Document:

<PAGE>

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. WN-__

                          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 $5.04 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.

     "Aggregate Warrants" means this Warrant together with all other Common
Stock Purchase Warrants issued by the Company pursuant to the Purchase
Agreement.

     "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.

-----------------------
(1) Insert 35% of the number of Shares purchased under Purchase Agreement by
Warrantholder.

<PAGE>

     "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.

     "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.

     "Closing Date" means July 2, 2003.

     "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 20 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

                                       2
<PAGE>

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 firm then engaged in such business, or
(v) if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc. (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. Until the Current Warrant Price
is adjusted pursuant to the terms herein, the initial Current Warrant Price
shall be $5.04 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 July 2, 2007.

     "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).

     "Purchase Agreement" means that certain Common Stock and Warrant Purchase
Agreement dated as of July 2, 2003 among the Company and the other parties named
therein, pursuant to which this Warrant was originally issued.

     "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.

                                       3
<PAGE>

     "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.

     "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 ___________ (2) 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 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

--------------------------
(2) Insert 35% of the number of Shares purchased under Purchase Agreement by
Warrantholder.

                                       4
<PAGE>

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 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
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

                                       5
<PAGE>

similar to the limitation set forth herein) exceeds 4.95% 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 Securities and Exchange 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 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 possible 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 exercise of
this Warrant.

     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; provided, however, that a Holder must obtain the
prior written consent of the Company in order to transfer Warrants representing
the right to purchase less than 100,000 shares of Warrant Stock. 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 Company issued or registered a

                                       6
<PAGE>

new Warrant on the books of the Company. In connection with any transfer of this
Warrant after the Registration Statement (as defined in the Registration 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, shall be stamped or
otherwise imprinted with legends 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 JUNE 30, 2003, 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.

                                       7
<PAGE>

     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 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

                                       8
<PAGE>

its indebtedness, any shares of stock of any class or any other securities or
property or assets of any nature whatsoever, then:

           (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

                                       9
<PAGE>

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. 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. In addition, clause (I) of the
foregoing provision shall not apply to any issuances or sales of Common Stock or
Convertible Securities where the Per Share Selling Price is greater than both
the Current Warrant Price and 87.5% of the Fair Market Price (otherwise the full
adjustment provided for herein shall apply). 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

                                       10
<PAGE>

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), the Per Share
Selling Price shall be deemed to be the lowest conversion, exchange, exercise or
reset price at which such securities are converted, exchanged, exercised or rest
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

                                       11
<PAGE>

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.

     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 4.4(a)
above, the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of 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

                                       12
<PAGE>

circumstances.

     4.8. 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.

     4.9. 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 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, or

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

then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 20 days'

                                       13
<PAGE>

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, 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 16.2.

     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)).

                                       14
<PAGE>

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, 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.

                                       15
<PAGE>

     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
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.

     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.

     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

                                       16
<PAGE>

by the Company to its stockholders generally.

     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. Redemption.

     15.1 Subject to the Purchase Agreement and subject to the terms set forth
herein (including without limitation subsection 15.2 below), in the event that
the closing sale price of the Company's Common Stock (as reported by the Nasdaq
Stock Market) is greater than $10.00 (as appropriately and equitably adjusted
for stock splits, reverse stock splits, stock dividends and the similar events)
for a period ("Pricing Period") of seven (7) consecutive trading days, the
Company shall have the right, upon at least ten (10) trading days' prior written
notice to the Holder ("Redemption Notice"), to redeem a portion of this Warrant
representing up to one-third (1/3) of the then remaining number of shares
underlying this Warrant (not previously exercised), at a redemption price equal
to $.01 per share issuable hereunder for the portion hereof being redeemed. Any
redemption hereunder shall occur on the date specified in the Redemption Notice
("Redemption Date"), provided that such Redemption Date may not occur until at
least ten (10) trading days following the date on which the Holder receives the
Redemption Notice (the "Redemption Notice Date"). The Company may not deliver
any Redemption Notice until after the completion of the Pricing Period, and must
deliver any Redemption Notice within five (5) trading days following the last
day of any Pricing Period. The period from the Redemption Notice Date to the
Redemption Date shall be referred to herein as the "Post-Call Period". The
Holder may exercise this Warrant, including any portion subject to a Redemption
Notice, at any time and from time to time during the period from the Redemption
Notice Date through the date on which the redemption price for such Warrants is
paid by the Company (and thereafter if such redemption price is not paid), and
the Company shall honor all tendered subscription forms during such period. If
the Company intends to redeem less than on-third of all of the then outstanding
Warrants issued to Purchasers under the Purchase Agreement, it shall do so on a
pro rata basis among such holders in accordance with this Section.

     (ii) Notwithstanding anything to the contrary herein, the Company shall be
prohibited from exercising its right to redeem this Warrant pursuant to this
Section if at any time during the Post-Call Period or during the thirty (30)
consecutive trading days immediately preceding such Post-Call Period there fails
to exist "Effective Registration". "Effective Registration" shall mean (i) the
resale of all Registrable Securities (as defined in the Investor Rights
Agreement) is covered by an effective registration statement in accordance with
the terms of the Investor Rights Agreement which registration statement is not
subject to any suspension or stop orders; (ii) the resale of such Registrable
Securities may be effected pursuant to a current and deliverable prospectus that
is not subject at the time to any blackout or similar circumstance; (iii) such
Registrable Securities are listed, or approved for listing prior to issuance, on
either the New York Stock Exchange, the American Stock Exchange or the Nasdaq
Stock Market (each an "Approved

                                       17
<PAGE>

Market") and are not subject to any trading suspension (nor shall trading
generally have been suspended on such exchange or market), and the Company shall
not have been notified of any pending or threatened proceeding or other action
to delist or suspend the Common Stock on the Approved Market on which the Common
Stock is then traded or listed; (iv) the requisite number of shares of Common
Stock shall have been duly authorized and reserved for issuance as required by
the terms of the Agreements; and (vi) none of the Company or any direct or
indirect subsidiary of the Company is (1) subject to any bankruptcy or
insolvency proceeding or (2) in breach of this Warrant, the Purchase Agreement
or any Related Documents.

     16. Miscellaneous.

     16.1 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.

     16.2 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.

     16.3 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.

     16.4 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.

     16.5 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.

     16.6 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.

     16.7 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

                                       18
<PAGE>

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 16.2.

                            [Signature Page Follows]

                                       19
<PAGE>

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

Dated: ___________________, 2003

                                                NEXMED, INC.

                                                By:_____________________________
                                                Name:
                                                Title:

Attest:

By:______________________________
Name:
Title: Secretary

<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.:  609-208-1622

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

The undersigned registered owner of this Warrant exercises this Warrant for the
purchase of ________________ shares of Common Stock of NexMed, Inc. ("Common
Shares"), and herewith makes payment therefor, all at the price and on the terms
and conditions specified in this Warrant and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to
____________________________________________________ and whose address is
___________________________________________________________, 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.

(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.

<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.

<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 __________ 20__.

Transferee Name:     __________________________

                     By: _______________________
                     Name:
                     Title:<PAGE>

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

                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

                                  by and among

                       NexMed, Inc., as Issuer and Seller

                                       and

                   the Purchasers named herein, as Purchasers

                                  July 2, 2003

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

<PAGE>

                         Table of Exhibits and Schedules
                         -------------------------------

Exhibit A       Form of Warrant

Exhibit B       Form of Investor Rights Agreement

Exhibit C       Form of Opinion of Seller's Counsel

Exhibit D       Form of Opinion of Nevada Counsel

Schedule 1          Purchasers and Shares of Common Stock and Warrants Purchased

Schedule 3.10       Litigation

Schedule 3.11       Absence of Certain Changes

Schedule 3.15       Intellectual Property

Schedule 3.19       Subsidiaries and Investments

Schedule 3.20       Capitalization

Schedule 3.21       Options, Warrants, Rights

Schedule 3.22       Employees, Employment Agreements and Employee Benefit Plans

Schedule 3.27       Brokers

<PAGE>

     COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as of
July 2, 2003, by and among NexMed, Inc., a Nevada corporation (the "Seller"),
and each of the persons listed on Schedule 1 hereto (each is individually
referred to as a "Purchaser" and collectively, the "Purchasers").

                              W I T N E S S E T H:

     WHEREAS, each of the Purchasers is willing to purchase from the Seller, and
the Seller desires to sell to the Purchasers, shares of the Seller's common
stock, $0.001 par value (the "Common Stock"), and Common Stock Purchase Warrants
(the "Warrants") entitling the holders thereof to purchase additional shares of
Common Stock, for an aggregate purchase price between $5 million and $10.5
million, as more fully set forth herein.

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

                          ARTICLE I - PURCHASE AND SALE

     1.1 Purchase and Sale.

     (a) On the terms and subject to the conditions set forth in this Agreement,
at the Closing (as defined in Section 2.2), the Seller will sell and each of the
Purchasers will purchase the number of shares of Common Stock set forth on
Schedule 1 hereto at a price per share equal to $3.60. In addition, the Seller
will sell and each Purchaser will purchase at the Closing Warrants to purchase
the number of shares of Common Stock equal to 35% of the number of Shares
purchased by such Purchaser at Closing hereunder as set forth on Schedule 1
hereto.

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

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

     1.3 Transfers; Legends.

     (a) Except as required by federal securities laws and the securities law of
any state or other jurisdiction within the United States, the Shares, Warrants
and Warrant Shares (collectively, the "Securities") may be transferred, in whole
or in part, by any of the Purchasers at any time. Any such transfer shall be
made by a Purchaser in accordance with applicable law. In connection with any
transfer of Securities other than pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or to the Seller, the Seller may require the transferor thereof to furnish to
the Seller an opinion of counsel selected by the transferor, such counsel and
the form and substance of which opinion shall be

<PAGE>

reasonably satisfactory to the Seller and Seller's counsel, to the effect that
such transfer does not require registration under the Securities Act; provided,
that in the case of a transfer pursuant to Rule 144 under the Securities Act, no
opinion shall be required if the transferor provides the Company with a
customary seller's representation letter, and if such sale is not pursuant to
subsection (k) of Rule 144, a customary broker's representation letter and Form
144. Notwithstanding the foregoing, the Seller hereby consents to and agrees to
register on the books of the Seller and with any transfer agent for the
securities of the Seller, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Seller that it is an Affiliate of such Purchaser and
an "accredited investor" as defined in Rule 501(a) under the Securities Act and
that it is acquiring the Securities solely for investment purposes (subject to
the qualifications hereof) and not with a view to, or for, resale, distribution
or fractionalization thereof in whole or in part in violation of the Securities
Act. Any transferee shall agree to be bound by the terms of the 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 Warrants after the Registration Statement (as defined in the
Registration Rights Agreement) is declared effective under the Securities Act,
the transferor of such Warrants shall reimburse the Seller for its reasonable
out of pocket costs in connection with such transfer (including without
limitation the reasonable attorneys fees for preparing and filing a prospectus
supplement with the SEC and/or delivering an updated opinion letter to the
Seller's transfer agent). An "Affiliate" means any Person (as such term is
defined below) that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser. A "Person" means any individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.

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

"THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON EXERCISE OF SECURITIES EVIDENCED
BY, THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO 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
AGREEMENT DATED AS OF JULY 2, 2003, AS AMENDED FROM

                                        2
<PAGE>

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 Shares 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 6.2(a) (other than those conditions
which by their terms are not to be satisfied or waived until the Closing), at
the offices of Seller's counsel. The date on which the Closing occurs is the
"Closing Date."

           ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER

     The Seller represents and warrants to the Purchasers as follows:

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

                                       3
<PAGE>

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

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

          (1)  New Brunswick Medical Inc. a Delaware corporation and a wholly-
               owned subsidiary of NexMed (U.S.A.), Inc.,

     (c)  NexMed International Limited, organized under British Virgin Islands
law,

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

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

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

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

                                       4
<PAGE>

     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 a Form D with respect
to the Shares and Warrants under Regulation D under the Securities Act; (iii)
the filing of the Registration Statement with the Commission; (iv) the
application(s) to each trading market for the listing of the Shares and the
Warrant Shares for trading thereon; and (v) any filings required under state
securities laws that are permitted to be made after the date hereof, the
execution, delivery and performance by the Seller of this Agreement and the
Related Documents, and the consummation of the transactions contemplated hereby
and thereby (including, but not limited to, the sale and delivery of the Shares
and Warrants and the subsequent issuance of the Warrant Shares upon exercise of
the Warrants, as applicable) by the Seller require no action by or in respect
of, or filing with, any governmental body, agency, official or authority.
Notwithstanding the foregoing, the Seller makes no representation or warranty
with respect to the compliance of the transactions contemplated by this
Agreement with Rule 4350(i) of the National Association of Securities Dealers,
Inc. ("NASD"), except that the Company has been advised by the NASD that
discussions with the Company and the review by the NASD of drafts of this
Agreement and the Related Documents should cause the NASD to conclude that the
transactions contemplated hereby should not be integrated with the Company's
April 21, 2003 offering of Series B 8% Cumulative Convertible Preferred Stock
and warrants to purchase shares of 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 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

                                       5
<PAGE>

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, 2001, (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 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, 2002 (the "Recent Reports"). None of
the information about the Seller or any of its Subsidiaries which has been
disclosed to the Purchasers herein or in the course of discussions and
negotiations with respect hereto which is not disclosed in the Recent Reports is
or was required to be so disclosed, and no material non-public information has
been disclosed to the Purchasers.

     3.7 Financial Statements. Each of the Seller's audited consolidated balance
sheet and related consolidated statements of income, cash flows and changes in
stockholders' equity (including the related notes) as of and for the years ended
December 31, 2002 and December 31, 2001, 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

                                       6
<PAGE>

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.

     3.11 Absence of Certain Changes. Since December 31, 2002, 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 for the Company's Series B 8% Cumulative Convertible Preferred
Stock;

     (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;

                                       7
<PAGE>

         (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, 2001 in the ordinary course of
     business;

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

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

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

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

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

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

     (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, 2002, as of the date hereof, (i) the Seller and its
Subsidiaries do not have any material liabilities

                                       8
<PAGE>

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, 2002.

     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, were 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, 2002 (other than taxes accruing after such date) and all similar items due
through the Closing Date will have been fully paid by that date or provided for
by adequate reserves, whether or not any such taxes were reported or reflected
in any tax returns or filings. No taxation authority has sought to audit the
records of the Seller or any of its Subsidiaries for the purpose of verifying or
disputing any tax returns, reports or related information and disclosures
provided to such taxation authority, or for the Seller's or any of its
Subsidiaries' alleged failure to provide any such tax returns, reports or
related information and disclosure. No material claims or deficiencies have been
asserted against or inquiries raised with the Seller or any of its Subsidiaries
with respect to any taxes or other governmental charges or levies which have not
been paid or otherwise satisfied, including claims that, or inquiries whether,
the Seller or any of its Subsidiaries has not filed a tax return that it was
required to file, and, to the best of the Seller's knowledge, there exists no
reasonable basis for the making of any such claims or inquiries. Neither the
Seller nor any of its Subsidiaries has waived any restrictions on assessment or
collection of taxes or consented to the extension of any statute of limitations
relating to taxation.

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

                                       9
<PAGE>

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

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

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

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

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

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

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

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

     3.18 Insurance. The insurance policies providing insurance coverage to the
Seller or its Subsidiaries including for product liability are adequate for the
business conducted by the Seller and its Subsidiaries (currently limited to the
testing phase) and are sufficient for compliance by the Seller and its
Subsidiaries with all requirements of law and all material agreements to which
the Seller or its Subsidiaries are a party or by which any of their assets are
bound. All of such

                                       10
<PAGE>

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
30,059,364 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 Company's Series B 8%
Cumulative Convertible Preferred Stock, 800 of which have been issued and 775 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 to
acquire capital stock or other equity interests of the Seller or its

                                       11
<PAGE>

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 granted under the Series B 8% Cumulative
Convertible Preferred Stock and the Warrants issued in connection therewith, 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"). 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

                                       12
<PAGE>

may be in a position to help or hinder the business of the Seller (or assist the
Seller in connection with any actual or proposed transaction) which (i) may
subject the Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past, may have
had an adverse effect on the Seller or (iii) if not continued in the future, may
adversely affect the assets, business, operations or prospects of the Seller or
subject the Seller to suit or penalty in any private or governmental litigation
or proceeding.

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

     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

                                       13
<PAGE>

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
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. Except as set forth on Schedule 3.27, 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.

                                       14
<PAGE>

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

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

          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

                                       15
<PAGE>

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.

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

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

     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.

     4.7 Independence. The Purchaser is neither an Affiliate of any other
Purchaser nor is a member of any "group" in which any other Purchaser is a
member. For purposes hereof, "group" has the meaning set forth in Section 13(d)
of the Exchange Act and applicable regulations of the Securities and Exchange
Commission.

               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 Seller 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.

                                       16
<PAGE>

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

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

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

     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, in
the absolute discretion 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

                                       17
<PAGE>

     Seller other than the Series B 8% Cumulative Convertible Preferred Stock;

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

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

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

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

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

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

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

                                       18
<PAGE>

     5.10 Additional Covenants.

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

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

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

     (d) Neither the Company 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 Company contemplates an offering of
its equity or debt securities within six months following the Closing Date, the
Company 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 Shares hereunder, the Company 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 Company fails to obtain such
assurance, then the Company shall not issue or sell any such securities without
the prior written consent of Purchasers purchasing at least 75% of the Shares
hereunder, provided that the Company may sell or issue securities without such
consent if (i) it obtains prior shareholder approval for such sale or issuance
in compliance with NASD rules, (ii) such sale or issuance is to a pharmaceutical
company in connection with a strategic transaction and not primarily as a
capital raising transaction, so long as the Company has not affirmatively

                                       19
<PAGE>

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, or (iii) none of the shares of Series B 8%
Cumulative Convertible Preferred Stock are then outstanding, so long as the
Company 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 NASD, then the Company 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 Shares and Warrant Shares and the full amount
of securities issued and/or to be issued in such other transaction.

     5.11 Securities Laws Disclosure; Publicity. The Seller may (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 Company 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 hereunder and under the documents contemplated
hereby are several and not joint with the obligations of each other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under any such document. Nothing contained
herein or in any other document contemplated hereby, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute any of the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated hereby or thereby. Each Purchaser confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Purchaser shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or

                                       20
<PAGE>

out of any other document contemplated hereby, and it shall not be necessary for
any other Purchaser to be joined as an additional party in any proceeding for
such purpose.

                       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) One or more certificates evidencing the aggregate number of
     Shares of the Common Stock, duly authorized, issued, fully paid and
     non-assessable, as is indicated on Schedule 1 to be purchased at the
     Closing by such Purchaser, registered in the name of such Purchaser, in
     such denominations as is indicated on Schedule 1 for such Purchaser;

            (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.

         2. The Investor Rights Agreement, in the form attached hereto as
     Exhibit B (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 C.

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

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

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

                                       21
<PAGE>

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

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

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

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

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

         6. A wire transfer representing the amounts due for reasonable legal
     fees and other expenses as described in Section 8.2 hereof.

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

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

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

     (a) Each of the Purchasers shall deliver or cause to be delivered to the
Seller (i) payment of the portion of the Purchase Price set forth opposite each
Purchaser's name on Schedule 1, in cash by either (x) wire transfer of
immediately available funds to an account designated in writing by Seller prior
to the date hereof, or (y) certified or cashier's check; (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.

             ARTICLE VII - INDEMNIFICATION, TERMINATION AND DAMAGES

     7.1 Survival of Representations. Except as otherwise provided herein, the

                                       22
<PAGE>

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) The Purchasers, severally and not jointly, agree 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 the Purchasers of any covenant or
agreement made by the Purchasers in this Agreement or in any of the Related
Documents; (B) any breach of warranty or representation made by the Purchasers
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 a 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

                                       23
<PAGE>

other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.

     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,

                                       24
<PAGE>

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
in addition to any other remedies legally available to such Purchasers, to
require that the Seller shall pay to each Purchaser liquidated damages at a rate
of 20% per annum of the aggregate Purchase Price of such Purchaser's Shares
still held by such Purchaser payable monthly in cash at the end of each month in
which the Breach Event is outstanding. Notwithstanding the foregoing, the amount
of liquidated damages payable by the Seller pursuant to this Section 7.4 in
respect of any Breach Event shall be limited to a total of $500,000 and such
limitation amount shall be allocated to the Purchasers on a pro rata basis.

         "Breach Event" means either:

              (i) Any breach of any material warranty or representation of the
     Seller as of the date made in this Agreement or any agreement delivered
     herewith 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 the Shares to the Seller (the "Breach Cure Period"); or

              (ii) Any breach by the Seller of any material covenant or other
     provision of this Agreement or any agreement delivered herewith which is
     within the control of the Seller, and which breach, if capable of being
     cured, has not been cured within the Breach Cure Period.

     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.

                                       25
<PAGE>

                          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 $40,000 as and for
legal and due diligence expenses incurred in connection herewith, half of which
amount has been previously paid and half of which amount shall be paid upon
execution hereof.

     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, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express. The address for such notices and communications shall be as
follows:

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

                     NexMed, Inc.
                     350 Corporate Boulevard
                     Robbinsville, NJ  08691
                     Attention:  Chief Financial Officer
                     Facsimile No.: 609-208-1622

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

                                       26
<PAGE>

notices to the Seller shall be sent to Katten Muchin Zavis Rosenman, 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
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

                                       27
<PAGE>

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
Purchasers purchasing at least 75% of the Shares hereunder, and such waiver or
amendment, as the case may be, shall be binding upon all Purchasers. The waiver
by a party of any breach hereof or default in the performance hereof shall not
be deemed to constitute a waiver of any other default or any succeeding breach
or default. This Agreement may not be amended or supplemented by any party
hereto except pursuant to a written amendment executed by the Seller and the
Purchasers purchasing at least 75% of the Shares hereunder. No amendment shall
be effected to impact a holder of Securities in a disproportionately adverse
fashion without the consent of such individual holder.

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

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

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

                                       28
<PAGE>

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]

                                       29
<PAGE>

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

SELLER:

NEXMED, INC.

By: Vivian Liu
    ----------
Name: Vivian Liu
Title: Vice President & Secretary

<PAGE>

PURCHASERS:

ROYAL BANK OF CANADA
By:      Its agent, RBC Dominion Securities Corporation

By: /s/  Steven C. Milke
    --------------------
Name:    Steven C. Milke
Title:   Managing Director

By:  /s/ Roger A. Blissett
     ---------------------
Name:    Roger A. Blisset
Title:   Managing Director

THE TAIL WIND FUND LTD.
By:      TAIL WIND ADVISORY AND MANAGEMENT LTD.,
         as investment manager

         By: /s/ David A. Crook
             ------------------
         Name:   David A. Crook
         Title:  Chief Executive Officer

SOLOMON STRATEGIC HOLDINGS, INC.

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

MIDSUMMER INVESTMENT, LTD.
By:      MIDSUMMER CAPITAL, LLC,
         as investment advisor

         By: /s/ Scott Kaufman
             -----------------
         Name:    Scott Kaufman
         Title:   Managing Director

<PAGE>

OMICRON MASTER TRUST
By:      Omicron Capital L.P., as subadvisor
By:      Omicron Capital Inc., its general partner

         By: /s/ Olivier Morali
             ------------------
         Name:    Olivier Morali, President

PROVIDENT MASTER FUND, LTD.

By: /s/ Irvin R. Kessler
    --------------------
Name:   Irvin R. Kessler
Title:  Managing Member, Provident Advisors LLC

CHULA PARTNERS, LP

By: /s/  Warren Berman
    ------------------
Name:    Warren Berman
Title:   General Partner

DYNAMIC EQUITY HEDGE FUND

By: /s/  Morton A. Cohen
    --------------------
Name:    Morton A. Cohen
Title:   Investment Manager

MORTON A. COHEN TTEE FBO THE
MORTON A. COHEN REVOCABLE LIVING TRUST

By: /s/ Morton A. Cohen
        ---------------
Name:   Morton A. Cohen
Title:  Trustee

<PAGE>

VIKING GLOBAL EQUITIES LP
By:      Viking Global Performance LLC, the general partner

         By: Brian Smith
             -----------
         Name:  Brian G. Smith
         Title: Chief Financial Officer

VGE III PORTFOLIO LTD.
By:      Viking Global Performance LLC, the Investment Manager

         By: Brian Smith
             -----------
         Name: Brian G. Smith
         Title: Chief Financial Officer

<PAGE>

ISLANDIA, L.P.
By:      John Lang, Inc., its general partner

         By: /s/ Edgar Berner
         Name:   Edgar Berner
         Title:  General Partner

<PAGE>

            SCHEDULE 1 TO COMMON STOCK AND WARRANT PURCHASE AGREEMENT
            ---------------------------------------------------------

               PURCHASERS AND SHARES OF COMMON STOCK AND WARRANTS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 COMMON STOCK
                                                                                                 ------------
   NAME, ADDRESS AND FAX                                                  SHARES OF COMMON        UNDERLYING
   ---------------------                                                  ----------------        ----------
    NUMBER OF PURCHASER                   COPIES OF NOTICES TO             STOCK PURCHASED         WARRANTS         PURCHASE PRICE
    -------------------                   --------------------             ---------------         --------         --------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                                  <C>                    <C>                <C>
ROYAL BANK OF CANADA                 ROYAL BANK OF CANADA
c/o RBC Dominion Securities          c/o RBC Dominion Securities
Corporation                          Corporation
One Liberty Plaza                    One Liberty Plaza                        1,388,889             486,111           $5,000,000
165 Broadway, 2nd Floor              165 Broadway, 2nd Floor
New York, NY 10006-1404              New York, NY 10006-1404
Fax: 212-858-7439                    Fax: 212-858-7439
Attn: Steve Lin                      Attn: Joe Muskatel
------------------------------------------------------------------------------------------------------------------------------------
THE TAIL WIND FUND LTD.
c/o Tail Wind Advisory &             Peter J. Weisman, P.C.
Management Ltd.                      335 Madison Avenue, Suite 1702
Attn:  David Crook                   New York, NY 10017                        333,333              116,667           $1,200,000
1st Floor, No. 1 Regent Street       Telephone: 212-418-4972
London, SW1Y 4NS UK                  Facsimile: 212-317-8855
Fax: 44-207-468-7657
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 COMMON STOCK
                                                                                                 ------------
   NAME, ADDRESS AND FAX                                                  SHARES OF COMMON        UNDERLYING
   ---------------------                                                  ----------------        ----------
    NUMBER OF PURCHASER                   COPIES OF NOTICES TO             STOCK PURCHASED         WARRANTS         PURCHASE PRICE
    -------------------                   --------------------             ---------------         --------         --------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                                 <C>                    <C>                <C>
SOLOMON STRATEGIC HOLDINGS, INC.
c/o Andrew P. MacKellar (Director)     Peter J. Weisman, P.C.
Greenlands, The Red Gap                335 Madison Avenue, Suite 1702
Castletown IM9 1HB                     New York, NY 10017                       55,556               19,445             $200,000
British Isles                          Telephone: 212-418-4972
Fax: 011 (44) 1624 824191              Facsimile: 212-317-8855
------------------------------------------------------------------------------------------------------------------------------------
MIDSUMMER INVESTMENT, LTD.             Rob Charron, Esq.
c/o Midsummer Capital, LLC             Feldman Weinstein LLP
485 Madison Avenue, 23rd Floor         420 Lexington Avenue, Ste 2620
New York, NY  10022                    New York, NY 10170                      277,778               97,222           $1,000,000
Tel: 212-584-2140                      Tel: (212) 997-4242
Attn: Scott Kaufman                    Fax: (212) 931-8704
------------------------------------------------------------------------------------------------------------------------------------
OMICRON MASTER TRUST                   Brian Pusch, Esq.
c/o Omicron Capital L.P.               Law Offices of Brian Pusch
810 Seventh Avenue, 39th Floor         29 West 57th Street, 14th Floor
New York, NY  10019                    New York, NY 10019                      138,889               48,611             $500,000
Fax: 212-803-5269                      Tel: (212) 980-0408
Attn:  Brian Daly                      Fax: (212) 980-7055
------------------------------------------------------------------------------------------------------------------------------------
PROVIDENT MASTER FUND, LTD.
894 Grove Lane East,  #280                                                      69,444               24,305             $250,000
Wayzata, MN 55391
Attn: Patrick Schwinghammer
Fax: (952) 345-5230
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 COMMON STOCK
                                                                                                 ------------
   NAME, ADDRESS AND FAX                                                  SHARES OF COMMON        UNDERLYING
   ---------------------                                                  ----------------        ----------
    NUMBER OF PURCHASER                   COPIES OF NOTICES TO             STOCK PURCHASED         WARRANTS         PURCHASE PRICE
    -------------------                   --------------------             ---------------         --------         --------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                                 <C>                    <C>                <C>
CHULA PARTNERS, LP
504 North Fourth Street,
Suite 102                                                                      41,667                14,583            $150,000
Fairfield, IA 52556
Attn: Warren Berman
Fax: (641) 472-6929
------------------------------------------------------------------------------------------------------------------------------------
DYNAMIC EQUITY HEDGE FUND
Scotia Plaza, 55th Floor
40 King Street West                                                            27,778                 9,722            $100,000
Toronto, Ontario M5H 4A9
Attn: Tom Niehaus
Fax: (216) 694-3545
------------------------------------------------------------------------------------------------------------------------------------
MORTON A. COHEN TTEE FBO
THE MORTON A. COHEN REVOCABLE
LIVING TRUST
1801 East Ninth Street, # 1120                                                 27,778                 9,722            $100,000
Cleveland, OH 44114
Attn: Mort Cohen or Tom Niehaus
Fax: (216) 694-3545
------------------------------------------------------------------------------------------------------------------------------------
VIKING GLOBAL EQUITIES LP
280 Park Avenue                                                               152,778                53,472            $550,000
New York, NY 10017
Attn: Brian Smith
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 COMMON STOCK
                                                                                                 ------------
   NAME, ADDRESS AND FAX                                                  SHARES OF COMMON        UNDERLYING
   ---------------------                                                  ----------------        ----------
    NUMBER OF PURCHASER                   COPIES OF NOTICES TO             STOCK PURCHASED         WARRANTS         PURCHASE PRICE
    -------------------                   --------------------             ---------------         --------         --------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                                 <C>                    <C>                <C>
VGE III PORTFOLIO LTD.
280 Park Avenue                                                                 125,000               43,750            $450,000
New York, NY 10017
Attn: Brian Smith
------------------------------------------------------------------------------------------------------------------------------------
ISLANDIA, L.P.
c/o John Lang, Inc.
485 Madison Avenue, 23rd Floor                                                  277,778               97,222           $1,000,000
New York, NY 10022
Attn: Fund Manager
Fax:  (212) 584-2199
------------------------------------------------------------------------------------------------------------------------------------
TOTALS:                                                                       2,916,668            1,020,832          $10,500,000
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}]]