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                                                                     Exhibit 4.1

              CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES
             AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
                  RIGHTS OF PREFERRED STOCK AND QUALIFICATIONS,
                      LIMITATIONS AND RESTRICTIONS THEREOF
                                       OF
               SERIES B 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                       OF
                                  NEXMED, INC.

         NEXMED, INC., a Nevada corporation (the "Corporation"), pursuant to the
provisions of Sections 78.195 and 78.1955 of Chapter 78 of Nevada Revised
Statutes, does hereby make this Certificate of Designation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation (the "Board") by the Articles of Incorporation of
the Corporation, as amended to date, the Board duly adopted the following
resolutions, which resolutions remain in full force and effect as of the date
hereof:

         RESOLVED, that, pursuant to Article FIFTH, Section C, of the Articles
of Incorporation of the Corporation, as amended to date, the Board hereby
authorizes the issuance of, and fixes the designation and preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions, of a series of preferred stock of the Corporation
consisting of 800 shares, par value $0.001 per share, to be designated "Series B
8% Cumulative Convertible Preferred Stock" (hereinafter, the "Convertible
Preferred Stock" or the "Preferred Stock").

         RESOLVED, that each share of Convertible Preferred Stock shall rank
equally in all respects and shall be subject to the following terms and
provisions:

         1. Dividends. The holders of the Convertible Preferred Stock shall be
entitled to receive, when, if and as declared by the Corporation's Board of
Directors, out of funds legally available therefor, cumulative dividends payable
as set forth in this Section 1.

              (a) Dividends on the Convertible Preferred Stock shall accrue and
shall be cumulative from the date of issuance of the shares of Convertible
Preferred Stock (the "Date of Original Issue"), whether or not earned or
declared by the Board of Directors of the Corporation. Until paid, the right to
receive dividends on the Convertible Preferred Stock shall accumulate, and shall
be payable at the Corporation's option in either cash or in shares of the
Corporation's Common Stock (the "Common Stock"), as set forth below, in arrears,
on March 31, June 30, September 30 and December 31 of each year (each, a
"Dividend Payment Date"), commencing on June 30, 2003 (the "Initial Dividend
Payment Date") except that if such Dividend Payment Date is not a business day,
then the Dividend Payment Date will be the immediately preceding business day.
If the Corporation elects to pay the dividend in shares of Common Stock, the
Corporation shall set aside a sufficient number of shares of Common Stock for
the payment of such declared dividends and shall deliver certificates
representing such shares of Common Stock

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to the holders of shares of Convertible Preferred Stock as of the record date
for such dividend in payment of such declared dividends within three business
days after such Dividend Payment Date. Each such dividend declared by the Board
of Directors on the Convertible Preferred Stock shall be paid to the holders of
record of shares of the Convertible Preferred Stock as they appear on the stock
register of the Corporation on the record date which shall be the business day
next preceding a Dividend Payment Date. Dividends in arrears for any past
dividend period may be declared by the Board of Directors of the Corporation and
paid on shares of the Convertible Preferred Stock on any date fixed by the Board
of Directors of the Corporation, whether or not a regular Dividend Payment Date,
to holders of record of shares of the Convertible Preferred Stock as they appear
on the Corporation's stock register on the record date. The record date, which
shall not be greater than 5 days before such Dividend Payment Date, shall be
fixed by the Board of Directors of the Corporation. Any dividend payment made on
shares of the Convertible Preferred Stock shall first be credited against the
dividends accumulated with respect to the earliest dividend period for which
dividends have not been paid.

              (b) The dividend rate (the "Dividend Rate") on each share of
Convertible Preferred Stock shall be 8% per share per annum on $10,000 (the
Liquidation Preference (as hereinafter defined) of each such share) for the
period from the Date of Original Issue until the Initial Dividend Payment Date
and, for each dividend period thereafter, which shall commence on the last day
of the preceding dividend period and shall end on the next Dividend Payment
Date, shall be at the Dividend Rate (as adjusted from time to time as
hereinafter provided) on such Liquidation Preference. Commencing (i) twenty-one
(21) months after the Initial Dividend Payment Date, or (ii) if prior thereto
Alprox-TD has received approval from the United States Food and Drug
Administration, then commencing twenty-seven (27) months after the Initial
Payment Date, the Dividend Rate shall be increased by two percentage points per
share per annum (provided, that the initial increase shall be four percentage
points per annum in the case of clause (ii)), and each three months thereafter,
the Dividend Rate shall increase by an additional two percentage points per
share per annum, up to a maximum Dividend Rate of 14% per share per annum.
Notwithstanding the foregoing, if at any time, a Breach Event (as defined below)
occurs, then the Dividend Rate shall be 14% for each dividend period in which a
Breach Event has occurred or is outstanding. The amount of dividends per share
of the Convertible Preferred Stock payable for each dividend period or part
thereof (the "Dividend Value") shall be computed by multiplying the Dividend
Rate for such dividend period by a fraction the numerator of which shall be the
number of days in the dividend period or part thereof on which such share was
outstanding and the denominator of which shall be 365 and multiplying the result
by the Liquidation Preference. If a dividend is to be paid in Common Stock, the
Common Stock shall be valued at the Current Market Price (as hereinafter
defined) as of such Dividend Payment Date. In furtherance thereof, the
Corporation shall reserve out of the authorized but unissued shares of Common
Stock, solely for issuance in respect of the payment of dividends as herein
described, a sufficient number of shares of Common Stock to pay such dividends,
when, if and as declared by the Board of Directors of the Corporation.

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

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

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         the higher of (a) the book value per share of Common Stock at such
         date, and (b) the Appraised Value (as hereinafter defined) per share of
         Common Stock at such date, or

              (2) if there shall then be a public market for the Common Stock,
         the higher of (x) the book value per share of Common Stock at such
         date, and (y) the average of the daily market prices for the 20
         consecutive trading days immediately before such date. The daily market
         price for each such trading day shall be (i) the closing bid price on
         such day on the principal stock exchange (including Nasdaq) on which
         such Common Stock is then listed or admitted to trading, or quoted, as
         applicable, (ii) if no sale takes place on such day on any such
         exchange, the last reported closing bid price on such day as officially
         quoted on any such exchange (including Nasdaq), (iii) if the Common
         Stock is not then listed or admitted to trading on any stock exchange,
         the last reported closing bid price on such day in the over-the-counter
         market, as furnished by the National Association of Securities Dealers
         Automatic Quotation System or the National Quotation Bureau, Inc., (iv)
         if neither such corporation at the time is engaged in the business of
         reporting such prices, as furnished by any similar firm then engaged in
         such business, or (v) if there is no such firm, as furnished by any
         member of the National Association of Securities Dealers, Inc. (the
         "NASD") selected mutually by holders of a majority of the Convertible
         Preferred Stock and the Corporation or, if they cannot agree upon such
         selection, as selected by two such members of the NASD, one of which
         shall be selected by holders of a majority of the Convertible Preferred
         Stock and one of which shall be selected by the Corporation (as
         applicable, the "Daily Market Price").

         "Appraised Value" means, in respect of any share of Common Stock on any
date herein specified, the fair saleable value of such share of Common Stock
(determined without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that the
Corporation may have no class of equity registered under the Exchange Act of
1934, as amended (the "Exchange Act")) as of the last day of the most recent
fiscal month end prior to such date specified, based on the value of the
Corporation (assuming the conversion and exercise of all of the Corporation's
authorized and issued capital stock), as determined by a nationally recognized
investment banking firm selected by the Corporation's Board of Directors and
having no prior relationship with the Corporation, and reasonably acceptable to
not less than a majority in interest of the holders of the Preferred Stock then
outstanding.

         "Breach Event" means either:

              (i) Any breach of any material warranty or representation of the
         Corporation as of the date made in the Preferred Stock Purchase
         Agreement or any agreement delivered therewith which breach, if capable
         of being cured, has not been cured within ten (10) days after notice of
         such breach has been given by the holders of a majority of Preferred
         Stock to the Corporation (the "Breach Cure Period"); or

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

              (c) Except as hereinafter provided, no dividends shall be declared
or paid or set apart for payment on the shares of Common Stock or any other
class or series of capital stock of the Corporation for any dividend period
unless full cumulative dividends have been or contemporaneously are declared and
paid on the Convertible Preferred Stock through the most recent Dividend Payment
Date. If full cumulative dividends have not been paid on shares of the
Convertible Preferred Stock, all dividends declared on shares of the Convertible
Preferred Stock shall be paid pro rata to the holders of outstanding shares of
the Convertible Preferred Stock.

              (d) Dividends on the Convertible Preferred Stock may be paid even
if, after giving effect thereto, the Corporation's total assets would be less
than the sum of its total liabilities, plus the amount that would be needed, if
the Corporation were to be dissolved at the time of such distribution, to
satisfy the preferential rights upon dissolution of stockholders, if any, whose
preferential rights are superior to those receiving the distribution.

              (e) The holders of the Convertible Preferred Stock shall each be
entitled to receive dividends, on a pari passu basis with the holders of shares
of Common Stock, out of any assets legally available therefor, with the amount
of such dividends to be distributed to the holders of Convertible Preferred
Stock computed on the basis of the number of shares of Common Stock which would
be held by such holder if, immediately prior to the declaration of the dividend,
all of the shares of Convertible Preferred Stock had been converted into shares
of Common Stock at the then current Conversion Value (as hereinafter defined).

         2. Voting Rights. Except as otherwise provided herein or by law, the
holders of the Convertible Preferred Stock shall have full voting rights and
powers, subject to the Beneficial Ownership Cap as defined in Section 5(h),
equal to the voting rights and powers of holders of Common Stock and shall be
entitled to notice of any stockholders meeting in accordance with the Bylaws of
the Corporation, and shall be entitled to vote, with respect to any question
upon which holders of Common Stock have the right to vote, including, without
limitation, the right to vote for the election of directors, voting together
with the holders of Common Stock as one class. To the extent permitted under the
applicable rules of the NASD, each holder of shares of Convertible Preferred
Stock shall be entitled to the number of votes equal to the number of shares of
Common Stock into which such shares of Convertible Preferred Stock could be
converted on the record date for the taking of a vote, subject to the Beneficial
Ownership Cap limitations set forth in Section 5(h), or, if no record date is
established, at the day prior to the date such vote is taken or any written
consent of stockholders is first executed. Fractional votes shall not, however,
be permitted and any fractional voting rights resulting from the above formula
(after aggregating all shares into which shares of Convertible Preferred Stock
held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward).

         3. Rights on Liquidation.

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              (a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (any such event being hereinafter
referred to as a "Liquidation"), before any distribution of assets of the
Corporation shall be made to or set apart for the holders of Common Stock, the
holders of Convertible Preferred Stock shall be entitled to receive payment out
of such assets of the Corporation in an amount equal to $10,000 per share of
Convertible Preferred Stock (such applicable amount being referred to as the
"Liquidation Preference" for the Convertible Preferred Stock), plus any
accumulated and unpaid dividends thereon (whether or not earned or declared) on
the Convertible Preferred Stock. If the assets of the Corporation available for
distribution to the holders of Convertible Preferred Stock shall not be
sufficient to make in full the payment herein required, such assets shall be
distributed pro-rata among the holders of Convertible Preferred Stock based on
the aggregate Liquidation Preferences of the shares of Convertible Preferred
Stock held by each such holder.

              (b) If the assets of the Corporation available for distribution to
stockholders exceed the aggregate amount of the Liquidation Preferences payable
with respect to all shares of Convertible Preferred Stock then outstanding,
then, after the payment required by paragraph 3(a) above shall have been made or
irrevocably set aside, the holders of Common Stock shall be entitled to receive
with respect to each share of Common Stock payment of a pro rata portion of such
assets based on the aggregate number of shares of Common Stock held by each such
holder. The holders of the Convertible Preferred Stock shall participate in such
a distribution on a pro-rata basis with the holders of the Common Stock, with
the amount distributable to the holders of Convertible Preferred Stock to be
computed on the basis of the number of shares of Common Stock which would be
held by them if immediately prior to the Liquidation all of the outstanding
shares of Convertible Preferred Stock had been converted into shares of Common
Stock at the then current Conversion Value.

              (c) A Change of Control (as defined below) of the Corporation
shall not be deemed a Liquidation, but shall instead be governed by the terms of
Section 7 below.

         4. Actions Requiring the Consent of Holders of Preferred Stock. As long
as any shares of Convertible Preferred Stock are outstanding, the consent of the
holders of at least 75% of the shares of Convertible Preferred Stock at the time
outstanding, given in accordance with the Articles of Incorporation and Bylaws
of the Corporation, as amended, shall be necessary for effecting or validating
any of the following transactions or acts:

              (a) Any amendment, alteration or repeal of any of the provisions
of this Certificate of Designation;

              (b) Any amendment, alteration or repeal of the Articles of
Incorporation of the Corporation that will adversely affect the rights of the
holders of the Convertible Preferred Stock;

              (c) The authorization or creation by the Corporation of, or the
increase in the number of authorized shares of, any stock of any class, or any
security convertible into stock of any class, or the authorization or creation
of any new class of preferred stock (or any action which would result in another
series of preferred stock) ranking in terms of liquidation

                                        5
<PAGE>

preference, redemption rights or dividend rights, pari passu with or senior to,
the Convertible Preferred Stock in any manner; provided, that, such actions in
connection with a Change of Control shall not require approval pursuant to this
Section 4(b); provided, further, that the foregoing proviso shall in no way be
deemed to impair any other voting rights of the Convertible Preferred Stock set
forth herein or under applicable law;

              (d) The redemption, purchase or other acquisition, directly or
indirectly, of any shares of capital stock of the Corporation or any of its
subsidiaries or any option, warrant or other right to purchase or acquire any
such shares, or any other security, other than (A) the: (i) redemption of
Preferred Stock pursuant to the terms hereof, or (ii) redemption of the warrants
to purchase shares of Common Stock that are issued or issuable (the "Warrants")
under that certain Preferred Stock and Warrant Purchase Agreement entered into
among the Corporation and the purchasers of the Preferred Stock on the Date of
Original Issue (the "Preferred Stock Purchase Agreement"), pursuant to the
redemption terms of the Warrants, or (B) the repayment or prepayment of any
indebtedness outstanding as of the date hereof in the ordinary course of
business; and

              (e) The declaration or payment of any dividend or other
distribution (whether in cash, stock or other property) with respect to the
capital stock of the Corporation or any subsidiary, other than a dividend or
other distribution pursuant to the terms of the Preferred Stock.

         5. Conversion.

              (a) Right to Convert. Subject to the limitation set forth in
Section 5(h) hereof, the holder of any share or shares of Convertible Preferred
Stock shall have the right at any time, at such holder's option, to convert all
or any lesser portion of such holder's shares of Convertible Preferred Stock
into such number of fully paid and non-assessable shares of Common Stock as is
determined by dividing (i) the aggregate Liquidation Preference of the shares of
Convertible Preferred Stock to be converted plus accrued and unpaid dividends
thereon by (ii) the Conversion Value (as defined below) then in effect for such
Convertible Preferred Stock. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Convertible
Preferred Stock. With respect to any fraction of a share of Common Stock called
for upon any conversion, the Corporation shall pay to the holder an amount in
cash equal to such fraction multiplied by the Current Market Price per share of
the Common Stock.

              (b) Mandatory Conversion. Subject to the limitation set forth in
Section 5(h) hereof, all the outstanding Convertible Preferred Stock shall be
automatically converted upon the occurrence of any one or more of the following
events (each a "Conversion Triggering Event"), as of the effective time of such
event, into such number of fully paid and non-assessable shares of Common Stock
as is determined by dividing (i) the aggregate Liquidation Preference of the
shares of Convertible Preferred Stock to be converted plus accrued and unpaid
dividends thereon by (ii) the Conversion Value (as hereinafter defined) then in
effect for such Convertible Preferred Stock:

                   (i) The Registration Statement (as hereinafter defined)
         covering all of

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         the shares of Common Stock into which the Preferred Stock is
         convertible is effective (or all of the shares of Common Stock into
         which the Preferred Stock is convertible may be sold without
         restriction pursuant to Rule 144(k) promulgated by the Securities and
         Exchange Commission under the Securities Act of 1933, as amended (the
         "Securities Act")) and the Current Market Price (solely as provided in
         clause (2)(i) or (2)(ii) of the definition thereof) of the Common Stock
         is greater than 250% of the Conversion Value for twenty consecutive
         trading days;

                   (ii) Upon closing of a sale of Common Stock by the
         Corporation in a firm-commitment underwriting in which:

                   (1) the offering price (before deduction of underwriting
              discounts, commissions or other selling or other expenses of the
              offering) of the Common Stock is greater than 200% of the
              Conversion Value;

                   (2) the aggregate gross proceeds of the offering to the
              Corporation are greater than $20,000,000 (without giving effect to
              the possible conversion or exercise or any warrant, convertible
              security or other derivative security included in such offering);
              and

                   (3) the Registration Statement covering all of the shares of
              Common Stock into which the Preferred Stock is convertible is then
              effective or all of the shares of Common Stock into which the
              Preferred Stock is convertible may be sold without restriction
              pursuant to Rule 144(k) promulgated by the Securities and Exchange
              Commission under the Securities Act;

                   (iii) Subject to the provisions of Section 13(c) (Redemption
         at the Corporation's Election), upon a Change in Control of the
         Corporation in which the per share consideration (the "Transaction
         Consideration") received by the holders of the Common Stock is an
         amount of not less than 150% of the Conversion Value plus accrued but
         unpaid dividends thereon, provided that upon consummation of such
         transaction the holders of the Common Stock issuable upon such
         conversion shall be entitled to receive the same per share
         consideration as the Transaction Consideration.

              "Registration Statement" shall have the meaning established in the
         Investor Rights Agreement dated the Date of Original Issue by and among
         the Corporation and the other parties signatory thereto.

              (c) Mechanics of Conversion.

                   (i) Such right of conversion (other than mandatory
         conversion) shall be exercised by the holder of shares of Convertible
         Preferred Stock by delivering to the Corporation a conversion notice in
         the form attached hereto as Exhibit A (the "Conversion Notice"),
         appropriately completed and duly signed and specifying the number of
         shares of Convertible Preferred Stock that the holder elects to convert
         (the "Converting Shares") into shares of Common Stock, and by surrender
         not later than two

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         business days thereafter of the certificate or certificates
         representing such Converting Shares. The Conversion Notice shall also
         contain a statement of the name or names (with addresses and tax
         identification or social security numbers) in which the certificate or
         certificates for Common Stock shall be issued, if other than the name
         in which the Converting Shares are registered. Promptly after the
         receipt of the Conversion Notice, the Corporation shall issue and
         deliver, or cause to be delivered, to the holder of the Converting
         Shares or such holder's nominee, a certificate or certificates for the
         number of shares of Common Stock issuable upon the conversion of such
         Converting Shares. Such conversion shall be deemed to have been
         effected as of the close of business on the date of receipt by the
         Corporation of the Conversion Notice (the "Conversion Date"), and the
         person or persons entitled to receive the shares of Common Stock
         issuable upon conversion shall be treated for all purposes as the
         holder or holders of record of such shares of Common Stock as of the
         close of business on the Conversion Date.

                   (ii) The Corporation shall effect such issuance of Common
         Stock (and certificates for unconverted Preferred Stock) within three
         (3) trading days of the Conversion Date and shall transmit the
         certificates by messenger or reputable overnight delivery service to
         reach the address designated by such holder within three (3) trading
         days after the receipt by the Corporation of such Conversion Notice. If
         certificates evidencing the Common Shares are not received by the
         holder within five (5) Trading Days of the Conversion Notice, then the
         holder will be entitled to revoke and withdraw its Conversion Notice,
         in whole or in part, at any time prior to its receipt of those
         certificates. In lieu of delivering physical certificates representing
         the Common Stock issuable upon conversion of Converting Shares or in
         payment of dividends hereunder, provided the Corporation's transfer
         agent is participating in the Depository Trust Company ("DTC") Fast
         Automated Securities Transfer ("FAST") program, upon request of the
         holder, the Corporation shall use its commercially reasonable best
         efforts to cause its transfer agent to electronically transmit the
         Common Stock issuable upon conversion or dividend payment to the
         holder, by crediting the account of the holder's prime broker with DTC
         through its Deposit Withdrawal Agent Commission ("DWAC") system. The
         time periods for delivery described above, and for delivery of Common
         Stock in payment of dividends hereunder, shall apply to the electronic
         transmittals through the DWAC system. The parties agree to coordinate
         with DTC to accomplish this objective. The person or persons entitled
         to receive the Common Stock issuable upon such conversion shall be
         treated for all purposes as the record holder or holders of such Common
         Shares at the close of business on the Conversion Date. If the
         conversion has not been rescinded in accordance with this paragraph and
         the Corporation fails to deliver to the holder such certificate or
         certificates (or shares through DTC) pursuant to this Section 5 (free
         of any restrictions on transfer or legends, if such shares have been
         registered) in accordance herewith, prior to the seventh trading day
         after the Conversion Date (assuming timely surrender of the Convertible
         Preferred Stock certificates), the Corporation shall pay to such
         holder, in cash, on a per diem basis, an amount equal to 2% of the
         Liquidation Preference of all Preferred Stock held by such holder per
         month until such delivery takes place.

              The Corporation's obligation to issue Common Stock upon conversion
         of

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         Preferred Stock shall be absolute, is independent of any covenant of
         any holder of Preferred Stock, and shall not be subject to: (i) any
         offset or defense; or (ii) any claims against the holders of Preferred
         Stock whether pursuant to this Certificate of Designation, the
         Preferred Stock Purchase Agreement, the Investor Rights Agreement, the
         Warrants or otherwise.

                   (iii) Subject to the provisions of Section 5(h), in the event
         that a Conversion Triggering Event has occurred, all the shares of
         Preferred Stock shall be converted as if the holders thereof had
         delivered a Conversion Notice with respect to such shares on such day.
         Promptly thereafter, the holders of the Convertible Preferred Stock
         shall deliver their certificates evidencing the Convertible Preferred
         Stock to the Corporation or its duly authorized transfer agent, and
         upon receipt thereof, the Corporation shall issue or cause its transfer
         agent to issue certificates evidencing the Common Stock into which the
         Convertible Preferred Shares have been converted.

              (d) Beneficial Ownership Cap. To the extent that any shares of
Convertible Preferred Stock are not automatically converted upon the occurrence
of a Conversion Triggering Event on account of the application of Section 5(h),
such shares of Convertible Preferred Stock shall be deemed converted
automatically under this Section 5 at the first moment thereafter when Section
5(h) would not prevent such conversion. Notwithstanding the preceding sentence,
upon the occurrence of the Conversion Triggering Event, the right to: (a) accrue
dividends on Preferred Stock (other than dividends pursuant to Section 1(e)
hereof); (b) the liquidation preference of the Preferred Stock, including,
without limitation, the right to be treated as holders of Preferred Stock in the
event of a merger or consolidation; (c) the veto rights described in Section 4
hereof; and (d) the participation rights provided in Section 10 hereof, and (e)
the redemption rights in Section 13 hereof shall cease immediately.

              (e) Conversion Value. The initial conversion value for the
Convertible Preferred Stock shall be $1.5686 per share of Common Stock, such
value to be subject to adjustment in accordance with the provisions of this
Section 5. Such conversion value in effect from time to time, as adjusted
pursuant to this Section 5, is referred to herein as a "Conversion Value." All
of the remaining provisions of this Section 5 shall apply separately to each
Conversion Value in effect from time to time with respect to Convertible
Preferred Stock.

              (f) Stock Dividends, Subdivisions and Combinations. If at any time
while the Preferred Stock is outstanding, the Corporation shall:

                   (i) cause the holders of its Common Stock to be entitled to
         receive a dividend payable in, or other distribution of, additional
         shares of Common Stock,

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

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

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<PAGE>

then in each such case the Conversion Value shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clauses (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that a Conversion Value is calculated hereunder, then the
calculation of such Conversion Value shall be adjusted appropriately to reflect
such event.

              (g) Certain Other Distributions. If at any time while the
Preferred Stock is outstanding the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive any
dividend or other distribution of:

                   (i) cash,

                   (ii) any evidences of its indebtedness, any shares of stock
         of any class or any other securities or property or assets of any
         nature whatsoever (other than cash or additional shares of Common Stock
         as provided in Section 5(f) hereof), or

                   (iii) any warrants or other rights to subscribe for or
         purchase any evidences of its indebtedness, any shares of stock of any
         class or any other securities or property or assets of any nature
         whatsoever (in each case set forth in subparagraphs 5(g)(i), 5(g)(ii)
         and 5(g)(iii) hereof, the "Distributed Property"),

then upon any conversion of Preferred Stock that occurs after such record date,
the holder of Preferred Stock shall be entitled to receive, in addition to the
Conversion Shares otherwise issuable upon such conversion, the Distributed
Property that such holder would have been entitled to receive in respect of such
number of Conversion Shares had the holder been the record holder of such
Conversion Shares as of such record date. Such distribution shall be made
whenever any such conversion is made. In the event that the Distributed Property
consists of property other than cash, then the fair value of such Distributed
Property shall be as determined in good faith by the Board of Directors of the
Corporation and set forth in reasonable detail in a written valuation report
(the "Valuation Report") prepared by the Board of Directors. The Corporation
shall give written notice of such determination and a copy of the Valuation
Report to all holders of Preferred Stock, and if the holders of a majority of
the outstanding Preferred Stock object to such determination within twenty (20)
business days following the date such notice is given to all of the holders of
Preferred Stock, the Corporation shall submit such valuation to an investment
banking firm of recognized national standing selected by not less than a
majority of the holders of the Preferred Stock and acceptable to the Company in
its reasonable discretion, whose opinion shall be binding upon the Corporation
and the Preferred Stockholders. A reclassification of the Common Stock (other
than a change in par value, or from par value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Corporation to the holders of its

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<PAGE>

Common Stock of such shares of such other class of stock within the meaning of
this Section 5(g) and, if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the meaning
of Section 5(f).

              (h) Blocking Provisions.

                   (i) Except as provided otherwise in this Section 5(h)(i), the
         number of Conversion Shares that may be acquired by any holder, and the
         number of shares of Convertible Preferred Stock that shall be entitled
         to voting rights under Section 2 hereof, shall be limited to the extent
         necessary to insure that, following such conversion (or deemed
         conversion for voting purposes), the number of shares of Common Stock
         then beneficially owned by such holder and its Affiliates and any other
         persons or entities whose beneficial ownership of Common Stock would be
         aggregated with the holder's for purposes of Section 13(d) of the
         Exchange Act (including shares held by any "group" of which the holder
         is a member, but excluding shares beneficially owned by virtue of the
         ownership of securities or rights to acquire securities that have
         limitations on the right to convert, exercise or purchase similar to
         the limitation set forth herein) does not exceed 4.95% of the total
         number of shares of Common Stock of the Corporation then issued and
         outstanding (the "Beneficial Ownership Cap"). For purposes hereof,
         "group" has the meaning set forth in Section 13(d) of the Exchange Act
         and applicable regulations of the Securities and Exchange Commission,
         and the percentage held by the holder shall be determined in a manner
         consistent with the provisions of Section 13(d) of the Exchange Act. As
         used herein, the term "Affiliate" means any person or entity that,
         directly or indirectly through one or more intermediaries, controls or
         is controlled by or is under common control with a person or entity, as
         such terms are used in and construed under Rule 144 under the
         Securities Act. With respect to a holder of Preferred Stock, any
         investment fund or managed account that is managed on a discretionary
         basis by the same investment manager as such holder will be deemed to
         be an Affiliate of such holder. Each delivery of a Conversion Notice by
         a holder of Preferred Stock will constitute a representation by such
         Holder that it has evaluated the limitation set forth in this paragraph
         and determined, subject to the accuracy of information filed under the
         Securities Act and the Exchange Act by the Corporation with respect to
         the outstanding Common Stock of the Corporation, that the issuance of
         the full number of shares of Common Stock requested in such Conversion
         Notice is permitted under this paragraph. This paragraph shall be
         construed and administered in such manner as shall be consistent with
         the intent of the first sentence of this paragraph. Any provision
         hereof which would require a result that is not consistent with such
         intent shall be deemed severed herefrom and of no force or effect with
         respect to the conversion contemplated by a particular Conversion
         Notice.

                   (ii) In the event the Corporation is prohibited from issuing
         shares of Common Stock as a result of any restrictions or prohibitions
         under applicable law or the rules or regulations of any stock exchange,
         interdealer quotation system or other self-regulatory organization, the
         Corporation shall as soon as possible seek the approval of its

                                       11
<PAGE>

         stockholders and take such other action to authorize the issuance of
         the full number of shares of Common Stock issuable upon the full
         conversion of the then outstanding shares of Convertible Preferred
         Stock.

                   (iii) Notwithstanding the foregoing provisions of Section
         5(h), any holder of Preferred Stock shall have the right prior to the
         Date of Original Issue upon written notice to the Corporation, or after
         the Date of Original Issue upon 61 days prior written notice to the
         Corporation, to choose not to be governed by the Beneficial Ownership
         Cap provided herein.

              (i) Common Stock Reserved. The Corporation shall at all times
reserve and keep available out of its authorized but unissued Common Stock,
solely for issuance upon the conversion of shares of Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall from time to
time be issuable upon the conversion of all the shares of Convertible Preferred
Stock at the time outstanding (without regard to any ownership limitations
provided in Section 5(h)).

         6. Other Provisions Applicable to Adjustments. The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock into which the Convertible Preferred Stock is convertible and the
current Conversion Value provided for in Section 5:

              (a) When Adjustments to Be Made. The adjustments required by
Section 5 shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that any adjustment to the Conversion Value
that would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for in
Section 5(f)) up to, but not beyond the Conversion Date if such adjustment
either by itself or with other adjustments not previously made adds or subtracts
less than 1% of the shares of Common Stock into which the Convertible Preferred
Stock is convertible immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by Section 5 and not
previously made, would result in a minimum adjustment or on the Conversion Date.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.

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

              (c) When Adjustment Not Required. If the Corporation undertakes a
transaction contemplated under Section 5(g) and as a result takes a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights or other benefits
contemplated under Section 5(g) and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights or other benefits
contemplated under Section 5(g), then thereafter no adjustment shall be required
by reason of the taking of

                                       12
<PAGE>

such record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.

              (d) Escrow of Stock. If after any property becomes distributable
pursuant to Section 5 by reason of the taking of any record of the holders of
Common Stock, but prior to the occurrence of the event for which such record is
taken, a holder of the Convertible Preferred Stock either converts the
Convertible Preferred Stock or there is a mandatory conversion during such
period or such holder is unable to convert shares pursuant to Section 5(h), such
holder of Convertible Preferred Stock shall continue to be entitled to receive
any shares of Common Stock issuable upon conversion under Section 5 by reason of
such adjustment (as if such Preferred Stock were not yet converted) and such
shares or other property shall be held in escrow for the holder of the
Convertible Preferred Stock by the Corporation to be issued to holder of the
Convertible Preferred Stock upon and to the extent that the event actually takes
place. Notwithstanding any other provision to the contrary herein, if the event
for which such record was taken fails to occur or is rescinded, then such
escrowed shares shall be canceled by the Corporation and escrowed property
returned to the Corporation.

         7. Merger, Consolidation or Disposition of Assets.

              (a) If, after the Date of Original Issue and while the Preferred
Stock is outstanding, there occurs: (i) an acquisition by an individual or legal
entity or group (as set forth in Section 13(d) of the Exchange Act) of more than
one-half of the voting rights or equity interests in the Corporation and such
acquisition is approved by the Corporation's Board of Directors; or (ii) a
merger or consolidation of the Corporation or a sale, transfer or other
disposition of all or substantially all the Corporation's property, assets or
business to another corporation where the holders of the Corporation's voting
securities prior to such transaction fail to continue to hold at least 50% of
the voting power of the Corporation and such transaction is approved by the
Corporation's Board of Directors (each, a "Change of Control"), and, pursuant to
the terms of such Change of Control, shares of common stock of the successor or
acquiring corporation, or any cash, shares of stock or other securities or
property of any nature whatsoever (including warrants or other subscription or
purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by or distributed
to the holders of Common Stock of the Corporation and the successor or acquiring
corporation (if other than the Corporation) does not assume the Preferred Stock
pursuant to Section 7(b) below, then the holder of the Convertible Preferred
Stock shall have the right thereafter to receive, at the holder's election,
which election which must be delivered by the holder to the Corporation within
10 days after receiving notice from the Corporation of the right to make such
election:

                   (i) upon the conversion of the Convertible Preferred Stock,
         the number of shares of common stock of the successor or acquiring
         corporation or of the Corporation, if it is the surviving corporation,
         and Other Property receivable upon or as a result of such Change of
         Control by a holder of the number of shares of Common Stock into which
         the Convertible Preferred Stock is convertible immediately prior to
         such event, or

                                       13
<PAGE>

                   (ii) at the effective time of such Change of Control, 150% of
         the Liquidation Preference that would have been payable immediately
         prior to the effective time of such Change of Control.

         If a timely election is not made pursuant to this Section 7(a), the
holder shall receive the benefit of Section 7(a)(i) and shall not be entitled to
the benefit of Section 7(a)(ii).

              (b) In case of any such Change of Control, the successor or
acquiring corporation (if other than the Corporation) shall have the right to
expressly assume the due and punctual observance and performance of each and
every covenant and condition of contained in this Certificate of Designation to
be performed and observed by the Corporation and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Corporation) in order to provide for adjustments of shares of the Common Stock
into which the Convertible Preferred Stock is convertible which shall be as
nearly equivalent as practicable to the adjustments provided for in Section 5.
For purposes of Section 5, common stock of the successor or acquiring
corporation shall include stock of such corporation of any class which is not
preferred as to dividends or assets on liquidation over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock.

              (c) The foregoing provisions of this Section 7 shall similarly
apply to successive Change of Control transactions. The provisions of this
Section 7 shall be inapplicable in the event that the Preferred Stock is subject
to mandatory conversion under Section 5 or redemption under Section 13.

         8. Other Action Affecting Common Stock. In case at any time or from
time to time the Corporation shall take any action in respect of its Common
Stock, other than the payment of dividends permitted by Section 5 or any other
action described in Section 5, then, unless such action will not have a
materially adverse effect upon the rights of the holder of Convertible Preferred
Stock, the number of shares of Common Stock or other stock into which the
Convertible Preferred Stock is convertible exercisable and/or the purchase price
thereof shall be adjusted in such manner as may be equitable in the
circumstances.

         9. Certain Limitations. Notwithstanding anything herein to the
contrary, the Corporation agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the current Conversion Value to
be less than the par value per share of Common Stock.

         10. Participation Rights.

              (a) Subject to the terms and conditions specified in this Section
10, at any time while the Convertible Preferred Stock is outstanding, the
holders of shares of Convertible Preferred Stock shall have a right to
participate with respect to the issuance or possible issuance

                                       14
<PAGE>

by the Corporation of any future equity or equity-linked securities or debt
which is convertible into equity or in which there is an equity component (as
the case may be, "Additional Securities") on the same terms and conditions as
offered by the Corporation to the other purchasers of such Additional
Securities. Each time the Corporation proposes to offer any Additional
Securities, the Corporation shall make an offering of such Additional Securities
to each holder of shares of Convertible Preferred Stock in accordance with the
following provisions:

                   (i) The Corporation shall deliver a notice (the "Issuance
         Notice") to the holders of shares of Convertible Preferred Stock
         stating (a) its bona fide intention to offer such Additional
         Securities, (b) the number of such Additional Securities to be offered,
         (c) the price and terms, if any, upon which it proposes to offer such
         Additional Securities, and (d) the anticipated closing date of the sale
         of such Additional Securities.

                   (ii) By written notification received by the Corporation,
         within ten (10) days after giving of the Issuance Notice, any holder of
         shares of Convertible Preferred Stock may elect to purchase or obtain,
         at the price and on the terms specified in the Issuance Notice, up to
         that number of such Additional Securities which equals such holder's
         Pro Rata Amount (as defined below). The "Pro Rata Amount" for any given
         holder of shares of Convertible Preferred Stock shall equal that
         portion of the Additional Securities that the Corporation proposes to
         offer which equals the proportion that the number of shares of Common
         Stock that such holder owns or has the right to acquire (without giving
         effect to the limitations contained in Section 5(h)) bears to the total
         number of shares of Common Stock then outstanding (assuming in each
         case the full conversion and exercise of all convertible and
         exercisable securities then outstanding); provided, however, that in
         the event that any such holder exercises its right to pay the
         consideration for the Additional Securities purchasable hereunder with
         shares of Convertible Preferred Stock (as provided in Section 10(b)
         below), then such holder's Pro Rata Amount shall be increased (but not
         decreased) to the extent necessary to equal that number of Additional
         Securities as are convertible into or exchangeable for such number of
         shares of Common Stock as is obtained by dividing (a) the Liquidation
         Preference attributable to such holder's shares of Convertible
         Preferred Stock plus any accrued and unpaid dividends on such
         Convertible Preferred Stock by (b) the Conversion Value then in effect,
         and in such event the Corporation shall be obligated to sell such
         number of Additional Securities to each such holder, even if the
         aggregate Pro Rata Amount for all such holders exceeds the aggregate
         amount of Additional Securities that the Corporation had initially
         proposed to offer. The Corporation shall promptly, in writing, inform
         each holder of shares of Convertible Preferred Stock which elects to
         purchase all of the Additional Shares available to it
         ("Fully-Exercising Holder") of any other holder's failure to do
         likewise. During the five-day period commencing after such information
         is given, each Fully-Exercising Holder shall be entitled to obtain that
         portion of the Additional Securities for which the holders

                                       15
<PAGE>

         of shares of Convertible Preferred Stock were entitled to subscribe but
         which were not subscribed for by such holders which is equal to the
         proportion that the number of shares of Convertible Preferred Stock
         held by such Fully-Exercising Holder bears to the total number of
         shares of Common Stock held by all Fully-Exercising Holders who wish to
         purchase some of the unsubscribed shares.

                   (iii) If all Additional Securities which the holders of
         shares of Convertible Preferred Stock are entitled to obtain pursuant
         to Section 10(a)(ii) are not elected to be obtained as provided in
         Section 10(a)(ii) hereof, the Corporation may, during the 75-day period
         following the expiration of the period provided in Section 10(a)(ii)
         hereof, offer the remaining unsubscribed portion of such Additional
         Securities to any person or persons at a price not less than, and upon
         terms no more favorable to the offeree than, those specified in the
         Issuance Notice. If the Corporation does not consummate the sale of
         such Additional Securities within such period, the right provided
         hereunder shall be deemed to be revived and such Additional Securities
         shall not be offered or sold unless first reoffered to the holders of
         shares of Convertible Preferred Stock in accordance herewith.

         (b) In the event that any holder of shares of Convertible Preferred
Stock exercises its participation right under this Section 10, such holder shall
be entitled to use the shares of Convertible Preferred Stock as the
consideration for the purchase of its allocated portion of Additional Securities
pursuant to this Section 10, with the shares of Convertible Preferred Stock
being valued at the Liquidation Preference plus any accrued and unpaid dividends
for such purpose; provided that the use of shares of such Convertible Preferred
Stock as consideration shall not result in the purchase of more than 20,000,000
shares of Common Stock or securities convertible into more than 20,000,000
shares of Common Stock.

         (c) The rights of the holders of Convertible Preferred Stock under this
Section 10 shall not apply to: (A) the conversion of the Convertible Preferred
Stock, the exercise of the Warrants, or the issuance of shares of Common Stock
as payment of dividends to holders of Preferred Stock, (B) the exercise of any
warrants or options (collectively, the "Existing Warrants") outstanding on the
date this Statement of Designation is filed with the Nevada Secretary of State
(the "Filing Date"), (C) the issuance (at issuance or exercise prices at or
above fair market value) of Common Stock, stock awards or options under, or the
exercise of any options granted pursuant to, any Board-approved employee stock
option or similar plan for the issuance of options or capital stock of the
Corporation, or (D) the issuance of shares of Common Stock pursuant to a stock
split, combination or subdivision of the outstanding shares of Common Stock.

         (d) The participation right set forth in this Section 10 may not be
assigned or transferred, except that such right is assignable by each holder of
shares of Convertible Preferred Stock to any wholly-owned subsidiary or parent
of, or to any corporation or entity that is, within the meaning of the
Securities Act, controlling, controlled by or under common control with, any
such holder.

                                       16
<PAGE>

         11. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Value, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Convertible
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Convertible Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Value at the time in effect for the Convertible Preferred Stock and
(iii) the number of shares of Common Stock and the amount, if any, or other
property which at the time would be received upon the conversion of Convertible
Preferred Stock owned by such holder (without regard to the ownership
limitations set forth in Section 5(h)).

         12. Notices of Record Date. In the event of any fixing by the
Corporation of a record date for the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any shares of
Common Stock or other securities, or any right to subscribe for, purchase or
otherwise acquire, or any option for the purchase of, any shares of stock of any
class or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Convertible Preferred Stock at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or rights, and the amount and character of such dividend,
distribution or right.

         13. Redemption.

              (a) Redemption at the Holders' Elections. If a Redemption
Triggering Event (as defined below) has occurred, and a holder has so elected,
the Corporation shall redeem the Convertible Preferred Stock of any holder who
gives a Demand for Redemption (as defined below). The Corporation shall,
promptly thereafter, redeem the shares of Convertible Preferred Stock as set
forth in the Demand for Redemption. The Corporation shall effect such redemption
on the Redemption Date by paying in cash for each such share to be redeemed an
amount equal to the greater of (i) the Redemption Price (as defined below) or
(ii) the total number of shares of Common Stock into which such Convertible
Preferred Stock is convertible multiplied by the Current Market Price at the
time of the Redemption Triggering Event. "Redemption Triggering Event" means the
Corporation's failure or refusal to convert any shares of Convertible Preferred
Stock in accordance with the terms hereof, or the providing of written notice to
such effect.

              (b) Demand for Redemption. A holder desiring to elect a redemption
as herein provided shall deliver a notice (the "Demand for Redemption") to the
Corporation while such Redemption Triggering Event continues specifying the
following:

                   (i) The approximate date and nature of the Redemption
         Triggering Event;

                   (ii) The number of shares of Convertible Preferred Stock to
         be

                                       17
<PAGE>

         redeemed; and

                   (iii) The address to which the payment of the Redemption
         Price shall be delivered, or, at the election of the holder, wire
         instructions with respect to the account to which payment of the
         Redemption Price shall be required.

         A holder may deliver the certificates evidencing the Convertible
Preferred Stock to be redeemed with the Demand for Redemption or under separate
cover. Payment of the Redemption Price shall be made not later than two (2)
business days after the date on which each of the following conditions has been
satisfied: (i) a holder has delivered a Demand for Redemption and the
certificates evidencing the shares of Convertible Preferred Stock to be
redeemed; and (ii) the Breach Cure Period has expired.

              (c) Redemption at the Corporation's Election. The Corporation may,
at the option of the Board of Directors, at any time after the second
anniversary of the Date of Original Issue, elect to redeem in whole or in part
the shares of Convertible Preferred Stock by giving notice of such election
pursuant to Section 13(d)(iii) hereof to all holders of Convertible Preferred
Stock. The amount payable in redemption of each share of Convertible Preferred
Stock (the "Redemption Price") shall be cash equal (i) all accrued but unpaid
dividends as of the Redemption Date (as defined below) with respect to each
share to be redeemed, plus (ii) 125% of the Liquidation Preference of each share
of Convertible Preferred Stock to be redeemed. The redemption shall be effected
in the manner specified in paragraph (d) below.

              (d) Redemption Mechanics. The Corporation shall effect a
redemption made at the election of the Corporation as follows:

                   (i) The number of shares subject to redemption shall be
         allocated pro rata among the holders of outstanding shares of
         Convertible Preferred Stock based upon the number of such shares held
         by each such holder.

                   (ii) The Corporation shall pay the Redemption Price in cash
         for each such share to be redeemed.

                   (iii) At least 15 but no more than 60 days prior to the date
         fixed for any redemption of Convertible Preferred Stock (the
         "Redemption Date"), written notice shall be given to each holder of
         record of Convertible Preferred Stock to be redeemed, notifying such
         holder of the redemption to be effected, specifying the Redemption
         Date, the Redemption Price, the place at which payment may be obtained
         and calling upon such holder to surrender to the Corporation, in the
         manner and at the place designated, its certificate or certificates
         representing the shares to be redeemed (the "Redemption Notice").
         Except as provided in Section 13(d)(v), on or after the Redemption
         Date, each holder of Convertible Preferred Stock to be redeemed shall
         surrender to the Corporation the certificate or certificates
         representing such shares, in the manner and at the place designated in
         the Redemption Notice, and thereupon the Redemption Price of such
         shares shall be paid to the person whose name appears on such
         certificate or certificates as the owner thereof, and upon such
         payment, each surrendered certificate shall be canceled. In

                                       18
<PAGE>

         the event less than all the shares represented by any such certificate
         are redeemed, a new certificate shall be issued representing the
         unredeemed shares.

                   (iv) From and after the close of business on the Redemption
         Date, unless there shall have been a default in payment of the
         Redemption Price, all rights of the holders of the shares of
         Convertible Preferred Stock designated for redemption as holders of
         Convertible Preferred Stock (except the right to receive the Redemption
         Price without interest upon surrender of their certificate or
         certificates), including the right to convert pursuant to Section 5(a),
         shall cease with respect to such shares, and such shares shall not
         thereafter be transferred on the books of the Corporation or be deemed
         to be outstanding for any purpose whatsoever.

                   (v) Three days prior to the Redemption Date, the Corporation
         shall deposit the Redemption Price of all outstanding shares of
         Convertible Preferred Stock designated for redemption in the Redemption
         Notice, and not yet redeemed, with a bank or trust company having
         aggregate capital and surplus in excess of $50,000,000 as a trust fund
         for the benefit of the respective holders of the shares designated for
         redemption and not yet redeemed. Simultaneously, the Corporation shall
         deposit irrevocable instructions and authorize such bank or trust
         company to pay, on and after the date fixed for redemption or prior
         thereto, the Redemption Price of the Convertible Preferred Stock to the
         holders thereof upon surrender of their certificates. The balance of
         any monies deposited by the Corporation pursuant to this paragraph
         remaining unclaimed at the expiration of two years following the
         Redemption Date shall thereafter be returned to the Corporation,
         provided that the stockholder to which such monies would be payable
         hereunder shall be entitled, upon proof of its ownership of the
         Convertible Preferred Stock, to receive such monies but without
         interest from the Redemption Date.

              (e) Status of Redeemed or Purchased Shares. Any shares of the
Convertible Preferred Stock at any time purchased, redeemed or otherwise
acquired by the Corporation shall not be reissued and shall be retired.

         14. Technology-Triggered Redemption.

              (a) If a Technology-Triggered Redemption Event (as defined below)
has occurred, the Corporation shall redeem on a pro rata basis up to one-half of
the Convertible Preferred Stock issued on the Date of Original Issue to any
holder who gives a Demand for Technology-Triggered Redemption (as defined in
Section 14(b) below). The Corporation shall effect such redemption by paying in
cash for each such share to be redeemed an amount equal to the
"Technology-Triggered Redemption Price", which shall equal (i) all accrued but
unpaid dividends as of the Technology-Triggered Redemption Date (as defined
below) with respect to each share to be redeemed, plus (ii) 100% of the
Liquidation Preference of each share to be redeemed.

              (b) Demand for Technology-Triggered Redemption. A holder desiring
to elect a redemption as herein provided shall deliver a notice (the "Demand for
Technology-Triggered Redemption") to the Corporation specifying the following:

                                       19
<PAGE>

                   (i) The number of shares of Convertible Preferred Stock to be
         redeemed; and

                   (iii) The address to which the payment of the
         Technology-Triggered Redemption Price shall be delivered, or, at the
         election of the holder, wire instructions with respect to the account
         to which payment of the Technology-Triggered Redemption Price shall be
         required.

         A holder may deliver the certificates evidencing the Convertible
Preferred Stock to be redeemed with the Demand for Technology-Triggered
Redemption or under separate cover not later than June 27, 2003. Payment of the
Technology-Triggered Redemption Price shall be made not later than June 30, 2003
(the "Technology-Triggered Redemption Date").

              (c) Definition of Technology-Triggered Redemption Event. A
"Technology-Triggered Redemption Event" shall mean that the Corporation has
failed to make a satisfactory determination of pre-clinical and clinical data
for Alprox-TD with regard to efficacy, safety and toxicology. Efficacy and
safety for Alprox-TD will be based on the unblinded results from the two pivotal
P3 studies, with satisfactory efficacy data defined as achieving statistical
significance (p<0.05 as suggested by the FDA) in the change in IIEF EF domain
score for at least one active dose as compared to the placebo, and satisfactory
safety data defined as an AE profile similar to the safety data published in
12/02 Urology for the efficacious dose; satisfactory toxicology data will be
based on the Corporation's representation on or about June 1, 2003, that the
results to date from the two-year rat study do no show significant
carcinogenicity findings attributable to Alprox-TD. The Corporation shall notify
each holder in reasonable detail not later than June 16, 2003 as to whether or
not a Technology-Triggered Redemption Event has taken place (the "Notice"), and
such Notice shall be reasonably acceptable to the holder. To the extent such
Notice contains material non-pubic information of the Corporation, the
Corporation shall simultaneously disclose such information in a filing on Form
8-K.

         15. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (New York City time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a business day or later than 5:00 p.m. (New
York City time) on any business day, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express. The address for such notices and communications shall be as
follows: (i) if to the Corporation, to 350 Corporate Boulevard, Robbinsville,
New Jersey 08691, facsimile: 609-208-1622, Attention: Chief Financial Officer,
or (ii) if to a holder of Preferred Stock, to the address or facsimile number
appearing on the Corporation's stockholder records or, in either case, to such
other address or facsimile number as the Corporation or a holder of Preferred
Stock may provide to the other in accordance with this Section.

         16. Stock Transfer Taxes. The issue of stock certificates upon
conversion of the

                                       20
<PAGE>

Convertible Preferred Stock shall be made without charge to the converting
holder for any tax in respect of such issue; provided, however, that the
Corporation shall be entitled to withhold any applicable withholding taxes with
respect to such issue, if any. The Corporation shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares in any name other than that of the holder of any of
the Convertible Preferred Stock converted, and the Corporation shall not be
required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issue thereof shall have paid to the
Corporation the amount of such tax or shall have established to the satisfaction
of the Corporation that such tax has been paid.

                            [signature page follows]

                                       21
<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this statement on
behalf of the Corporation and affixed the corporate seal hereto this 21st day of
April, 2003.

NEXMED, INC.

By: /s/ Y. Joseph Mo                   By: /s/ Vivian Liu
    ------------------------------         ------------------------------
    Y. Joseph Mo                           Vivian Liu
    Chairman, President and CEO            Secretary

                                       22
<PAGE>

                                    EXHIBIT A

                            FORM OF CONVERSION NOTICE

(To be executed by the registered Holder in order to convert shares of Preferred
Stock)

         The undersigned hereby irrevocably elects to convert the number of
shares of Series B 8% Cumulative Convertible Preferred Stock (the "Preferred
Stock") indicated below into shares of common stock, par value $0.001 per share
(the "Common Stock"), of NexMed, Inc., a Nevada corporation (the "Corporation"),
according to the Certificate of Designation of the Preferred Stock and the
conditions hereof, as of the date written below. The undersigned hereby requests
that certificates for the shares of Common Stock to be issued to the undersigned
pursuant to this Conversion Notice be issued in the name of, and delivered to,
the undersigned or its designee as indicated below. If the shares of Common
Stock are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto. A copy of
the certificate representing the Preferred Stock being converted is attached
hereto.

--------------------------------------------------------------------------------
Date of Conversion (Date of Notice)

--------------------------------------------------------------------------------
Number of shares of Preferred Stock owned prior to Conversion

--------------------------------------------------------------------------------
Number of shares of Preferred Stock to be Converted

--------------------------------------------------------------------------------
Stated Value of Preferred Stock to be Converted

--------------------------------------------------------------------------------
Amount of accumulated and unpaid dividends on shares of Preferred Stock to be
Converted

--------------------------------------------------------------------------------
Number of shares of Common Stock to be Issued (including conversion of accrued
but unpaid dividends on shares of Preferred Stock to be Converted)

--------------------------------------------------------------------------------
Applicable Conversion Value

--------------------------------------------------------------------------------
Number of shares of Preferred Stock owned subsequent to Conversion

Conversion Information:[NAME OF HOLDER]


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

Address of Holder:

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

-----------------------------------
Issue Common Stock to (if different than above):

Name:
     ------------------------------

                                       23
<PAGE>

Address:
        ---------------------------

        ---------------------------
Tax ID #:
         --------------------------

         The undersigned represents, subject to the accuracy of information
filed under the Securities Act and the Exchange Act by the Corporation with
respect to the outstanding Common Stock of the Corporation, as of the date
hereof that, after giving effect to the conversion of Preferred Shares pursuant
to this Conversion Notice, the undersigned will not exceed the "Beneficial
Ownership Cap" contained in Section 5(h) of the Certificate of Designation of
the Preferred Stock.

------------------------------------------------
Name of Holder



By:
   ---------------------------------------------
   Name:
   Title:

                                       24