Document:

Exhibit
      10.1

    

      EMPLOYMENT
        AGREEMENT

      

      EMPLOYMENT
        AGREEMENT
        dated
        October 31, 2007 by and between NexMed, Inc., a Nevada corporation (the
        "Company") and Hemanshu Pandya (the "Executive"). 

      

      WHEREAS,
        the Company desires to continue to employ Executive and to enter into
        an
        agreement (the "Agreement") embodying the terms of such employment;

      

      WHEREAS,
        the Company considers it essential to its best interests and the best interests
        of its stockholders to foster the continued employment of Executive by the
        Company during the term of this Agreement; and 

      

      WHEREAS,
        Executive is willing to accept and continue his employment on the terms
        hereinafter set forth in this Agreement. 

      

      NOW,
        THEREFORE, in consideration of the premises and mutual covenants herein and
        for
        other good and valuable consideration, the parties agree as follows:

      

      
        	
                1.

              	
                Term
                  of Employment.
                  Subject to earlier termination in accordance with the provisions
                  of
                  Section 6 of this Agreement, Executive shall be employed by the
                  Company
                  pursuant to the terms of this Agreement for a period commencing
                  on October
                  31, 2007 (the "Effective Date") and ending on October 31, 2008
                  (the
                  "Initial Term of Employment"); provided,
                  however,
                  that,
                  the term of employment under this Agreement (the "Employment Term")
                  shall
                  renew automatically for one-year terms on each successive October
                  30th,
                  unless and until either party gives at least 60 days advance written
                  notice to the other that the Employment Term should not be automatically
                  extended. The Executive shall be employed “at will” and his employment can
                  be terminated at any time by either the Company or the Executive,
                  subject
                  to the provisions of Section 6
                  below.

              

      

       

      
        	
                2.

              	
                Position.

              

      

       

      
        	 	
                (a)

              	
                During
                  the Employment Term, Executive shall be employed by the Company
                  as Vice
                  President and Chief Operating Officer, and shall have such duties,
                  authority, and responsibility as are commensurate with his position,
                  subject to the direction of the Company's Chief Executive Officer
                  (the
                  “CEO”).

              

      

       

      
        	 	
                (b)

              	
                During
                  the Employment Term, Executive shall devote all of his business
                  time and
                  attention to the performance of his duties hereunder faithfully
                  and to the
                  best of his abilities and shall not undertake employment with,
                  or
                  participate in, the conduct of the business affairs of any other
                  person,
                  corporation, or entity; provided,
                  that,
                  nothing shall preclude Executive from (i) with the prior written
                  approval
                  of the CEO, serving in due course as a director, trustee or member
                  of a
                  committee of any organization or (ii) participating in the affairs
                  of any
                  recognized charitable organizations, or in any community affairs,
                  of
                  Executive's choice. 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                Executive's
                  duties hereunder shall be performed for the Company worldwide,
                  with
                  principle place of business at the Company's headquarters in East
                  Windsor,
                  New Jersey. 

              

      

       

      
        	
                3.

              	
                Compensation.
                  

              

      

       

      
        	 	
                (a)

              	
                Base
                  Salary.
                  During the Employment Term, the Company shall pay Executive a base
                  salary,
                  subject to increase at the discretion of the Board of Directors
                  of the
                  Company (the "Board"), at the annual rate of $225,000
                  (the "Base Salary"), payable in regular installments in accordance
                  with
                  the Company's usual payroll practices. Such base salary will be
                  adjusted
                  to $250,000 annually following the Company’s receipt of an anticipated
                  cash infusion of $5 Million from a licensing
                  partner.

              

      

       

      
        	 	
                (b)

              	
                Bonus.
                  With respect to each calendar year during the Employment Term,
                  Executive
                  shall be eligible to earn an annual bonus award (the "Bonus") in
                  an amount
                  not to exceed 50% of Executive’s annual Base Salary. The amount of the
                  Bonus shall be determined by the Board, or the Compensation Committee
                  of
                  the Board (the "Compensation Committee"), in its sole discretion,
                  based
                  upon the achievement by the Company of objective performance measures
                  established and determined by the Board or the Compensation Committee
                  in
                  consultation with Executive no later than the end of the first
                  month of
                  such calendar year. The Bonus with respect to each calendar year
                  in the
                  Employment Term shall be paid as promptly as practicable following
                  the
                  delivery of the Company's audited financial statements for such
                  year, but
                  not later than March 15 of the calendar year following the calendar
                  year
                  in which the Bonus is earned. Unless otherwise stated herein, the
                  Bonus
                  shall not accrue until the date on which it is paid, and Executive
                  must be
                  employed on the date the Bonus is paid in order to receive the
                  Bonus,
                  except that Executive’s continuous employment is not required pursuant to
                  Sections 6(b)(2) and 6(c)(2). 

              

      

       

      
        	 	
                (c)

              	
                Stock
                  Option Grants.
                  

              

      

       

      
        	 	
                (i)

              	
                On
                  October 3, 2007, the Compensation Committee approved a grant to
                  Executive
                  of an option to purchase an aggregate of 175,000 shares of the
                  Company's
                  Common Stock (the "Option") based on the closing price of the Company’s
                  Common Stock on October 31, 2007 of $1.43 per
                  share. The Option vests in three installments: 25,000 Stock Option
                  Shares
                  on October 31, 2008; 50,000 Stock Option Shares on October 31,
                  2009; and
                  100,000 Stock Option Shares on October 31, 2010, assuming continuous
                  and
                  uninterrupted employment until such dates. The Company will provide
                  the
                  Executive the ability to perform a cashless exercise of all Stock
                  Options,
                  in accordance with the vesting
                  schedule.

              

      

       

      
        	 	
                (ii)

              	
                The
                  Option is subject to The NexMed, Inc. Stock Option and Long-Term
                  Incentive
                  Compensation Plan (the "Option Plan") and the applicable stock
                  option
                  agreement. 

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iii)

              	
                In
                  addition to the foregoing, the Compensation Committee may recommend
                  to the
                  Board that additional stock options be granted to Executive in
                  accordance
                  with the terms and subject to the conditions of the Option
                  Plan.

              

      

       

      
        	 	
                (iv)

              	
                All
                  of Executive's outstanding but unvested stock options shall vest
                  immediately upon the occurrence of a Change in Control (as defined
                  in
                  Appendix A hereto).

              

      

       

      
        	 	
                (d)

              	
                Stock
                  Grants.
                  

              

      

      

      
        	 	
                (i)

              	
                On
                  October 3, 2007, the Compensation Committee approved a grant to
                  Executive
                  of an aggregate of 75,000 shares of the Company’s Restricted Common Stock.
                  This Grant vests in three equal installments (33.33% of the Stock
                  Grants,
                  which represents 25,000 Stock Shares) on October 31, 2008, October
                  31,
                  2009, and October 31, 2010, respectively, assuming continuous and
                  uninterrupted employment until such
                  dates.

              

      

       

      
        	 	
                (ii)

              	
                On
                  October 3, 2007, the Compensation Committee approved a grant to
                  Executive
                  of an aggregate of 50,000 shares of the Company’s Common Stock. This Grant
                  will vest upon the Executive’s execution of a licensing/development
                  agreement valued at over $5 Million, provided that
                  such agreement is executed within 18 months of Executive’s employment
                  start date and assuming continuous and uninterrupted employment
                  until such
                  date.

              

      

       

      
        	 	
                (iii)

              	
                All
                  of Executive’s outstanding but unvested stock grants provided under this
                  Section shall vest immediately upon the occurrence of a Change
                  in Control
                  (as defined in Appendix A of the
                  Agreement).

              

      

       

      
        	
                4.

              	
                Employee
                  Benefits.
                  During the Employment Term, Executive shall be eligible for inclusion,
                  to
                  the extent permitted by law, as a full-time employee of the Company
                  or any
                  of its subsidiaries, in any and all of the following plans, programs,
                  and
                  policies in effect at the time: (i) pension, profit sharing, savings,
                  and
                  other retirement plans and programs, (ii) life and health (medical,
                  dental, hospitalization, short-term and long-term disability) insurance
                  plans and programs, (iii) stock option and stock purchase plans
                  and
                  programs, (iv) accidental death and dismemberment protection plans
                  and
                  programs, (v) travel accident insurance plans and programs, (vi)
                  vacation
                  policy (Executive shall have four weeks of vacation per calendar
                  year),
                  and (vii) other plans and programs sponsored by the Company or
                  any
                  subsidiary for employees or executives generally, including any
                  and all
                  plans and programs that supplement any or all of the foregoing
                  types of
                  plans or programs. 

              

      

       

      
        	
                5.

              	
                Business
                  Expenses and Perquisites.
                  The Company shall reimburse to Executive, or pay directly, all
                  reasonable
                  expenses incurred by Executive in connection with the business
                  of the
                  Company, and its subsidiaries and affiliates, including but not
                  limited to
                  business-class travel, reasonable accommodations, and entertainment,
                  subject to documentation in accordance with the Company's policy.
                  

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                6.

              	
                Termination.
                  

              

      

       

      
        	 	
                (a)

              	
                By
                  the Company for Cause.
                  The Company may, for Cause, terminate Executive's employment hereunder
                  at
                  any time by written notice to Executive. For purposes of this Agreement,
                  the term "Cause" shall mean Executive's (i) engaging in fraud against
                  the
                  Company or misappropriation of funds of the Company, (ii) disregard
                  or
                  failure to follow specific and reasonable directives of the Board,
                  (iii)
                  willful failure to perform his duties as Vice President and Chief
                  Operating Officer of the Company, (iv) willful misconduct resulting
                  in
                  material injury to the Company, (v) violation of the terms of the
                  Non-Disclosure and Inventions Agreement between Executive and NexMed
                  (U.S.A.), Inc., a wholly-owned subsidiary of the Company, dated
                  October
                  31, 2007 (the "Non-Disclosure Agreement") attached hereto as Appendix
                  "B",
                  (vi) conviction of, or Executive's plea of guilty or no contest
                  to, a
                  felony or any crime involving as a material element fraud or dishonesty,
                  or (vii) material breach (not covered by clauses (i) through (vi)
                  of this
                  paragraph) of any of the other provisions of this Agreement; provided,
                  that,
                  in the case of subclauses (ii), (iii) or (vii), Cause shall not
                  exist if
                  the act or omission deemed to constitute Cause is cured (if curable)
                  by
                  Executive within thirty (30) days after written notice thereof
                  to
                  Executive by the Company. For purposes of the foregoing, no act,
                  or
                  failure to act, on Executive's part shall be considered "willful"
                  unless
                  done, or omitted to be done, by Executive other than in good faith,
                  and
                  without reasonable belief that his action or omission was in furtherance
                  of the interests of the Company. 

              

      

       

      In
        the
        event of the termination of Executive's employment under this Section 6(a)
        for
        Cause, the Employment Term shall end on the day of such termination and the
        Company shall pay to Executive, no later than the payroll cycle following
        Executive’s termination, in one lump sum: (i) any accrued but unpaid Base
        Salary, less applicable deductions, including salary in respect of any accrued
        and accumulated vacation due to Executive at the date of such termination;
        and
        (ii) any amounts owing, but not yet paid, pursuant to Section 5
        hereof.

      

      Except
        as
        specifically set forth in Section 9 hereof, the Company shall have no further
        obligations to Executive under this Agreement. 

      

      
        	 	
                (b)

              	
                Disability
                  or Death.
                  If Executive should suffer a Permanent Disability, the Company
                  may
                  terminate Executive's employment hereunder upon ten (10) or more
                  days'
                  prior written notice to Executive. If Executive should pass away
                  during
                  the term of this Agreement, Executive’s employment shall be deemed
                  terminated on his date of death. For purposes of this Agreement,
                  a
                  "Permanent Disability" shall be deemed to have occurred only when
                  Executive has qualified for benefits (including satisfaction of
                  any
                  applicable waiting period) under the Company's or a subsidiary's
                  long-term
                  disability insurance arrangement (the "LTD Policy"). In the event
                  of the
                  termination of Executive's employment hereunder by reason of Permanent
                  Disability or death, the Employment Term shall end on the day of
                  such
                  termination and the Company shall pay, no later than the payroll
                  cycle
                  following Executive’s termination, to Executive or Executive's legal
                  representative (in the event of Permanent Disability), or any beneficiary
                  or beneficiaries designated by Executive to the Company in writing,
                  or to
                  Executive's estate if no such beneficiary has been so designated
                  (in the
                  event of Executive's death), a single lump sum payment of: (i)
                  any accrued
                  but unpaid Base Salary, less applicable deductions, including salary
                  in
                  respect of any accrued and accumulated vacation, due to Executive
                  at the
                  date of such termination; (ii) any amounts owing, but not yet paid,
                  pursuant to Section 5 hereof. 

              

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      In
        addition, upon a termination under this Section 6(b), and upon the satisfaction
        of the conditions set forth herein: (1) Executive shall receive a pro rata
        Bonus
        for the calendar year in which such termination occurs, equal to the Bonus
        he
        would have received, to the extent all criteria for such a Bonus have been
        met
        (with the exception of the requirement that Executive be employed on the
        date
        the Bonus is to be paid), for the calendar year of said termination multiplied
        by a fraction, the numerator of which is the number of days in such year
        preceding and including the date of termination, and the denominator of which
        is
        365. Said pro-rata Bonus shall be paid at the same time as the Bonus would
        have
        been paid had Executive remained employed by the Company through the date
        of
        payment, but in any event, not later than March 15 of the calendar year
        following the calendar year in which the Bonus is earned; (2) Executive shall
        receive any unpaid Bonus for the calendar year preceding his termination,
        to the
        extent that all criteria for such bonus have been met (with the exception
        of the
        requirement that Executive be employed on the date the Bonus is to be paid).
        Said Bonus shall be paid at the same time as the Bonus would have been paid
        had
        Executive remained employed by the Company through the date of payment; (3)
        Executive’s next-scheduled but unvested stock options granted pursuant to
        Section 3(c) of this Agreement shall vest immediately; and (4) Executive’s
        next-scheduled but unvested stock granted pursuant to Section 3(d) of this
        Agreement shall vest immediately. The payment of the Bonuses and the
        acceleration of Executive’s options and stock are conditioned upon Executive (or
        his legal representative) signing a release in favor of the Company, as provided
        for in Section 6(f).

      

      Except
        as
        specifically set forth in Section 9 hereof, the Company shall have no further
        obligations to Executive under this Agreement. 

      

      
        	 	
                (c)

              	
                By
                  the Company without Cause.
                  The Company may, without Cause, terminate Executive’s employment hereunder
                  at any time upon ten (10) or more days’ written notice to Executive. The
                  Company, in its sole discretion, may provide the Executive with
                  ten (10)
                  days’ pay in lieu of notice. In the event Executive’s employment is
                  terminated pursuant to this Section 6(c), the Employment Term shall
                  end on
                  the day of such termination and the Company shall pay to Executive,
                  no
                  later than the payroll cycle following Executive’s termination, in one
                  lump sum: (i) any accrued but unpaid Base Salary, less applicable
                  deductions, including salary in respect of any accrued and accumulated
                  vacation, due to Executive at the date of such termination, and
                  (ii) any
                  amounts owing, but not yet paid, pursuant to Section 5 hereof.
                  

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      In
        addition, upon a termination under this Section 6(c) and upon the satisfaction
        of the conditions set forth herein: (1) Executive shall receive a pro rata
        Bonus
        for the calendar year in which such termination occurs, equal to the Bonus
        he
        would have received, to the extent all criteria for such a Bonus have been
        met
        (with the exception of the requirement that Executive be employed on date
        the
        Bonus is to be paid), for the calendar year of said termination multiplied
        by a
        fraction, the numerator of which is the number of days in such year preceding
        and including the date of termination, and the denominator of which is 365.
        Said
        pro-rata Bonus shall be paid at the same time as the Bonus would have been
        paid
        had Executive remained employed by the Company through the date of payment,
        but
        in any event, not later than March 15 of the calendar year following the
        calendar year in which the Bonus is earned; (2) Executive shall receive any
        unpaid Bonus for the calendar year preceding his termination, to the extent
        that
        all criteria for such bonus have been met (with the exception of the Executive
        being employed on the date the Bonus is to be paid). Said Bonus shall be
        paid at
        the same time as the Bonus would have been paid had Executive remained employed
        by the Company through the date of payment; (3) Executive’s next-scheduled but
        unvested stock options granted pursuant to Section 3(c) of this Agreement
        shall
        vest immediately; (4) Executive’s next-scheduled but unvested stock granted
        pursuant to Section 3(d) of this Agreement shall vest immediately; and (5)
        Executive shall receive severance payments (the “Severance”) in an amount equal
        to the Executive’s annual Base Salary at the time of such termination of six
        months plus one week for every fully completed year of service, up to one
        year,
        and payable in regular installments in accordance with the Company’s usual
        payroll practices beginning thirty (30) days following Executive’s date of
        termination. The payment of the Bonuses and the Severance, as well as the
        acceleration of Executive’s options and stock, are conditioned upon Executive
        signing a release in favor of the Company, as provided for in Section
        6(f).

       

      Except
        as
        specifically set forth in Section 9 hereof, the Company shall have no further
        obligations to Executive under this Agreement. 

      

      
        	 	
                (d)

              	
                By
                  Executive for Good Reason.
                  If any of the events described below occurs during the Employment
                  Term,
                  Executive may terminate Executive's employment hereunder for Good
                  Reason
                  by written notice to the Company identifying the event or omission
                  constituting Good Reason not more than one (1) month following
                  the
                  occurrence of such event and, in the case of subclauses (ii), (iii),
                  or
                  (iv) below, a failure by the Company to cure such act or omission
                  within
                  thirty (30) days after receipt of such written notice. In the event
                  that
                  Executive elects to terminate employment pursuant to this Section
                  6(d),
                  the Employment Term and Executive's employment hereunder will be
                  terminated effective as of the later of thirty-one (31) days after
                  the
                  Company's receipt of Executive's notice of termination or thirty-one
                  (31)
                  days after the event, and Executive's termination for Good Reason
                  pursuant
                  to this Section 6(d) shall be treated for all purposes as a termination
                  without Cause pursuant to Section 6(c) and the provisions of Section
                  6(c)
                  shall apply to such termination. The occurrence of any of the following
                  events without Executive's consent shall permit Executive to terminate
                  Executive's employment for "Good Reason" pursuant to this Section
                  6(d):
                  

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
        	 	
                (i)

              	
                A
                  "Change in Control" (as defined in Appendix A hereto) occurs;
                  

              

      

       

      
        	 	
                (ii)

              	
                The
                  failure by the Company to observe or comply in any material respect
                  with
                  any of the material provisions of this
                  Agreement;

              

      

       

      
        	 	
                (iii)

              	
                A
                  material diminution in Executive's
                  duties;

              

      

       

      
        	 	
                (iv)

              	
                The
                  assignment to Executive of duties that are materially inconsistent
                  with
                  Executive’s duties or that materially impair Executive’s ability to
                  function as the Vice President and Chief Operating Officer of the
                  Company;

              

      

       

      
        	 	
                (v)

              	
                The
                  relocation of Executive’s primary office from a location that is more than
                  twenty five (25) miles from both (a) the Company’s executive offices at
                  the time of relocation and (b) Executive’s primary residence at the time
                  of such relocation; or

              

      

       

      
        	 	
                (vi)

              	
                The
                  Company providing Executive with a notice of non-renewal of this
                  Agreement
                  by the Company under Section 1.

              

      

       

      Except
        as
        specifically set forth in Section 9 hereof, the Company shall have no further
        obligations to Executive under this Agreement. 

      

      
        	 	
                (e)

              	
                By
                  Executive without Good Reason.
                  Executive may terminate the Employment Term and Executive's employment
                  hereunder at any time without Good Reason upon thirty (30) days
                  advance
                  written notice to the Company. In the event Executive's employment
                  is
                  terminated pursuant to this Section 6(e), the Company shall pay
                  to
                  Executive, no later than ten (10) days after the last day of Executive's
                  employment, in one lump sum, the sum of (i) any accrued but unpaid
                  Base
                  Salary, less applicable deductions, including salary in respect
                  of any
                  accrued and accumulated vacation, due to Executive at the date
                  of such
                  termination, and (ii) any amounts owing, but not yet paid, pursuant
                  to
                  Section 5 hereof. 

              

      

       

      Except
        as
        specifically set forth in Section 9 hereof, the Company shall have no further
        obligations to Executive under this Agreement. 

      

      
        	 	
                (f)

              	
                Release.
                  Notwithstanding any other provision of this Agreement to the contrary,
                  Executive acknowledges and agrees that any and all payments and
                  benefits
                  to which Executive is entitled under this Section 6(b), 6(c), or
                  6(d),
                  with the exception of accrued salary, accrued vacation payments,
                  and
                  payments pursuant to Section 5 of this Agreement, are conditioned upon and
                  subject to Executive's first executing a Confidential Separation
                  Agreement
                  including a general waiver and release (and the expiration of any
                  associated revocation period), in such reasonable and customary
                  form as
                  shall be prepared by the Company, of all claims Executive may have
                  against
                  the Company, and related entities and individuals.
                  

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
        	
                7.

              	
                Required
                  Postponement for Specified
                  Services.

              

      

       

      
        	 	
                (a)

              	
                Specified
                  Executive Delay.
                  Notwithstanding anything in this Agreement to the contrary, if
                  required by
                  section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”)
                  and if Executive is considered a Specified Executive (as defined
                  herein)
                  and payment of any amounts under this Agreement is required to
                  be delayed
                  for a period of six months after separation from service pursuant
                  to
                  Section 409A of the Code, payment of such amounts shall be delayed
                  as
                  required by section 409A, and the accumulated amounts shall be
                  paid in a
                  lump sum payment within five days after the end of the six-month
                  period.
                  If Executive dies during the postponement period prior to the payment
                  of
                  benefits, the amounts withheld on account of section 409A shall
                  be paid to
                  the personal representative of Executive’s estate within 60 days after the
                  date of Executive’s death. 

              

      

       

      
        	 	
                (b)

              	
                “Specified
                  Executive”
                  shall mean an employee who, at any time during the 12-month period
                  ending
                  on the identification date, is a “specified employee” under section 409A
                  of the Code, as determined by the Compensation Committee of the
                  Board or
                  its delegate. The determination of Specified Executives, including
                  the
                  number and identity of persons considered officers and the identification
                  date, shall be made by the Compensation Committee or its delegate
                  in
                  accordance with the provisions of section 409A of the Code and
                  the
                  regulations issued thereunder.

              

      

       

      
        	
                8.

              	
                No
                  Mitigation; Employee Benefit Plans.
                  Executive shall not be required to mitigate amounts payable to
                  him under
                  this Agreement by seeking other employment or otherwise, and there
                  shall
                  be no offset against amounts payable to Executive under this Agreement
                  on
                  account of Executive's subsequent employment. Amounts payable to
                  Executive
                  under this Agreement shall not be offset by any claims that the
                  Company
                  may have against Executive, and such amounts payable to Executive
                  under
                  this Agreement shall not be affected by any other circumstances,
                  including, without limitation, any counterclaim, recoupment, defense,
                  or
                  other right that the Company may have against Executive or others.
                  Provided,
                  however,
                  that,
                  payments made to Executive as a result of the termination of Executive's
                  employment hereunder shall not be considered as includible compensation
                  with respect to any employee benefit plans maintained by the Company,
                  except to the extent otherwise required by law.

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
        	
                9.

              	
                Indemnification.
                  In the event that Executive is made a party or threatened to be
                  made a
                  party to any action, suit, or proceeding, whether civil, criminal,
                  administrative, or investigative (a "Proceeding"), by reason of
                  Executive's employment with, or serving as an officer of, the Company,
                  the
                  Company shall indemnify and hold Executive harmless, and defend
                  Executive
                  to the fullest extent authorized by the laws of the state in which
                  the
                  Company is incorporated, as the same exist and may hereafter be
                  amended,
                  against any and all claims, demands, suits, judgments, assessments,
                  and
                  settlements (collectively the "Claims"), including all expenses
                  incurred
                  or suffered by Executive in connection therewith (excluding, however,
                  any
                  legal fees incurred by Executive for Executive's own counsel, except
                  as
                  otherwise provided in this Section 9, and excluding any Proceedings
                  initiated by executive), and such indemnification shall continue
                  as to
                  Executive even after Executive is no longer employed by the Company
                  hereunder, and shall inure to the benefit of Executive's heirs,
                  executors,
                  and administrators; provided,
                  however,
                  that,
                  Executive promptly gives written notice to the Company of any such
                  Claims
                  (although Executive's failure to promptly give notice shall not
                  affect the
                  Company's obligations under this Section 9 except to the extent
                  that such
                  failure prejudices the Company or its ability to defend such Claims).
                  The
                  Company shall have the right to undertake, with counsel or other
                  representatives of its own choosing, the defense or settlement
                  of any
                  Claims. In the event that the Company shall fail to notify Executive,
                  within ten days of its receipt of Executive's written notice, that
                  the
                  Company has elected to undertake such defense or settlement, or
                  if at any
                  time the Company shall otherwise fail to diligently defend or pursue
                  settlement of such Claims, then Executive shall have the right
                  to
                  undertake the defense, compromise, or settlement of such Claims,
                  in which
                  event the Company shall hold Executive harmless from any legal
                  fees
                  incurred by Executive for Executive's counsel. Neither Executive
                  nor the
                  Company shall settle any Claims without the prior written consent
                  of the
                  other, which consent shall not be unreasonably withheld or delayed.
                  In the
                  event that the Company submits to Executive a bona fide settlement
                  offer
                  from the claimant of Claims (which settlement offer shall include
                  as an
                  unconditional term thereof the giving by the claimant or the plaintiff
                  to
                  Executive a release from all liability in respect of such Claims),
                  and
                  Executive refuses to consent to such settlement, then thereafter
                  the
                  Company's liability to Executive for indemnification hereunder
                  with
                  respect to such Claims shall not exceed the settlement amount included
                  in
                  such bona fide settlement offer, and Executive shall either assume
                  the
                  defense of such Claims or pay the Company's attorneys' fees and
                  other
                  out-of-pocket costs incurred thereafter in continuing the defense
                  of such
                  Claims. Regardless of which party is conducting the defense of
                  any such
                  Claims, the other party, with counsel or other representatives
                  of its own
                  choosing and at its sole cost and expense, shall have the right
                  to consult
                  with the party conducting the defense of such Claims and its counsel
                  or
                  other representatives concerning such Claims and Executive and
                  the
                  respective counsel or other representatives shall cooperate with
                  respect
                  to such Claims. The party conducting the defense of any such Claims
                  and
                  its counsel shall in any case keep the other party and its counsel
                  (if
                  any) fully informed as to the status of such Claims and any matters
                  relating thereto. Executive and the Company shall provide to the
                  other
                  such records, books, documents, and other materials as shall reasonably
                  be
                  necessary for each to conduct or evaluate the defense of any Claims,
                  and
                  will generally cooperate with respect to any matters relating thereto.
                  This Section 9 shall remain in effect after this Agreement is terminated,
                  regardless of the reasons for such termination. The indemnification
                  provided to Executive pursuant to this Section 9 shall not supersede
                  or
                  reduce any indemnification provided to Executive under any separate
                  agreement, or the By-Laws of the Company; in this regard, it is
                  intended
                  that this Agreement shall expand and extend Executive's rights
                  to receive
                  indemnification. 

              

      

       

      
        	
                10.

              	
                Withholding.
                  The Company shall have the right to deduct and withhold from all
                  payments
                  to Executive hereunder all payroll taxes, income tax withholding
                  and other
                  federal, state and local taxes and charges which currently are
                  or which
                  hereafter may be required by law to be so deducted and withheld.
                  

              

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
        	
                11.

              	
                Restrictive
                  Covenants.
                  The restrictive covenants contained in the Non-Disclosure and Inventions
                  Agreement, signed by Executive on October 31, 2007 and attached
                  hereto as
                  Appendix B, including but not limited to, Section 2 (Confidential
                  Material); Section 3 (Non-Solicitation); Section 4 (Non-Compete),
                  and
                  Section 5 (Intellectual Property and Inventions) are incorporated
                  by
                  reference as if fully set forth herein. Executive hereby reaffirms
                  his
                  obligations under that agreement.

              

      

       

      
        	
                12.

              	
                Non-Assignability.
                  Executive's rights and benefits hereunder are personal to Executive,
                  and
                  shall not be alienated, voluntarily or involuntarily assigned,
                  or
                  transferred. 

              

      

       

      
        	
                13.

              	
                Binding
                  Effect.
                  This Agreement shall be binding upon the parties hereto, and their
                  respective assigns, successors, executors, administrators, and
                  heirs. In
                  the event the Company becomes a party to any merger, consolidation,
                  or
                  reorganization, this Agreement shall remain in full force and effect
                  as an
                  obligation of the Company or its successor(s) in interest. None
                  of the
                  payments provided for by this Agreement shall be subject to seizure
                  for
                  payment of any debts or judgments against Executive or Executive's
                  beneficiary or beneficiaries, nor shall Executive or any such beneficiary
                  or beneficiaries have any right to transfer or encumber any right
                  or
                  benefit hereunder. 

              

      

       

      
        	
                14.

              	
                Entire
                  Agreement; Modification.
                  

              

      

       

      
        	 	
                (a)

              	
                This
                  Agreement supersedes all prior agreements, with the exception of
                  the
                  Non-Disclosure and Inventions Agreement, and all other agreements
                  (or
                  portions thereof) that deal with confidentiality or intellectual
                  property.
                  This Agreement sets forth the entire understanding among the parties
                  hereto with respect to the subject matter hereof, may not be changed
                  orally, and may be changed only by an agreement in writing signed
                  by the
                  parties hereto. 

              

      

       

      
        	 	
                (b)

              	
                Executive
                  acknowledges that from time to time, the Company may establish,
                  maintain
                  and distribute manuals, handbooks or personnel policies, and officers
                  or
                  other representatives of the Company may make written or oral statements
                  relating to personnel policies and procedures. Such manuals, handbooks
                  and
                  statements are intended only for general guidance. No policies,
                  procedures
                  or statements of any nature by or on behalf of the Company (whether
                  written or oral, and whether or not contained in any manual or
                  handbook or
                  personnel policies), and no acts or practices of any nature, shall
                  be
                  construed to modify this Agreement or to create express or implied
                  obligations of any nature to
                  Executive.

              

      

      

      
        	
                15.

              	
                Notices.
                  All notices and communications hereunder shall be in writing, sent
                  by
                  certified or registered mail, return receipt requested, postage
                  prepaid;
                  by facsimile transmission, with proof of the time and date of receipt
                  retained by the transmitter; or by hand-delivery properly receipted.
                  The
                  actual date of receipt as shown by the return receipt therefore,
                  the
                  facsimile transmission sheet, or the hand-delivery receipt, as
                  the case
                  may be, shall determine the date on which (and, in the case of
                  a
                  facsimile, the time at which) notice was given. All payments required
                  hereunder by the Company to Executive shall be sent postage prepaid,
                  or,
                  at Executive's election, shall be transferred to Executive electronically
                  to such bank account as Executive may designate in writing to the
                  Company,
                  including designation of the applicable electronic address. The
                  foregoing
                  items (other than any electronic transfer to Executive) shall be
                  addressed
                  as follows (or to such other address as the Company and Executive
                  may
                  designate in writing from time to time):

              

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      To
        the
        Company: 

      NexMed,
        Inc. 

      89
        Twin
        Rivers Drive

      East
        Windsor, NJ 08520

      Fax:
        609-426-9116

      Attention:
        Chief Executive Officer

      

      To
        Executive: 

      Hemanshu
        Pandya

      7
        Nottinghill Court

      Manalapan,
        N.J. 07726

      Fax:
        732-294-0301

      

      
        	
                16.

              	
                Section
                  409A of the Code.
                  This Agreement is intended to comply with section 409A of the Code
                  and its
                  corresponding regulations, to the extent applicable. Notwithstanding
                  anything in this Agreement to the contrary, payments may only be
                  made
                  under this Agreement upon an event and in a manner permitted by
                  section
                  409A of the Code, to the extent applicable. As used in the Agreement,
                  the
                  term “termination of employment” shall mean Executive’s separation from
                  service with the Company within the meaning of section 409A of
                  the Code
                  and the regulations promulgated thereunder. For purposes of section
                  409A,
                  the right to a series of payments under the Agreement shall be
                  treated as
                  a right to a series of separate payments. All reimbursements and
                  in-kind
                  benefits provided under the Agreement shall be made or provided
                  in
                  accordance with the requirements of section 409A of the Code, including,
                  where applicable, the requirement that (i) any reimbursement shall
                  be for
                  expenses incurred during Executive’s lifetime (or during a shorter period
                  of time specified in this Agreement), (ii) the amount of expenses
                  eligible
                  for reimbursement, or in-kind benefits provided, during a calendar
                  year
                  may not affect the expenses eligible for reimbursement, or in-kind
                  benefits to be provided, in any other calendar year, (iii) the
                  reimbursement of an eligible expense will be made on or before
                  the last
                  day of the calendar year following the year in which the expense
                  is
                  incurred, and (iv) the right to reimbursement or in-kind benefits
                  is not
                  subject to liquidation or exchange for another
                  benefit.

              

      

       

      
        	
                17.

              	
                Governing
                  Law; Jurisdiction.
                  This Agreement shall be governed by, and construed and enforced
                  according
                  to, the domestic laws of the State of New Jersey without giving
                  effect to
                  the principles of conflict of laws thereof, or such principles
                  of any
                  other jurisdiction, which could cause the application of the substantive
                  law of any jurisdiction other than the State of New Jersey. The
                  Company
                  and Executive agree that the state or federal courts of New Jersey
                  shall
                  have exclusive jurisdiction to hear and determine any dispute which
                  may
                  arise under this Agreement. 

              

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      
        	
                18.

              	
                Severability.
                  The invalidity or unenforceability of any provision of this Agreement
                  shall not affect the validity or enforceability of any other provision
                  of
                  this Agreement, and each other provision of the Agreement shall
                  be
                  severable and enforceable to the extent permitted by law.
                  

              

      

       

      
        	
                19.

              	
                Headings.
                  The headings of the Sections hereof are provided for convenience
                  only and
                  are not to serve as a basis for interpretation or construction,
                  and shall
                  not constitute a part, of this Agreement.

              

      

       

      
        	
                20.

              	
                Signature
                  in Counterparts.
                  This Agreement may be signed in counterparts, each of which shall
                  be an
                  original, with the same effect as if the signatures thereto and
                  hereto
                  were upon the same instrument. 

              

      

       

      IN
        WITNESS WHEREOF, Executive has hereunto set his hand and the Company has
        caused
        this Agreement to be executed in its name on its behalf, all as of the day
        and
        year first above written. 

      
 

      
        	 	
                /s/
                  Hemanshu
                  Pandya                                          
                  

              
	 	
                Hemanshu
                  Pandya

              
	 	 
	 	 
	 	 
	 	
                NEXMED,
                  INC.

              
	 	 
	 	 
	 	
                By:
                  /s/ Vivian H.
                  Liu                                             
                  

              
	 	
                Title:
                  President and Chief Executive
                  Officer

              

      

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      Appendix
        A

      Change
        in Control

      

      For
        the
        purpose of this Agreement, a "Change in Control" shall be deemed to have
        taken
        place if: 

      

      A. Individuals
        who, on the date hereof, constitute the Board (the "Incumbent Directors")
        cease
        for any reason to constitute at least a majority of the Board, provided that
        any
        person becoming a director subsequent to the date hereof, whose election
        or
        nomination for election was approved by a vote of at least two-thirds of
        the
        Incumbent Directors then on the Board (either by a specific vote or by approval
        of the proxy statement of the Company in which such person is named as a
        nominee
        for director, without written objection to such nomination) shall be an
        Incumbent Director; provided,
        however,
        that,
        no
        individual initially elected or nominated as a director of the Company as
        a
        result of an actual or threatened election contest with respect to directors
        or
        as a result of any other actual or threatened solicitation of proxies or
        consents by or on behalf of any person other than the Board shall be deemed
        to
        be an Incumbent Director; 

      

      B. Any
        "Person" (as such term is defined in Section 3(a)(9) of the Securities Exchange
        Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2)
        of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule
        13d-3 under the Exchange Act), directly or indirectly, of securities of the
        Company representing 25% or more of the combined voting power of the Company's
        then outstanding securities eligible to vote for the election of the Board
        (the
        "Voting Securities"); provided,
        however,
        that,
        the
        event described in this paragraph B shall not be deemed to be a Change in
        Control by virtue of any of the following acquisitions: (i) by the Company
        or
        any subsidiary of the Company in which the Company owns more than 25% of
        the
        combined voting power of such entity (a "Subsidiary"), (ii) by any employee
        benefit plan (or related trust) sponsored or maintained by the Company or
        any
        Subsidiary, (iii) by any underwriter temporarily holding the Company's Voting
        Securities pursuant to a public offering of such Voting Securities, (iv)
        pursuant to a Non-Qualifying Transaction (as defined in paragraph C immediately
        below), (v) pursuant to any acquisition by Executive or by any Person which
        is
        an "affiliate" (within the meaning of 17 C.F.R. § 230.405) of Executive (an
        "Excluded Person"); 

      

      C. The
        consummation of a merger, consolidation, statutory share exchange or similar
        form of corporate transaction involving the Company or any of its Subsidiaries
        that requires the approval of the Company's stockholders, whether for such
        transaction or the issuance of securities in the transaction (a "Business
        Combination"), unless immediately following such Business Combination: (i)
        more
        than 25% of the total voting power of (A) the corporation resulting from
        such
        Business Combination (the "Surviving Corporation"), or (B) if applicable,
        the
        ultimate parent corporation that directly or indirectly has beneficial ownership
        of 100% of the voting securities eligible to elect directors of the Surviving
        Company (the "Parent Corporation"), is represented by the Company's Voting
        Securities that were outstanding immediately prior to such Business Combination
        (or, if applicable, is represented by shares into which the Company's Voting
        Securities were converted pursuant to such Business Combination), and such
        voting power among the holders thereof is in substantially the same proportion
        as the voting power of the Company's Voting Securities among the holders
        thereof
        immediately prior to the Business Combination, (ii) no Person (other than
        (A)
        any employee benefit plan (or related trust) sponsored or maintained by the
        Surviving Corporation or the Parent Corporation or (B) an Excluded Person
        is or
        becomes the beneficial owner, directly or indirectly, of 25% or more of the
        total voting power of the outstanding voting securities eligible to elect
        directors of the Parent Corporation (or, if there is no Parent Corporation,
        the
        Surviving Corporation) and (iii) at least a majority of the members of the
        board
        of directors of the Parent Corporation (or, if there is no Parent Corporation,
        the Surviving Corporation) following the consummation of the Business
        Combination were Incumbent Directors at the time of the Board's approval
        of the
        execution of the initial agreement providing for such Business Combination
        (any
        Business Combination which satisfies all of the criteria specified in (i),
        (ii)
        and (iii) above shall be deemed to be a "Non-Qualifying Transaction");

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      D. A
        sale of
        all or substantially all of the Company's assets, other than to an Excluded
        Person; 

      

      E. The
        stockholders of the Company approve a plan of complete liquidation or
        dissolution of the Company; or 

      

      F. Such
        other events as the Board may designate. 

      

      Notwithstanding
        the foregoing, a Change in Control of the Company shall not be deemed to
        occur
        solely because any person acquires beneficial ownership of more than 25%
        of the
        Company's Voting Securities as a result of the acquisition of the Company's
        Voting Securities by the Company which reduces the number of the Company's
        Voting Securities outstanding; provided,
        that,
        if
        after such acquisition by the Company such person becomes the beneficial
        owner
        of additional Company Voting Securities that increases the percentage of
        outstanding Company Voting Securities beneficially owned by such person,
        a
        Change in Control of the Company shall then occur.

      

      

      

      

      
        
          
          

        

        
          14CERTIFICATE
      OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES

    A
      SENIOR CONVERTIBLE PREFERRED STOCK OF

    NTR
      ACQUISITION CO.

    

    NTR
      Acquisition Co., a Delaware corporation (this “Corporation”),
      hereby certifies that the following resolution was adopted by the Board of
      Directors of this Corporation:

    

    RESOLVED,
      that pursuant to the authority expressly granted to and vested in the Board
      of
      Directors of this Corporation (the “Board
      of Directors”)
      by the
      provisions of the Second Amended and Restated Certificate of Incorporation
      of
      this Corporation, as amended (the “Certificate
      of Incorporation”),
      there
      is hereby created, out of the 1,000,000 shares of preferred stock, par value
      $0.0001 per share, of this Corporation authorized in Article Five of the
      Certificate of Incorporation (the “Preferred
      Stock”),
      a
      series of the Preferred Stock consisting of 40,000 shares, which series shall
      have the following powers, designations, preferences, and relative,
      participating, optional or other rights, and the following qualifications,
      limitations and restrictions (in addition to any powers, designations,
      preferences and relative, participating, optional or other rights, and any
      qualifications, limitations and restrictions, set forth in the Certificate
      of
      Incorporation which are applicable to the Preferred Stock):

    

    SERIES
      A
      SENIOR CONVERTIBLE PREFERRED STOCK

    

    Designation
      and Amount: The shares of such series of preferred stock shall be designated
      as
      the Series A Senior Convertible Preferred Stock (the “Series
      A Preferred Stock”)
      and
      the number of shares initially constituting such series be 40,000
      shares.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    1.
      Dividends. 

     

    (a) The
      holders of the Series A Preferred Stock shall be entitled to receive dividends
      at the rate of $57.50 per share (as adjusted for any stock dividends,
      combinations or splits with respect to such shares) per annum, respectively,
      payable out of funds legally available therefore. Such dividends shall be fully
      cumulative, shall accrue from the date of first issuance of each share of Series
      A Preferred Stock, respectively, shall be deemed to accrue from such date
      whether or not earned or declared and whether or not there are profits, surplus
      or other funds of this Corporation legally available for the payment of
      dividends, and shall be payable in cash quarterly in arrears on March 15, June
      15, September 15 and December 15 of each year commencing with, at this
      Corporation’s option, the first or second such date occurring after the date of
      first issuance of the Series A Preferred Stock, (except that if any such date
      is
      a Saturday, Sunday or legal holiday, then such dividend will be payable on
      the
      next succeeding day that is not a Saturday, Sunday or legal holiday) to holders
      of record as they appear upon the stock transfer books of this Corporation
      at
      the close of business on the date ten (10) days prior to such dividend payment
      dates (or such earlier date set by the Board of Directors but not more than
      sixty (60) days prior to such dividend payment dates). Quarterly dividend
      periods shall commence and include the first day, and shall end on and include
      the last day, of the fiscal quarter that immediately precedes the fiscal quarter
      in which the corresponding dividend payment date occurs. If this Corporation
      has
      funds legally available to pay any dividend in cash when due, but not does
      not
      pay such cash dividend when due, then, in addition to the obligation to pay
      such
      cash dividend, the Corporation shall issue additional shares of Series A
      Preferred Stock on the date it was required to pay such cash dividend in an
      amount equal to the quotient of (i) amount of such unpaid cash dividend and
      (ii)
      the Liquidation Preference Amount, rounded up to the nearest whole share. If
      this Corporation elects to pay the first cash dividend on the second dividend
      payment date, then, in lieu of such cash dividends, it shall issue additional
      shares of Series A Preferred Stock on the first dividend payment date in an
      amount equal to the quotient of (i) amount of such unpaid dividends and (ii)
      the
      Liquidation Preference Amount, rounded up to the nearest whole share. For
      purposes hereof, the terms (i) “Transaction”
shall
      mean the consummation of the Initial Business Combination (as defined in the
      Second Amended and Restated Certificate of Incorporation of this Corporation
      as
      in effect on the date hereof) and (ii) “legal
      holiday”
shall
      mean any day on which banking institutions in the City of New York are
      authorized or required by law or executive order to close. For any quarter
      during which a share of Series A Preferred Stock was not outstanding for the
      full quarter, the dividend payable on such share will be computed on the basis
      of a 360-day year consisting of twelve (12) thirty-day months. Unless otherwise
      provided herein, dividends on each share of Series A Preferred Stock will be
      cumulative from and including the date of original issuance to and including
      the
      earliest of (i) the date of redemption of such share, (ii) the date of
      conversion of such share and (iii) the date of final distribution of assets
      upon
      liquidation, dissolution or winding up of this Corporation.

    

    No
      dividends (other than those payable solely in the Common Stock of this
      Corporation or in any right to acquire Common Stock for no consideration) shall
      be paid on any Common Stock of this Corporation with respect to any
      fiscal
      quarter of this Corporation until cash dividends in the total amount of $14.375
      per share (as adjusted for any stock dividends, combinations or splits with
      respect to
      such
      shares) on the Series A Preferred Stock shall have been paid with respect to
      that fiscal quarter and any prior quarter in which
      dividends accumulated but remain unpaid, and no dividends (other
      than those payable solely in the Common Stock of this Corporation or in any
      right to acquire Common Stock for no consideration) shall
      be
      paid on
      any
      share of Common Stock unless dividends (including normal dividends paid pursuant
      to the above provisions of this Section
      1),
      have
      been paid with respect to all outstanding shares of Series A Preferred Stock
      in
      an amount for
      each
      such share of Series A Preferred Stock (excluding any accumulated dividend
      amounts) equal to or greater than the aggregate
      amount of such dividends for all shares of Common Stock into which each such
      share of Series A Preferred Stock could then be converted. For purposes hereof,
      “dividend” shall include any pro rata distribution by this Corporation of cash,
      property, securities (including, but not limited to, rights, warrants or
      options) or other property or assets to the holder of the Common Stock, whether
      or not paid out of capital, surplus or earnings, other than a distribution
      upon
      liquidation of this Corporation in accordance with Section 2.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    Except
      pursuant to the terms of any shares of Preferred Stock the authorization and
      issuance of which was approved by the holders of Series A Preferred Stock
      pursuant to Section
      6
      (an
“Approved
      Issuance”),
      no
      dividends shall be paid on or declared and set apart for the shares of any
      other
      Preferred Stock until all accumulated and unpaid dividends from all prior years
      with respect to shares of the Series A Preferred Stock shall have been paid
      on
      or declared and set aside for the shares of the Series A Preferred
      Stock.

    

    Except
      pursuant to an Approved Issuance or as otherwise provided herein with respect
      to
      the Series A Preferred Stock, no right shall accrue to holders of shares of
      any
      other Preferred Stock by reason of the fact that dividends on said shares are
      not declared in any prior year, nor shall any undeclared or unpaid dividend
      bear
      or accrue any interest.

    

    (b) In
      the
      event this Corporation shall declare a distribution (other than any distribution
      described in Section
      2
      or
3)
      payable
      in securities of other persons, evidences of indebtedness issued by this
      Corporation or other persons, assets (excluding cash dividends) or options
      or
      rights to purchase any such securities
      or evidences of indebtedness, then, in each such case the holders of the
Series
      A
      Preferred Stock shall be entitled to a proportionate share of any such
      distribution as though the holders of the Series A Preferred Stock were the
      holders of the number of shares of Common Stock of this Corporation into
      which
      their respective shares of Series A Preferred Stock are convertible as of the
      record date fixed for the determination of the holders of Common Stock of this
      Corporation entitled to receive such distribution.

     

    2.
      Liquidation Preference.

     

    (a) In
      the
      event of any liquidation, dissolution or winding up of this Corporation, whether
      voluntary or involuntary, the holders of the Series A Preferred
      Stock shall be entitled to receive, prior and in preference to any distribution
      of any of the assets or surplus funds of this Corporation to the holders of
      the
      Common
      Stock
      by reason of their ownership thereof, the amount of $1000 per
      share
      (as adjusted for any stock dividends, combinations or splits with respect
to
      such
      shares), respectively, plus all accrued or declared but unpaid dividends on
      such
      share for
      each
      share of Series A Preferred Stock then held by them. The
      Series A Preferred Stock shall rank senior as to the receipt of the respective
      preferential amounts for each other series of Preferred Stock upon the
      occurrence of such event. If upon the occurrence of such event, the assets
      and
      funds thus distributed among the holders of the Series A Preferred Stock shall
      be insufficient to permit
      the payment to such holders of the full
      aforesaid preferential amount, then
      the
      entire assets and funds of this Corporation legally available for distribution
      shall be distributed ratably among the holders of the Series A Preferred Stock
      in proportion to the preferential amount each such holder is otherwise entitled
      to receive.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (b) After
      payment to the holders of the Series A Preferred Stock of the amounts set forth
      in Section
      2(a),
      the
      entire remaining assets and funds of this Corporation legally available for
      distribution, if any, shall be distributed among the holders of the Common
      Stock
      and the Series A Preferred Stock in proportion to the shares of Common Stock
      then held by them and the shares of Common Stock which they then have the right
      to acquire upon conversion of the shares of Series A Preferred Stock then held
      by them.

    

    (c) For
      purposes of this Section
      2,
      upon
      the written election by the holders of a majority of the outstanding shares
      of
      Series A Preferred Stock delivered to this Corporation, (i) any acquisition
      of
      this Corporation by means of merger or other form of corporate reorganization
      in
      which outstanding shares of this Corporation are exchanged for securities or
      other consideration issued, or caused to be issued, by the acquiring corporation
      or its subsidiary (other than a mere reincorporation transaction) or (ii) a
      sale
      of all or substantially all of
      the
      assets of this Corporation, shall be treated as a liquidation, dissolution
      or
winding
      up of this Corporation, and shall entitle the holders of Series A Preferred
      Stock and Common Stock to receive at the closing of such transaction in cash,
      securities or other property (valued as provided in Section
      2(d))
      amounts
      as specified in
      Sections
      2(a)
      and
2(b).
      This
      Corporation shall provide notice of any such event not less than thirty (30)
      days prior to such event.

    

    (d) Whenever
      the distribution provided for in this Section
      2
      shall be
      payable in securities or property other than cash, the value of such
      distribution shall be the fair market value of
      such
      securities or other property as determined in good faith by the Board of
      Directors and set forth in a resolution.

     

    3.
      Redemption.

     

    (a) This
      Corporation shall redeem, from any source of funds legally available therefor,
      all of the outstanding shares of the Series A Preferred Stock on the fifth
      anniversary (the “Redemption
      Date”)
      of the
      date of issuance of the first issued share of Series A Preferred Stock, (except
      that if any such date is a Saturday, Sunday or legal holiday, then such
      redemption will occur on the next succeeding day that is not a Saturday, Sunday
      or legal holiday). This Corporation shall effect such redemption on the
      Redemption Date by paying in cash in exchange for the shares of Series A
      Preferred Stock to be redeemed a sum equal to $1,000 per share of Series A
      Preferred Stock (as adjusted for any stock dividends, combinations or splits
      with respect to such shares) plus all declared or accumulated but unpaid
      dividends on such shares (the “Redemption
      Price”).
      The
      Series A Preferred Stock shall rank senior on redemption to each other series
      of
      Preferred Stock and no amount should be paid in redemption of any other such
      series unless and until the Redemption Price has been paid to the holders of
      the
      Series A Preferred Stock.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Any
      redemption effected pursuant to this Section
      3(a)
      shall be
      made on a pro-rata basis among the holders of the Series A Preferred Stock
      in
      proportion to the shares of Series A Preferred Stock then held by
      them.

    

    (b) At
      least
      fifteen (15) but no more than thirty (30) days prior to the Redemption Date
      written notice shall be mailed, first class postage prepaid, to each holder
      of
      record (at the close of business on the business day next preceding the day
      on
      which notice is given) of the Series A Preferred
      Stock to be redeemed, at the address last shown on the records of
      this
      Corporation for such holder, notifying such holder of the redemption to be
      effected,
      specifying the number of shares to be redeemed from such holder, the
      Redemption
      Date, the Redemption Price, the place at which payment may be obtained and
      calling upon such holder to surrender to this Corporation, in the manner
      and at the place designated, his certificate or certificates representing the
      shares to be redeemed (the “Redemption
      Notice”).
      Except as provided in Section
      3(c),
      on or
      after the Redemption Date, each holder of Series A Preferred Stock to be
      redeemed shall surrender to this 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
      payable to the order of the person whose name appears on such certificate or
      certificates as the owner thereof and each surrendered certificate shall be
      cancelled. In the event less than all the shares represented by any such
      certificate are redeemed, a new certificate shall be issued representing the
      unredeemed shares.

    

    (c) From
      and
      after the Redemption Date, unless there shall have been a default in payment
      of
      the Redemption Price, all rights of the holders of shares of Series A Preferred
      Stock designated for redemption in the Redemption Notice as holders of Series
      A
      Preferred Stock (except the right to receive the Redemption Price without
      interest upon surrender of their certificate or certificates) shall cease with
      respect to such shares, and such shares shall not thereafter be transferred
      on
      the books of this Corporation or be deemed to be outstanding for any purpose
      whatsoever. If the funds of this Corporation legally available for redemption
      of
      shares of Series A Preferred Stock on the Redemption Date are insufficient
      to
      redeem the total number of shares of Series A Preferred Stock to be redeemed
      on
      such date, those funds which are legally available will be used to redeem the
      maximum possible number of such shares ratably among the holders of such shares
      to be redeemed based upon their holdings of Series A Preferred Stock. The shares
      of Series A Preferred Stock not redeemed shall remain outstanding and entitled
      to all the rights and preferences provided herein. At any time thereafter when
      additional funds of this Corporation are legally available for the redemption
      of
      shares of Series A Preferred Stock such funds will immediately be used to redeem
      the balance of the shares which this Corporation has become obliged to redeem
      on
      the Redemption Date, but which it has not redeemed.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (d) On
      or
      prior to the Redemption Date, this Corporation shall pay the Redemption Price
      of
      all shares of Series A Preferred Stock designated for redemption in the
      Redemption Notice and not yet redeemed to the holders of the shares designated
      for redemption and not yet redeemed, upon receipt by this Corporation from
      such
      holder of its share certificate pursuant to Section
      3(b)
      above.
      From and after
      the
      Redemption Date the shares so called for redemption shall be
      redeemed
      and
      shall be deemed to be no longer outstanding, and the holders thereof shall
      cease
      to
      be stockholders with respect to such shares and shall have no rights
      with
      respect
      thereto except the right to receive from this Corporation payment of the
      Redemption Price of the shares, without interest, upon surrender of their
      certificates therefor. 

     

    4.
      Voting
      Rights; Directors.

     

    (a) Each
      holder of shares of the Series A Preferred Stock shall be entitled to the number
      of votes equal to the number of shares of Common Stock into which such shares
      of
      Series A Preferred Stock could be converted and shall have voting rights and
      powers equal to the voting rights and powers of the Common Stock (except as
      otherwise expressly provided herein or as required by law, voting together
      with
      the Common Stock as a single class) and shall be entitled to notice of any
      stockholders’ meeting in accordance with the Bylaws of this Corporation.
      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 Series A Preferred Stock held by each holder could be converted as
      of
      the record date for such vote) shall be rounded to the nearest whole number
      (with one-half being rounded upward). Each holder
      of
      Common Stock shall be entitled to one (1) vote for each share of Common Stock
      held.

    

    (b) So
      long
      as Occidental holds not less than eighty percent (80%) of the Series A Preferred
      Stock issued at consummation of the Transaction, holders of a majority of the
      outstanding shares of Series A Preferred Stock shall be entitled, but not
      required, to elect one member of the Board of Directors at each meeting or
      pursuant to each consent of this Corporation’s stockholders for the election of
      directors (the “Series
      A Director”).
      The
      Series A Director shall not be assigned to any class of the Board of Directors,
      and shall serve a term lasting until the earliest of (i) such Series A
      Director’s successor is elected and qualified, (ii) the Series A Director’s
      earlier resignation, removal from office, death or incapacity and (iii) such
      time as Occidental holds less than eighty percent (80%) of the Series A
      Preferred Stock issued at consummation of the Transaction. Any Series A Director
      may be removed during the term of office of such director, either with or
      without cause, by, and only by, the affirmative vote of the holders of a
      majority of the outstanding shares of Series A Preferred Stock, pursuant to
      a
      written consent, and any vacancy thereby created may be filled by holders of
      a
      majority of the outstanding shares of Series A Preferred Stock pursuant to
      written consent.

    

    (c) So
      long
      as any shares of the Series A Preferred Stock remain outstanding, in the event
      of a failure of this Corporation to pay cash dividends on the Series
      A
      Preferred Stock on two successive dividend payment dates, if such payment is
      required pursuant to Section
      1,
      or to
      redeem shares of the Series A Preferred Stock as required pursuant
      to
Section
      3
      (the
“Events
      of Default”),
      then
      the holders of the Series
      A
      Preferred Stock shall (immediately upon the giving of written notice
      to this
      Corporation by the holders of a majority of the outstanding shares of Series
      A
      Preferred Stock), voting together as a single class, be entitled to elect two
      directors in addition to the Series A Director described above.
       If,
      after the
      election of the two additional directors pursuant to Section
      4(d),
      the
      Events of Default
      are cured, then the holders of the Series A Preferred Stock shall be
      divested
      of the special voting rights specified in this section and the directors elected
      pursuant to such Section
      4(d)
      shall be
      removed from office. However, the special voting rights of this section shall
      again accrue to the holders of the shares of the
      Series A Preferred Stock in case of any later occurrence of an Event of
Default.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (d) Whenever
      under the provisions of Section
      4(c),
      the
      right shall have accrued to the holders of the Series A Preferred Stock to
      vote
      as a single class to elect two directors, the Board of Directors shall, within
      ten (10) days after delivery to this Corporation at its principal office of
      a
      request to such effect by the holders of a majority of the outstanding shares
      of
      the Series A Preferred Stock, call a special meeting of the holders of the
      Series A Preferred Stock for the election of such directors, to be held upon
      not
      less than ten (10) nor more than twenty (20) days’ notice to such holders. If
      such notice of meeting is not given within the ten (10) days required above,
      the
      holders of Series A Preferred Stock requesting such meeting may also call such
      meeting and for such purposes shall have access to the stock books and records
      of this Corporation. At any meeting so called or at any other meeting held
      while
      the holders of shares of Series A Preferred Stock shall have the voting power
      provided in Section 4(c),
      the
      holders of a majority of the outstanding shares of Series A Preferred Stock
      present in person or by proxy or voting by written consent, shall be sufficient
      to constitute a quorum for the election of such directors as herein provided.
      In
      the case of any vacancy in the office of a director occurring among the
      directors elected by the holders of Series A Preferred Stock pursuant to
Section
      4(c),
      the
      remaining director so elected by the holders of Series A Preferred Stock may
      elect a successor to hold office for the unexpired term of the director whose
      place shall be vacant, provided that if there are no remaining directors
      so elected by the
      holders of Series A Preferred Stock,
      the
      vacancies may be filled by the affirmative vote
      of the
      holders of a majority of the outstanding shares of Series A Preferred Stock,
      voting together as a single class, given either at a special meeting of such
      stockholders duly called for that purpose or pursuant to a written consent
      of
      stockholders. Any directors who shall have been elected by the holders of Series
      A Preferred Stock or by any directors so elected as provided in the next
      preceding sentence hereof may be removed during the aforesaid term of office,
      with or without cause, by, and only by, the affirmative vote of the holders
      of a
      majority of the outstanding shares of the Series A Preferred Stock, given either
      at a special meeting of such stockholders duly called for that purpose or
      pursuant to a written consent of such stockholders, and any vacancy thereby
      created may be filled by the holders of Series A Preferred Stock represented
      at
      such meeting or pursuant to such written consent.

     

    5.
      Conversion.

     

    The
      holders of the Series A Preferred Stock shall have conversion rights as follows
      (the “Conversion
      Rights”):

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (a) Right
      to Convert. Each
      share of Series A Preferred Stock shall be convertible, at the option of the
      holder thereof, at any time after the date of issuance of such share and on
      or
      prior to the fifth day prior to the Redemption Date, if any, as may have been
      fixed in a Redemption Notice with respect to such share of Series A Preferred
      Stock, at the office of this Corporation or any transfer agent for such stock,
      into such number of fully paid and nonassessable shares of Common Stock as
      is
      determined by dividing $1,000 by the Series A Conversion Price applicable to
      such share in effect on the date the certificate is surrendered for conversion,
      rounded to the nearest $0.01 (rounding $0.005 down). The price at which shares
      of Common Stock shall be deliverable upon conversion of shares of the Series
      A
      Preferred Stock (the “Series
      A Conversion Price”)
      shall
      initially be the Fixed Amount per share of Common Stock. Such initial Series
      A
      Conversion Price shall be adjusted as provided
      in this Agreement. The “Fixed
      Amount”
shall
      equal (A) in the case of Series A Preferred Stock issued on the closing date
      of
      the Transaction, the lower of (i) the closing price per share of the Common
      Stock on the day that immediately precedes the closing date of the Transaction
      (except
      that if such day is a Saturday, Sunday or legal holiday, then the next preceding
      day that is not a Saturday, Sunday or legal holiday)
      and
      (ii) the average of the closing price for each of the thirty (30) trading days
      immediately preceding the date on which this Corporation announces the
      Transaction or (B) in the case of Series A Preferred Stock issued on a date
      other than the closing date of the Transaction, the closing price per share
      of
      the Common Stock on the day that immediately precedes the date of issuance
      (except
      that if such day is a Saturday, Sunday or legal holiday, then the next preceding
      day that is not a Saturday, Sunday or legal holiday).
      For
      purposes of this Section
      5,
      the
“closing price” for each day shall be the last reported sales price or, in case
      no such reported sales take place on such day, the average of the closing bid
      and asked prices for such day, in each case as reported by the American Stock
      Exchange, or if such last sale price is not so reported by the American Stock
      Exchange, or if no such sale takes place on such day, the mean between the
      closing bid and asked prices for the Common Stock as reported by the American
      Stock Exchange. If the shares of Common Stock are not reported by the American
      Stock Exchange, the “closing
      price”
for
      each day shall be the last reported sales price or, in case no such reported
      sales take place on such day, the average of the closing bid and asked prices
      for such day, in each case as reported by the national exchange on which the
      Common Stock is traded. For the purpose hereof, “trading
      day”
shall
      mean a day on which the specified securities exchange shall be open for business
      or, if the shares of Common Stock shall not be listed on such exchange for
      such
      period, a day with respect to which quotations of the character referred to
      in
      the next preceding sentence shall be reported. 

    

    (b) Forced
      Conversion. Each
      share of Series A Preferred Stock shall be convertible at the option of this
      Corporation into shares of Common Stock at the then-effective Series A
      Conversion Price at any time after the closing price for the Common Stock on
      the
      American Stock Exchange for any thirty (30) consecutive trading days has
      exceeded two hundred percent (200%) of the then-current Series A Conversion
      Price and this Corporation has provided notice to the holders of the Series
      A
      Preferred Stock setting forth the date for such conversion, which date is not
      less than forty-five (45) days after the last of such thirty (30) consecutive
      trading days. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (c)
      Mechanics
      of Conversion.

     

    (i)
      Before
      any holder of shares of Series A Preferred Stock shall be entitled to convert
      the same into shares of Common Stock, it shall surrender the certificate or
      certificates therefor, duly endorsed, at the office of this Corporation or
      of
      any transfer agent for such stock, and shall give written notice to this
      Corporation
      at
      such office that it elects to convert the same, the number of shares it elects
      to convert and shall state therein the name
      or
      names in which it wishes the certificate or certificates for shares of
Common
      Stock to be issued. This Corporation shall, as soon as practicable thereafter,
      issue
      and
      deliver at such office to such holder of Series A Preferred Stock, a certificate
      or certificates for the number of shares of Common Stock to which it shall
      be
      entitled as aforesaid. Such conversion shall be deemed to have been made
      immediately prior to the close of business on the date of surrender of the
      shares of Series A Preferred Stock to be converted, and the person or
persons
      entitled to receive the shares of Common Stock issuable upon such conversion
      shall be
      treated for all purposes as the record holder or holders of such shares of
      Common Stock on such date. In the event less than all the shares represented
      by
      any surrendered certificate are converted, a new certificate shall be issued
      representing the unconverted shares.

     

    (ii)
      The
      holder of a share of Series A Preferred Stock at the close of business on a
      record date shall be entitled to receive the dividend payable thereon on the
      corresponding dividend payment date, even if the share is converted in the
      intervening period or this Corporation defaults in the payment of such dividend
      due on such date; provided
      that,
      unless such share has been called for redemption in such intervening period,
      a
      share of Series A Preferred Stock surrendered in such intervening period must
      be
      accompanied by payment of an amount equal to the dividend payable on such share
      on such dividend payment date.

     

    (iii)
      If
      the conversion is in connection with an underwritten offering of securities
      pursuant to the Securities Act of 1933, as amended, the conversion may, at
      the
      option of any holder tendering shares of Series A Preferred Stock for
      conversion, be conditioned upon the closing with the underwriters of the sale
      of
      securities pursuant to such offering, in which event the person(s) entitled
      to
      receive the Common Stock upon conversion of the Series A Preferred Stock shall
      not be deemed to have converted such Series A Preferred Stock until immediately
      prior to the closing of such sale of securities.

     

    (d) Adjustments
      to Series A Conversion Price for Certain Diluting Issues.

     

    (i) Special
      Definitions.
       For
      purposes of this Section
      5(d),
      the
      following definitions apply:

     

    (1) “Options”
      shall
      mean rights, options, or warrants to sub-scribe for, purchase or otherwise
      acquire Additional Shares of Common Stock, Series A Preferred Stock, or
      Convertible Securities (defined below).

    

    (2) “Original
      Issue Date” shall
      mean the date on which a share of Series A Preferred Stock was first
      issued.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    (3) “Convertible
      Securities” shall
      mean any evidences of indebtedness, shares (other than Common Stock and Series
      A
      Preferred Stock) or other securities convertible into or exchangeable for
      Additional Shares of Common Stock.

    

    (4) “Additional
      Shares of Common Stock” shall
      mean all shares of Common Stock issued (or, pursuant to Section
      5(d)(iii),
      deemed
      to be issued) by this Corporation after the Original Issue Date, other than
      shares of Common Stock issued or issuable:

    (A) upon
      conversion of shares of Series A Preferred Stock;

    (B) to
      officers, directors or employees of, or consultants to, this Corporation
      pursuant to stock option or stock purchase plans or agreements on terms approved
      by the Board of Directors, but not exceeding 1,500,000 shares of Common Stock
      (net of any repurchases of such shares or cancellations or expirations of
      options), subject to adjustment for all subdivisions and
      combinations.

    (C) as
      a
      dividend or distribution on Series A Preferred Stock;

    (D) upon
      exercise or conversion of options or warrants outstanding as of the date of
      issuance of the first issued share of Series A Preferred Stock, respectively;
      or

    (E) for
      which
      adjustment of the Series A Conversion Price is made pursuant to Section
      5(e).

     

    (ii) No
      Adjustment of Conversion Price. Any
      provision herein to the contrary notwithstanding, (A) no adjustment in the
      Series A Conversion Price shall be made in respect of the issuance of Additional
      Shares of Common Stock unless the consideration per share (determined pursuant
      to Section 5(d)(v))
      for an
      Additional Share of Common Stock issued or deemed
      to
      be issued by this Corporation is less than the Series
      A
Conversion
      Price in
      effect
      on the date of, and immediately prior to, such issue and (B) no adjustment
      in
      the Series A Conversion Price shall be made unless such adjustment would require
      an increase or decrease of at least one percent (1%) of such price; provided,
      however,
      that
      any adjustments which by reason of this Section
      5(d)(ii)(B)
      are not
      required to be made shall be carried forward and taken into account in any
      subsequent adjustment.

    

    (iii) Deemed
      Issue of Additional Shares of Common Stock. In
      the
      event this Corporation at any time or from time to time after the Original
      Issue
      Date shall issue any Options or Convertible Securities or shall fix a record
      date for
      the
      determination of holders of any class of securities then entitled to
      receive any
      such
      Options or Convertible Securities, then the maximum number of shares
      (as set
      forth in the instrument relating thereto without regard to any provisions
contained
      therein designed to protect against dilution) of Common Stock
      issuable
      upon the
      exercise of such Options or, in the case of Convertible Securities and Options
      for Convertible Securities or for Series A Preferred Stock, the exercise,
      conversion or exchange of such Convertible Securities or Series A Preferred
      Stock, shall be deemed to be Additional Shares of Common Stock issued as of
      the
      time of such issue or, in case such a record date shall have been fixed, as
      of
the
      close
      of business on such record date; provided
      that in
      any such case in which
      Additional Shares of Common Stock are deemed to be issued:

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    (1) no
      further adjustments in the Series A Conversion Price shall be made upon the
      subsequent issue of such Convertible Securities, or Series A Preferred Stock
      or
      shares of Common Stock upon the exercise of such
      Options or conversion or exchange of such Convertible Securities or
      Series
      A
      Preferred Stock;

     

    (2) if
      such
      Options or Convertible Securities by their terms pro-vide,
      with the passage of time or otherwise, for any increase or decrease in the
      consideration payable to this Corporation, or decrease or increase in the number
      of shares of Common Stock issuable, upon the exercise, conversion or exchange
      thereof, the Series A Conversion Price computed upon the original issue thereof
      (or upon the occurrence of a record date with respect thereto), and any
      subsequent adjustments based thereon, shall, upon any such increase or decrease
      becoming effective, be recomputed to reflect such increase or decrease insofar
      as it affects such Options or the rights of conversion or exchange under such
      Convertible
      Securities (provided, however, that no such adjustment of the Series
      A
      Conversion Price shall affect Common Stock previously issued upon conversion
      of
      Series A Preferred Stock);

    

    (3) upon
      the
      expiration of any such Options or any rights of conversion or exchange under
      such Convertible Securities which shall not have been exercised, the Series
      A
      Conversion Price computed upon the original issue thereof (or upon the
      occurrence of a record date with respect thereto), and any subsequent
      adjustments based thereon, shall, upon such expiration, be recomputed as
      if:

    

    (A) in
      the
      case of Convertible Securities or Options for Common Stock the only Additional
      Shares of Common Stock issued were the shares of Common Stock, if any, actually
      issued upon the exercise of such Options or the conversion or exchange of such
      Convertible Securities and the consideration received therefor was the
      consideration actually received by this Corporation for the issue of all such
      Options, whether or not exercised, plus the consideration actually received
      by
      this Corporation upon such exercise, or for the issue of all such Convertible
      Securities which were actually converted or exchanged, plus the additional
      consideration, if any, actually received by this Corporation upon such
      conversion or exchange, and

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (B) in
      the
      case of Options for Convertible Securities or Series A Preferred Stock only
      the
      Convertible Securities or Series A Preferred Stock, if any, actually issued
      upon
      the exercise thereof were issued at the time of issue of such Options, and
      the
      consideration received by this Corporation for
      the
      Additional Shares of Common Stock deemed to have been then issued
      was
      the
      consideration actually received by this Corporation for the issue of all such
      Options,
      whether or not exercised, plus the consideration deemed to have been received
      by
      this Corporation (determined pursuant to Section
      5(d))
      upon
      the issue
      of the
      Convertible Securities or Series A Preferred Stock with respect to which such
      Options were actually exercised;

    

    (4) no
      readjustment pursuant to Section
      5(d)(iii)(2)
      or
(3)
      above
      shall have the effect of increasing the Series A Conversion Price to an amount
      which exceeds the lower of (a) the Series A Conversion Price on the original
      adjustment date, or (b) the Series A Conversion Price that would have resulted
      from any issuance of Additional Shares of Common Stock between the original
      adjustment date and such readjustment date;

    

    (5)
      in
      the case of any Options that expire by their terms not more than thirty (30)
      days after the date of issue thereof, no adjustment of the Series A Conversion
      Price shall be made until the expiration or exercise of all such Options,
      whereupon such adjustment shall be made in the same manner provided in
Section
      5(d)(iii)(3).

     

    (iv) Adjustment
      of Conversion Price Upon Issuance of Additional Shares of Common
      Stock.
      In the
      event this Corporation, at any time after the Original Issue Date shall issue
      Additional Shares of Common Stock (including Additional Shares of Common Stock
      deemed to be issued pursuant to Section 5(d)(iii))
      without
      consideration or for a consideration per share less than the Series A Conversion
      Price in effect on the date of and immediately prior to such issue, then and
      in
      such event, the Series A Conversion Price shall, at the option and upon notice
      from holders of a majority of the outstanding shares of Series A Preferred
      Stock, be reduced to the lowest price at which any of the Additional Shares
      of
      Common Stock are issued or deemed issued. 

    

    (v) Determination
      of Consideration.
       For
      purposes of
      this
Section 
      5(d),
      the
      consideration received by this Corporation for the issue of any Additional
      Shares of Common Stock shall be computed as follows:

    

    (1) Cash
      and Property. Such consideration
      shall:

    

    (A) insofar
      as it consists of cash, be computed at the aggregate amount of cash received
      by
      this Corporation excluding amounts paid or payable for accrued interest or
      accrued dividends;

     

    (B) insofar
      as it consists of property other than cash, be computed at the fair value
      thereof at the time of such issue, as determined in good faith by the Board
      of
      Directors and set forth in a resolution; and

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (C) in
      the
      event Additional Shares of Common Stock are issued together
      with other shares or securities or other assets of this Corporation for
      consideration which covers both, be the proportion of such consideration so
      received,
      computed
      as provided in Section
      5(d)(v)(1)(A)
      and
(B),
      as
      determined in good faith by the Board of Directors and set forth in a
      resolution.

     

    (2) Options
      and Convertible Securities. The
      consideration per share
      received
      by this Corporation for Additional Shares of Common Stock deemed to have been
      issued pursuant to Section
      5(d)(iii),
      relating to Options and Convertible Securities shall be determined by
      dividing:

     

    (A) the
      total
      amount, if any, received or receivable by this Corporation
      as consideration for the issue of such Options or Convertible
      Securities,
      plus the
      minimum aggregate amount of additional consideration (as set forth in the
      instruments relating thereto, without regard to any provision contained therein
      designed to protect against dilution) payable to this Corporation upon the
      exercise of such Options or the conversion or exchange of such Convertible
      Securities, or in the case of Options for Convertible Securities or Series
      A
Preferred
      Stock, the exercise of such Options for Convertible Securities or
      Series
      A
      Preferred Stock and the conversion or exchange of such Convertible Securities
      or
      Series A Preferred Stock by

     

    (B) the
      maximum number of shares of Common Stock (as set forth in the instruments
      relating thereto, without regard to any provision contained
      therein designed to protect against the dilution) issuable upon the
      exercise
      of such
      Options or conversion or exchange of such Convertible Securities.

    

    (e) Adjustments
      to the Conversion Price for Stock Dividends and for Combinations
      or Subdivisions of Common Stock. In
      the
      event that this Corporation at any time or from time to time after the Original
      Issue Date shall declare or pay, without consideration, any dividend on the
      Common Stock payable in Common Stock or in any right to acquire Common Stock
      for
      no consideration, or shall effect
      a
      subdivision of the outstanding shares of Common Stock into a greater number
      of
      shares of Common Stock (by stock split, reclassification or otherwise
      than
      by
      payment of a dividend in Common Stock or in any right to acquire Common Stock),
      or in the event the outstanding shares of Common Stock shall be combined or
      consolidated, by reclassification or otherwise, into a lesser number of shares
      of Common Stock, then the Series A Conversion Price in effect immediately prior
      to such event shall, concurrently with the effectiveness
      of such event, be proportionately decreased or increased, as appropriate. In
      the
      event that this Corporation shall declare or pay, without
      consideration,
      any
      dividend on the Common Stock payable in any right to acquire Common Stock for
      no
      consideration, then this Corporation shall be deemed to have made a dividend
      payable in Common Stock in an amount of shares equal to the maximum number
      of
      shares issuable upon exercise of such rights to acquire Common
      Stock.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    (f) Adjustments
      for Reclassification and Reorganization.
       If
      the
      Common Stock issuable upon conversion of the Series A Preferred Stock shall
      be
      changed into the same or a different number of shares of any other class or
      classes of stock, whether by capital reorganization, reclassification or
      otherwise (other than a subdivision or combination of shares provided for in
      Section
      5(e)
      or a
      merger or other reorganization referred to in Section
      2(c)),
      the
      Series
      A
Conversion
      Price then in effect shall, concurrently with the effectiveness of such
      reorganization or reclassification, be proportionately adjusted
      so that
      the Series A Preferred Stock shall be convertible into, in lieu of the number
      of
      shares of Common Stock which the holders would otherwise have been
      entitled to receive, a number of shares of such other class or classes of
      stock
      equivalent to the number of shares of Common Stock that would have been subject
      to receipt by the holders upon conversion of the Series A Preferred Stock
      immediately before that change.

    

    (g) Reorganizations,
      Mergers, Consolidations or Sales of Assets. 
      If at
      any time or from time to time after the Original Issue Date, there is a capital
      reorganization of the Common Stock (other than recapitalization, subdivision,
      combination, reclassification, exchange or substitution of shares provided
      for
      elsewhere in this Section 5),
      and the
      holders of the Series A Preferred Stock have not made an election under
Section 2(c), as
      a part
      of such capital
      reorganization provision shall be made so that the holders of the Series A
      Preferred Stock shall thereafter be entitled to receive upon conversion of
      the
      Series A
      Preferred Stock
      the
      number of shares of stock or other securities or property of this Corporation
      to
      which a holder of the number of shares of Common Stock deliverable upon
      conversion would have been entitled on such capital reorganization, subject
      to
      adjustment in respect of such stock or securities by the terms thereof.
      In any such case, appropriate adjustment shall be made in the
      application
      of the
      provisions of this Section
      5
      with
      respect to the rights of the holders of Series A Preferred
      Stock
      after
      the capital reorganization to the end that the provisions of this Section 5
      (including adjustment of the Series A Conversion
      Price then in effect and the number of shares issuable upon conversion of the
      Series
      A
      Preferred
      Stock)
      shall
      be applicable after that event and be as nearly equivalent as practicable.
      The
      entity formed by a merger or other reorganization referred to in Section
      2(c)
      shall
      make provision in its certificate or articles of incorporation or other
      constituent documents to establish the rights set forth herein. Such certificate
      or articles of incorporation or other constituent documents shall provide for
      the adjustments in the Series A Conversion Price in a manner as nearly
      equivalent as practicable to the adjustments provided for herein.

    

    (h) No
      Impairment. This
      Corporation will not, by amendment of its Certificate of Incorporation or
      through any reorganization, transfer of assets, consolidation, merger,
      dissolution, issue or sale of securities or any other voluntary action, avoid
      or
      seek to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by this Corporation, but will at all times in good faith
      assist in the carrying out of all the provisions of this Section
      5
      and in
      the taking
      of
      all such action as may be necessary or appropriate in order to protect
      the
      Conversion Rights of the holders of the Series A Preferred Stock against
      impairment.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    (i) Certificates
      as to Adjustments. Upon
      the
      occurrence of each adjustment or readjustment of the Series A Conversion Price
      pursuant to this Section
      5
      (or any
      event that may result in an adjustment upon the election of the holders of
      Series A Preferred Stock pursuant to Section
      5(d)(iv)),
      this
      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 Series A Preferred Stock a certificate executed by this Corporation’s
      President or Chief Financial Officer setting forth such adjustment or
      readjustment (or the adjustment that would result upon such election) and
      showing in detail the facts upon which such adjustment or readjustment is based.
      This Corporation shall furnish an additional notice to each holder of Series
      A
      Preferred Stock upon any adjustment of the Series A Conversion Price resulting
      from an election of the holders of Series A Preferred Stock pursuant to
Section
      5(d)(iv).
      This
      Corporation shall, upon the written request at any time of any holder of Series
      A Preferred Stock, furnish or cause to be furnished to such holder a like
      certificate setting forth (i) such adjustments and readjustments, (ii) the
      Series A Conversion Price at the time in effect, and (iii) the number of shares
      of Common Stock and the amount, if any, of other property which
      at
      the time would be received upon the conversion of the Series A Preferred
      Stock.

    

    (j) Notices
      of Record Date.
      In the
      event that this Corporation shall propose at any time: (i) to declare any
      dividend or distribution upon its Common Stock, whether in cash, property,
      stock
      or other securities, whether or not a regular cash dividend and whether or
      not
      out of earnings or earned surplus; (ii) to offer for subscription pro rata
      to
      the holders of any class or series of its stock any additional shares of stock
      of any class or series or other rights; (iii) to effect any reclassification
      or
      recapitalization of its Common Stock outstanding involving a change in the
      Common Stock; or (iv) to merge or consolidate with or into any other
      corporation, or sell, lease or convey all or substantially all of its assets,
      or
      to liquidate, dissolve or wind up; then, in connection with each such event,
      this Corporation shall send to the holders of Series A Preferred Stock:

    

    (1) at
      least
      ten (10) days’ prior written notice of the date on which a record shall be taken
      for such dividend, distribution or subscription rights (and specifying the
      date
      on which the holders of Common Stock shall be entitled thereto );
      and

    

    (2) in
      the
      case of the matters referred to in clause (iii) and (iv) above, at least ten
      (10) days’ prior written notice of the date when the same shall take place (and
      specifying the date on which the holders of Common Stock shall be entitled
      to
      exchange their Common Stock for securities or other property deliverable
      upon
      the
      occurrence of such event).

    

    (k) Issue
      Taxes.
       This
      Corporation shall pay any and all issue and other taxes that may be payable
      in
      respect of any issue or delivery of shares of Common Stock on conversion of
      Series A Preferred Stock pursuant hereto; provided,
      however,
      that
      this Corporation shall not be obligated to pay any transfer taxes resulting
      from
      any transfer requested by any holder in connection with any such
      conversion.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    (l) Reservation
      of Stock Issuable Upon Conversion. 
      This
      Corporation shall at
      all
      times reserve and keep available out of its authorized but unissued shares
      of
      Common
      Stock free from preemptive rights, solely for the purpose of effecting the
      conversion of the shares of the Series A Preferred Stock, such number of its
      shares of Common Stock as shall from time to time be sufficient to effect the
      conversion of all outstanding
      shares of the Series A Preferred Stock and, if at any time the number
      of
      authorized but unissued shares of Common Stock shall not be sufficient to effect
      the conversion of all then outstanding shares of the Series A Preferred Stock,
      this Corporation will take such corporate action as may be necessary,
      to
      increase its authorized but unissued shares of Common Stock to such number
      of
      shares as shall be sufficient for such purpose, including, without limitation,
      engaging in best efforts to obtain the requisite stockholder approval of any
      necessary amendment to this Certificate.

    

    (m) Fractional
      Shares. 
      No
      fractional share shall be issued upon the conversion of any share or shares
      of
      Series A Preferred Stock. All shares of Common Stock (including fractions
      thereof) issuable upon conversion of more than one share of Series A Preferred
      Stock by a holder thereof shall be aggregated for purposes of determining
      whether the conversion would result in the issuance of any fractional share.
      If,
      after the aforementioned aggregation, the conversion
      would result in the issuance of a fraction of a share of Common
      Stock,
      this
      Corporation shall, in lieu of issuing any fractional share, pay the holder
      otherwise entitled to such fraction a sum in cash equal to the fair market
      value
      of such
      fraction on the date of conversion (as determined in good faith by the Board
      of
      Directors).

    

    (n) Notices. 
      Any
      notice required by the provisions of this Certificate to
      be
given
      to
      the holders of shares of Series A Preferred Stock shall be deemed given if
      deposited in the United States mail, postage prepaid, or if sent by facsimile
      or
      delivered personally by hand or nationally recognized courier and addressed
      to
      each holder of record at such holder’s address or facsimile number appearing in
      the records of this Corporation.

    

    6. Restrictions
      and Limitations.

     

    (a) So
      long
      as any shares of Series A Preferred Stock remain outstanding, this Corporation
      shall not, without the approval of the holders of a majority of the outstanding
      shares of the Series A Preferred Stock:

     

    (i) Redeem,
      purchase or otherwise acquire for value (or pay into or set aside for a sinking
      fund for such purpose) any share or shares of Series A Preferred Stock held
      by
      such holder otherwise than by redemption in accordance with Section
      3
      or by
      conversion in accordance with Section
      5;

     

    (ii) Redeem,
      purchase or otherwise acquire (or pay into or set aside for a sinking fund
      for
      such purpose) any of the Common Stock, other than pursuant to the exercise
      by
      holders of Common Stock of any conversion rights pursuant to Article SIXTH
      of
      the Certificate of Incorporation; 

     

    (iii) Authorize
      or issue, or obligate itself to issue, any other equity security (including
      any
      security convertible into or exercisable for any equity security) senior to
      or
      on a parity with the Series A Preferred Stock as to dividend rights or
      redemption rights or liquidation preferences;

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (iv) Permit
      any wholly owned subsidiary to issue or sell, or obligate itself to issue or
      sell, except to this Corporation or any wholly owned subsidiary, any stock
      of
      such subsidiary; or

     

    (v)
       Increase
      or decrease (other than by redemption or conversion) the total number of
      authorized shares of Preferred Stock or Series A Preferred Stock.

    

    (b) This
      Corporation shall not amend its Certificate of Incorporation or By-laws without
      the approval, by vote or written consent, by holders of a majority of the
      outstanding shares of Series A Preferred Stock if such amendment would change
      any of the rights, preferences or privileges provided for herein for the benefit
      of any shares of the Series A Preferred Stock. Without limiting the generality
      of the preceding sentence, this Corporation will not amend its Certificate
      of
      Incorporation or Bylaws without the approval of holders of a majority of the
      outstanding shares Series A Preferred Stock if such amendment
      would:

    

    (i) Reduce
      the dividend rates on the Series A Preferred Stock provided for herein, make
      such dividends non-cumulative, or defer the date from which dividends will
      accrue, or cancel accrued and unpaid dividends, or change the relative seniority
      rights of the holders of the Series A Preferred Stock as to the payment of
      dividends in relation to the holders of any other capital stock of this
      Corporation;

     

    (ii) Reduce
      the amount payable to the holders of the Series A Preferred Stock upon the
      voluntary or involuntary liquidation, dissolution, or winding up of this
      Corporation, or change the relative seniority of the liquidation preferences
      of
      the holders of the Series A Preferred Stock to the rights upon liquidation
      of
      the holders of any other capital stock of this Corporation;

     

    (iii) Reduce
      the Series A Redemption Price;

     

    (iv) Delay
      the
      Redemption Date;

     

    (v) Make
      the
      Series A Preferred Stock redeemable at the option of this
      Corporation;

     

    (vi) Cancel
      or
      modify the Conversion Rights of the Series A Preferred Stock provided for in
      Section
      5;
      or

     

    (vii) Change
      the rights of the holders of the Series A Preferred Stock to appoint directors
      of this Corporation provided for in Section
      4.

     

    7.
      No Reissuance of Series A Preferred Stock.

     

    No
      share
      or shares of Series A Preferred Stock acquired by this Corporation by reason
      of
      redemption, purchase, conversion or otherwise shall be reissued, and all such
      shares shall be cancelled, retired and eliminated from the shares which this
      Corporation shall be authorized to issue.

     

    
      
         

      

      
        17

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