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                                                                     Exhibit 4.1

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

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

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

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

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

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

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

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

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

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

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

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

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

         "Breach Event" means either:

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

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

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

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

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

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

         3. Rights on Liquidation.

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

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

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

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

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

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

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

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

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

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

         5. Conversion.

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

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

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

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

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

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

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

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

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

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

              (c) Mechanics of Conversion.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                   (i) cash,

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

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

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

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

              (h) Blocking Provisions.

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

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

                                       11
<PAGE>

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

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

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

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

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

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

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

                                       12
<PAGE>

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

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

         7. Merger, Consolidation or Disposition of Assets.

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

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

                                       13
<PAGE>

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

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

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

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

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

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

         10. Participation Rights.

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

                                       14
<PAGE>

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

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

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

                                       15
<PAGE>

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

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

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

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

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

                                       16
<PAGE>

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

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

         13. Redemption.

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

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

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

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

                                       17
<PAGE>

         redeemed; and

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

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

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

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

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

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

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

                                       18
<PAGE>

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

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

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

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

         14. Technology-Triggered Redemption.

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

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

                                       19
<PAGE>

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

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

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

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

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

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

                                       20
<PAGE>

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

                            [signature page follows]

                                       21
<PAGE>

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

NEXMED, INC.

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

                                       22
<PAGE>

                                    EXHIBIT A

                            FORM OF CONVERSION NOTICE

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

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

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

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

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

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

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

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

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

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

Conversion Information:[NAME OF HOLDER]

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

Address of Holder:

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

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

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

                                       23
<PAGE>

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

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

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

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

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

                                       24<PAGE>

                                                                     Exhibit 4.2

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

                                                                 Warrant No. W-_

                          COMMON STOCK PURCHASE WARRANT

          To Purchase _________ Shares of Common Stock of NEXMED, INC.

         THIS IS TO CERTIFY THAT __________________, or registered assigns (the
"Holder"), is entitled, during the Exercise Period (as hereinafter defined), to
purchase from NexMed, Inc. a Nevada corporation (the "Company"), the Warrant
Stock (as hereinafter defined and subject to adjustment as provided herein), in
whole or in part, at a purchase price of $1.4322 per share, all on and subject
to the terms and conditions hereinafter set forth.

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

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

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

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

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

<PAGE>

         "Certificate of Designation" means the Certificate of Designation of
the Series B 8% Cumulative Convertible Preferred Stock of the Company.

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

         "Closing Date" means April 21, 2003.

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

         "Common Stock" means (except where the context otherwise indicates) the
Common Stock, $0.001 par value per share, of the Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may thereafter
be changed or converted, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets on liquidation over any other class of stock
of the Company and which is not subject to redemption and (ii) shares of common
stock of any successor or acquiring corporation received by or distributed to
the holders of Common Stock of the Company in the circumstances contemplated by
Section 4.4.

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

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

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

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

         or

         (2) if there shall then be a public market for the Common Stock, the
higher of (x) the book value per share of Common Stock at such date, and (y) the
average of the daily market prices for the 20 consecutive trading days
immediately before such date. The daily market price for each such trading day
shall be (i) the closing bid price on such day on the principal stock exchange
(including Nasdaq) on which such Common Stock is then listed or admitted to
trading, or quoted, as applicable, (ii) if no sale takes place on such day on
any such exchange, the last reported closing bid price on such day as officially
quoted on any such exchange (including Nasdaq), (iii) if the Common Stock is not
then listed or admitted to trading on any stock exchange, the last reported
closing bid price on such day in the over-the-counter market, as

                                       2
<PAGE>

furnished by the National Association of Securities Dealers Automatic Quotation
System or the National Quotation Bureau, Inc., (iv) if neither such corporation
at the time is engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business, or (v) if there is no such firm,
as furnished by any member of the National Association of Securities Dealers,
Inc. (the "NASD") selected mutually by the holder of this Warrant and the
Company or, if they cannot agree upon such selection, as selected by two such
members of the NASD, one of which shall be selected by holder of this Warrant
and one of which shall be selected by the Company.

         "Current Warrant Price" means, in respect of a share of Common Stock at
any date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant on such date. Until the Current Warrant Price
is adjusted pursuant to the terms herein, the initial Current Warrant Price
shall be $1.4322 per share of Common Stock.

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

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

         "Expiration Date" means April 20, 2007.

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

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

         "Other Property" has the meaning set forth in Section 4.4.

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

         "Preferred Stock Purchase Agreement" means that certain Preferred Stock
and Warrant Purchase Agreement dated as of April 21, 2003 among the Company and
the other parties named therein, pursuant to which this Warrant was originally
issued.

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

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

                                       3
<PAGE>

effect at the time.

         "Series B Convertible Preferred Stock" shall mean the Company's Series
B 8% Cumulative Convertible Preferred Stock, par value $0.001 per share.

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

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

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

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

         "Warrant Stock" means the 824,780 shares of Common Stock to be
purchased upon the exercise hereof, subject to adjustment as provided herein.

         2. Exercise of Warrant.

         2.1. Manner of Exercise. From and after the second anniversary of the
Closing Date, and until 5:00 P.M., New York time, on the Expiration Date (the
"Exercise Period"), the Holder may exercise this Warrant, on any Business Day,
for all or any part of the number of shares of Warrant Stock purchasable
hereunder.

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

                                       4
<PAGE>

Price and this Warrant, is received by the Company as described above. If this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Stock, deliver
to the Holder a new Warrant evidencing the rights of the Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant, or at the request of
the Holder, appropriate notation may be made on this Warrant and the same
returned to the Holder.

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

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

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

         2.4. Restrictions on Exercise Amount.

         (i) Unless a Holder delivers to the Company irrevocable written notice
prior to the date of issuance hereof or sixty-one days prior to the effective
date of such notice that this Section 2.4(i) shall not apply to such Holder, the
Holder may not acquire a number of shares of Warrant Stock to the extent that,
upon such exercise, the number of shares of Common Stock then beneficially owned
by such holder and its Affiliates and any other persons or entities whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act (including shares held by any
"group" of which the holder is a member, but excluding shares beneficially owned
by virtue of the ownership of securities or rights to acquire securities that
have limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) exceeds 4.95% of the total number of shares of
Common Stock of the Company then issued and outstanding. For purposes hereof,
"group" has the meaning set forth in Section 13(d) of the Exchange Act and
applicable regulations of the

                                       5
<PAGE>

Securities and Exchange Commission, and the percentage held by the holder shall
be determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. Each delivery of a notice of exercise by a Holder will constitute
a representation by such Holder that it has evaluated the limitation set forth
in this paragraph and determined, based on the most recent public filings by the
Company with the Commission, that the issuance of the full number of shares of
Warrant Stock requested in such notice of exercise is permitted under this
paragraph.

         (ii) In the event the Company is prohibited from issuing shares of
Warrant Stock as a result of any restrictions or prohibitions under applicable
law or the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization, the Company shall as soon as
possible seek the approval of its stockholders and take such other action to
authorize the issuance of the full number of shares of Common Stock issuable
upon exercise of this Warrant.

         3. Transfer, Division and Combination.

         3.1. Transfer. The Warrants and the Warrant Stock shall be freely
transferable, subject to compliance with all applicable laws, including, but not
limited to the Securities Act; provided, however, that a Holder must obtain the
prior written consent of the Company in order to transfer Warrants representing
the right to purchase less than 100,000 shares of Warrant Stock. If, at the time
of the surrender of this Warrant in connection with any transfer of this Warrant
or the resale of the Warrant Stock, this Warrant or the Warrant Stock, as
applicable, shall not be registered under the Securities Act, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant or the Warrant Stock as the case may be, furnish to
the Company a written opinion of counsel that is reasonably acceptable to the
Company to the effect that such transfer may be made without registration under
the Securities Act, (ii) that the Holder or transferee execute and deliver to
the Company an investment letter in form and substance acceptable to the Company
and substantially in the form attached as Exhibit C hereto and (iii) that the
transferee be an "accredited investor" as defined in Rule 501(a) promulgated
under the Securities Act. Transfer of this Warrant and all rights hereunder, in
whole or in part, in accordance with the foregoing provisions, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
Section 2.1 or the office or agency designated by the Company pursuant to
Section 12, together with a written assignment of this Warrant substantially in
the form of Exhibit B hereto duly executed by the Holder or its agent or
attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Following a transfer that complies with the requirements of this Section 3.1,
the Warrant may be exercised by a new Holder for the purchase of shares of
Common Stock regardless of whether the Company issued or registered a new
Warrant on the books of the Company.

         3.2. Restrictive Legends. Each certificate for Warrant Stock initially
issued upon the exercise of this Warrant, and each certificate for Warrant Stock
issued to any subsequent

                                       6
<PAGE>

transferee of any such certificate, shall be stamped or otherwise imprinted with
legends in substantially the following form:

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

"THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS
AGREEMENT DATED AS OF APRIL 21, 2003, AS AMENDED FROM TIME TO TIME, AMONG THE
COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY."

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

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

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

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

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

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

                                       7
<PAGE>

shares of Common Stock, then:

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

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

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

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

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

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

              (i) cash,

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

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

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

                                       8
<PAGE>

         all such evidences of indebtedness, shares of stock, other securities
         or property or warrants or other subscription or purchase rights so
         distributable; and

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

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

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

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

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

                                       9
<PAGE>

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

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

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

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

         4.5. Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than the payment of dividends permitted by Section 4 or any other action
described in Section 4, then, unless such action will not have a materially
adverse effect upon the rights of the holder of this Warrant, the

                                       10
<PAGE>

number of shares of Common Stock or other stock into which this Warrant is
exercisable and/or the purchase price thereof shall be adjusted in such manner
as may be equitable in the circumstances.

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

         4.7. Stock Transfer Taxes. The issue of stock certificates upon
exercise of this Warrant shall be made without charge to the holder for any tax
in respect of such issue. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of shares in any name other than that of the holder of this Warrant,
and the Company shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.

         5. Notices to Warrant Holders.

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

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

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

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

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

                                       11
<PAGE>

then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 20 days' prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 16.2.

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

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

         7. Reservation and Authorization of Common Stock; Registration With
Approval of Any Governmental Authority. From and after the Closing Date, the
Company shall at all times reserve and keep available for issue upon the
exercise of Warrants such number of its authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of all outstanding
Warrants (without regard to any ownership limitations provided in Section
2.4(i)).

                                       12
<PAGE>

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

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

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

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

         11. Loss or Mutilation. Upon receipt by the Company from the Holder of
evidence

                                       13
<PAGE>

reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity or security reasonably
satisfactory to it and reimbursement to the Company of all reasonable expenses
incidental thereto and in case of mutilation upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof a new Warrant of
like tenor to the Holder; provided, however, that in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered
to the Company for cancellation.

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

         13. Financial and Business Information.

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

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

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

                                       14
<PAGE>

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

         15. Technology-Triggered Redemption. If a Holder delivers a Demand for
Technology-Triggered Redemption (as defined in the Certificate of Designation)
pursuant to Section 14 of the Certificate of Designation with respect to any
portion of that Holder's Series B Convertible Preferred Stock, then this Warrant
shall be deemed automatically amended, without additional consideration or
action, to reduce the number of shares which may be issued hereunder by a
percentage equal to the percentage of the Holder's Series B Convertible
Preferred Stock originally issued pursuant to the Preferred Stock Purchase
Agreement so redeemed. This Warrant may thereupon be amended or replaced by a
new Warrant of like tenor reflecting such amendment.

         16. Miscellaneous.

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

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

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

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

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

                                       15
<PAGE>

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

         16.7. Governing Law. This Warrant and the transactions contemplated
hereby shall be deemed to be consummated in the State of New York and shall be
governed by and interpreted in accordance with the local laws of the State of
New York without regard to the provisions thereof relating to conflicts of laws.
The Company hereby irrevocably consents to the exclusive jurisdiction of the
State and Federal courts located in New York City, New York in connection

                                       16
<PAGE>

with any action or proceeding arising out of or relating to this Warrant. In any
such litigation the Company agrees that the service thereof may be made by
certified or registered mail directed to the Company pursuant to Section 16.2.

                            [Signature Page Follows]

                                       17
<PAGE>

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

Dated: April 21, 2003

                                       NEXMED, INC.

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

Attest:

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

                                       18
<PAGE>

                                    EXHIBIT A

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

         The undersigned registered owner of this Warrant exercises this Warrant
for the purchase of ________________ shares of Common Stock of NexMed, Inc., and
herewith makes payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to
____________________ and whose address is ____________________________________.
[and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.]

-------------------------------------
(Name of Registered Owner)

-------------------------------------
(Signature of Registered Owner)

-------------------------------------
(Street Address)

-------------------------------------
(State) (Zip Code)

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

                                       19
<PAGE>

                                    EXHIBIT B

                                 ASSIGNMENT FORM

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

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

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

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

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

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

Dated:
      --------------------------------

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

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

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

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

                                       20
<PAGE>

                                    EXHIBIT C

                    FORM OF INVESTMENT REPRESENTATION LETTER

In connection with the acquisition of [warrants (the "Warrants") to purchase
____ shares of common stock of NexMed, Inc. (the "Company"), par value $0.001
per share (the "Common Stock")][___shares of common stock of NexMed, Inc. (the
"Company"), par value $0.001 per share (the "Common Stock") upon the exercise of
warrants by ________], by _______________ (the "Holder") from _____________, the
Holder hereby represents and warrants to the Company as follows:

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

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

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

"[NEITHER] THE SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES
INTO WHICH THEY ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND ALL SUCH SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. [NEITHER] THE
SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THEY ARE
EXERCISABLE] MAY [NOT] BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT
THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
REGISTRATION UNDER THE ACT."

                                       21
<PAGE>

IN WITNESS WHEREOF, the Holder has caused this Investment Representation Letter
to be executed in its corporate name by its duly authorized officer this __ day
of __________ 200_.

[Name]

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

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