to the adjustment, divided by
      (y) the number of shares of Common Stock acquirable upon exercise of this
      Warrant immediately after such adjustment. A reclassification of the
      Common Stock (other than a change in par value, or from par value to no
      par value or from no par value to par value) into shares of Common Stock
      and shares of any other class of stock shall be deemed a distribution by
      the Company to the holders of its Common Stock of such shares of such
      other class of stock within the meaning of this Section 4.2 and, if the
      outstanding shares of Common Stock shall be changed into a larger or
      smaller number of shares of Common Stock as a part of such
      reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4.1.

      4.3. Securities Issuances. In the event that the Company or any of its
subsidiaries (A) issues or sells any Common Stock or convertible securities,
warrants, options or other rights to subscribe for or to purchase or exchange
for, shares of Common Stock ("Convertible Securities") or (B) directly or
indirectly effectively reduces the conversion, exercise or exchange price for
any Convertible Securities which are currently outstanding, at or to an
effective Per Share Selling Price (as defined below) which is less than the
greater of (I) the closing sale price per share of the Common Stock on the
principal market on which the Common Stock is traded the Trading Day next
preceding such issue or sale or, in the case of issuances to holders of its
Common Stock, the date fixed for the determination of stockholders entitled to
receive such warrants, rights, or options ("Fair Market Price"), or (II) the
Current Warrant Price, then in each such case the Current Warrant Price in
effect immediately prior to such issue or sale or record date, as applicable,
shall be automatically reduced effective concurrently with such issue or sale to
an amount determined by multiplying the Current Warrant Price then in effect by
a fraction, (x) the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate consideration
received by the Company for such additional shares would purchase at such Fair
Market Price or Current Warrant Price, as the case may be, and (y) the
denominator of which shall be the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale; provided, however,
that in no event shall any adjustment(s) pursuant to this Section 4.3 reduce the
Current Warrant Price to a price less than $1.31, which figure shall be

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appropriately and equitably adjusted for any stock splits, stock dividends,
spin-offs and similar such events. The foregoing provision shall not apply to
any issuances or sales of Common Stock or Convertible Securities (i) pursuant to
any Convertible Securities currently outstanding on the date hereof in
accordance with the terms of such Convertible Securities in effect on the date
hereof, or (ii) to any officer, director, employee or Consultant (as defined
below) of the Company pursuant to a bona fide option or equity incentive plan
duly adopted by the Company, provided that any such issuances or sales to
Consultants must be reasonable consideration for the services rendered by such
Consultants and shall not exceed more than $1 million in market value to all
Consultants in the aggregate under any circumstances. "Consultant" shall mean
any natural person providing bona fide services to the Company which are not in
connection with the offer or sale of securities in a capital raising transaction
and which do not directly or indirectly promote or maintain a market for the
Company's securities. The Company shall give to the Warrantholder written notice
of any such sale of Common Stock within 24 hours of the closing of any such sale
and shall within such 24 hour period issue a press release announcing such sale
if such sale is a material event for, or otherwise material to, the Company.

      For the purposes of the foregoing adjustments, in the case of the issuance
of any Convertible Securities, the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall be
made upon the actual issuance of Common Stock upon exercise, exchange or
conversion of such Convertible Securities, and provided further that to the
extent such Convertible Securities expire or terminate unconverted or
unexercised, then at such time the Current Warrant Price shall be readjusted as
if such portion of such Convertible Securities had not been issued.

      For purposes of this Section 4.3, if an event occurs that triggers more
than one of the above adjustment provisions, then only one adjustment shall be
made and the calculation method which yields the greatest downward adjustment in
the Current Warrant Price shall be used.

      "Per Share Selling Price" shall include the amount actually paid by third
parties for each share of Common Stock in a sale or issuance by the Company. In
the event a fee is paid by the Company in connection with such transaction
directly or indirectly to such third party or its affiliates, any such fee shall
be deducted from the selling price pro rata to all shares sold in the
transaction to arrive at the Per Share Selling Price. A sale of shares of Common
Stock shall include the sale or issuance of Convertible Securities, and in such
circumstances the Per Share Selling Price of the Common Stock covered thereby
shall also include the exercise, exchange or conversion price thereof (in
addition to the consideration received by the Company upon such sale or issuance
less the fee amount as provided above). In case of any such security issued in a
transaction in which the purchase price or the conversion, exchange or exercise
price is directly or indirectly subject to adjustment or reset based on a future
date, future trading prices of the Common Stock, specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock, or otherwise (but excluding standard stock split anti-dilution
provisions or weighted-average anti-dilution provisions similar to that set
forth herein, provided that any actual reduction of such price under any such
security pursuant to such weighted-average anti-dilution provision shall be
included and cause a adjustment hereunder), the Per Share Selling Price shall be

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deemed to be the lowest conversion, exchange, exercise or reset price at which
such securities are converted, exchanged, exercised or reset or might have been
converted, exchanged, exercised or reset, or the lowest adjustment, as the case
may be, over the life of such securities. If shares are issued for a
consideration other than cash, the Per Share Selling Price shall be the fair
value of such consideration as determined in good faith by independent certified
public accountants mutually acceptable to the Company and the Holder. In the
event the Company directly or indirectly effectively reduces the conversion,
exercise or exchange price for any Convertible Securities which are currently
outstanding, then the Per Share Selling Price shall equal such effectively
reduced conversion, exercise or exchange price.

      4.4. Other Provisions Applicable to Adjustments. The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock into which this Warrant is exercisable and the Current Warrant
Price provided for in Section 4:

            (a) When Adjustments to Be Made. The adjustments required by Section
4 shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that any that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of the
Common Stock, as provided for in Section 4.1) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than 1% of the shares of Common Stock
into which this Warrant is exercisable immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such minimum
amount (except as aforesaid) which is postponed shall be carried forward and
made as soon as such adjustment, together with other adjustments required by
this Section 4 and not previously made, would result in a minimum adjustment or
on the date of exercise. For the purpose of any adjustment, any specified event
shall be deemed to have occurred at the close of business on the date of its
occurrence.

            (b) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/100th of a share.

            (c) When Adjustment Not Required. If the Company undertakes a
transaction contemplated under this Section 4 and as a result takes a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights or other benefits
contemplated under this Section 4 and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights or other benefits
contemplated under this Section 4, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.

            (d) Escrow of Stock. If after any property becomes distributable
pursuant to Section 4 by reason of the taking of any record of the holders of
Common Stock, but prior to the occurrence of the event for which such record is
taken, a holder of this Warrant exercises the Warrant during such time, then
such holder shall continue to be entitled to receive any shares of Common Stock
issuable upon exercise hereunder by reason of such adjustment and such shares or
other property shall be held in escrow for the holder of this Warrant by the
Company to be issued to holder of this Warrant upon and to the extent that the
event actually takes place. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be canceled by the Company and
escrowed property returned to the Company.

                                       11
<PAGE>

      4.5. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets.

            (a) If there shall occur a Change of Control and, pursuant to the
terms of such Change of Control, shares of common stock of the successor or
acquiring corporation, or any cash, shares of stock or other securities or
property of any nature whatsoever (including warrants or other subscription or
purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by or distributed
to the holders of Common Stock of the Company, then the Holder of this Warrant
shall have the right thereafter to receive, upon the exercise of the Warrant,
the number of shares of common stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and the Other Property
receivable upon or as a result of such Change of Control by a holder of the
number of shares of Common Stock into which this Warrant is exercisable
immediately prior to such event.

            (b) In case of any such Change of Control described in Section
4.5(a) above, the resulting, successor or acquiring entity (if other than the
Company) and, if an entity different from the successor or acquiring entity, the
entity whose capital stock or assets the holders of the Common Stock are
entitled to receive as a result of such Change of Control, shall expressly
assume the due and punctual observance and performance of each and every
covenant and condition contained in this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of the Common Stock into which this Warrant is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in Section 4.
For purposes of Section 4, common stock of the successor or acquiring
corporation shall include stock of such corporation of any class which is not
preferred as to dividends or assets on liquidation over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4 shall similarly apply to successive
Change of Control transactions.

      4.6. Other Action Affecting Common Stock. In case at any time or from time
to time the Company shall take any action in respect of its Common Stock, other
than the payment of dividends permitted by Section 4 or any other action
described in Section 4, then, unless such action will not have a materially
adverse effect upon the rights of the holder of this Warrant, the number of
shares of Common Stock or other stock into which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.

      4.7. Certain Limitations. Notwithstanding anything herein to the contrary,
the Company agrees not to enter into any transaction which, by reason of any
adjustment hereunder, would cause the Current Warrant Price to be less than the
par value per share of Common Stock.

      4.8. Stock Transfer Taxes. The issue of stock certificates upon exercise
of this Warrant shall be made without charge to the holder for any tax in

                                       12
<PAGE>

respect of such issue. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of shares in any name other than that of the holder of this Warrant,
and the Company shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.

      5. Notices to Warrant Holders.

      5.1. Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Current Warrant Price, the Company, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to the Holder of this Warrant a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written request at any time of the Holder of this Warrant, furnish or cause to
be furnished to such Holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Current Warrant Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, or
other property which at the time would be received upon the exercise of Warrants
owned by such Holder.

      5.2. Notice of Corporate Action. If at any time:

            (a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other than a cash
dividend payable out of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of incorporation of the
Company) or other distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or

            (b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation,

            (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company, or

            (d) the Company shall cause the holders of its Common Stock to be
entitled to receive (i) any dividend or other distribution of cash, (ii) any
evidences of its indebtedness, or (iii) any shares of stock of any class or any
other securities or property or assets of any nature whatsoever (other than cash
or additional shares of Common Stock as provided in Section 4.1 hereof); or (iv)
any warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property or assets of any nature whatsoever;

then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 20 days' prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,

                                       13
<PAGE>

consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 15.2.

      5.3. No Rights as Stockholder. This Warrant does not entitle the Holder to
any voting or other rights as a stockholder of the Company prior to exercise and
payment for the Warrant Price in accordance with the terms hereof.

      6. No Impairment. The Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant. Upon the request of the
Holder, the Company will at any time during the period this Warrant is
outstanding acknowledge in writing, in form satisfactory to the Holder, the
continuing validity of this Warrant and the obligations of the Company
hereunder.

      7. Reservation and Authorization of Common Stock; Registration With
Approval of Any Governmental Authority. From and after the Closing Date, the
Company shall at all times reserve and keep available for issue upon the
exercise of Warrants such number of its authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of all outstanding
Warrants (without regard to any ownership limitations provided in Section
2.4(i)). All shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms of
such Warrant, shall be duly and validly issued and fully paid and nonassessable,

                                       14
<PAGE>

and not subject to preemptive rights. Before taking any action which would cause
an adjustment reducing the Current Warrant Price below the then par value, if
any, of the shares of Common Stock issuable upon exercise of the Warrants, the
Company shall take any corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Current Warrant Price. Before taking any
action which would result in an adjustment in the number of shares of Common
Stock for which this Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority under any federal or state law before such shares may
be so issued (other than as a result of a prior or contemplated distribution by
the Holder of this Warrant), the Company will in good faith and as expeditiously
as possible and at its expense endeavor to cause such shares to be duly
registered.

      8. Taking of Record; Stock and Warrant Transfer Books. In the case of all
dividends or other distributions by the Company to the holders of its Common
Stock with respect to which any provision of Section 4 refers to the taking of a
record of such holders, the Company will in each such case take such a record
and will take such record as of the close of business on a Business Day. The
Company will not at any time, except upon dissolution, liquidation or winding up
of the Company, close its stock transfer books or Warrant transfer books so as
to result in preventing or delaying the exercise or transfer of any Warrant.

      9. Registration Rights. The resale of the Warrant Stock shall be
registered in accordance with the terms and conditions contained in that certain
Investor Rights Agreement dated of even date hereof, among the Holder, the
Company and the other parties named therein (the "Investor Rights Agreement").
The Holder acknowledges that pursuant to the Investor Rights Agreement, the
Company has the right to request that the Holder furnish information regarding
such Holder and the distribution of the Warrant Stock as is required by law or
the Commission to be disclosed in the Registration Statement (as such term is
defined in the Investor Rights Agreement), and the Company may exclude from such
registration the shares of Warrant Stock acquirable hereunder if Holder fails to
furnish such information within a reasonable time prior to the filing of each
Registration Statement, supplemented prospectus included therein and/or amended
Registration Statement.

      10. Supplying Information. Upon any default by the Company of its
obligations hereunder or under the Investor Rights Agreement, the Company shall
cooperate with the Holder in supplying such information as may be reasonably
necessary for such Holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.

      11. Loss or Mutilation. Upon receipt by the Company from the Holder of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity or security reasonably
satisfactory to it and reimbursement to the Company of all reasonable expenses
incidental thereto and in case of mutilation upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof a new Warrant of
like tenor to the Holder; provided, however, that in the case of mutilation, no

                                       15
<PAGE>

indemnity shall be required if this Warrant in identifiable form is surrendered
to the Company for cancellation.

      12. Office of the Company. As long as any of the Warrants remain
outstanding, the Company shall maintain an office or agency (which may be the
principal executive offices of the Company) where the Warrants may be presented
for exercise, registration of transfer, division or combination as provided in
this Warrant.

      13. Financial and Business Information.

      13.1. Quarterly Information. The Company will deliver to the Holder, as
soon as available and in any event within 45 days after the end of each of the
first three quarters of each fiscal year of the Company, one copy of an
unaudited consolidated balance sheet of the Company and its subsidiaries as at
the end of such quarter, and the related unaudited consolidated statements of
income, retained earnings and cash flow of the Company and its subsidiaries for
such quarter and, in the case of the second and third quarters, for the portion
of the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year. Such financial statements shall be prepared by the Company in
accordance with GAAP and accompanied by the certification of the Company's chief
executive officer or chief financial officer that such financial statements
present fairly the consolidated financial position, results of operations and
cash flow of the Company and its subsidiaries as at the end of such quarter and
for such year-to-date period, as the case may be; provided, however, that the
Company shall have no obligation to deliver such quarterly information under
this Section 13.1 to the extent it is publicly available; and provided further,
that if such information contains material non-public information, the Company
shall so notify the Holder prior to delivery thereof and the Holder shall have
the right to refuse delivery of such information.

      13.2. Annual Information. The Company will deliver to the Holder as soon
as available and in any event within 90 days after the end of each fiscal year
of the Company, one copy of an audited consolidated balance sheet of the Company
and its subsidiaries as at the end of such year, and audited consolidated
statements of income, retained earnings and cash flow of the Company and its
subsidiaries for such year; setting forth in each case in comparative form the
figures for the corresponding periods in the previous fiscal year; all prepared
in accordance with GAAP, and which audited financial statements shall be
accompanied by an opinion thereon of the independent certified public
accountants regularly retained by the Company, or any other firm of independent
certified public accountants of recognized national standing selected by the
Company; provided, however, that the Company shall have no obligation to deliver
such annual information under this Section 13.2 to the extent it is publicly
available; and provided further, that if such information contains material
non-public information, the Company shall so notify the Holder prior to delivery
thereof and the Holder shall have the right to refuse delivery of such
information..

      13.3. Filings. The Company will file on or before the required date all
regular or periodic reports (pursuant to the Exchange Act) with the Commission
and will deliver to Holder promptly upon their becoming available one copy of
each report, notice or proxy statement sent by the Company to its stockholders
generally.

                                       16
<PAGE>

      14. Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Common Stock,
whether such liability is asserted by the Company or by creditors of the
Company.

      15. Miscellaneous.

      15.1 Nonwaiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of the Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to the Holder such amounts as shall be sufficient to cover any third party costs
and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

      15.2 Notice Generally. All notices, requests, demands or other
communications provided for herein shall be in writing and shall be given in the
manner and to the addresses set forth in the Purchase Agreement.

      15.3 Successors and Assigns. Subject to compliance with the provisions of
Section 3.1, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and assigns of the Holder. The provisions of this Warrant are intended to be for
the benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.

      15.4 Amendment. This Warrant may be modified or amended or the provisions
of this Warrant waived with the written consent of both the Company and the
Holder.

      15.5 Severability. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be modified to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.

      15.6 Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.

      15.7 Governing Law. This Warrant and the transactions contemplated hereby
shall be deemed to be consummated in the State of New York and shall be governed
by and interpreted in accordance with the local laws of the State of New York
without regard to the provisions thereof relating to conflicts of laws. The
Company hereby irrevocably consents to the exclusive jurisdiction of the State
and Federal courts located in New York City, New York in connection with any
action or proceeding arising out of or relating to this Warrant. In any such
litigation the Company agrees that the service thereof may be made by certified
or registered mail directed to the Company pursuant to Section 15.2.

                                       17
<PAGE>

      IN WITNESS WHEREOF, NexMed, Inc. has caused this Warrant to be executed by
its duly authorized officer and attested by its Secretary.

Dated: May 17, 2005

                                             NEXMED, INC.

                                             By:______________________________
                                             Name:
                                             Title:

Attest:

By:______________________________
Name:
Title: Secretary

                                       18
<PAGE>

                                    EXHIBIT A

                                SUBSCRIPTION FORM
                 [To be executed only upon exercise of Warrant]

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

Wells Fargo Bank Minnesota, N.A.
Shareowner Services
161 North Concord Exchange Street
South St Paul, MN 55075-1139
Attn:    Suzy Swits
Fax: 651-450-4078

1. The undersigned registered owner hereby elects to purchase shares of the
Common Stock of NexMed, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.

2. The undersigned registered owner hereby elects to convert the attached
Warrant into Common Stock of NexMed, Inc. through "cashless exercise" in the
manner specified in the Warrant. This conversion is exercised with respect to
_____________________ of the shares of Warrant Stock covered by the Warrant.

3. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name as is specified below:

                                         ______________________________________
                                                      (Name)

                                         ______________________________________
                                         ______________________________________
                                         ______________________________________
                                                    (Address)

and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.

                                       19
<PAGE>

(Delete following paragraph if not applicable:)

[Holder hereby represents to you that it has sold or has current plans to resell
all of such Common Shares received upon this exercise of this Warrant, solely in
accordance with the terms of the Registration Statement filed with the U.S.
Securities and Exchange Commission by the Company covering such Common Shares as
described under the section entitled "Plan of Distribution" therein.]

_____________________________________
(Name of Registered Owner)

_____________________________________
(Signature of Registered Owner)

_____________________________________
(Street Address)

_____________________________________
(State) (Zip Code)

NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.

                                       20
<PAGE>

                                    EXHIBIT B

                                 ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the
purchase of shares of common stock of NexMed, Inc. hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
under this Warrant, with respect to the number of shares of common stock set
forth below:

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

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

---------------------------------------
(Name and Address of Assignee)

---------------------------------------
(Number of Shares of Common Stock)

and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of the Company, maintained for the
purpose, with full power of substitution in the premises.

Dated:_________________________________

--------------------------------------
(Print Name and Title)

--------------------------------------
(Signature)

--------------------------------------
(Witness)

NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.

                                       21
<PAGE>

                                    EXHIBIT C

                    FORM OF INVESTMENT REPRESENTATION LETTER

Re:   Common Stock, par value $0.001 per share ("Common Stock"), of NexMed,
      Inc., a Nevada corporation ("Company").

In connection with the acquisition by the undersigned ("Transferee") of:

|_|   warrants ("Warrants") to purchase _______ shares of Common Stock, or

|_|   _______ shares of Common Stock issued upon the exercise of Warrants,

the Transferee hereby represents and warrants to the Company as follows:

The Transferee (i) is an "Accredited Investor" as that term is defined in Rule
501 of Regulation D promulgated under the Securities Act of 1933, as amended
(the "Act"); and (ii) has the ability to bear the economic risks of such
Transferee's prospective investment, including a complete loss of Transferee's
investment in the Warrants and/or the shares of Common Stock issuable upon the
exercise thereof (collectively, the "Securities").

The Transferee, by acceptance of the Securities, represents and warrants to the
Company that the Securities and all other securities acquired upon any and all
exercises of the Warrants are purchased for the Transferee's own account, and
not with view to distribution of either the Securities or any other securities
purchasable upon exercise of the Warrants in violation of applicable securities
laws.

The Transferee acknowledges that (i) the Securities have not been registered
under the Act, (ii) the Securities are "restricted securities" and the
certificate(s) representing the Securities shall bear the following legend, or a
similar legend to the same effect, until (i) in the case of the shares of Common
Stock underlying the Warrants, such shares shall have been registered for resale
by the Transferee under the Act and effectively been disposed of in accordance
with a registration statement that has been declared effective; or (ii) in the
opinion of counsel for the Company such Securities may be sold without
registration under the Act:

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933, as amended (the "Act"),
         and all such securities are subject to restrictions on transferability
         as set forth in this certificate. The securities represented hereby may
         not be sold, transferred, or otherwise disposed of in the absence of an
         effective registration statement under the Act or an opinion of
         counsel, reasonably acceptable to counsel for the company, to the
         effect that the proposed sale, transfer, or disposition may be
         effectuated without registration under the Act."

IN WITNESS WHEREOF, the Transferee has caused this Investment Representation
Letter to be duly executed this __ day of __________ 2___.

Transferee Name:     __________________________

                     By: _______________________
                     Name:______________________
                     Title:_____________________

                                       22------------------------------------------------------------------------------

                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

                                  by and among

                       NexMed, Inc., as Issuer and Seller

                                       and

                   the Purchasers named herein, as Purchasers

                            with respect to Seller's

               Series C 6% Cumulative Convertible Preferred Stock

                      and Warrants to Purchase Common Stock

                                  May 16, 2005

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

<PAGE>

                         Table of Exhibits and Schedules

Exhibit A        Form of Certificate of Designation of the
                 Series C 6% Cumulative Convertible Preferred Stock

Exhibit B        Form of Warrant

Exhibit C        Form of Investor Rights Agreement

Exhibit D        Form of Opinion of Seller's Counsel

Exhibit E        Form of Opinion of Nevada Counsel

Exhibit F        Form of Closing Escrow Agreement

Schedule 1       Purchasers and Shares of Preferred 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

                                       2
<PAGE>

      PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as
of May 16, 2005, 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, up to an aggregate of 600
shares of its Series C 6% Cumulative Convertible Preferred Stock, $10,000
liquidation preference per share, par value $0.001 per share (the "Preferred
Stock"), and Common Stock Purchase Warrants (the "Warrants") entitling the
holders thereof to purchase shares of the Seller's common stock, $0.001 par
value (the "Common Stock") 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 Preferred Stock in the amounts set
forth on Schedule 1 hereto. In addition, the Seller will sell and each Purchaser
will purchase at the Closing the number of Warrants set forth on Schedule 1
hereto.

      (b) The shares of Common Stock issuable upon conversion of the Preferred
Stock or upon payment of dividends on the Preferred Stock are referred to herein
as the "Conversion 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 Preferred Stock and Warrants. The terms and provisions of
the Preferred Stock are set forth in the form of Certificate of Designation of
Series C 6% Cumulative Convertible Preferred Stock, attached hereto as Exhibit A
(the "Certificate of Designation"). The terms and provisions of the Warrants are
more fully set forth in the form of Common Stock Purchase Warrant, attached
hereto as Exhibit B.

      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, the Preferred
Stock, Conversion Shares, Warrants and Warrant Shares (collectively, the
"Securities") may be transferred, in whole or in part, by any of the Purchasers
at any time. In the case of Preferred Stock, such transfer may be effected by
delivering written transfer instructions to the Seller, and the Seller shall
reflect such transfer on its books and records and reissue certificates
evidencing the Preferred Stock upon surrender of certificates evidencing the
Preferred Stock being transferred. 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

                                       1
<PAGE>

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 of Conversion
Shares and/or Warrant Shares 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 "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 Investor 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
Preferred Stock or Warrants after the Registration Statement (as defined in the
Investor Rights Agreement) is declared effective under the Securities Act, the
transferor of such Preferred Stock or 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, unless such Securities
are registered under the Securities Act or eligible for resale without
registration pursuant to Rule 144(k) under the Securities Act, shall bear the
following legends:

"THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON CONVERSION OR 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 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 INVESTOR RIGHTS

                                       2
<PAGE>

AGREEMENT DATED AS OF MAY ___, 2005, 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."

                     ARTICLE II - PURCHASE PRICE AND CLOSING

      2.1 Purchase Price. The aggregate purchase price (the "Purchase Price") to
be paid by the Purchasers to the Seller to acquire the Preferred Stock and the
applicable Warrants shall be the total amounts set forth 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 Article 6.1(a) and (b) 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 Peter J. Weisman, P.C., 335 Madison Avenue, Suite
1702, New York, NY 10017. 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), results of
operations or current prospects, taken as a whole, on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of the Company
to perform its obligations hereunder or under the Related Documents. 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

                                       3
<PAGE>

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, and

            (1)   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, the Certificate of Designation, the
Investor Rights Agreement, the Closing Escrow Agreement (as defined below), 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 Preferred Stock and the Warrants, and the subsequent
issuance of the Conversion Shares upon conversion of the Preferred Stock and the
Warrant Shares upon exercise of the Warrants) have been duly authorized, and no
additional corporate or stockholder action is required for the approval of this
Agreement. The Conversion Shares and 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 filings referenced in Section 5.10; (ii) the filing of the Certificate of
Designation; (iii) the filing of a Form D with respect to the Preferred Stock
and Warrants under Regulation D under the Securities Act; (iv) the filing of the
Registration Statement with the Commission; (v) the application(s) to each
trading market for the listing of the Conversion Shares and the Warrant Shares
for trading thereon; and (vi) any filings required under state securities laws
that are permitted to be made after the date hereof, the execution, delivery and

                                       4
<PAGE>

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 Preferred Stock and Warrants and
the subsequent issuance of the Conversion Shares and Warrant Shares upon
conversion of the Preferred Stock or otherwise or 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. The Seller has disclosed
the terms and conditions and other relevant facts of the transactions
contemplated hereby to Nasdaq and obtained from Nasdaq its assurance that such
transactions will not be integrated with any prior issuance or offering of the
Seller for purposes of the Nasdaq rules requiring shareholder approval of the
issuance of 20% or more of an issuer's outstanding common stock.

      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 Conversion Shares and Warrant Shares) do not and will not (a)
contravene or conflict with the Articles (as amended by the Certificate of
Designation) 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 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, 2003 (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.

                                       5
<PAGE>

      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, 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.

      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.

      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.

                                       6
<PAGE>

      3.11 Absence of Certain Changes. Since December 31, 2004, 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, other than on account of the filing of the Certificate of
Designation;

      (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 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;

            (v) discharge or satisfaction of any material Lien, other than
      current liabilities incurred since December 31, 2004 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.

                                       7
<PAGE>

      (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;

      (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, 2004, 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, 2004.

      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, 2004 (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

                                       8
<PAGE>

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.

      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.

                                       9
<PAGE>

      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.

      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 80,000,000 shares of common stock, $0.001 par value per share, of which
51,830,835 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, and other than the 800 shares of the Seller'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 other than the
shares of the Seller's Series C 6% Cumulative Convertible Preferred Stock
contemplated hereby and none of which, immediately prior to the 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 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

                                       10
<PAGE>

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. Other than the rights of the Purchasers under the Preferred Stock and
the Warrants, and 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
Investor 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.

      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

                                       11
<PAGE>

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.

      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 presently operated (the
"Governmental Authorizations"). All the Governmental Authorizations have been

                                       12
<PAGE>

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.

      (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 is 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 Preferred Stock or 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

                                       13
<PAGE>

statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.

          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 Preferred
Stock 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

                                       14
<PAGE>

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.

      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 of the Preferred Stock is
outstanding, and 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 Preferred Stock or Warrants (provided that
such subsequent holders give notice to the Seller that they hold Preferred Stock
or 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 Conversion 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 Company shall have no
obligation to deliver reports or schedules (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 Preferred Stock of their rights hereunder to conduct an investigation shall
not in any way diminish any liability hereunder.

                                       15
<PAGE>

      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 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 Preferred Stock,
Warrants, Conversion Shares, 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.

                                       16
<PAGE>

      5.9 Perform Covenants. The Seller shall (a) make full and timely payment
of any and all payments on the Preferred Stock, and all other obligations of the
Seller to the Purchasers in connection therewith, whether now existing or
hereafter arising, and (b) 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 Preferred Stock 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 Preferred Stock 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. Subject to any consent or approval rights of
the Purchasers hereunder, in the event the Seller contemplates an offering of
its equity or debt securities within six months following the Closing Date, the
Seller agrees that it shall notify the Purchasers of such offering (without
providing any material non-public information to any Purchaser without its prior
approval), and upon the reasonable request of Purchasers purchasing at least 75%
of the Preferred Stock hereunder, the Seller shall first disclose the terms and
conditions and other relevant facts of such proposed transaction to Nasdaq and
obtain from Nasdaq its assurance that such transaction will not be integrated
with the offering which is the subject of this Agreement for purposes of the
Nasdaq rules requiring shareholder approval of the issuance of 20% or more of an
issuer's outstanding common stock. In the event the Seller fails to obtain such
assurance, then the Seller shall not issue or sell any such securities without
the prior written consent of Purchasers purchasing at least 75% of the Preferred
Stock hereunder, provided that the Seller may sell or issue securities without
such consent if (i) it obtains prior shareholder approval for such sale or
issuance in compliance with the Nasdaq stock market rules or (ii) such sale or
issuance is to a pharmaceutical company in connection with a strategic

                                       17
<PAGE>

transaction and not primarily as a capital raising transaction, so long as the
Seller has not affirmatively been notified (orally or in writing) by Nasdaq that
it is reasonably likely to treat such sale or issuance as being integrated with
the transactions contemplated under this Agreement. In the event that the
transactions contemplated under this Agreement are deemed integrated with any
other transaction(s) by the Nasdaq stock market, then the Seller shall as soon
as possible seek the approval of its stockholders and take such other action to
authorize the issuance of the full number of Conversion Shares and Warrant
Shares (without regard to the 20% limitation) and the full amount of securities
issued and/or to be issued in such other transaction.

      5.11 Securities Laws Disclosure; Publicity. The Seller shall (i) on or
promptly after the Closing Date, issue a press release acceptable to The Tail
Wind Fund Ltd. disclosing the transactions contemplated hereby, and (ii) after
the Closing Date, 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.

      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 thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by such agreement. 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 the other
Related Documents, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose. Each Purchaser
represents that it has been represented by its own separate legal counsel in its
review and negotiation of this Agreement and the Related Documents. For reasons
of administrative convenience only, the Purchasers acknowledge and agree that
they and their respective counsel have chosen to communicate with the Seller
through Peter J. Weisman, P.C., but Peter J. Weisman, P.C. does not represent
any of the Purchasers in this transaction other than The Tail Wind Fund Ltd.
(the "Lead Investor").

                                       18
<PAGE>

                       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 Preferred 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 is indicated on Schedule 1 for such Purchaser
      ("Share Certificates") or (B) a copy of irrevocable transfer agent
      instructions that (I) have been delivered to the Seller's transfer agent
      and (II) instruct the Seller's transfer agent to issue the Share
      Certificates, (III) are acknowledged in writing by the Company's transfer
      agent and (IV) are in form and substance satisfactory to The Tail Wind
      Fund Ltd.; 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; and

            (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 Investor Rights Agreement, in the form attached hereto as
      Exhibit C (the "Investor Rights Agreement"), duly executed by the Seller.

            3. A legal opinion of Katten Muchin Zavis Rosenman ("Seller's
      Counsel"), counsel to the Seller, in the form attached hereto as Exhibit
      D.

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

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

                  (i) that the Certificate of Designation authorizing the
            Preferred Stock has been duly filed in the office of the Nevada
            Secretary of State, and that attached to the Secretary's Certificate
            is true and complete copy of the Articles of Incorporation of the
            Seller, as amended, including the Certificate 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;

                                       19
<PAGE>

                  (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 Preferred
            Stock 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. A wire transfer representing the amounts due for reasonable legal
      fees and other expenses as described in Section 8.2 hereof; such amounts
      may, at the election of the Purchasers, be paid out of the funds due from
      the Purchasers at the Closing.

            7. Proof of due filing with the Secretary of State of the State of
      Nevada of the Certificate of Designation authorizing the Preferred Stock.

            8. 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 Conversion Shares and the Warrant Shares
      for trading or quotation thereon in the time and manner required thereby.

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

            (b) The Seller shall have entered into a Closing Escrow Agreement
with Peter J. Weisman, P.C. (the "Escrow Agent") in the form attached hereto as
Exhibit F (the "Closing Escrow Agreement") pursuant to which the Escrow Agent
shall hold certain funds and documents described therein. Each of the Purchasers
authorizes the Lead Investor to enter into the Closing Escrow Agreement and to
act in the capacity described therein.

      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) upon receipt of the Seller's items described in Section 6.1 above,
payment of the portion 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 Investor Rights
Agreement; and (iv) such other documents as the Seller shall reasonably request.

                                       20
<PAGE>

             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.

      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 and as to itself only,
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

                                       21
<PAGE>

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.

      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.

      7.4 Liquidated Damages. The Seller and the Purchasers agree that the
Purchasers will suffer damages if a Breach Event (as defined below) occurs or is
ongoing. The Seller and the Purchasers further agree that it may not be feasible
to ascertain the extent of such damages with precision. If a Breach Event (as
defined below) occurs, then the Purchasers may elect, as liquidated damages, and

                                       22
<PAGE>

in addition to any other remedies legally available to such Purchasers, to
require that the Seller shall pay to the Purchasers liquidated damages at a rate
of 17% per annum of the aggregate Liquidation Amount of such Purchasers'
outstanding Preferred Stock payable monthly in cash at the end of each month (or
part thereof) in which the Breach Event is outstanding, provided, however, that
with respect to any particular Breach Event such 17% figure shall be reduced to
the extent necessary such that the rate of liquidated damages under this Section
7.4, combined with (a) any Periodic Amounts (as defined in the Investor Rights
Agreement) pursuant to Section 8(e) of the Investor Rights Agreement payable for
such Breach Event and (b) the 8% increase in the Dividend Rate (as defined in
and pursuant to the Certificate of Designation) due such Breach Event), shall
not exceed 20% per annum.

            "Breach Event" means either:

            (i) Any breach of any warranty or representation of the Seller as of
      the date made in this Agreement, any Related Agreement or any other
      agreement delivered herewith, which breach, or the facts and circumstances
      concerning such breach, has or is reasonably likely to have a Material
      Adverse Effect; or

            (ii) Any breach by the Seller of any material covenant or obligation
      under this Agreement, any Related Agreement or any other agreement
      delivered herewith, and which breach, if capable of being cured, has not
      been cured within ten (10) days after notice of such breach has been given
      by the holders of a majority of Preferred Stock to the Seller.

      The Seller and the Purchasers have expressly negotiated this Section 7.4,
and have agreed that in light of the circumstances existing at the time of
execution of this Agreement, the liquidated damages expressed herein represent a
reasonable estimate of the harm likely to be suffered by the Purchasers upon the
occurrence of a Breach Event.

                          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.

      8.2 Fees and Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay to Tail Wind
Advisory and Management Ltd. a non-refundable sum equal to $60,000 as and for
legal and due diligence expenses incurred in connection herewith, $20,000 of
which amount has been previously paid. The Company shall pay all fees and
expenses of any placement agents, finders and escrow agents in connection with

                                       23
<PAGE>

the transactions contemplated by this Agreement pursuant to a separate agreement
between such parties.

      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.:  609-208-1621

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the 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.

      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

                                       24
<PAGE>

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 supersedes 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
holders of at least 75% of the Preferred Stock then outstanding, 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 holders of at least 75% of the Preferred Stock then outstanding.
No amendment shall be effected to impact a holder of Preferred Stock in a
disproportionately adverse fashion without the consent of such individual holder
of Preferred Stock.

      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.

                                       25
<PAGE>

      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]

                                       26
<PAGE>

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

SELLER:

NEXMED, INC.

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

<PAGE>

PURCHASERS:

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

                     By:
                         -------------------------------------------------------
                     Name:        David Crook
                     Title:       CEO
Address:             c/o Tail Wind Advisory & Management Ltd.
                     1 Regent Street, 1st Floor
                     London SW1Y 4NS
                     England
Telephone:           011-44-207-468-7660
Facsimile:           011-44-207-468-7657
Email:               dcrook@tailwindam.com
Amount of Investment:                $400,000

Print Exact Name:    SOLOMON STRATEGIC HOLDINGS, INC.

                     By:
                         -------------------------------------------------------
                     Name:      Andrew P. MacKellar
                     Title:     Director
Address:             c/o Andrew P. MacKellar
                     Greenlands
                     The Red Gap
                     Castletown
                     IM9 1HB
                     British Isles
Telephone:           +011 (44) 1624 824171
Facsimile:           +011 (44) 1624 824191
Email:               mackellar_twi@manx.net
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:      C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:     President
Address:             Regions Bank
                     417 North 20th St., 14th Floor
                     Birmingham, AL 35203
Telephone:           205-290-5533
Facsimile:           205-290-5563
Email:               bettye.grant@regions.com
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Union Bank of California
                     475 Sansome Street, 15th Floor
                     San Francisco, CA 94111
Telephone:           415-296-6971
Facsimile:           415-296-6551
Email:               ben.long@uboc.com
Amount of Investment:                $100,000

<PAGE>

PURCHASERS:

Print Exact Name:    Caeser's Riverboat Casino Foundation

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Wachovia Securities
                     3800 National City Tower
                     Louisville, KY 40202
Telephone:           800-998-7686
Facsimile:           502-561-5097
Email:               otto.g.feddern@wachoviasec.com
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Compass Bank
                     15 South 20th Street
                     Birmingham, AL 35233
                     Attn:  Danny McHale
                     WMG Operations
                            Telephone: 205-297-6620
                            Facsimile: 205-297-6754
Email:               danny.mchale@compassbnk.com
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Montauk Securities
                     Parkway 109 Office Center
                     328 Newman Springs Road
                     Red Bank, NJ 07701
                     Attn: Norma Doxey
Telephone:           800-876-3672
Facsimile:           732-842-5097
Email:               ndoxey@montaukfinancial.com
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Montauk Securities
                     Parkway 109 Office Center
                     328 Newman Springs Road
                     Red Bank, NJ 07701
                     Attn:  Norma Doxey
Telephone:           800-876-3672
Facsimile:           732-842-5097
Email:               ndoxey@montaukfinancial.com
Amount of Investment:                $100,000

<PAGE>

PURCHASERS:

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

                     By:
                         -------------------------------------------------------
                     Name:     C. E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Montauk Securities
                     Parkway 109 Office Center
                     328 Newman Springs Road
                     Red Bank, NJ 07701
                     Attn:  Norma Doxey
Telephone:           800-876-3672
Facsimile:           732-842-5097
Email:               ndoxey@montaukfinancial.com
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     Stephanie Napier/Lori Harding (subject to the
                               attached addendum)
                     Title:    Vice President/Officer
Address:             4717 Grand Avenue
                     Suite 400
                     Kansas City, MO  64112
Telephone:           816-360-3798
Facsimile:           816-360-3731
Email:               Melissa.Dutcher@micorp.com (trustee contact)
Amount of Investment:                    $100,000

Print Exact Name:    Poterbaugh Foundation dated 10/31/49
                     By:
                         -------------------------------------------------------
                     Name:     C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             Morgan Stanley
                     6305 Waterford Blvd., Suite 240
                     Oklahoma City, OK 73175
Telephone:           800-735-7677
Facsimile:           405-843-9142
Email:               Paul.malloy@morganstanley.com
Amount of Investment:                $200,000

Print Exact Name:    Cherrytrust & Co.

                     By:
                         -------------------------------------------------------
                     Name:     C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             American National Bank
                     Attn:  Trust Dept., (fbo Mary Hugh Scott PC 1282-01)
                     3033 East First Avenue
                     Denver, CO 80206
Telephone:           303-394-5107
Facsimile:           303-394-5114
Email:               cbatchler@anbbank.com
Amount of Investment:                $100,000

<PAGE>

PURCHASERS:

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

                     By:
                         -------------------------------------------------------
                     Name:     C.E. Lanphier, Lanphier Capital Management, Inc.
                     Title:    President
Address:             c/o Charles Schwab, Attn Vanessa Lau
                     106 West Portal Avenue
                     San Francisco, CA  94127
Telephone:           415-242-2306
Facsimile:           415-242-2300
Email:               Vanessa.lau@Schwab.com
Amount of Investment:                100,000

Print Exact Name:    Charles W. Edwards, Jr.

                     By:
                         -------------------------------------------------------
                     Name:     Charles W. Edwards, Jr.
                     Title:
Address:             570 Bennett Way
                     Florence, Alabama 35634
Telephone:           256-757-1336
Facsimile:           -
Email:               cwedwardsjr@earthlink.net
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     Leonard J. Sojka
                     Title:    Trustee
Address:             1460 Spring Valley Road
                     Golden Valley, MN 55422
Telephone:           W: 612-253-6191  H: 763-529-5234
Facsimile:           612-253-6151
Email:               lsojka@Bloomberg.net
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     Andrew S. Troob
                     Title:    Trustee
Address:             725 Greeenleaf
                     Glencoe, IL 60022
Telephone:           847-835-3192   312-260-5830
Facsimile:           312-260-5830
Email:               AndyTroob@yahoo.com
Amount of Investment:                $100,000

<PAGE>

PURCHASERS:

Print Exact Name:    FAN Associates LLC

                     By:
                         -------------------------------------------------------
                     Name:     Wen Ling Lee Fan
                     Title:    Manager
Address:             7 Lockhern Drive
                     Livingston, NJ  07039
Telephone:           973-533-1612
Facsimile:           973-716-9274
Email:               FCFAN@comcast.net
Amount of Investment:                $600,000

Print Exact Name:    John R. and Tristen M. Green

                     By:
                         -------------------------------------------------------
                     Name:     Tristen M. Green
                     Title:
Address:             P.O. Box 223726
                     Princeville, HI 96722-3726
Telephone:           808-826-1415
Facsimile:           SAME
Email:               alohabrun@earthlink.net
Amount of Investment:                $100,000

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

                     By:
                         -------------------------------------------------------
                     Name:     Brady T. Lipp
                     Title:    Managing Member of Akros Capital, LLC
                               (management company)
Address:             230 Park Avenue, 7th Floor
                     New York, NY 10169
Telephone:           212-499-2590 (work) or 914-557-4677
Facsimile:           212-499-2589
Email:               brady@akroscapital.com
Amount of Investment:                $50,000

Print Exact Name:    Brady T. Lipp

                     By:
                         -------------------------------------------------------
                     Name:     Brady T. Lipp
                     Title:
Address:             16 Catherine Place
                     Katonah, NY 10536
Telephone:           914-557-4677
Facsimile:           914-232-5077
Email:               shadesmn@aol.com
Amount of Investment:                $50,000

Print Exact Name:    Mark S. Ain

                     By:
                         -------------------------------------------------------
                     Name:     Mark S. Ain
                     Title:
Address:             8 Dana Road
                     Lexington, MA  02421
Telephone:           978-947-4900
Facsimile:           978-367-5955
Email:               main@kronos.com
Amount of Investment:                $50,000

<PAGE>

PURCHASERS:

Print Exact Name:    Omicron Master Trust

                     By:
                         -------------------------------------------------------
                     Name:     Bruce Bernstein
                     Title:    Managing Partner
Address:             650 5th Avenue, 24th Flr.
                     New York, NY  10019
Telephone:           212-258-2302
Facsimile:           212-258-2315
Email:               bd@omicroncapital.com
Amount of Investment:                $750,000

Print Exact Name:     Robert C. Ciricillo

                      By:
                         -------------------------------------------------------
                      Name:      Robert C. Ciricillo
                      Title:
Address:              335 East 51st Street - Apt. 11A
                      New York, NY  10022
Telephone:            212-980-5409; 941-714-0527
Facsimile:            212-758-4496
Email:                ciricillo@aol.com
Amount of Investment:                 $150,000

Print Exact Name:    Iroquois Master Fund Ltd.

                     By:
                         -------------------------------------------------------
                     Name:     Joshua Silverman
                     Title:    Authorized Signatory
Address:             641 Lexington Avenue, 26th Flr.
                     New York, NY  10022
Telephone:           212-974-3070
Facsimile:           212-207-3453
Email:               JSilverman@Icfund.com
Amount of Investment:                $200,000

Print Exact Name:    SDS Capital Group SPC, Ltd.

                     By:
                         -------------------------------------------------------
                     Name:     Scott E. Derby
                     Title:    General Counsel
Address:             c/o SDS Management, LLC
                     53 Forest Avenue, 2nd Floor
                     Old Greenwich, CT 06870
Telephone:           203-967-5850
Facsimile:           203-967-5851
Email:               Steve@sdscapital.com /scott@sdscapital.com
Amount of Investment:                $500,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]