Document:

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                               PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT ("Agreement") is made as of the 11th day of June,
2002 by and among NEXMED, INC., a Nevada corporation (the "Company"), and the
Purchasers set forth on the signature page affixed hereto (each a "Purchaser"
and collectively the "Purchasers").

                                    RECITALS

     A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended;

     B. The Purchasers wish to purchase, and the Company wishes to sell and
issue to the Purchasers, upon the terms and subject to the conditions stated in
this Agreement (i) an aggregate of $5 million in principal amount of the
Company's 5% Convertible Notes due November 2005 in the form attached hereto as
EXHIBIT A (the "Notes"), which Notes shall be convertible into shares of common
stock of the Company, $0.001 par value per share (the "Common Stock"), in
accordance with the terms of the Notes, and (ii) 5-year warrants ("Warrants") to
purchase an aggregate of up to such aggregate number of shares of Common Stock
as is equal to 25% of the Purchase Price divided by the average VWAP (as defined
in the Notes) for the twenty (20) consecutive Trading Days (as defined in the
Notes) immediately preceding the date hereof, in the form attached hereto as
EXHIBIT B, in each case as are set forth on the signature page attached hereto
and executed by each such Purchaser for an aggregate purchase price of $5
million;

     C. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as EXHIBIT C (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and applicable state securities laws; and

     In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     1. Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:

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          1.1. "Affiliate" means, with respect to any Person, any other Person
     which directly or indirectly controls, is controlled by, or is under common
     control with, such Person, where "control" means the possession, direct or
     indirect, of the power to direct or cause the direction of the management
     and policies of a Person, whether through the ownership of voting
     securities, by contract or otherwise.

          1.2. "Agreements" means this Agreement, the Registration Rights
     Agreement, the Subsidiary Guaranty, the Mortgage, the Notes and the
     Warrants.

          1.3. The "Company" shall refer to the Company (as defined in the first
     paragraph hereof) together with its subsidiaries wherever applicable
     (including without limitation with respect to all representations of the
     Company unless the context otherwise requires).

          1.4. "Closing" means the consummation of the transactions contemplated
     by this Agreement, and "Closing Date" means the date of such Closing.

          1.5. "Convertible Securities" means any convertible securities,
     warrants, options or other rights to subscribe for or to purchase or
     exchange for, shares of Common Stock.

          1.6. "Notes" shall have meaning set forth in the recitals to this
     Agreement.

          1.7. "Material Adverse Effect" means a material adverse effect on the
     (i) condition (financial or otherwise), business, assets or results of
     operations of the Company; (ii) ability of the Company to perform any of
     its material obligations under the terms of the Agreements; or (iii)
     material rights and remedies of a Purchaser under the terms of the
     Agreements.

          1.8. "Mortgage" means the Mortgage, Security Agreement and Assignment
     of Leases and Rents, in the form attached hereto as EXHIBITS D, executed by
     the Operating Subsidiary in favor of the Purchasers, securing the Company's
     obligations under the Notes.

          1.9. "Operating Subsidiary" means NexMed (U.S.A.), Inc., a Delaware
     corporation which is wholly-owned by the Company.

          1.10. "Person" means an individual, corporation, partnership, limited
     liability company, trust, business trust, association, joint stock company,
     joint venture, pool, syndicate, sole proprietorship, unincorporated
     organization, governmental authority or any other form of entity not
     specifically listed herein.

          1.11. "SEC" means the U.S. Securities and Exchange Commission.

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          1.12. "SEC Filings" means the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 2000 and all other reports filed by the
     Company pursuant to the 1934 Act since December 31, 2000.

          1.13. "Securities" means the Notes, Underlying Shares, Warrants and
     Warrant Shares.

          1.14. "Subsidiary Guaranty" means the Subsidiary Guaranty, in the form
     attached hereto as EXHIBITS E, executed by the Operating Subsidiary in
     favor of the Purchasers, guaranteeing the Company's obligations under the
     Notes.

          1.15. "Underlying Shares" means the shares of Common Stock issued or
     issuable upon conversion of, as payment for interest or prepayment of
     principal under, or otherwise pursuant to, the Notes.

          1.16. "Variable Rate Transaction" means a transaction in which the
     Company issues or sells, or agrees to issue or sell, Common Stock or
     Convertible Securities in which the applicable sale, conversion, exercise
     or exchange price or rate may directly or indirectly effectively be
     reduced, reset or repriced based upon future events or occurrences, future
     trading prices or quotations, or future issuances of Common Stock or
     Convertible Securities (including such resets effected directly or
     indirectly by the issuance of additional securities), including an "equity
     line" transaction but excluding standard provisions for rights of first
     refusal on additional financings and standard anti-dilution provisions
     including weighted-average anti-dilution provisions substantially similar
     to those set forth in the Notes and Warrants which are contained in
     Convertible Securities.

          1.17. "Warrants" shall have meaning set forth in the recitals to this
     Agreement.

          1.18. "Warrant Shares" means the shares of Common Stock issuable upon
     exercise of or otherwise pursuant to the Warrants.

          1.19. "1933 Act" means the Securities Act of 1933, as amended, and the
     rules and regulations promulgated thereunder.

          1.20. "1934 Act" means the Securities Exchange Act of 1934, as
     amended, and the rules and regulations promulgated thereunder.

     2. Purchase and Sale of the Notes and Warrants. Subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties made herein, each of the Purchasers hereby severally, and not
jointly, agrees to purchase, and the Company hereby agrees to sell and issue to
each of the Purchasers, the principal amount of Notes and Warrants to purchase
the number of shares of Common Stock set forth on such Purchaser's signature
page attached hereto and as indicated herein. Each

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Purchaser's aggregate purchase price (the "Purchase Price") for the Notes and
Warrants to be purchased hereunder is set forth on such Purchaser's signature
page attached hereto.

     3. Closing.

          3.1. Closing Procedure. The Company shall promptly deliver to
     Purchasers' counsel, in trust, Notes and Warrants, registered in the names
     of the Purchasers as indicated on the signature pages to this Agreement,
     representing all of the Notes and all of the Warrants, with instructions
     that such Notes and Warrants are to be held in escrow for release to the
     Purchasers only upon payment of the Purchase Price to the Company and
     confirmation of receipt by the Company or its counsel. Upon receipt by
     counsel to the Purchasers of the Notes, Warrants and the execution and/or
     delivery of such other documents contemplated hereby to be executed and/or
     delivered on or prior to the Closing, Purchaser shall promptly cause a wire
     transfer in same day funds to be sent to the account of the Company as
     instructed in writing by the Company, in an amount representing the
     Purchase Price. On the date the Company receives such funds, the Notes and
     the Warrants shall be released to the Purchasers (and such date shall be
     deemed the "Closing Date").

          3.2. Closing Date Deliveries.

               (a) On the Closing Date, the Company shall deliver to the
          Purchasers:

                   (i)   Notes in the form attached as Exhibit A;

                   (ii)  Warrants in the form attached as Exhibit B;

                   (iii) The executed Registration Rights Agreement in the form
                         attached as Exhibit C;

                   (iv)  The executed Subsidiary Guaranty in the form attached
                         as Exhibit E and the executed and acknowledged Mortgage
                         in the form attached as Exhibit D, in each case
                         executed by the Operating Subsidiary;

                   (v)   The opinion(s) of counsel referred to in Section 7.5
                         below; and

                   (vi)  An officer's certificate in form and substance
                         reasonably satisfactory to the Purchasers and the
                         Purchasers' counsel, executed by an officer of the
                         Company and the Operating Subsidiary, certifying as to
                         satisfaction of applicable closing conditions,
                         incumbency of signing officers, the true, correct and

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                         complete nature of the Certificate of Incorporation and
                         By-laws, good standing and authorizing resolutions, in
                         each case of the Company and the Operating Subsidiary.

               (b) On the Closing Date, the Purchasers shall deliver to the
          Company:

                    (i)  The Purchase Price set forth on the Purchasers'
                         signature page hereto; and

                    (ii) The executed Registration Rights Agreement.

     4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers that:

          4.1. Organization, Good Standing and Qualification. The Company is a
     corporation duly incorporated, validly existing and in good standing under
     the laws of the jurisdiction of its incorporation and has all requisite
     corporate power and authority to carry on its business as now conducted and
     own its properties. The Company is duly qualified to do business as a
     foreign corporation and is in good standing in each jurisdiction in which
     the conduct of its business or its ownership or leasing of property makes
     such qualification or licensing necessary unless the failure to so qualify
     would not be reasonably likely to result in a Material Adverse Effect. All
     of the Company's subsidiaries are listed by name and jurisdiction on
     Schedule 4.1 attached hereto. All subsidiaries are wholly-owned by the
     Company. The Operating Subsidiary is a wholly-owned subsidiary of the
     Company and owns all the Mortgaged Property (as defined in the Mortgage).

          4.2. Authorization. The Company has full power and authority and has
     taken all requisite action on the part of the Company, its officers,
     directors and stockholders necessary for (i) the authorization, execution
     and delivery of the Agreements, (ii) authorization of the performance of
     all obligations of the Company hereunder and thereunder, and (iii) the
     authorization, issuance (or reservation for issuance) and delivery of the
     Securities. The Agreements constitute the legal, valid and binding
     obligations of the Company, enforceable against the Company in accordance
     with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
     reorganization, moratorium and similar laws of general applicability,
     relating to or affecting creditors' rights generally.

          4.3. Capitalization. Set forth on Schedule 4.3 hereto is (a) the
     authorized capital stock of the Company on the date hereof; (b) the number
     of shares of capital stock issued and outstanding on the date hereof; (c)
     the number of shares of capital stock issuable pursuant to the Company's
     stock plans; and (d) the number of shares of capital stock issuable and
     reserved for issuance pursuant to securities (other than the Notes and the
     Warrants) exercisable for, or convertible into or exchangeable for any
     shares of

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     capital stock. All of the issued and outstanding shares of the Company's
     capital stock have been duly authorized and validly issued and are fully
     paid and nonassessable, except to the extent that the failure of the
     foregoing to be true and correct would not have a Material Adverse Effect.
     Except as set forth on Schedule 4.3, no Person is entitled to preemptive or
     similar statutory or contractual rights with respect to any securities of
     the Company. Except as set forth on Schedule 4.3, there are no outstanding
     warrants, options, convertible securities or other rights, agreements or
     arrangements of any character under which the Company is or may be
     obligated to issue any equity securities of any kind, and except as
     contemplated by this Agreement or set forth on Schedule 4.3, the Company is
     not currently in negotiations for the issuance of any equity securities of
     any kind. Except as set forth on Schedule 4.3, the Company has no knowledge
     of any voting agreements, buy-sell agreements, option or right of first
     purchase agreements or other agreements of any kind among any of the
     securityholders of the Company relating to the securities of the Company
     held by them. Except as set forth on Schedule 4.3, the Company has not
     granted any Person the right to require the Company to register any
     securities of the Company under the 1933 Act, whether on a demand basis or
     in connection with the registration of securities of the Company for its
     own account or for the account of any other Person.

          4.4. Valid Issuance. As of the Closing, the Company has reserved a
     sufficient number of shares of Common Stock for the issuance upon
     conversion of, as payment for interest on or repayment of principal of, and
     otherwise pursuant to, the Notes, and upon exercise of or otherwise
     pursuant to the Warrants. The Notes, Warrants, Underlying Shares and
     Warrant Shares are duly authorized, and such Securities, when issued in
     accordance herewith and, in respect of the Underlying Shares and Warrant
     Shares pursuant to the terms of the Notes and Warrants, respectively, will
     be validly issued, fully paid, non-assessable and free and clear of all
     encumbrances and restrictions, except for restrictions on transfer imposed
     by applicable securities laws. The number of shares to be reserved
     hereunder shall be determined without regard to any restrictions on
     beneficial ownership contained in the Agreements.

          4.5. Consents. The execution, delivery and performance by the Company
     of the Agreements and, subject to the truth and accuracy of the
     representations made by the Purchasers in Sections 5 of this Agreement, the
     offer, issuance and sale of the Securities, require no consent of, action
     by or in respect of, or filing with, any Person, governmental body, agency,
     or official, other than filings that have been made pursuant to applicable
     state securities laws and post-sale filings pursuant to applicable state
     and federal securities laws and the requirements of the Nasdaq Stock
     Market, which the Company undertakes to file within the applicable time
     periods.

          4.6. Delivery of SEC Filings; Business. The SEC Filings represent all
     filings required of the Company pursuant to the 1934 Act since December 31,
     2000. The SEC Filings complied as to form in all material respects with the
     requirements of the 1934 Act and did not contain any untrue statement of a
     material fact or omit to state any material fact necessary in order to make
     the statements made therein, in the light of the circumstances under which
     they were made, not misleading. The Company is engaged

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     only in the business described in the SEC Filings and the SEC Filings
     contain a complete and accurate description of the business of the Company
     in all material respects. The Company has not provided to any Purchaser (i)
     any information required to be filed under the 1934 Act that has not been
     so filed or (ii) any material nonpublic information.

          4.7. Use of Proceeds. The proceeds of the sale of the Securities
     hereunder shall be used by the Company for working capital and general
     corporate purposes.

          4.8. No Material Adverse Change. Since December 31, 2001, except as
     disclosed and described in the Company's Annual Report on Form 10-K for the
     fiscal year ended December 31, 2001 and the Company's Form 10-Q filed with
     the SEC for the fiscal quarter ending March 31, 2001, or any other reports
     filed by the Company subsequent to such Form 10-K pursuant to the 1934 Act
     and filed at least ten (10) days prior to the date hereof, there has not
     been:

               (i) any change in the consolidated assets, liabilities, financial
          condition or operating results of the Company from that reflected in
          the financial statements included in the Company's Form 10-K for the
          fiscal year ended December 31, 2001, except changes in the ordinary
          course of business which have not had, in the aggregate, a Material
          Adverse Effect;

               (ii) any declaration or payment of any dividend, or any
          authorization or payment of any distribution, on any of the capital
          stock of the Company, or any redemption or repurchase of any
          securities of the Company;

               (iii) any material damage, destruction or loss, whether or not
          covered by insurance, to any assets or properties of the Company or
          any of its subsidiaries;

               (iv) any waiver by the Company of a material right or of a
          material debt owed to it;

               (v) any satisfaction or discharge of any lien, claim or
          encumbrance or payment of any obligation by the Company, except in the
          ordinary course of business and which is not material to the assets,
          properties, financial condition, operating results or business of the
          Company taken as a whole (as such business is presently conducted and
          as it is proposed to be conducted);

               (vi) any material change or amendment to a material contract or
          arrangement by which the Company or any of its assets or properties is
          bound or subject;

               (vii) any material labor difficulties or labor union organizing
          activities with respect to employees of the Company;

               (viii) any transaction entered into by the Company other than in
          the ordinary course of business; or

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               (ix) any other event or condition of any character that may have
          a Material Adverse Effect.

          4.9. Registration Statements; Material Contracts.

               (a) During the preceding two years, each registration statement
          and any amendment thereto filed by the Company pursuant to the 1933
          Act, as of the date such statement or amendment became effective,
          complied as to form in all material respects with the 1933 Act and did
          not contain any untrue statement of a material fact or omit to state
          any material fact required to be stated therein or necessary in order
          to make the statements made therein, in light of the circumstances
          under which they were made, not misleading; and each prospectus filed
          pursuant to Rule 424(b) under the 1933 Act, as of its issue date and
          as of the closing of any sale of securities pursuant thereto did not
          contain any untrue statement of a material fact or omit to state any
          material fact required to be stated therein or necessary in order to
          make the statements made therein, in the light of the circumstances
          under which they were made, not misleading.

               (b) Except as set forth on Schedule 4.3 hereto, there are no
          agreements or instruments currently in force and effect that
          constitute a warrant, option, convertible security or other right,
          agreement or arrangement of any character under which the Company is
          or may be obligated to issue any material amounts of any equity
          security of any kind, or to transfer any material amounts of any
          equity security of any kind.

          4.10. Form S-3 Eligibility. The Company is currently eligible to
     register the resale of its Common Stock on a registration statement on Form
     S-3 under the 1933 Act.

          4.11. No Conflict, Breach, Violation or Default; Compliance with Law.
     The execution, delivery and performance of the Agreements by the Company
     and the issuance and sale of the Securities will not conflict with or
     result in a breach or violation of any of the terms and provisions of, or
     constitute a default under (i) the Company's Certificate of Incorporation
     (including any certificates of designation) or the Company's Bylaws, both
     as in effect on the date hereof (copies of which have been provided to the
     Purchasers before the date hereof), or (ii) except where it would not have
     a Material Adverse Effect, (A) any statute, rule, regulation or order of
     any governmental agency or body or any court, domestic or foreign, having
     jurisdiction over the Company or any of its properties, or (B) any
     agreement or instrument to which the Company is a party or by which the
     Company is bound or to which any of the properties of the Company is
     subject. Except where it would not have a Material Adverse Effect, the
     Company (i) is not in violation of any statute, rule or regulation
     applicable to the Company or its assets, (ii) is not in violation of any
     judgment, order or decree applicable to the Company or its assets, and
     (iii) is not in breach or violation of any agreement, note or instrument to
     which it or its assets are a party or are bound or subject. The Company has
     not received notice from any Person of any claim or investigation that, if
     adversely determined, would render the preceding sentence untrue or
     incomplete.

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          4.12. Tax Matters. The Company has timely prepared and filed all tax
     returns required to have been filed by the Company with all appropriate
     governmental agencies and timely paid all taxes owed by it, in each case
     taking into account permitted extensions. The charges, accruals and
     reserves on the books of the Company in respect of taxes for all fiscal
     periods are adequate in all material respects, and there are no material
     unpaid assessments against the Company nor, to the knowledge of the
     Company, any basis for the assessment of any additional taxes, penalties or
     interest for any fiscal period or audits by any federal, state or local
     taxing authority except such as which are not material. All material taxes
     and other assessments and levies that the Company is required to withhold
     or to collect for payment have been duly withheld and collected and paid to
     the proper governmental entity or third party when due. There are no tax
     liens or claims pending or threatened against the Company or any of its
     respective assets or property. There are no outstanding tax sharing
     agreements or other such arrangements between the Company and any other
     corporation or entity.

          4.13. Title to Properties and Securities. Except as disclosed in the
     SEC Filings, the Company has good and marketable title to all real
     properties and all other properties and assets owned by it, in each case
     free from liens, encumbrances and defects that would materially affect the
     value thereof or materially interfere with the use made or currently
     planned to be made thereof by them; and except as disclosed in the SEC
     Filings, the Company holds any leased real or personal property under valid
     and enforceable leases with no exceptions that would materially interfere
     with the use made or currently planned to be made thereof by them. The
     Operating Subsidiary owns all the Mortgaged Property (as defined in the
     Mortgage) free and clear of all liens, claims, encumbrances and defects
     except those that would not individually or in the aggregate materially
     affect the value thereof or materially interfere with the use made or
     currently planned to be made thereof. The Company (excluding its
     subsidiaries) does not own any assets other than the securities of each of
     its wholly-owned subsidiaries and does not engage in any operating
     activities other than acting as a holding company of the securities of such
     subsidiaries. All of the Company's operating assets and properties are
     owned or leased by the Operating Subsidiary, except for the Company's
     intellectual property rights which are entirely owned by NexMed Holdings,
     Inc., a Delaware corporation ("Holdings"), which is wholly-owned subsidiary
     of the Company, and except for assets located outside the United States,
     which are entirely owned by (a) NexMed International Limited, a corporation
     which is organized under the laws of the British Virgin Islands and which
     is wholly-owned subsidiary of the Company ("International"), (b) NexMed
     (Americas) Limited, incorporated in Nova Scotia and wholly-owned by
     International, or (c) NexMed International Limited, incorporated in Hong
     Kong and wholly-owned by International. Holdings does not engage in any
     activities except for holding the intellectual property rights of the
     Company, and International and its two subsidiaries do not engage in any
     business or activities in the United States.

          4.14. Certificates, Authorities and Permits. The Company possesses
     adequate certificates, authorities or permits issued by appropriate
     governmental agencies or bodies necessary to conduct the business now
     operated by it and has not received any notice of proceedings relating to
     the revocation or modification of any such certificate,

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     authority or permit that, if determined adversely to the Company, would
     individually or in the aggregate have a Material Adverse Effect.

          4.15. No Labor Disputes. No material labor dispute with the employees
     of the Company exists or, to the knowledge of the Company, is imminent.

          4.16. Intellectual Property. The Company owns or possesses adequate
     rights or licenses to the inventions, know-how, patents, patent rights,
     copyrights, trademarks, trade names, licenses, approvals, governmental
     authorizations, trade secrets confidential information and other
     intellectual property rights (collectively, "Intellectual Property
     Rights"), free and clear of all liens, security interests, charges,
     encumbrances, equities and other adverse claims, necessary to conduct the
     business now operated by it, or presently employed by it, and presently
     contemplated to be operated by it, and the Company has not received any
     notice of infringement of or conflict with asserted rights of others with
     respect to any Intellectual Property Rights except as disclosed in the SEC
     Filings. Except as set forth on Schedule 4.16 hereto, none of the Company's
     Intellectual Property Rights have expired or terminated, or are expected to
     expire or terminate within three years from the date of this Agreement,
     except where such expirations or termination would not result, either
     individually or in the aggregate, in a Material Adverse Effect. To the
     knowledge of the Company, the Company's patents and other Intellectual
     Property Rights and the present activities of the Company do not infringe
     any patent, copyright, trademark, trade name or other proprietary rights of
     any third party where such infringement may cause a Material Adverse Effect
     on the Company, and there is no claim, action or proceeding being made or
     brought against, or to the Company's knowledge, being threatened against,
     the Company regarding its Intellectual Property Rights, and the Company is
     unaware of any facts or circumstances which might give rise to any of the
     foregoing. The Company has no knowledge of the material infringement of its
     Intellectual Property Rights by third parties and has no reason to believe
     that any of its Intellectual Property Rights is unenforceable, and the
     Company is unaware of any facts or circumstances which might give rise to
     any of the foregoing. The Company has taken commercially reasonable
     security measures to protect the secrecy, confidentiality and value of all
     of its intellectual properties.

          4.17. Environmental Matters. The representations and warranties
     contained in Section 9 of the Mortgage are true and correct as of the date
     hereof.

          4.18. Litigation. Except as disclosed in the SEC Filings, there are no
     pending actions, suits or proceedings against or affecting the Company or
     any of its properties that, if determined adversely to the Company, would
     individually or in the aggregate have a Material Adverse Effect or would
     materially and adversely affect the ability of the Company to perform its
     obligations under the Agreements, or which are otherwise material in the
     context of the sale of the Securities; and to the Company's knowledge, no
     such actions, suits or proceedings are threatened or contemplated.

          4.19. Financial Statements. The financial statements included in each
     SEC Filing present fairly and accurately in all material respects the
     consolidated financial

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     position of the Company as of the dates shown and its consolidated results
     of operations and cash flows for the periods shown, and such financial
     statements have been prepared in conformity with generally accepted
     accounting principles applied on a consistent basis. Except as set forth in
     the financial statements of the Company included in the SEC Filings filed
     prior to the date hereof, the Company has no liabilities, contingent or
     otherwise, except those which individually or in the aggregate are not
     material to the financial condition or operating results of the Company.

          4.20. Insurance Coverage. The Company maintains in full force and
     effect insurance coverage that the Company reasonably believes to be
     adequate against all liabilities, claims and risks against which it is
     customary for comparably situated companies to insure.

          4.21. Compliance with Nasdaq Continued Listing Requirements. The
     Company is in compliance with all applicable Nasdaq National Market
     continued listing requirements. There are no proceedings pending or to the
     Company's knowledge threatened against the Company relating to the
     continued listing of the Company's Common Stock on the Nasdaq National
     Market and the Company has not received any notice of, nor to the knowledge
     of the Company is there any basis for, the delisting of the Common Stock
     from the Nasdaq National Market.

          4.22. Acknowledgment of Dilution. The number of shares of Common Stock
     issuable pursuant to the Notes and Warrants may increase. The Company's
     executive officers and directors have studied and fully understand the
     nature of the transactions being contemplated hereunder and recognize that
     they have a potential dilutive effect. The board of directors of the
     Company has concluded in its good faith business judgment that such
     issuance is in the best interests of the Company. The Company acknowledges
     that its obligations to issue shares of Common Stock pursuant to this
     Agreement (and the terms of the Notes and Warrants) are binding on it and
     enforceable regardless of the dilution that such issuance may have on the
     ownership interest of the other stockholders of the Company.

          4.23. Brokers and Finders. The Purchasers shall have no liability or
     responsibility for the payment of any commission or finder's fee to any
     third party in connection with or resulting from this agreement or the
     transactions contemplated by this Agreement by reason of any agreement of
     or action taken by the Company. Upon Closing, the Company shall pay to any
     finder in connection with the transactions contemplated hereby any finder's
     fee(s) owing to such finder pursuant to a separate agreement or
     arrangement.

          4.24. No General Solicitation. Neither the Company nor any Person
     acting on its behalf has conducted any general solicitation or general
     advertising (as those terms are used in Regulation D) in connection with
     the offer or sale of any of the Securities.

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          4.25. No Integrated Offering. Neither the Company nor any of its
     Affiliates, nor any Person acting on its or their behalf has, directly or
     indirectly, made any offers or sales of any security or solicited any
     offers to buy any security, under circumstances that would adversely affect
     reliance by the Company on Section 4(2) of the 1933 Act for the exemption
     from registration for the transactions contemplated hereby or would require
     registration of the Securities under the 1933 Act, or would require the
     integration of this offering with any other offering of securities for
     purposes of determining the need to obtain stockholder approval of the
     transactions contemplated hereby under the rules of the Nasdaq Stock
     Market.

          4.26. Disclosures. No representation or warranty made by the Company
     under any section hereof and no written information furnished by the
     Company to the Purchasers or any authorized representative of the
     Purchasers, pursuant to the Agreements or in connection therewith, contains
     any untrue statement of a material fact or omits to state a material fact
     necessary in order to make the statements contained herein and therein, in
     light of the circumstances under which the statements were made, not
     misleading.

     5. Representations and Warranties of the Purchaser. Each of the Purchasers
hereby severally, and not jointly, represents and warrants to the Company as to
itself only that:

          5.1. Organization and Existence. The Purchaser is a validly existing
     corporation, partnership or limited liability company and has all requisite
     corporate, partnership or limited liability company power and authority to
     invest in the Securities pursuant to this Agreement.

          5.2. Authorization. The execution, delivery and performance by the
     Purchaser of this Agreement and the Registration Rights Agreement have been
     duly authorized and this Agreement and the Registration Rights Agreement
     will each constitute the valid and legally binding obligation of the
     Purchaser, enforceable against the Purchaser in accordance with their
     terms, subject to bankruptcy, insolvency, fraudulent transfer,
     reorganization, moratorium and similar laws of general applicability,
     relating to or affecting creditors' rights generally.

          5.3. Purchase Entirely for Own Account. The Securities to be received
     by the Purchaser hereunder will be acquired for the Purchaser's own
     account, not as nominee or agent, and not with a view to the resale or
     distribution of any part thereof in violation of securities laws, and the
     Purchaser has no present intention of selling, granting any participation
     in, or otherwise distributing the same in violation of securities laws. The
     Purchaser is not a registered broker dealer or an entity engaged in the
     business of being a broker dealer.

          5.4. Investment Experience. The Purchaser acknowledges that it can
     bear the economic risk and complete loss of its investment in the
     Securities and has such knowledge and experience in financial or business
     matters and in private placement

                                       12
<PAGE>

     transactions of companies similar to the Company so that it is capable of
     evaluating the merits and risks of the purchase contemplated hereby.

          5.5. Disclosure of Information. The Purchaser has had an opportunity
     to receive documents related to the Company and to ask questions of and
     receive answers from the Company regarding the Company, its business and
     the terms and conditions of the offering of the Securities and has received
     and read the SEC Filings filed via EDGAR at least five days prior to the
     date hereof. Neither such inquiries nor any other due diligence
     investigation conducted by the Purchaser shall modify, amend or affect the
     Purchaser's right to rely on the Company's representations and warranties
     contained in this Agreement or made pursuant to this Agreement.

          5.6. Restricted Securities. The Purchaser understands that the
     Securities are characterized as "restricted securities" under the U.S.
     federal securities laws inasmuch as they are being acquired from the
     Company in a transaction not involving a public offering and that under
     such laws, applicable state laws and applicable regulations such securities
     may be resold without registration under the 1933 Act only in certain
     limited circumstances.

          5.7. Legends. It is understood that, until registration for resale
     pursuant to the Registration Rights Agreement or until sales under Rule 144
     are permitted, certificates evidencing the Securities may bear one or all
     of the following legends or legends substantially similar thereto:

               (a) "The shares represented by this certificate may not be
          transferred without (i) the opinion of counsel reasonably satisfactory
          to the corporation that such transfer may lawfully be made without
          registration under the Securities Act of 1933 or qualification under
          applicable state securities laws; or (ii) such registration or
          qualification."

               (b) If required by the authorities of any state in connection
          with the issuance of sale of the Securities, the legend required by
          such state authority.

          Upon registration for resale pursuant to the Registration Rights
     Agreement or upon Rule 144(k) under the 1933 Act becoming available, the
     Company shall promptly cause certificates evidencing the Underlying Shares
     and Warrant Shares previously issued to be replaced with certificates which
     do not bear such restrictive legends, and all Underlying Shares and Warrant
     Shares subsequently issued shall not bear such restrictive legends. In the
     event that the Company does not issue new, unlegended certificates in
     replacement of the legended certificates as required under this Section 5.7
     within 10 business days of a written request to do so, or if any
     subsequently issued Underlying Shares and Warrant Shares are issued with
     restrictive legends when unlegended certificates are required under this
     Section 5.7, the Company shall be liable to the Purchaser (or subsequent
     holder thereof) for damages in an amount of $500 cash for each such day
     beyond the replacement date (or issuance date, in the case of newly
     converted

                                       13
<PAGE>

     Notes or newly exercised Warrants) that such unlegended certificates are
     not issued and delivered to the Purchaser or subsequent holder.

          5.8. Accredited Investor. The Purchaser is an "accredited investor" as
     defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.

          5.9. No General Solicitation. The Purchaser did not learn of the
     investment in the Securities as a result of any public advertising or
     general solicitation.

     6. Closing Documents. The parties acknowledge and agree that part of the
inducement for the Purchasers to enter into this Agreement is the Company's
execution and delivery of the Registration Rights Agreement and the execution
and delivery of the Subsidiary Guarantee and the Mortgage by the Operating
Subsidiary. The parties acknowledge and agree that on or prior to the Closing,
the Registration Rights Agreement, Subsidiary Guarantee and the Mortgage will be
duly executed and delivered by the parties thereto.

     7. Covenants and Agreements of the Company.

          7.1. 19.9% Cap; Rule 144.

               (a) 19.9% Cap. In the event that at any time the Company would be
          obligated to issue an amount of shares upon conversion of, or in
          payment of interest or repayment of principal on, the Notes, or upon
          exercise of the Warrants, which, when aggregated with all shares of
          Common Stock issued to the Purchasers hereunder (including under the
          Notes and Warrants), would constitute a breach of the Company's
          obligations under the rules or regulations of the Nasdaq Stock Market
          as they apply to the Company, or any other principal securities
          exchange or market ("Principal Market") upon which the Common Stock is
          or becomes traded (the "Cap Regulations"), the Company shall not be
          obligated to issue any such shares of Common Stock to the extent such
          shares are in excess of the maximum permissible amount ("Maximum
          Common Stock Issuance") under such Cap Regulations ("Excess Shares").
          Each holder of Notes shall be entitled to receive the number of
          Underlying Shares, together with its Warrant Shares under the Warrant
          held by it, equal to such holder's pro rata share of the Maximum
          Common Stock Issuance (based upon its aggregate Purchase Price under
          the Purchase Agreement). Once a holder has received its total pro rata
          share upon conversion of its Notes and exercise of its Warrants, and
          if the Company shall not have complied with its obligations to obtain
          the stockholder approval described below by the date set forth below,
          it shall have the right to compel the Company to redeem its remaining
          Notes and Warrants as set forth below. If a holder has converted and
          exercised all of its Notes and Warrants, but has not depleted the
          total number of pro rata shares of the Maximum Common Stock Issuance
          allocated to it hereunder, its remaining pro rata shares shall be
          reallocated amongst the other holders still holding Notes and Warrants
          on a pro rata basis. If at any point in time and from time to time
          (each a "Trigger Date") the number of Common Shares issued pursuant to
          conversion of the Notes and exercise of the Warrants, together with
          the number of Common Shares that would then be issuable by the Company

                                       14
<PAGE>

          upon conversion of all the Notes and exercise of all the Warrants then
          outstanding, would exceed the Maximum Common Stock Issuance but for
          this Section, then the Company shall, at the Company's election,
          either (A) promptly call a shareholders meeting to obtain shareholder
          approval for the issuance of Common Shares hereunder in excess of the
          Maximum Common Stock Issuance, which such shareholder approval shall
          be obtained within 60 days (or 90 days in the event the SEC reviews
          the applicable proxy statement) following the Trigger Date, or (B)
          purchase from the holders of Notes and Warrants on a pro rata basis
          such Principal Amount of Notes and number of Warrants which cannot be
          converted or exercised due to such Maximum Common Stock Issuance
          limitation at a redemption price equal to (x) for the Notes, 100% of
          such Principal Amount, and (y) for the Warrants, the number of Excess
          Shares underlying the Warrant multiplied by the positive difference,
          if any, of the Market Price (as defined in the Notes) as of the
          Trigger Date minus the Per Share Warrant Price (as defined in the
          Warrants). Such redemption price shall be paid within five (5) trading
          days after a Trigger Date if this clause (B) is elected. The Company
          shall make such election with three (3) days following the Trigger
          Date by giving written notice to all holders of Notes and Warrants. If
          the Company fails to timely make such election, or elects clause (A)
          but then fails to obtain such shareholder approval within 60 days (or
          90 days in the event the SEC reviews the applicable proxy statement)
          following the Trigger Date, then the Company shall purchase such Notes
          and Warrants which cannot be converted or exercised within five (5)
          trading days following any such failure. Only shares of Common Stock
          acquired pursuant to this Agreement (including Underlying Shares and
          Warrant Shares) will be included in determining whether the limitation
          contained herein would be exceeded for purposes of this Section
          7.1(a).

               (b) Rule 144. The Company agrees that, for purposes of
          determining the holding period under Rule 144 of the 1933 Act for
          Underlying Shares issued upon conversion of the Notes, the holding
          period of such Underlying Shares shall be tacked to the holding period
          of the Notes.

          7.2. Limitation on Transactions.

               (a) So long as any of the Notes remain outstanding, without the
          prior written consent of the holders of a majority-in-interest of the
          Notes (which consent may be withheld in such holders' discretion), the
          Company shall not issue or sell or agree to issue or sell any
          securities in a Variable Rate Transaction, provided, however, that
          without such consent, the Company may issue or sell for cash any
          securities in a Variable Rate Transaction so long as the total number
          of shares of Common Stock issued and/or agreed to be issued in the
          aggregate for all such transactions (determined as if all such
          securities as of their issuance are deemed fully converted, exercised
          and exchanged into Common Stock without regard to limitations or
          restrictions contained therein) represents less than seven percent
          (7%) of the total number of the Company's issued and outstanding
          shares of Common Stock as of the closing date of any such transaction.

               (b) So long as any Notes remain outstanding, the Company shall
          not directly or indirectly, create, incur, assume or permit or suffer
          to exist any lien,

                                       15
<PAGE>

          mortgage, security interest or encumbrance (other than statutory liens
          imposed by law incurred in the ordinary course of business for sums
          not yet delinquent or being contested in good faith, if such reserve
          or other appropriate provision, if any, as shall be required by GAAP
          shall have been made in respect thereof) upon any of the Mortgaged
          Property (as defined in the Mortgage) except for those created by the
          Mortgage and shall not directly or indirectly sell, transfer or lease
          any of the Mortgaged Property.

          7.3. Right of the Purchasers to Participate in Future Transactions.
     After September 30, 2002, so long as any Notes remain outstanding, the
     Purchasers will have a right to participate in any sales of any of the
     Company's securities in a capital raising transaction on the terms and
     conditions set forth in this Section 7.3. During such period, the Company
     shall give ten (10) business days advance written notice to the Purchasers
     prior to any non-public offer or sale of any of the Company's equity
     securities or any securities convertible into or exchangeable or
     exercisable for such securities in a capital raising transaction by
     providing to the Purchasers a comprehensive term sheet containing all
     significant business terms of such a proposed transaction. The Purchasers
     shall have the right (pro rata in accordance with the Purchasers'
     participation in this offering) to participate in such transaction by
     purchasing in such transaction an amount of the identical securities issued
     in such transaction equal to up to 37% of the amount purchased by such
     other investors (i.e., up to 27% of the aggregate amount of such securities
     issued to the Purchasers and such other investors together) for the same
     consideration and on the same terms and conditions as such third-party
     sale. If, subsequent to the Company giving notice to a Purchaser hereunder
     but prior to the Purchaser exercising its rights hereunder, the terms and
     conditions of the third-party sale are changed from that disclosed in the
     comprehensive term sheet provided to such Purchaser, the Company shall be
     required to provide a new notice to the Purchaser hereunder and the
     Purchasers shall have the right to exercise their rights to purchase the
     identical securities in such transaction on such changed terms and
     conditions as provided hereunder. The rights and obligations of this
     Section 7.3 shall in no way diminish the other rights of the Purchaser
     pursuant to this Section 7. Notwithstanding anything to the contrary
     contained herein, the number of shares of Common Stock that may be acquired
     by any Purchaser pursuant to any capital raising transaction as described
     in this Section 7.3 shall not exceed a number that, when added to the total
     number of shares of Common Stock deemed beneficially owned by such
     Purchaser (other than by virtue of the ownership of securities or rights to
     acquire securities that have limitations on the Purchaser's right to
     convert, exercise or purchase similar to the limitation set forth herein),
     together with all shares of Common Stock deemed beneficially owned by the
     Purchaser's "affiliates" (as defined in Rule 144 of the 1933 Act) that
     would be aggregated for purposes of determining whether a group under
     Section 13(d) of the 1934 Act, exists, would exceed 9.9% of the total
     issued and outstanding shares of the Common Stock.

          7.4. [Intentionally Deleted.]

                                       16
<PAGE>

          7.5. Opinion of Counsel. On or prior to the Closing Date, the Company
     will deliver to the Purchasers the opinions of legal counsel to the Company
     substantially in the form and substance attached hereto as Exhibit F.

          7.6. Reservation of Common Stock issuable upon Conversion of Notes and
     Exercise of Warrants. The Company hereby agrees at all times to reserve and
     keep available out of its authorized but unissued shares of Common Stock,
     solely for the purpose of providing for the full conversion of Notes
     (including payment and repayment of interest and principal thereon) and the
     exercise of the Warrants, such number of shares of Common Stock as shall
     from time to time equal the number of shares sufficient to permit the full
     conversion of Notes (including payment and repayment of interest and
     principal thereon) and to permit the full exercise of the Warrants in
     accordance with the terms of the Warrants. All calculations pursuant to
     this paragraph shall be made without regard to restrictions on beneficial
     ownership.

          7.7. Reports. For so long as the Purchasers beneficially own the Notes
     or Warrants, the Company will furnish to the Purchasers the following
     reports, each of which shall be provided to the Purchasers by air mail or
     reputable international courier (within one week of filing with the SEC, in
     the case of SEC filings), to the extent not filed on and available at that
     time via EDGAR:

               (a) Quarterly Reports. As soon as available and in any event
          within 45 days after the end of each fiscal quarter of the Company,
          the Company's quarterly report on Form 10-Q or, in the absence of such
          report, consolidated balance sheets of the Company as at the end of
          such period and the related consolidated statements of operations,
          stockholders' equity and cash flows for such period and for the
          portion of the Company's fiscal year ended on the last day of such
          quarter, all in reasonable detail and certified by the Company to have
          been prepared in accordance with generally accepted accounting
          principles, subject to year-end and audit adjustments.

               (b) Annual Reports. As soon as available and in any event within
          90 days after the end of each fiscal year of the Company, the
          Company's Form 10-K or, in the absence of a Form 10-K, consolidated
          balance sheets of the Company as at the end of such fiscal year and
          the related consolidated statements of earnings, stockholders' equity
          and cash flows for such year, all in reasonable detail and accompanied
          by the report on such consolidated financial statements of an
          independent certified public accountant selected by the Company and
          reasonably satisfactory to the Purchaser.

               (c) Securities Filings. As promptly as practicable and in any
          event within five days after the same are issued or filed, copies of
          (i) all notices, proxy statements, financial statements, reports and
          documents as the Company shall send or make available generally to its
          stockholders or to financial analysts, and (ii) all periodic and
          special reports, documents and registration statements (other than on
          Form S-8) which the Company furnishes or files, or, to the extent also
          delivered to the Company, any officer or director of the Company (in
          such person's capacity as such) furnishes or files with the SEC.

                                       17
<PAGE>

               (d) Other Information. Such other information relating to the
          Company as from time to time may reasonably be requested by any
          Purchaser provided the Company produces such information in its
          ordinary course of business, and further provided that the Company,
          solely in its own discretion, determines that such information is not
          confidential in nature and disclosure to the Purchaser would not be
          harmful to the Company or violate any rules or regulations of the SEC
          or the Nasdaq Stock Market.

               (e) Rule 144. The Company agrees to make publicly available on a
          timely basis the information necessary to enable Rule 144 under the
          1933 Act to be available for resale.

          7.8. Press Releases. Any press release or other publicity concerning
     this Agreement or the transactions contemplated by this Agreement shall be
     submitted to the Purchasers for comment at least two (2) business days
     prior to issuance, unless the release is required to be issued within a
     shorter period of time by law or pursuant to the rules of the NASDAQ Stock
     Market or a national securities exchange. The Company shall issue a press
     release concerning the fact and material terms of this Agreement within one
     business day of the Closing.

          7.9. No Conflicting Agreements. The Company will not take any action,
     enter into any agreement or make any commitment that would conflict or
     interfere in any material respect with the obligations to the Purchasers
     under the Agreements.

          7.10. Insurance. For so long as any Purchaser beneficially owns any of
     the Securities, the Company shall have in full force and effect (a)
     insurance reasonably believed by the Company to be adequate on all assets
     and activities, covering property damage and loss of income by fire or
     other casualty, and (b) insurance reasonably believed to be adequate
     protection against all liabilities, claims and risks against which it is
     customary for companies similarly situated as the Company to insure.

          7.11. Compliance with Laws. So long as the Purchasers beneficially own
     any Securities, the Company will use reasonable efforts to comply with all
     applicable laws, rules, regulations, orders and decrees of all governmental
     authorities, except to the extent non-compliance (in one instance or in the
     aggregate) would not have a Material Adverse Effect.

          7.12. Listing of Underlying Shares and Related Matters. The Company
     hereby agrees, promptly following the Closing of the transactions
     contemplated by this Agreement, to take such action to cause the Underlying
     Shares and the Warrant Shares to be listed on the Nasdaq National Market as
     promptly as possible but no later than the effective date of the
     registration contemplated by the Registration Rights Agreement. The Company
     further agrees that if the Company applies to have its Common Stock or
     other securities traded on any other principal stock exchange or market, it
     will include in such application the Underlying Shares and Warrant Shares
     and will take such other action as is necessary to cause such Common Stock
     to be so listed. For so long as any Notes remain outstanding, the Company
     will take all action necessary to continue the

                                       18
<PAGE>

     listing and trading of its Common Stock on the Nasdaq National Market or on
     the Nasdaq Small-Cap Market, the New York Stock Exchange or the American
     Stock Exchange (collectively, "Approved Markets"), and will comply in all
     respects with the Company's reporting, filing and other obligations under
     the bylaws or rules of such exchange or market, as applicable, to ensure
     the continued eligibility for trading of the Underlying Shares and the
     Warrant Shares thereon.

          7.13. Corporate Existence. So long as any Notes or Warrants remain
     outstanding, the Company shall maintain its corporate existence, except in
     the event of a merger, consolidation or sale of all or substantially all of
     the Company's assets, as long as the surviving or successor entity in such
     transaction (a) assumes the Company's obligations hereunder and under the
     agreements and instruments entered into in connection herewith, regardless
     of whether or not the Company would have had a sufficient number of shares
     of Common Stock authorized and available for issuance in order to fulfill
     its obligations hereunder and effect the conversion (including payment on)
     and exercise in full of all Notes and Warrants outstanding as of the date
     of such transaction; (b) has no legal, contractual or other restrictions on
     its ability to perform the obligations of the Company hereunder and under
     the agreements and instruments entered into in connection herewith; and
     (c)(i) is a publicly traded corporation whose common stock and the shares
     of capital stock issuable upon conversion and exercise of the Notes and
     Warrants are (or would be upon issuance thereof) listed for trading on an
     Approved Market or (ii) if not such a publicly traded corporation, then the
     buyer agrees that it will, at the election of the Purchasers, purchase such
     Purchasers' Securities at a price equal to the greater of (a) 110% of the
     Purchase Price of such Securities or (b) the fair market value of such
     Securities on an as-converted and as-exercised basis based on the closing
     price immediately preceding such transaction or the redemption date,
     whichever is greater.

     8. Survival. All representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants and agreements as of the date hereof and shall survive the execution
and delivery of this Agreement and terminate upon expiration of the applicable
statute of limitations.

     9. Miscellaneous.

          9.1. Successors and Assigns. This Agreement may not be assigned by a
     party hereto without the prior written consent of the other parties hereto
     which consent may not be unreasonably withheld or delayed, except that
     without the prior written consent of the Company, but after notice duly
     given, a Purchaser may assign its rights and delegate its duties hereunder
     in whole or in part to an Affiliate or to any Person to which such
     Purchaser has transferred or assigned all or part of its Notes or Warrants
     in accordance with the terms of the Notes and Warrants, provided in each
     case that such Affiliate, transferee or assignee acknowledges in writing to
     the Company that the representations and warranties contained in Section 5
     hereof shall apply to such Affiliate, transferee or assignee. The terms and
     conditions of this Agreement shall inure to the benefit of and be binding
     upon the respective permitted successors and assigns of the

                                       19
<PAGE>

     parties. Nothing in this Agreement, express or implied, is intended to
     confer upon any party other than the parties hereto or their respective
     successors and assigns any rights, remedies, obligations, or liabilities
     under or by reason of this Agreement, except as expressly provided in this
     Agreement.

          9.2. Counterparts. This Agreement may be executed in two or more
     counterparts, each of which shall be deemed an original, but all of which
     together shall constitute one and the same instrument.

          9.3. Titles and Subtitles. The titles and subtitles used in this
     Agreement are used for convenience only and are not to be considered in
     construing or interpreting this Agreement.

          9.4. Notices. Unless otherwise provided, any notice required or
     permitted under this Agreement shall be given in writing and shall be
     deemed effectively given only upon delivery to each party to be notified by
     (i) personal delivery, (ii) telex or telecopier, upon receipt of
     confirmation of complete transmittal, or (iii) an internationally
     recognized overnight air courier, addressed to the party to be notified at
     the address as follows, or at such other address as such party may
     designate by ten days' advance written notice to the other party:

                  If to the Company:

                  NexMed, Inc.
                  350 Corporate Boulevard
                  Robbinsville, NJ  08691
                  Fax: (609) 208-1622
                  Attention:  Chief Financial Officer

                  With a copy to:

                  Katten Muchin Zavis Rosenman
                  575 Madison Avenue
                  New York, New York 10022
                  Fax: (212) 940-8776
                  Attention:  Robert Kohl, Esq.

                  If to the Purchasers, to the addresses set forth on
                  the signature pages hereto.

          9.5. 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,
     all of which amount has been previously paid. The Company shall pay all
     fees and expenses of any placement agents or

                                       20
<PAGE>

     finders in connection with the transactions contemplated by this Agreement
     pursuant to a separate agreement between such parties.

          9.6. Amendments and Waivers. Any term 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 with the written consent of the Company and 75% in
     interest of the Purchasers, provided, however, that any such amendment or
     waiver effected in accordance with this paragraph shall be binding upon
     each holder of any Securities purchased under this Agreement at the time
     outstanding, each future holder of all such securities, and the Company.

          9.7. Severability. If one or more provisions of this Agreement are
     held to be unenforceable under applicable law, such provision shall be
     excluded from this Agreement and the balance of this Agreement shall be
     interpreted as if such provision were so excluded and shall be enforceable
     in accordance with its terms.

          9.8. Entire Agreement. This Agreement, including the Exhibits and
     Schedules hereto, and the Registration Rights Agreement, the Notes and
     Warrants and other documents contemplated hereby constitute the entire
     agreement among the parties hereof with respect to the subject matter
     hereof and thereof and supersede all prior agreements and understandings,
     both oral and written, between the parties with respect to the subject
     matter hereof and thereof.

          9.9. Further Assurances. The parties shall execute and deliver all
     such further instruments and documents and take all such other actions as
     may reasonably be required to carry out the transactions contemplated
     hereby and to evidence the fulfillment of the agreements herein contained.

          9.10. Applicable Law. This Agreement shall be governed by, and
     construed in accordance with, the laws of the State of New York without
     regard to principles of conflicts of laws.

          9.11. Remedies.

               (a) The Purchasers shall be entitled to specific performance of
          the Company's obligations under the Agreements.

               (b) The Company on the one hand, and each Purchaser severally and
          not jointly on the other hand, shall indemnify the other and hold it
          harmless from any loss, cost, expense or fees (including attorneys'
          fees and expenses) arising out of any breach of any representation,
          warranty, covenant or agreement in any of the Agreements, or arising
          out of the enforcement of this Section 9.11.

          9.12. Jurisdiction. The parties hereby agree that all actions or
     proceedings arising directly or indirectly from or in connection with this
     Agreement or the other Agreements shall be litigated only in the Supreme
     Court of the State of New York or the United States District Court for the
     Southern District of New York located in New York

                                       21
<PAGE>

     County, New York, except for actions or proceedings arising directly or
     indirectly from or in connection with the Mortgage, which may be litigated
     in the applicable court(s) in New Jersey. The parties consent to the
     jurisdiction and venue of the foregoing courts and consent that any process
     or notice of motion or other application to either of said courts or a
     judge thereof may be served inside or outside the State of New York or the
     Southern District of New York by registered mail, return receipt requested,
     directed to the party being served at its address set forth in this
     Agreement (and service so made shall be deemed complete three (3) days
     after the same has been posted as aforesaid) or by personal service or in
     such other manner as may be permissible under the rules of said courts. The
     Company and the Purchasers hereby waive any right to a jury trial in
     connection with any litigation pursuant to this Agreement or the other
     Agreements.

          9.13. Like Treatment of Purchasers and Holders. Neither the Company
     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 the 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 of any terms or provisions of the Agreements,
     unless such consideration is required to be paid to all Purchasers or
     holders of Securities bound by such consent, waiver or amendment. The
     Company 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.

          9.14. Actions of Purchasers. Notwithstanding anything herein to the
     contrary, the actions and obligations of the Purchasers hereunder shall at
     all times be considered several and not joint, and the Purchasers are not,
     under any circumstances, agreeing to act jointly with respect to the
     Securities or any of their actions or obligations under the Agreements, and
     shall not constitute a "group" under the 1934 Act.

          9.15. Collateral Agent. The Purchasers hereby appoint The Tail Wind
     Fund Ltd. as "Collateral Agent" under the Mortgage. The Collateral Agent
     may be removed, and a successor Collateral Agent may be appointed, by a
     majority-in-interest of holders of the Notes, and any Collateral Agent may
     resign from such position upon thirty days prior notice to the Company
     (which shall constitute notice to the Operating Subsidiary) and the holders
     of Notes. If a successor Collateral Agent does not take such position
     within 30 days after the retiring Collateral Agent resigns or is removed,
     the retiring Collateral Agent or a majority-in-interest of the holders of
     the Notes may petition any court of competent jurisdiction for the
     appointment of a successor Collateral Agent. The Collateral Agent will act
     or refrain from acting based on the direction of a majority-in-interest of
     holders of the Notes, and may take any action or refrain from taking any
     action as provided in the Mortgage as it shall determine in its reasonable
     judgment and discretion. With respect to any monies or property held by, or
     expended by, the Collateral Agent on behalf of the holders of the Notes,
     such amounts shall be allocated pro rata based on the principal amount of
     Notes outstanding. The Collateral Agent shall be reimbursed by the holders
     of Notes for all reasonable expenses incurred in connection

                                       22
<PAGE>

     with acting as Collateral Agent under the Mortgage (provided that this
     shall in no way affect any liability of the Operating Subsidiary or the
     Company under the Mortgage). The Collateral Agent may refuse to perform any
     duty or exercise any right or power unless it receives indemnity
     satisfactory to it against any loss, liability or expense. No implied
     covenants or obligations shall be read into this Agreement or the Mortgage
     against Collateral Agent. Except for Collateral Agent's own willful
     misconduct, bad faith or gross negligence, the Collateral Agent (i) may
     rely and/or act upon any written instrument, document or request believed
     by the Collateral Agent in good faith to be genuine and to be executed and
     delivered by the proper person(s), and may assume in good faith the
     authenticity, validity and effectiveness thereof and shall not be obligated
     to make any investigation or determination as to the truth and accuracy of
     any information contained therein, and (ii) shall not be responsible for
     the acts or omissions of the other parties hereto or holders of Notes. In
     consideration of its acceptance of the appointment as the Collateral Agent,
     each of the Purchasers (and any subsequent holder of the Notes) jointly and
     severally agree to indemnify the Collateral Agent against, and hold the
     Collateral Agent harmless from, all costs, damages, expenses (including
     reasonable attorney's fees and disbursements) and liabilities that the
     Collateral Agent may incur or sustain in connection with serving as
     Collateral Agent under the Mortgage, unless such costs, damages, expenses
     and liabilities are caused by the Collateral Agent's own willful
     misconduct, bad faith or gross negligence.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       23
<PAGE>

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

THE COMPANY:                             NEXMED, INC.

                                         By: /s/
                                            -------------------------------
                                         Name:  Y. Joseph Mo, Ph.D.
                                         Title: Chairman, President and CEO

                                       24
<PAGE>

                                      THE PURCHASERS:

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

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

Aggregate Purchase Price:             $4,000,000
Principal Amount of Notes:            $4,000,000
No. of Warrants:                      311,526
Initial Conversion Price of Notes:    $4.08

Resident:                             BVI

Address for Notices:                  The Tail Wind Fund Ltd.
                                      c/o Tail Wind Advisory and Management Ltd.
                                      Attn:  David Crook
                                      1st Floor, No. 1 Regent Street
                                      London, SW1Y 4NS UK
                                      Telephone:  44-171-468-7660
                                      Facsimile:   44-171-468-7657

                                      with a copy to:

                                      Peter J. Weisman, P.C.
                                      110 East 59th Street, 18th Floor
                                      New York, NY  10022
                                      Telephone:  212-418-4972
                                      Facsimile:  212-317-8855

                                       25
<PAGE>

                                            SOLOMON STRATEGIC HOLDINGS, INC.

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

Aggregate Purchase Price:                   $1,000,000
Principal Amount of Notes:                  $1,000,000
No. of Warrants:                            79,882
Initial Conversion Price of Notes:          $4.08

Resident:                                   BVI

Address for Notices:                        Solomon Strategic Holdings, Inc.
                                            c/o Andy P. MacKellar (Director)
                                            Greenlands
                                            The Red Gap
                                            Castletown
                                            IM9 1HB
                                            British Isles
                                            Telephone: 44-171-468-7660
                                            Facsimile: +011 (44) 1624 824191

                                            with a copy to:

                                            Peter J. Weisman, P.C.
                                            110 East 59th Street, 18th Floor
                                            New York, NY 10022
                                            Telephone: 212-418-4972
                                            Facsimile: 212-317-8855

                                       26<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (the "Agreement") is made and
entered into as of this 11th day of June, 2002 by and between NexMed, Inc., a
Nevada corporation (the "Company"), and the "Purchasers" named in that Purchase
Agreement of even date herewith by and between the Company and the Purchasers
(the "Purchase Agreement").

         The parties hereby agree as follows:

         1. Certain Definitions

            As used in this Agreement, the following terms shall have the
following meanings:

            "Common Stock" shall mean the Company's common stock, par value
$0.001 per share.

            "Investor" and "Investors" shall mean the Purchaser(s) identified in
the Purchase Agreement and any transferee of the Purchaser(s) who is a permitted
assignee of any Notes, Warrants or Registrable Securities.

            "Notes" shall mean the Company's 5% Convertible Notes Due November
2005 issued and sold to the Purchasers pursuant to the Purchase Agreement.

            "Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.

            "Register," "registered" and "registration" refer to a registration
made by preparing and filing a registration statement or similar document in
compliance with the 1933 Act (as defined below), and the declaration or ordering
of effectiveness of such registration statement or document.

            "Registrable Securities" shall mean (a) the Underlying Shares and
the Warrant Shares (without regard to any limitations on beneficial ownership
contained in the Certificate or Warrants) or other securities issued or issuable
to each Holder or its permitted transferee or designee (i) upon conversion of
the Notes and/or upon exercise of the Warrants, or (ii) upon any distribution
with respect to, any exchange for or any replacement of such Notes or Warrants
or (iii) upon any conversion, exercise or exchange of any securities issued in
connection with any such distribution, exchange or replacement; (b) securities
issued or issuable upon any stock split, stock dividend, recapitalization or
similar event with respect to the

<PAGE>

foregoing; and (c) any other security issued as a dividend or other distribution
with respect to, in exchange for or in replacement of the securities referred to
in the preceding clauses.

            "Registration Statement" shall mean any registration statement filed
under the 1933 Act of the Company that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.

            "SEC" means the U.S. Securities and Exchange Commission.

            "1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

            "1934 Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

            "Warrants" mean the warrants to purchase shares of Common Stock
issued to the Purchasers pursuant to the Purchase Agreement.

         2. Registration.

            (a) Registration Statements.

                (i) Registrable Securities. Promptly following the closing of
the purchase and sale of the Notes and Warrants contemplated by the Purchase
Agreement (the "Closing Date") (but no later than thirty (30) days after the
Closing Date), the Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on
such form of registration statement as is then available to effect a
registration for resale of the Registrable Securities, subject to the Investor's
consent) covering the resale of the Registrable Securities in an amount equal to
130% of the number of shares of Common Stock necessary to permit the conversion
in full of the Notes and 100% of the number of shares of Common Stock necessary
to permit the exercise in full of the Warrants. Such Registration Statement also
shall cover, to the extent allowable under the 1933 Act and the Rules
promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities. Except for
the resale of those shares of Common Stock set forth on Schedule A attached
hereto, no securities shall be included in the Registration Statement other than
the Registrable Securities without the consent of the Investors holding a
majority of the Registrable Securities (on an as-converted, as-exercised basis),
which consent shall not be unreasonably withheld. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c) to the
Investor and its counsel prior to its filing or other submission.

                                       2
<PAGE>

                (ii) Additional Registrable Securities. In the event any
Registrable Securities are not covered by the Registration Statement referred to
in clause (i) above, the Company shall prepare and file with the SEC a
Registration Statement on Form S-3 (or, if Form S-3 is not then available to the
Company, on such form of registration statement as is then available to effect a
registration for resale of such Registrable Securities, subject to the
Investor's consent) covering the resale of such Registrable Securities. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the Rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to such Registrable
Securities. Except for the resale of those shares of Common Stock set forth on
Schedule A attached hereto, no securities shall be included in the Registration
Statement other than the Registrable Securities without the consent of the
Investors holding a majority of the Registrable Securities (on an as-converted,
as-exercised basis), which consent shall not be unreasonably withheld. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) to the Investor and its counsel prior to its filing
or other submission.

            (b) Expenses. The Company will pay all expenses associated with each
registration, but excluding discounts, commissions, fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals.

            (c) Effectiveness.

                (i) The Company shall use its best efforts to have each
Registration Statement declared effective as soon as practicable, but in no
event later than the earlier of (a) 120 days following the Closing Date (or the
date of the occurrence of additional Registrable Securities, as the case may be)
and (b) 5 days following the date on which the SEC notifies the Company or its
counsel that the Registration Statement is not subject to any further review. In
connection therewith, the Company shall respond to all SEC comments on the
Registration Statement and file any amendments to the Registration Statement
within 15 business days following any date on which the SEC furnishes comments
to, asks questions of, or requests further information from, the Company or its
counsel with respect to the Registration Statement or any part thereof or any
document incorporated by reference therein. After any Registration Statement is
declared effective by the SEC, the Company shall cause such Registration
Statement to remain effective in accordance with the terms hereof, subject to
permitted suspension of such effectiveness only for Allowed Delays (as defined
below). On or prior to the date any Registration Statement is declared effective
by the SEC, the Company shall cause the Registrable Securities to be
specifically listed or included for quotation on the Nasdaq National Market
System, the Nasdaq Small Cap Market, the New York Stock Exchange or the American
Stock Exchange, and maintain such listing and quotation for the Registrable
Securities and the Common Stock in general.

                (ii) For not more than twenty (20) consecutive Trading Days (as
defined in the Notes) and for a total of not more than thirty (30) Trading Days
in any twelve (12) consecutive month period, the Company may delay the
disclosure of material non-public

                                       3
<PAGE>

information concerning the Company, by terminating or suspending effectiveness
of any registration contemplated by this Section not containing such
information, the disclosure of which at the time is not, in the good faith
opinion of the Company, in the best interests of the Company (an "Allowed
Delay"); provided, that the Company shall promptly (a) notify the Investor in
writing of the existence of (but in no event, without the prior written consent
of the Investor, shall the Company disclose to the Investor any of the facts or
circumstances regarding) material non-public information giving rise to an
Allowed Delay, and (b) advise the Investor in writing to cease all sales under
the Registration Statement until the end of the Allowed Delay. The duration of
the Registration Period will be extended by the number of days of any and all
Allowed Delays.

            (d) Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Company shall have the right to select an investment banker and
manager to administer the offering, which investment banker or manager shall be
reasonably satisfactory to the Investor.

         3. Company Obligations. The Company will use its best efforts to effect
the registration of the Registrable Securities in accordance with the terms
hereof, and pursuant thereto the Company will, as expeditiously as possible:

            (a) use its best efforts to cause such Registration Statement to
become effective and to remain continuously effective for a period (the
"Registration Period") that will terminate upon the earlier of the date on which
all Registrable Securities, covered by such Registration Statement, as amended
from time to time (i) have been sold or (ii) become available for resale without
registration or limitation pursuant to Rule 144(k) of the 1933 Act. (For
clarification purposes, so long as the Warrants may be exercised by Cashless
Exercise (as defined in the Warrants) in the absence of an effective
registration statement, the Company may assume that the Investor(s) will utilize
such Cashless Exercise except to the extent the 1933 Act or the rules,
regulations or SEC interpretations thereunder do not permit tacking of the
holding period for the Warrant Shares received upon a Cashless Exercise to the
holding period for the Warrants.)

            (b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in Section
3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with
respect to the distribution of all Registrable Securities; provided that, at
least three (3) days prior to the filing of a Registration Statement or
Prospectus, or any amendments or supplements thereto, the Company will furnish
to the Investor copies of all documents proposed to be filed;

            (c) permit counsel designated by the Investor to review each
Registration Statement and all amendments and supplements thereto no fewer than
five (5) business days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects on the basis that such
document contains a material misstatement or omission;

                                       4
<PAGE>

            (d) furnish to the Investor and its legal counsel (i) promptly after
the same is prepared and publicly distributed, filed with the SEC, or received
by the Company, one copy of any Registration Statement and any amendment
thereto, each preliminary prospectus and Prospectus and each amendment or
supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which the
Company has sought confidential treatment, and provided that such items shall be
redacted prior to delivering to the Investor and its counsel to the extent
necessary to avoid disclosure of material non-public information concerning the
Company), and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;

            (e) in the event the Company selects an underwriter for the
offering, the Company shall enter into and perform its reasonable obligations
under an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;

            (f) if required by the underwriter, at the request of the Investor,
the Company shall furnish, on the date that Registrable Securities, as
applicable, are delivered to an underwriter, if any, for sale in connection with
the Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering,
addressed to the underwriter and the Investor and (ii) a letter, dated such
date, from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriter
and the Investor;

            (g) make reasonable effort to prevent the issuance of any stop order
or other suspension of effectiveness and, if such order is issued, obtain the
withdrawal of any such order at the earliest possible moment;

            (h) prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the Investor
and its counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as the Investor reasonably requests in writing and do any
and all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the
Registration Statement, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, or to become subject to any tax in any such state or jurisdiction
where it is not otherwise subject;

                                       5
<PAGE>

            (i) cause all Registrable Securities covered by a Registration
Statement to be listed on each securities exchange, interdealer quotation system
or other market on which similar securities issued by the Company are then
quoted or listed;

            (j) immediately notify the Investor, at any time when a Prospectus
relating to the Registrable Securities is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the Prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of any such holder, promptly prepare and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; and

            (k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934 Act, take such
other actions as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act (for the purpose of this subsection 3(l), "Availability
Date" means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if such
fourth fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter).

         4. Obligations of the Investor.

            (a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities, that the Investor shall furnish in writing to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably required to effect the registration of such Registrable
Securities, and shall execute such documents in connection with such
registration as the Company may reasonably request. At least fifteen (15)
business days prior to the first anticipated filing date of any Registration
Statement, the Company shall notify the Investor of the information the Company
requires from the Investor if the Investor elects to have any of the Registrable
Securities included in the Registration Statement. The Investor shall provide
such information to the Company at least ten (10) business days prior to the
first anticipated filing date of such Registration Statement if the Investor
elects to have any of the Registrable Securities included in the Registration
Statement.

                                       6
<PAGE>

            (b) The Investor, by its acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from the Registration
Statement, in which case the Investor shall be deemed to have waived its rights
to have Registrable Securities registered under this Agreement, unless the
Investor has good cause for such an election.

            (c) In the event the Company determines to engage the services of an
underwriter, the Investor agrees to enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the dispositions of the
Registrable Securities.

            (d) The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event rendering a Registration Statement no
longer effective, the Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities, until the Investor's receipt of the copies of the
supplemented or amended prospectus filed with the SEC and declared effective
and, if so directed by the Company, the Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession of the
prospectus covering the Registrable Securities, current at the time of receipt
of such notice.

            (e) The Investor may not participate in any underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to the terms of this Agreement.

         5. Indemnification.

            (a) Indemnification by Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law the Investor, its
officers, directors, stockholders and employees and each person who controls
such Investor (within the meaning of the 1933 Act) against all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorney's fees) and expenses imposed on such person caused by (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or any preliminary prospectus or any amendment or
supplement thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are based upon any
information

                                       7
<PAGE>

furnished in writing to the Company by such Investor, expressly for use therein,
or (ii) any violation by the Company of any federal, state or common law, rule
or regulation applicable to the Company in connection with any Registration
Statement, Prospectus or any preliminary prospectus, or any amendment or
supplement thereto, and shall reimburse in accordance with subparagraph (c)
below, each of the foregoing persons for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claims. The foregoing is subject to the condition that, insofar as the foregoing
indemnities relate to any untrue statement, alleged untrue statement, omission
or alleged omission made in any preliminary prospectus or Prospectus that is
eliminated or remedied in any Prospectus or amendment or supplement thereto, the
above indemnity obligations of the Company shall not inure to the benefit of any
indemnified party if a copy of such corrected Prospectus or amendment or
supplement thereto had been made available to such indemnified party and was not
sent or given by such indemnified party at or prior to the time such action was
required of such indemnified party by the 1933 Act and if delivery of such
Prospectus or amendment or supplement thereto would have eliminated (or been a
sufficient defense to) any liability of such indemnified party with respect to
such statement or omission. Indemnity under this Section 5(a) shall remain in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the permitted transfer of the
Registrable Securities.

            (b) Indemnification by Holder. In connection with any registration
pursuant to the terms of this Agreement, the Investor will furnish to the
Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities or the proposed manner of
distribution for use in connection with any Registration Statement or Prospectus
and agrees to indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its directors, officers, employees, stockholders and each
person who controls the Company (within the meaning of the 1933 Act) against any
losses, claims, damages, liabilities and expense (including reasonable
attorney's fees) resulting from any untrue statement of a material fact or any
omission of a material fact required to be stated in the Registration Statement
or Prospectus or preliminary prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but only
to the extent that such untrue statement or omission is contained in any
information furnished in writing by such Investor to the Company specifically
for inclusion in such Registration Statement or Prospectus or amendment or
supplement thereto and that such information was substantially relied upon by
the Company in preparation of the Registration Statement or Prospectus or any
amendment or supplement thereto. In no event shall the liability of an Investor
be greater in amount than the dollar amount of the proceeds (net of all expense
paid by such Investor and the amount of any damages such holder has otherwise
been required to pay by reason of such untrue statement or omission) received by
such Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.

            (c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate

                                       8
<PAGE>

counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation.

            (d) Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission) received by it upon the sale of all the Registrable
Securities sold by such indemnified party which were covered by the relevant
Registration Statement or Prospectus contained therein.

         6. Miscellaneous.

            (a) Amendments and Waivers. This Agreement may be amended only by a
writing signed by the parties hereto. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the Investor.

            (b) Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in the Purchase Agreement.

                                       9
<PAGE>

            (c) Assignments and Transfers by Investor. This Agreement and all
the rights and obligations of the Investor hereunder may not be assigned or
transferred to any transferee or assignee except to a holder of any Notes,
Warrants or Registrable Securities which is a permitted assignee pursuant to the
assignment provisions of such instruments.

            (d) Assignments and Transfers by the Company. This Agreement may not
be assigned by the Company without the prior written consent of Investor, except
that without the prior written consent of the Investor, but after notice duly
given, the Company shall assign its rights and delegate its duties hereunder to
any successor-in-interest corporation, and such successor-in-interest shall
assume such rights and duties, in the event of a merger or consolidation of the
Company with or into another corporation or the sale of all or substantially all
of the Company's assets.

            (e) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

            (f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

            (g) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

            (h) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms to the fullest extent permitted by law.

            (i) Further Assurances. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

            (j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                                       10
<PAGE>

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

                    [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       11
<PAGE>

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

THE COMPANY:                              NEXMED, INC.

                                          By: /s/
                                             -------------------------------
                                          Name:  Y. Joseph Mo, Ph.D.
                                          Title: Chairman, President and CEO

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

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

                                          SOLOMON STRATEGIC HOLDINGS, INC.

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

                                       12
<PAGE>

                                   SCHEDULE A

                OTHER SHARES PERMITTED ON REGISTRATION STATEMENT

SELLING STOCKHOLDER               SHARES OF COMMON STOCK
-------------------               ----------------------

Meyerson & Co., Inc.              100,000 shares issuable upon exercise of
                                  Warrants at $13.00 per share expiring 2/21/04.

Griffin Securities, Inc.          15,000 shares issuable upon exercise of
                                  Warrants at $7.00 per share expiring 7/27/03.

Griffin Securities, Inc.          All shares issuable upon exercise of 3-year
                                  Warrants issued in connection with the
                                  closing of the Purchase Agreement.

                                       13

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