Document:

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. B-__

                          COMMON STOCK PURCHASE WARRANT

                                    B WARRANT

      To Purchase ____________(1) Shares of Common Stock of NEXMED, INC.

      THIS IS TO  CERTIFY  THAT  _______________,  or  registered  assigns  (the
"Holder"), is entitled,  during the Exercise Period (as hereinafter defined), to
purchase from NexMed,  Inc., a Nevada  corporation (the "Company"),  the Warrant
Stock (as hereinafter  defined and subject to adjustment as provided herein), in
whole or in part, at a purchase price of $2.00 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.

      "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.

________________

(1)   Insert 10% of the number of Shares purchased under the Purchase Agreement.

<PAGE>

      "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 (or, if other than the  Company,  the  successor  or  acquiring  entity)
immediately following such transaction.

      "Closing Date" means December 21, 2004.

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

      "Common  Stock" means (except where the context  otherwise  indicates) the
Common Stock,  $0.001 par value per share,  of the Company as constituted on the
Closing Date,  and any capital stock into which such Common Stock may thereafter
be changed or converted, and shall also include (i) capital stock of the Company
of any other  class  (regardless  of how  denominated)  issued to the holders of
shares of  Common  Stock  upon any  reclassification  thereof  which is also not
preferred as to dividends or assets on liquidation over any other class of stock
of the Company and which is not subject to redemption  and (ii) shares of common
stock of any successor or acquiring  corporation  received by or  distributed to
the holders of Common Stock of the Company in the circumstances  contemplated by
Section 4.5.

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

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

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

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

         or

      (2) if there  shall  then be a public  market for the  Common  Stock,  the
higher of (x) the book value per share of Common Stock at such date, and (y) the
average of the daily  market  prices for the five (5)  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 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.

                                       2
<PAGE>

      "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.  Unless and until the Current
Warrant  Price is adjusted  pursuant to the terms  herein,  the initial  Current
Warrant Price shall be $2.00 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 December 21, 2005.

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

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

      "Other Property" has the meaning set forth in Section 4.5.

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

      "Purchase  Agreement" means that certain Common Stock and Warrant Purchase
Agreement  dated as of December 17, 2004 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 effect at the time.

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

                                       3
<PAGE>

      "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  [____________]  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 date of  original  issuance
hereof and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise
Period"),  the Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Warrant Stock purchasable hereunder.

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

                                       4
<PAGE>

      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
Company shall not issue to the Holder,  and 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) would
exceed 9.9% 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
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.

                                       5
<PAGE>

      (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. 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.  In
connection  with any transfer of this Warrant after the  Registration  Statement
(as defined in the Investor  Rights  Agreement) is declared  effective under the
Securities  Act, the Holder or transferee  of this Warrant  shall  reimburse the
Company for its reasonable out of pocket costs in connection  with such transfer
(including  without  limitation the reasonable  attorneys fees for preparing and
filing a prospectus supplement with the SEC and/or delivering an updated opinion
letter to the Seller's transfer agent).

      3.2.  Restrictive  Legends.  Each  certificate for Warrant Stock initially
issued upon the exercise of this Warrant, and each certificate for Warrant Stock
issued to any subsequent  transferee of any such  certificate,  unless,  in each
case, such Warrant Stock is eligible for resale without registration pursuant to
Rule 144(k) under the Exchange Act, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

                                       6
<PAGE>

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

"THE  SALE,  TRANSFER  OR  ASSIGNMENT  OF THE  SECURITIES  REPRESENTED  BY  THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN  INVESTOR RIGHTS
AGREEMENT DATED AS OF DECEMBER 17, 2004, 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 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

                                       7
<PAGE>

      (2) the Current 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 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

                                       8
<PAGE>

shares of Common  Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of such shares of
such other  class of stock  within the  meaning of this  Section 4.2 and, if the
outstanding  shares of Common  Stock  shall be changed  into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be  deemed  a  subdivision  or  combination,  as the  case may be,  of the
outstanding shares of Common Stock within the meaning of Section 4.1.

      4.3.  Securities  Issuances.  In the event that the  Company or any of its
subsidiaries  (A) issues or sells any Common  Stock or  convertible  securities,
warrants,  options or other rights to  subscribe  for or to purchase or exchange
for,  shares of Common  Stock  ("Convertible  Securities")  or (B)  directly  or
indirectly  effectively  reduces the conversion,  exercise or exchange price for
any  Convertible  Securities  which  are  currently  outstanding,  at  or  to an
effective  Per Share  Selling  Price (as defined  below)  which is less than the
greater  of (I) the  closing  sale  price per share of the  Common  Stock on the
principal  market  on which the  Common  Stock is traded  the  Trading  Day next
preceding  such  issue or sale or, in the case of  issuances  to  holders of its
Common Stock, the date fixed for the  determination of stockholders  entitled to
receive such warrants,  rights,  or options ("Fair Market  Price"),  or (II) the
Current  Warrant  Price,  then in each such case the  Current  Warrant  Price in
effect  immediately  prior to such issue or sale or record date, as  applicable,
shall be automatically reduced effective concurrently with such issue or sale to
an amount  determined by multiplying the Current Warrant Price then in effect by
a  fraction,  (x) the  numerator  of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale, plus
(2) the  number  of shares of Common  Stock  which the  aggregate  consideration
received by the Company for such  additional  shares would purchase at such Fair
Market  Price  or  Current  Warrant  Price,  as the  case  may  be,  and (y) the
denominator  of which  shall be the  number of  shares  of  Common  Stock of the
Company  outstanding  immediately  after  such  issue  or  sale.  The  foregoing
provision  shall  not  apply  to any  issuances  or  sales  of  Common  Stock or
Convertible  Securities  (i) pursuant to any  Convertible  Securities  currently
outstanding on the date hereof in accordance with the terms of such  Convertible
Securities  in  effect on the date  hereof,  or (ii) to any  officer,  director,
employee or Consultant (as defined below) of the Company pursuant to a bona fide
option or equity  incentive plan duly adopted by the Company,  provided that any
such issuances or sales to Consultants must be reasonable  consideration for the
services  rendered by such Consultants and shall not exceed more than $1 million
in market value to all  Consultants  in the aggregate  under any  circumstances.
"Consultant"  shall mean any natural person  providing bona fide services to the
Company  which are not in  connection  with the offer or sale of securities in a
capital raising  transaction and which do not directly or indirectly  promote or
maintain a market for the  Company's  securities.  The Company shall give to the
Warrantholder written notice of any such sale of Common Stock within 24 hours of
the closing of any such sale and shall  within such 24 hour period issue a press
release  announcing such sale if such sale is a material event for, or otherwise
material to, the Company.

                                       9
<PAGE>

      For the purposes of the foregoing adjustments, in the case of the issuance
of any  Convertible  Securities,  the maximum  number of shares of Common  Stock
issuable upon exercise,  exchange or conversion of such  Convertible  Securities
shall be deemed to be outstanding,  provided that no further adjustment shall be
made upon the  actual  issuance  of Common  Stock  upon  exercise,  exchange  or
conversion  of such  Convertible  Securities,  and provided  further that to the
extent  such  Convertible   Securities   expire  or  terminate   unconverted  or
unexercised,  then at such time the Current Warrant Price shall be readjusted as
if such portion of such Convertible Securities had not been issued.

      For purposes of this Section  4.3, if an event occurs that  triggers  more
than one of the above adjustment  provisions,  then only one adjustment shall be
made and the calculation method which yields the greatest downward adjustment in
the Current Warrant Price shall be used.

      "Per Share Selling Price" shall include the amount  actually paid by third
parties for each share of Common Stock in a sale or issuance by the Company.  In
the event a fee is paid by the  Company  in  connection  with  such  transaction
directly or indirectly to such third party or its affiliates, any such fee shall
be  deducted  from  the  selling  price  pro  rata  to all  shares  sold  in the
transaction to arrive at the Per Share Selling Price. A sale of shares of Common
Stock shall include the sale or issuance of Convertible Securities,  and in such
circumstances  the Per Share Selling  Price of the Common Stock covered  thereby
shall also  include the  exercise,  exchange  or  conversion  price  thereof (in
addition to the consideration received by the Company upon such sale or issuance
less the fee amount as provided above). In case of any such security issued in a
transaction in which the purchase price or the conversion,  exchange or exercise
price is directly or indirectly subject to adjustment or reset based on a future
date, future trading prices of the Common Stock,  specified or contingent events
directly or indirectly  related to the business of the Company or the market for
the Common Stock, or otherwise (but excluding standard stock split anti-dilution
provisions  or  weighted-average  anti-dilution  provisions  similar to that set
forth herein,  provided  that any actual  reduction of such price under any such
security  pursuant to such  weighted-average  anti-dilution  provision  shall be
included and cause a adjustment hereunder), the Per Share Selling Price shall be
deemed to be the lowest conversion,  exchange,  exercise or reset price at which
such securities are converted,  exchanged, exercised or reset or might have been
converted,  exchanged, exercised or reset, or the lowest adjustment, as the case
may  be,  over  the  life  of  such  securities.  If  shares  are  issued  for a
consideration  other than cash,  the Per Share  Selling  Price shall be the fair
value of such consideration as determined in good faith by independent certified
public  accountants  mutually  acceptable to the Company and the Holder.  In the
event the Company  directly or indirectly  effectively  reduces the  conversion,
exercise or exchange price for any  Convertible  Securities  which are currently
outstanding,  then the Per Share  Selling  Price  shall  equal such  effectively
reduced conversion, exercise or exchange price.

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

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

                                       10
<PAGE>

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

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

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

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

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

                                       11
<PAGE>

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

      4.6. Other Action Affecting Common Stock. In case at any time or from time
to time the Company shall take any action in respect of its Common Stock,  other
than the  payment  of  dividends  permitted  by  Section 4 or any  other  action
described  in Section 4, then,  unless such  action  will not have a  materially
adverse  effect  upon the  rights of the holder of this  Warrant,  the number of
shares of Common  Stock or other  stock into which this  Warrant is  exercisable
and/or the  purchase  price  thereof  shall be adjusted in such manner as may be
equitable in the circumstances.

      4.7. 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.

      4.8. 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.

                                       12
<PAGE>

      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,

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

            (d) the Company  shall  cause the holders of its Common  Stock to be
entitled to receive (i) any  dividend or other  distribution  of cash,  (ii) any
evidences of its indebtedness,  or (iii) 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 (iv)
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, 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.

                                       13
<PAGE>

      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)). 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.

                                       14
<PAGE>

      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 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;  and provided further,
that if such information contains material non-public  information,  the Company
shall so notify the Holder  prior to delivery  thereof and the Holder shall have
the right to refuse delivery of such information.

                                       15
<PAGE>

      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;  and provided  further,  that if such information  contains  material
non-public information, the Company shall so notify the Holder prior to delivery
thereof  and the  Holder  shall  have  the  right  to  refuse  delivery  of such
information..

      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.  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. Forced Exercise.

      15.1 Subject to the Purchase  Agreement and subject to the terms set forth
herein (including without limitation subsection 2.4(i) above and subsection 15.2
below),  in the event that the closing sale price of the Company's  Common Stock
(as  reported  by  the  Nasdaq   Stock   Market)  is  greater  than  $10.00  (as
appropriately  and equitably  adjusted for stock  splits,  reverse stock splits,
stock  dividends  and the  similar  events) for a period  ("Pricing  Period") of
twenty (20)  consecutive  Trading Days,  the Company shall have the right,  upon
prior written notice to the Holder ("Forced Exercise Notice"),  to compel all or
a portion of this Warrant to be exercised on or prior the date ("Forced Exercise
Date")  specified  in the Forced  Exercise  Notice,  provided  that such  Forced
Exercise  Date may not occur until at least ten (10) Trading Days  following the
date on which the Holder  receives the Forced Exercise  Notice.  The Company may
not deliver any Forced Exercise Notice until after the completion of the Pricing
Period, and must deliver any Forced Exercise Notice within five (5) Trading Days
following  the  last day of any  Pricing  Period.  The  period  from the  Forced
Exercise  Notice Date to the Forced Exercise Date shall be referred to herein as
the "Post-Notice  Period". If the Company intends to force exercise of less than
all of all of the then  outstanding  Warrants  issued  to  Purchasers  under the
Purchase  Agreement,  it shall do so on a pro rata basis  among such  holders in
accordance with this Section.

                                       16
<PAGE>

      15.2 Notwithstanding anything to the contrary herein, the Company shall be
prohibited from exercising its right to force exercise of this Warrant  pursuant
to this  Section  if at any time  during  the  Post-Notice  Period or during the
thirty (30)  consecutive  Trading Days  immediately  preceding such  Post-Notice
Period there fails to exist "Effective  Registration".  "Effective Registration"
shall  mean (i) the  resale of all  Registrable  Securities  (as  defined in the
Investor Rights Agreement) is covered by an effective  registration statement in
accordance  with the terms of the Investor Rights  Agreement which  registration
statement is not subject to any  suspension  or stop orders;  (ii) the resale of
such  Registrable   Securities  may  be  effected  pursuant  to  a  current  and
deliverable  prospectus  that is not  subject  at the  time to any  blackout  or
similar circumstance;  (iii) such Registrable Securities are listed, or approved
for  listing  prior to  issuance,  on either  the New York Stock  Exchange,  the
American Stock  Exchange or the Nasdaq Stock Market (each an "Approved  Market")
and are not subject to any trading  suspension (nor shall trading generally have
been suspended on such exchange or market),  and the Company shall not have been
notified of any pending or  threatened  proceeding  or other action to delist or
suspend the Common  Stock on the  Approved  Market on which the Common  Stock is
then traded or listed; (iv) the requisite number of shares of Common Stock shall
have been duly  authorized and reserved for issuance as required by the terms of
the Agreements; and (v) none of the Company or any direct or indirect subsidiary
of the Company is (1) subject to any bankruptcy or insolvency  proceeding or (2)
in breach of this Warrant, the Purchase Agreement or any Related Documents.

      16. Miscellaneous.

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

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

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

                                       17
<PAGE>

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

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

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

      16.7 Governing Law. This Warrant and the transactions  contemplated hereby
shall be deemed to be consummated in the State of New York and shall be governed
by and  interpreted  in accordance  with the local laws of the State of New York
without  regard to the  provisions  thereof  relating to conflicts of laws.  The
Company hereby irrevocably  consents to the exclusive  jurisdiction of the State
and Federal  courts  located in New York City,  New York in connection  with any
action or  proceeding  arising out of or relating to this  Warrant.  In any such
litigation the Company agrees that the service  thereof may be made by certified
or registered mail directed to the Company pursuant to Section 16.2.

                            [Signature Page Follows]

                                       18
<PAGE>

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

Dated: December ___, 2004

                                                     NEXMED, INC.

                                                     By:________________________
                                                     Name:
                                                     Title:

Attest:

By:______________________________
Name:
Title: Secretary

                                       19
<PAGE>

                                    EXHIBIT A

                                SUBSCRIPTION FORM
                 [To be executed only upon exercise of Warrant]

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

Wells Fargo Bank Minnesota, N.A.
Shareowner Services
161 North Concord Exchange Street
South St Paul, MN 55075-1139
Attn:    Suzy Swits
Fax: 651-450-4078

1. The undersigned registered owner hereby elects to purchase shares of the
Common Stock of NexMed, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.

2. The  undersigned  registered  owner  hereby  elects to convert  the  attached
Warrant into Common Stock of NexMed,  Inc.  through  "cashless  exercise" in the
manner  specified in the Warrant.  This  conversion is exercised with respect to
_____________________ of the shares of Warrant Stock covered by the Warrant.

3. Please issue a certificate or  certificates  representing  said shares in the
name of the undersigned or in such other name as is specified below:

                                                        ------------------------
                                                                 (Name)

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

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

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

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.

                                       20
<PAGE>

(Delete following paragraph if not applicable:)

[Holder hereby represents to you that it has sold or has current plans to resell
all of such Common Shares received upon this exercise of this Warrant, solely in
accordance  with the terms of the  Registration  Statement  filed  with the U.S.
Securities and Exchange Commission by the Company covering such Common Shares as
described under the section entitled "Plan of Distribution" therein.]

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

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

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

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

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

                                       21
<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.

                                       22
<PAGE>

                                    EXHIBIT C

                    FORM OF INVESTMENT REPRESENTATION LETTER

RE:   COMMON  STOCK,  PAR VALUE $0.001 PER SHARE  ("COMMON  STOCK"),  OF NEXMED,
      INC., A NEVADA CORPORATION ("COMPANY").

In connection with the acquisition by the undersigned ("Transferee") of:

|_|   warrants ("Warrants") to purchase _______ shares of Common Stock, or

|_|   _______ shares of Common Stock issued upon the exercise of Warrants,

the Transferee hereby represents and warrants to the Company as follows:

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

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

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

      "The securities  represented by this  certificate have not been registered
      under the  Securities  Act of 1933,  as amended (the "Act"),  and all such
      securities are subject to restrictions on  transferability as set forth in
      this  certificate.  The  securities  represented  hereby  may not be sold,
      transferred,  or  otherwise  disposed  of in the  absence of an  effective
      registration statement under the Act or an opinion of counsel,  reasonably
      acceptable  to counsel for the  company,  to the effect that the  proposed
      sale,  transfer,  or disposition may be effectuated  without  registration
      under the Act."

IN WITNESS  WHEREOF,  the Transferee has caused this  Investment  Representation
Letter to be duly executed this __ day of __________ 2___.

Transferee Name:     __________________________

                     By: _______________________
                     Name:
                     Title:

                                       23
<PAGE>------------------------------------------------------------------------------

                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

                                  by and among

                       NexMed, Inc., as Issuer and Seller

                                       and

                   the Purchasers named herein, as Purchasers

                                December 17, 2004

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

<PAGE>

                                       Table of Exhibits and Schedules

Exhibit A         Form of A Warrant

Exhibit B         Form of B Warrant

Exhibit C         Form of Investor Rights Agreement

Exhibit D         Form of Opinion of Seller's Counsel

Exhibit E         Form of Opinion of Nevada Counsel

Exhibit F         Form of Closing Escrow Agreement

Schedule 1                 Purchasers and Shares of Common Stock and Warrants
                           Purchased

Schedule 3.10              Litigation

Schedule 3.11              Absence of Certain Changes

Schedule 3.15              Intellectual Property

Schedule 3.17              Preemptive Rights

Schedule 3.19              Subsidiaries and Investments

Schedule 3.20              Capitalization

Schedule 3.21              Options, Warrants, Rights

Schedule 3.22              Employees, Employment Agreements and Employee Benefit
                           Plans

<PAGE>

Exhibit 10 1 - Purchase Agreement (2).DOC

      COMMON STOCK AND WARRANT PURCHASE  AGREEMENT (the "Agreement") dated as of
December  17,  2004,  by and  among  NexMed,  Inc.,  a Nevada  corporation  (the
"Seller"),  and  each of the  persons  listed  on  Schedule  1  hereto  (each is
individually referred to as a "Purchaser" and collectively, the "Purchasers").

                                 W I T N E S S:

      WHEREAS,  each of the  Purchasers  is willing to purchase from the Seller,
and the Seller desires to sell to the Purchasers,  shares of the Seller's common
stock, $0.001 par value (the "Common Stock"), and Common Stock Purchase Warrants
in the form of Exhibit A hereto (the "A  Warrants")  and Common  Stock  Purchase
Warrants in the form of Exhibit B hereto (the "B  Warrants",  and together  with
the A Warrants,  the "Warrants")  each entitling the holders thereof to purchase
additional  shares  of  Common  Stock  pursuant  to the  terms  thereof,  for an
aggregate purchase price up to $7.1 million, as more fully set forth herein.

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

                          ARTICLE I - PURCHASE AND SALE

      1.1 Purchase and Sale.

      (a) On the  terms  and  subject  to  the  conditions  set  forth  in  this
Agreement,  at the Closing (as defined in Section 2.2), the Seller will sell and
each of the  Purchasers  will  purchase the number of shares of Common Stock set
forth on  Schedule 1 hereto at a price per share  equal to $1.28.  In  addition,
each  Purchaser  shall  receive at the Closing  (i) A Warrants  to purchase  the
number of shares of Common Stock equal to 40% of the number of Shares  purchased
by such  Purchaser  at Closing  hereunder  as set forth on Schedule 1 hereto and
(ii) B Warrants to purchase the number of shares of Common Stock equal to 10% of
the number of Shares  purchased by such  Purchaser  at Closing  hereunder as set
forth on Schedule 1 hereto.

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

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

      1.3 Transfers; Legends.

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

                                       1
<PAGE>

or to the Seller,  the Seller may require the  transferor  thereof to furnish to
the Seller an opinion of counsel  selected by the  transferor,  such counsel and
the form and substance of which opinion shall be reasonably  satisfactory to the
Seller and Seller's  counsel,  to the effect that such transfer does not require
registration under the Securities Act; provided,  that in the case of a transfer
pursuant to Rule 144 under the  Securities  Act, no opinion shall be required if
the  transferor  provides  the Seller with a customary  seller's  representation
letter,  and if such sale is not  pursuant  to  subsection  (k) of Rule  144,  a
customary  broker's  representation  letter  and Form 144.  Notwithstanding  the
foregoing,  the Seller hereby consents to and agrees to register on the books of
the Seller and with any transfer agent for the securities of the Seller, without
any such  legal  opinion,  any  transfer  of  Securities  by a  Purchaser  to an
Affiliate  of such  Purchaser,  provided  that the  transferee  certifies to the
Seller that it is an Affiliate of such Purchaser and an "accredited investor" as
defined in Rule 501(a) under the  Securities  Act and that it is  acquiring  the
Securities solely for investment purposes (subject to the qualifications hereof)
and not  with a view  to,  or for,  resale,  distribution  or  fractionalization
thereof in whole or in part in violation of the  Securities  Act. Any transferee
shall agree to be bound by the terms of the Investor  Rights  Agreement and this
Agreement.  The Seller shall reissue certificates evidencing the Securities upon
surrender  of  certificates  evidencing  the  Securities  being  transferred  in
accordance with this Section 1.3(a). In connection with any transfer of Warrants
after the Registration  Statement (as defined in the Investor Rights  Agreement)
is declared  effective under the Securities Act, the transferor of such Warrants
shall  reimburse the Seller for its reasonable out of pocket costs in connection
with such transfer  (including without limitation the reasonable  attorneys fees
for preparing and filing a prospectus  supplement with the SEC and/or delivering
an updated opinion letter to the Seller's  transfer agent). An "Affiliate" means
any Person (as such term is defined below) that,  directly or indirectly through
one or more  intermediaries,  controls or is  controlled  by or is under  common
control with a Person,  as such terms are used in and  construed  under Rule 144
under the Securities  Act. With respect to a Purchaser,  any investment  fund or
managed account that is managed on a discretionary  basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. A
"Person" means any individual or corporation,  partnership,  trust, incorporated
or unincorporated  association,  joint venture, limited liability company, joint
stock company,  government (or an agency or subdivision of any thereof) or other
entity of any kind.

      (b) The  certificates  representing  the  Shares,  unless  such Shares are
eligible for resale without registration pursuant to Rule 144(k) under the t 6 0
Exchange Act, shall bear the following legend:

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

"THE  SALE,  TRANSFER  OR  ASSIGNMENT  OF THE  SECURITIES  REPRESENTED  BY  THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN  INVESTOR RIGHTS
AGREEMENT DATED AS OF DECEMBER 17, 2004, 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."

                                       2
<PAGE>

                     ARTICLE II - PURCHASE PRICE AND CLOSING

      2.1 Purchase Price. The aggregate purchase price (the "Purchase Price") to
be paid by the Purchasers to the Seller to acquire the Shares and the applicable
Warrants shall be the total amounts set forth on Schedule 1 hereto.

      2.2 The Closing.  The closing of the transactions  contemplated under this
Agreement (the  "Closing")  will take place as promptly as  practicable,  but no
later  than  five (5)  business  days  following  satisfaction  or waiver of the
conditions set forth in Article  6.1(a) and 6.2(a) (other than those  conditions
which by their terms are not to be satisfied or waived  until the  Closing),  at
the offices of Peter J. Weisman, P.C., 335 Madison Avenue, Suite 1702, New York,
NY 10017. The date on which the Closing occurs is the "Closing Date."

      ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER

      The Seller represents and warrants to the Purchasers as follows:

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

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

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

                                       3
<PAGE>

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

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

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

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

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

      3.4   Governmental   Authorization.   Except  as  otherwise   specifically
contemplated  in this Agreement and the Related  Documents,  and except for: (i)
the filings referenced in Section 5.10; (ii) the filing of a Form D with respect
to the Shares and Warrants under  Regulation D under the  Securities  Act; (iii)
the  filing  of  the  Registration  Statement  with  the  Commission;  (iv)  the
application(s)  to each  trading  market  for the  listing of the Shares and the
Warrant  Shares for trading  thereon;  and (v) any filings  required under state
securities  laws  that are  permitted  to be made  after  the date  hereof,  the
execution,  delivery and  performance  by the Seller of this  Agreement  and the
Related Documents, and the consummation of the transactions  contemplated hereby
and thereby (including,  but not limited to, the sale and delivery of the Shares
and Warrants and the subsequent  issuance of the Warrant Shares upon exercise of
the Warrants,  as  applicable)  by the Seller require no action by or in respect
of, or filing with, any governmental  body, agency,  official or authority.  The
Seller has disclosed the terms and  conditions  and other  relevant facts of the
transactions  contemplated  hereby to Nasdaq and obtained from Nasdaq its verbal
assurance that such  transactions will not be integrated with any prior issuance
or offering of the Seller for purposes of the Nasdaq rules requiring shareholder
approval of the issuance of 20% or more of an issuer's outstanding common stock.

                                       4
<PAGE>

      3.5  Non-Contravention.  The  execution,  delivery and  performance by the
Seller of this Agreement and the Related Documents,  and the consummation by the
Seller of the  transactions  contemplated  hereby  and  thereby  (including  the
issuance of the Shares and Warrant Shares) do not and will not (a) contravene or
conflict with the Articles and Bylaws of the Seller and its  Subsidiaries or any
material  agreement to which the Seller is a party or by which it is bound;  (b)
contravene  or conflict  with or  constitute a violation of any provision of any
law,  regulation,   judgment,  injunction,  order  or  decree  binding  upon  or
applicable to the Seller or its Subsidiaries; (c) constitute a default (or would
constitute a default with notice or lapse of time or both) under or give rise to
a right of  termination,  cancellation  or  acceleration  or loss of any benefit
under any  material  agreement,  contract or other  instrument  binding upon the
Seller or its Subsidiaries or under any material license,  franchise,  permit or
other  similar  authorization  held by the  Seller or its  Subsidiaries;  or (d)
result in the creation or imposition of any Lien (as defined below) on any asset
of the Seller or its  Subsidiaries.  For  purposes of this  Agreement,  the term
"Lien" means,  with respect to any asset, any mortgage,  lien,  pledge,  charge,
security interest, claim or encumbrance of any kind in respect of such asset.

      3.6 SEC Documents.  The Seller is obligated under the Securities  Exchange
Act of 1934,  as  amended  (the  "Exchange  Act") to file  reports  pursuant  to
Sections 13 or 15(d)  thereof (all such reports filed or required to be filed by
the Seller, including all exhibits thereto or incorporated therein by reference,
and all  documents  filed by the Seller  under the  Securities  Act  hereinafter
called the "SEC Documents"). The Seller has filed all reports or other documents
required to be filed under the  Exchange  Act.  All SEC  Documents  filed by the
Seller as of or for any period  beginning on or after January 1, 2002,  (i) were
prepared in all material  respects in accordance  with the  requirements  of the
Exchange  Act and (ii) did not at the time they were  filed  (or,  if amended or
superseded  by a  filing  prior  to the  date  hereof,  then on the date of such
filing)  contain  any untrue  statement  of a  material  fact or omit to state a
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  The Seller has previously  delivered to the Purchaser a correct
and complete copy of each report (including,  without limitation, the 2004 Proxy
Statement)  which the Seller filed with the Securities  and Exchange  Commission
(the "SEC" or the "Commission")  under the Exchange Act for any period ending on
or after December 31, 2003 (the "Recent Reports"). None of the information about
the Seller or any of its Subsidiaries which has been disclosed to the Purchasers
herein or in the course of  discussions  and  negotiations  with respect  hereto
which  is not  disclosed  in the  Recent  Reports  is or was  required  to be so
disclosed,  and no material  non-public  information  has been  disclosed to the
Purchasers.

      3.7  Financial  Statements.  Each  of the  Seller's  audited  consolidated
balance  sheet and related  consolidated  statements  of income,  cash flows and
changes in stockholders'  equity (including the related notes) as of and for the
years ended  December 31, 2003 and December 31, 2002, as contained in the Recent
Reports  (collectively,  the "Seller's  Financial  Statements" or the "Financial
Statements") (x) present fairly in all material respects the financial  position
of the  Seller  and its  Subsidiaries  on a  consolidated  basis as of the dates
thereof and the results of operations, cash flows and stockholders' equity as of
and for each of the periods then ended, and (y) were prepared in accordance with
generally accepted accounting  principals ("GAAP") applied on a consistent basis
throughout the periods involved,  in each case, except as otherwise indicated in
the notes thereto.

                                       5
<PAGE>

      3.8 Compliance with Law. The Seller and its Subsidiaries are in compliance
and have  conducted  their  business  so as to comply  with all laws,  rules and
regulations,  judgments,  decrees or orders of any court, administrative agency,
commission,   regulatory   authority   or  other   governmental   authority   or
instrumentality,  domestic  or  foreign,  applicable  to their  operations,  the
violation of which would cause a Material Adverse Affect. There are no judgments
or orders, injunctions,  decrees,  stipulations or awards (whether rendered by a
court or  administrative  agency or by arbitration),  including any such actions
relating to affirmative action claims or claims of  discrimination,  against the
Seller or its Subsidiaries or against any of their properties or businesses.

      3.9 No Defaults.  The Seller and its  Subsidiaries  are not, nor have they
received  notice that they would be with the passage of time,  giving of notice,
or both,  (i) in violation of any provision of their Articles and Bylaws (ii) in
default or  violation of any term,  condition or provision of (A) any  judgment,
decree,  order,  injunction  or  stipulation  applicable  to the  Seller  or its
Subsidiaries or (B) any material agreement, note, mortgage, indenture, contract,
lease or  instrument,  permit,  concession,  franchise  or  license to which the
Seller  or  its  Subsidiaries  are a  party  or  by  which  the  Seller  or  its
Subsidiaries or their  properties or assets may be bound,  and no  circumstances
exist which would entitle any party to any material agreement,  note,  mortgage,
indenture,   contract,   lease  or  instrument  to  which  such  Seller  or  its
Subsidiaries  are a party,  to terminate  such as a result of such Seller or its
Subsidiaries,  having failed to meet any material  provision thereof  including,
but not  limited  to,  meeting  any  applicable  milestone  under  any  material
agreement or contract.

      3.10 Litigation.  Except as disclosed in the Recent Reports or on Schedule
3.10, there is no action,  suit,  proceeding,  judgment,  claim or investigation
pending or, to the best knowledge of the Seller,  threatened  against the Seller
and its Subsidiaries which could,  individually or in the aggregate,  reasonably
be expected to have a Material  Adverse Effect on the Seller or its Subsidiaries
or  which  in any  manner  challenges  or seeks  to  prevent,  enjoin,  alter or
materially delay any of the transactions  contemplated  hereby,  and there is no
basis for the assertion of any of the foregoing.

      There are no claims or  complaints  existing  or, to the  knowledge of the
Seller or its  Subsidiaries,  threatened for product liability in respect of any
product of the Seller or its  Subsidiaries,  and the Seller and its Subsidiaries
are not aware of any basis for the assertion of any such claim.

      3.11 Absence of Certain  Changes.  Since December 31, 2003, the Seller has
conducted its business  only in the ordinary  course and there has not occurred,
except as set forth in the Recent Reports or any exhibit thereto or incorporated
by reference therein:

                                       6
<PAGE>

      (a) Any event that could reasonably be expected to have a Material Adverse
Effect on the Seller or any of its Subsidiaries;

      (b) Any  amendments or changes in the Articles or Bylaws of the Seller and
its Subsidiaries;

      (c) Any damage,  destruction or loss, whether or not covered by insurance,
that would, individually or in the aggregate, have or would be reasonably likely
to have, a Material Adverse Effect on the Seller and its Subsidiaries;

      (d) Except as set forth on Schedule 3.11(d), any

            (i)  incurrence,  assumption  or  guarantee  by  the  Seller  or its
Subsidiaries of any debt for borrowed money other than for equipment leases;

            (ii)  issuance  or  sale  of  any  securities  convertible  into  or
exchangeable for securities of the Seller other than to directors, employees and
consultants  pursuant to existing equity compensation or stock purchase plans of
the Seller;

            (iii)  issuance or sale of options or other  rights to acquire  from
the Seller or its Subsidiaries, directly or indirectly, securities of the Seller
or any securities  convertible  into or  exchangeable  for any such  securities,
other  than  options  issued to  directors,  employees  and  consultants  in the
ordinary course of business in accordance with past practice;

            (iv)  issuance  or  sale  of any  stock,  bond  or  other  corporate
security;

            (v)  discharge  or  satisfaction  of any material  Lien,  other than
current  liabilities  incurred since December 31, 2003 in the ordinary course of
business;

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

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

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

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

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

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

                                       7
<PAGE>

      (f)  Any  entry  into,  amendment  of,   relinquishment,   termination  or
non-renewal by the Seller or its Subsidiaries of any material contract, license,
lease, transaction,  commitment or other right or obligation,  other than in the
ordinary course of business; or

      (g) Any transfer or grant of a right with respect to the trademarks, trade
names, service marks, trade secrets,  copyrights or other intellectual  property
rights owned or licensed by the Seller or its Subsidiaries,  except as among the
Seller and its Subsidiaries.

      3.12  No  Undisclosed  Liabilities.  Except  as set  forth  in the  Recent
Reports,  and except for liabilities  and  obligations  incurred in the ordinary
course of business  since  December  31, 2003,  as of the date  hereof,  (i) the
Seller and its Subsidiaries do not have any material  liabilities or obligations
(absolute,  accrued, contingent or otherwise) which, and (ii) there has not been
any aspect of the prior or current  conduct of the business of the Seller or its
Subsidiaries  which may form the basis for any material claim by any third party
which if asserted  could result in any such material  liabilities or obligations
which,  are not fully  reflected,  reserved  against or disclosed in the balance
sheet of the Seller as at December 31, 2003.

      3.13 Taxes.  All tax  returns  and tax  reports  required to be filed with
respect  to the  income,  operations,  business  or assets of the Seller and its
Subsidiaries  have  been  timely  filed  (or  appropriate  extensions  have been
obtained) with the appropriate  governmental  agencies in all  jurisdictions  in
which  such  returns  and  reports  are  required  to be  filed,  and all of the
foregoing  as filed are correct and  complete  and,  in all  material  respects,
reflect  accurately  all liability for taxes of the Seller and its  Subsidiaries
for the periods to which such  returns  relate,  and all amounts  shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy,  property, excise, payroll,  withholding,  FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its  Subsidiaries  or relating to or chargeable  against any of its material
assets, revenues or income or relating to any employee,  independent contractor,
creditor,  stockholder or other third party through the Closing Date, were fully
collected  and paid by such date if due by such date or provided for by adequate
reserves in the Financial  Statements  as of and for the periods ended  December
31, 2003 (other than taxes  accruing  after such date) and all similar items due
through the Closing  Date will have been fully paid by that date or provided for
by adequate  reserves,  whether or not any such taxes were reported or reflected
in any tax returns or filings.  No  taxation  authority  has sought to audit the
records of the Seller or any of its Subsidiaries for the purpose of verifying or
disputing  any tax  returns,  reports or  related  information  and  disclosures
provided  to  such  taxation  authority,  or  for  the  Seller's  or  any of its
Subsidiaries'  alleged  failure  to  provide  any such tax  returns,  reports or
related information and disclosure. No material claims or deficiencies have been
asserted  against or inquiries raised with the Seller or any of its Subsidiaries
with respect to any taxes or other governmental charges or levies which have not
been paid or otherwise  satisfied,  including claims that, or inquiries whether,
the Seller or any of its  Subsidiaries  has not filed a tax  return  that it was
required to file,  and, to the best of the Seller's  knowledge,  there exists no
reasonable  basis for the making of any such  claims or  inquiries.  Neither the
Seller nor any of its  Subsidiaries has waived any restrictions on assessment or
collection of taxes or consented to the extension of any statute of  limitations
relating to taxation.

                                       8
<PAGE>

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

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

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

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

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

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

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

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

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

                                       9
<PAGE>

      3.18 Insurance. The insurance policies providing insurance coverage to the
Seller or its Subsidiaries  including for product liability are adequate for the
business conducted by the Seller and its Subsidiaries  (currently limited to the
testing  phase)  and  are  sufficient  for  compliance  by the  Seller  and  its
Subsidiaries  with all requirements of law and all material  agreements to which
the Seller or its  Subsidiaries  are a party or by which any of their assets are
bound.  All of such  policies  are in full  force and  effect  and are valid and
enforceable in accordance with their terms,  and the Seller and its Subsidiaries
have complied with all material terms and conditions of such policies, including
premium payments.  None of the insurance carriers has indicated to the Seller or
its Subsidiaries an intention to cancel any such policy.

      3.19  Subsidiaries  and  Investments.  Except as set  forth in the  Recent
Reports or on Schedule 3.19, the Seller has no Subsidiaries or Investments.  For
purposes of this Agreement,  the term "Investments"  shall mean, with respect to
any Person, all advances, loans or extensions of credit to any other Person, all
purchases or  commitments  to purchase any stock,  bonds,  notes,  debentures or
other  securities  of any other  Person,  and any other  investment in any other
Person,   including   partnerships   or  joint  ventures   (whether  by  capital
contribution  or  otherwise) or other similar  arrangement  (whether  written or
oral) with any Person,  including but not limited to  arrangements  in which (i)
the Person shares  profits and losses,  (ii) any such other Person has the right
to  obligate or bind the Person to any third  party,  or (iii) the Person may be
wholly or partially  liable for the debts or  obligations  of such  partnership,
joint venture or other arrangement.

      3.20  Capitalization.  The authorized capital stock of the Seller consists
of  80,000,000  shares of common  stock,  $0.001 par value per  share,  of which
46,093,980  shares  are  issued  and  outstanding  as of the  date  hereof,  and
10,000,000 shares of preferred stock, issuable in one or more classes or series,
with  such  relative  rights  and  preferences  as the  Board of  Directors  may
determine,  none of which has been  authorized for issuance other than 1,000,000
shares of Series A Junior  Participating  Preferred Stock,  $0.001 par value per
share, none of which,  immediately  prior to the Closing,  has been issued or is
outstanding,  and  other  than  the  800  shares  of the  Seller's  Series  B 8%
Cumulative  Convertible  Preferred Stock, 800 of which have been issued and none
of which,  immediately prior to the Closing, are outstanding.  All shares of the
Seller's issued and  outstanding  capital stock have been duly  authorized,  are
validly  issued  and  outstanding,  and are  fully  paid and  nonassessable.  No
securities  issued by the Seller from the date of its  incorporation to the date
hereof  were  issued in  violation  of any  statutory  or common law  preemptive
rights.  There are no  dividends  which have  accrued or been  declared  but are
unpaid on the  capital  stock of the  Seller.  All taxes  required to be paid by
Seller in connection with the issuance and any transfers of the Seller's capital
stock have been  paid.  Except as set forth on  Schedule  3.20,  all  permits or
authorizations  required to be  obtained  from or  registrations  required to be
effected with any Person in connection  with any and all issuances of securities
of the Seller  from the date of the  Seller's  incorporation  to the date hereof
have been  obtained  or  effected,  and all  securities  of the Seller have been
issued  and  are  held in  accordance  with  the  provisions  of all  applicable
securities or other laws.

      3.21  Options,  Warrants,  Rights.  Except as set forth on Schedule  3.21,
there are no outstanding (a) securities,  notes or instruments  convertible into
or  exercisable  for any of the capital  stock or other equity  interests of the
Seller or its Subsidiaries; (b) options, warrants, subscriptions or other rights
to  acquire  capital  stock or  other  equity  interests  of the  Seller  or its

                                       10
<PAGE>

Subsidiaries;  or (c)  commitments,  agreements or  understandings  of any kind,
including employee benefit arrangements,  relating to the issuance or repurchase
by the Seller or its Subsidiaries of any capital stock or other equity interests
of  the  Seller  or  its  Subsidiaries,   any  such  securities  or  instruments
convertible  or  exercisable  for  securities or any such  options,  warrants or
rights.  Except  as set forth on  Schedule  3.21,  neither  the  Seller  nor the
Subsidiaries  have  granted  anti-dilution  rights  to any  person  or entity in
connection  with any  outstanding  option,  warrant,  subscription  or any other
instrument convertible or exercisable for the securities of the Seller or any of
its  Subsidiaries.  Other than the rights  granted to the  Purchasers  under the
Investor  Rights  Agreement,  there are no  outstanding  rights which permit the
holder  thereof to cause the Seller or the  Subsidiaries  to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Seller or any of its Subsidiaries in a registration  statement
filed by the Seller or any of its  Subsidiaries  under the  Securities  Act, and
there are no outstanding  agreements or other commitments which otherwise relate
to the  registration of any securities of the Seller or any of its  Subsidiaries
for sale or  distribution in any  jurisdiction,  except as set forth on Schedule
3.21.

      3.22 Employees,  Employment  Agreements and Employee Benefit Plans. Except
as set forth in the Recent Reports or on Schedule 3.22, there are no employment,
consulting,   severance  or   indemnification   arrangements,   agreements,   or
understandings  between  the Seller and any  officer,  director,  consultant  or
employee of the Seller or its Subsidiaries (the "Employment Agreements"). Except
as set forth in the Recent Reports or on Schedule 3.22, no Employment  Agreement
provides  for the  acceleration  or  change  in the  award,  grant,  vesting  or
determination  of  options,  warrants,  rights,  severance  payments,  or  other
contingent   obligations  of  any  nature   whatsoever  of  the  Seller  or  its
Subsidiaries  in favor of any such parties in connection  with the  transactions
contemplated by this Agreement.  Except as disclosed in the Recent Reports or on
Schedule 3.22, the terms of employment or engagement of all directors, officers,
employees,  agents,  consultants and professional advisors of the Seller and its
Subsidiaries are such that their employment or engagement may be terminated upon
not more than two weeks' notice given at any time without  liability for payment
of compensation or damages and the Seller and its Subsidiaries  have not entered
into any agreement or  arrangement  for the  management of their business or any
part thereof other than with their directors or employees.

      3.23 Absence of Certain Business  Practices.  Neither the Seller,  nor any
Affiliate  of the  Seller,  nor to the  knowledge  of the  Seller,  any agent or
employee of the Seller,  any other Person acting on behalf of or associated with
the Seller, or any individual  related to any of the foregoing  Persons,  acting
alone or  together,  has: (a)  received,  directly or  indirectly,  any rebates,
payments,  commissions,  promotional  allowances or any other economic benefits,
regardless  of their  nature  or  type,  from any  customer,  supplier,  trading
company,  shipping company,  governmental employee or other Person with whom the
Seller has done business directly or indirectly;  or (b) directly or indirectly,
given or agreed to give any gift or similar  benefit to any customer,  supplier,
trading company, shipping company,  governmental employee or other Person who is
or may be in a position to help or hinder the  business of the Seller (or assist
the Seller in connection with any actual or proposed  transaction) which (i) may
subject  the  Seller  to any  damage  or  penalty  in  any  civil,  criminal  or
governmental  litigation or proceeding,  (ii) if not given in the past, may have
had an adverse effect on the Seller or (iii) if not continued in the future, may
adversely affect the assets, business,  operations or prospects of the Seller or
subject the Seller to suit or penalty in any private or governmental  litigation
or proceeding.

                                       11
<PAGE>

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

      3.25 Environmental  Matters. None of the premises or any properties owned,
occupied or leased by the Seller or its  Subsidiaries  (the "Premises") has been
used by the Seller or the  Subsidiaries  or, to the Seller's  knowledge,  by any
other Person, to manufacture, treat, store, or dispose of any substance that has
been designated to be a "hazardous  substance"  under  applicable  Environmental
Laws  (hereinafter  defined)  ("Hazardous   Substances")  in  violation  of  any
applicable Environmental Laws. To its knowledge, the Seller has not disposed of,
discharged,  emitted or released any Hazardous  Substances  which would require,
under  applicable  Environmental  Laws,  remediation,  investigation  or similar
response  activity.  No  Hazardous  Substances  are  present  as a result of the
actions of the Seller or, to the Seller's knowledge, any other Person, in, on or
under  the  Premises  which  would  give  rise  to  any  liability  or  clean-up
obligations of the Seller under applicable  Environmental  Laws. The Seller and,
to the  Seller's  knowledge,  any  other  Person  for  whose  conduct  it may be
responsible  pursuant to an agreement or by operation of law, are in  compliance
with all  laws,  regulations  and  other  federal,  state or local  governmental
requirements,  and all applicable judgments,  orders,  writs, notices,  decrees,
permits, licenses,  approvals,  consents or injunctions in effect on the date of
this Agreement relating to the generation, management, handling, transportation,
treatment,  disposal, storage, delivery,  discharge,  release or emission of any
Hazardous Substance (the "Environmental  Laws").  Neither the Seller nor, to the
Seller's  knowledge,  any other Person for whose  conduct it may be  responsible
pursuant  to an  agreement  or by  operation  of law has  received  any  written
complaint,  notice,  order,  or citation of any  actual,  threatened  or alleged
noncompliance  with any of the  Environmental  Laws, and there is no proceeding,
suit or investigation pending or, to the Seller's knowledge,  threatened against
the Seller or, to the  Seller's  knowledge,  any such Person with respect to any
violation or alleged violation of the Environmental  Laws, and, to the knowledge
of the Seller,  there is no basis for the  institution  of any such  proceeding,
suit or investigation.

      3.26 Licenses; Compliance With FDA and Other Regulatory Requirements.

      (a) General.  Except as disclosed in the Recent Reports,  the Seller holds
all  material  authorizations,  consents,  approvals,  franchises,  licenses and
permits  required  under  applicable  law or regulation for the operation of the
business  of  the  Seller  and  its  Subsidiaries  as  presently  operated  (the
"Governmental  Authorizations").  All the Governmental  Authorizations have been
duly issued or obtained and are in full force and effect, and the Seller and its
Subsidiaries  are in material  compliance with the terms of all the Governmental
Authorizations. The Seller and its Subsidiaries have not engaged in any activity
that,  to their  knowledge,  would cause  revocation  or  suspension of any such
Governmental  Authorizations.  The Seller has no  knowledge  of any facts  which
could   reasonably  be  expected  to  cause  the  Seller  to  believe  that  the
Governmental  Authorizations will not be renewed by the appropriate governmental
authorities  in  the  ordinary  course.  Neither  the  execution,  delivery  nor
performance of this Agreement  shall  adversely  affect the status of any of the
Governmental Authorizations.

                                       12
<PAGE>

      (b) FDA.  Without  limiting  the  generality  of the  representations  and
warranties made in paragraph (a) above, the Seller  represents and warrants that
(i) the Seller and each of its  Subsidiaries is in material  compliance with all
applicable  provisions of the United States Federal Food, Drug, and Cosmetic Act
(the "FDC Act"),  (ii) its products and those of each of its  Subsidiaries  that
are in the Seller's  control are not adulterated or misbranded and are in lawful
distribution,  (iii) the United States Food and Drug  Administration (the "FDA")
has not initiated legal action with respect to the manufacturing of the Seller's
products, such as seizures or FDA-required recalls, and Seller uses best efforts
to comply with applicable FDA good manufacturing practice regulations,  (iv) all
adverse  events that were known to and  required to be reported by Seller to the
FDA have been reported to the FDA in a timely manner, (v) neither the Seller nor
any of its  Subsidiaries  is, to their  knowledge,  employing or  utilizing  the
services of any  individual  who has been  debarred  under the FDC Act, (vi) all
stability  studies  required to be  performed  for products  distributed  by the
Seller or any of its Subsidiaries have been completed or are ongoing in material
compliance  with the applicable FDA  requirements,  and (vii) the Seller and its
Subsidiaries  is in  compliance  in all material  respects  with all  applicable
provisions of the Controlled Substances Act.

      3.27 Brokers.  No broker,  finder or investment  banker is entitled to any
brokerage,   finder's  or  other  fee  or  commission  in  connection  with  the
transactions contemplated by this Agreement,  based upon any arrangement made by
or on behalf of the Seller,  which would make any Purchaser  liable for any fees
or commissions.

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

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

                                       13
<PAGE>

          ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

      Each  Purchaser,  for  itself  only,  hereby  severally  and not  jointly,
represents and warrants to the Seller as follows:

      4.1 Existence and Power. The Purchaser is duly organized, validly existing
and in good  standing  under the laws of the  jurisdiction  of such  Purchaser's
organization. The Purchaser has all powers required to carry on such Purchaser's
business as now conducted.

      4.2  Authorization.   The  execution,  delivery  and  performance  by  the
Purchaser of this Agreement,  the Related Documents to which such Purchaser is a
party, and the  consummation by the Purchaser of the  transactions  contemplated
hereby  and  thereby  have been duly  authorized,  and no  additional  action is
required  for the  approval of this  Agreement  or the Related  Documents.  This
Agreement and the Related  Documents to which the Purchaser is a party have been
or, to the extent  contemplated  hereby, will be duly executed and delivered and
constitute valid and binding  agreements of the Purchaser,  enforceable  against
such  Purchaser  in  accordance  with their  terms,  except as may be limited by
bankruptcy,  reorganization,  insolvency, moratorium and similar laws of general
application  relating to or affecting the enforcement of rights of creditors and
except  that  enforceability  of their  obligations  thereunder  are  subject to
general  principles  of equity  (regardless  of whether such  enforceability  is
considered in a proceeding in equity or at law).

      4.3 Investment. The Purchaser is acquiring the securities described herein
for its own account and not with a view to, or for sale in connection  with, any
distribution  thereof,  nor with the intention of  distributing or reselling the
same, provided, however, that by making the representation herein, the Purchaser
does not agree to hold any of the  securities  for any minimum or other specific
term  and  reserves  the  right  to  dispose  of the  securities  at any time in
accordance  with or pursuant to a registration  statement or an exemption  under
the Securities  Act. The Purchaser is aware that none of the securities has been
registered under the Securities Act or under applicable state securities or blue
sky laws. The Purchaser is an  "Accredited  Investor" as such term is defined in
Rule 501 of Regulation D, as  promulgated  under the  Securities  Act (including
without  limitation,  if the  Purchaser  is an employee  benefit plan within the
meaning  of  the  Employee   Retirement  Income  Security  Act  of  1974  and  a
self-directed  plan, then  investment  decisions are made solely by persons that
are "Accredited Investors").

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

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

                                       14
<PAGE>

      4.6 General  Solicitation.  The Purchaser is not purchasing the Securities
as a  result  of any  advertisement,  article,  notice  or  other  communication
regarding the securities  published in any newspaper,  magazine or similar media
or broadcast  over  television or radio or presented at any seminar or any other
general solicitation or general advertisement.

               ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS

      5.1 Insurance.  The Seller and its Subsidiaries  shall,  from time to time
upon the  written  request of the  Purchasers,  promptly  furnish or cause to be
furnished  to  the  Purchasers  evidence,   in  form  and  substance  reasonably
satisfactory to the Purchasers,  of the maintenance of all insurance  maintained
by it for loss or damage by fire and other hazards,  damage or injury to persons
and property, including from product liability, and under workmen's compensation
laws.

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

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

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

                                       15
<PAGE>

      5.4 Further  Assurances.  The Seller shall, at its cost and expense,  upon
written request of the Purchasers, duly execute and deliver, or cause to be duly
executed and delivered,  to the Purchasers  such further  instruments and do and
cause to be done such further acts as may be necessary,  advisable or proper, at
the reasonable  request of the  Purchasers,  to carry out more  effectually  the
provisions  and  purposes of this  Agreement.  The parties  shall use their best
efforts to timely satisfy each of the conditions described in Article VI of this
Agreement.

      5.5 Use of Proceeds.  The Seller covenants and agrees that the proceeds of
the Purchase  Price shall be used by the Seller for working  capital and general
corporate purposes;  under no circumstances shall any portion of the proceeds be
applied to:

            (i) accelerated repayment of debt existing on the date hereof;

            (ii) the payment of dividends or other  distributions on any capital
stock of the Seller;

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

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

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

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

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

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

                                       16
<PAGE>

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

      5.10 Additional Covenants.

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

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

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

      (d) Neither the Seller nor any of its Affiliates, nor any Person acting on
its or their behalf,  shall  directly or indirectly  make any offers or sales of
any securities or solicit any offers to buy any securities  under  circumstances
that would cause the loss of the 4(2) exemption under the Securities Act for the
transactions  contemplated hereby.  Subject to any consent or approval rights of
the Purchasers  hereunder,  in the event the Seller  contemplates an offering of
its equity or debt securities  within six months following the Closing Date, the
Seller  agrees that it shall notify the  Purchasers  of such  offering  (without
providing any material non-public information to any Purchaser without its prior
approval), and upon the reasonable request of Purchasers purchasing at least 75%
of the  Shares  hereunder,  the  Seller  shall  first  disclose  the  terms  and
conditions and other  relevant facts of such proposed  transaction to Nasdaq and

                                       17
<PAGE>

obtain from Nasdaq its assurance  that such  transaction  will not be integrated
with the  offering  which is the subject of this  Agreement  for purposes of the
Nasdaq rules requiring shareholder approval of the issuance of 20% or more of an
issuer's  outstanding common stock. In the event the Seller fails to obtain such
assurance,  then the Seller shall not issue or sell any such securities  without
the prior written  consent of  Purchasers  purchasing at least 75% of the Shares
hereunder,  provided that the Seller may sell or issue  securities  without such
consent if (i) it obtains prior  shareholder  approval for such sale or issuance
in  compliance  with  NASD  rules  or  (ii)  such  sale  or  issuance  is  to  a
pharmaceutical  company  in  connection  with a  strategic  transaction  and not
primarily  as a  capital  raising  transaction,  so long as the  Seller  has not
affirmatively  been  notified  (orally  or in  writing)  by  Nasdaq  that  it is
reasonably  likely to treat such sale or issuance as being  integrated  with the
transactions   contemplated  under  this  Agreement.   In  the  event  that  the
transactions  contemplated  under this Agreement are deemed  integrated with any
other transaction(s) by the NASD, then the Seller shall as soon as possible seek
the approval of its  stockholders  and take such other  action to authorize  the
issuance of the full number of Shares and Warrant  Shares and the full amount of
securities issued and/or to be issued in such other transaction.

      5.11 Securities  Laws  Disclosure;  Publicity.  The Seller shall (i) on or
promptly  after the Closing Date,  issue a press release  acceptable to The Tail
Wind Fund Ltd. disclosing the transactions  contemplated  hereby, and (ii) after
the Closing Date,  file with the  Commission a Report on Form 8-K disclosing the
transactions  contemplated hereby. Except as provided in the preceding sentence,
neither  the Seller  nor the  Purchasers  shall make any press  release or other
publicity  about the terms of this  Agreement or the  transactions  contemplated
hereby without the prior approval of the other unless otherwise  required by law
or the rules of the Commission or Nasdaq.

      5.12 Like Treatment of Purchasers and Holders.  Neither the Seller nor any
of its affiliates  shall,  directly or  indirectly,  pay or cause to be paid any
consideration  (immediate  or  contingent),  whether  by way of  interest,  fee,
payment for redemption,  conversion or exercise of the Securities, or otherwise,
to any  Purchaser or holder of  Securities,  for or as an  inducement  to, or in
connection  with the  solicitation  of, any consent,  waiver or amendment to any
terms or  provisions  of this  Agreement or the Related  Documents,  unless such
consideration  is required to be paid to all Purchasers or holders of Securities
bound by such consent,  waiver or amendment.  The Seller shall not,  directly or
indirectly,  redeem any  Securities  unless such offer of redemption is made pro
rata to all  Purchasers  or  holders  of  Securities,  as the  case  may be,  on
identical terms.

      5.13  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser under this Agreement or any Related  Documents are
several  and not  joint  with the  obligations  of any other  Purchaser,  and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under any such agreement.  Nothing contained herein or in
any Related  Documents,  and no action taken by any Purchaser  pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by such agreement.  Each Purchaser
shall be entitled  to  independently  protect and enforce its rights,  including
without limitation, the rights arising out of this Agreement or out of the other
Related  Documents,  and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose. Each Purchaser
represents that it has been represented by its own separate legal counsel in its
review and negotiation of this Agreement and the Related Documents.  For reasons
of administrative  convenience  only, the Purchasers  acknowledge and agree that
they and their  respective  counsel have chosen to  communicate  with the Seller
through Peter J. Weisman,  P.C.,  but Peter J. Weisman,  P.C. does not represent
any of the  Purchasers  in this  transaction  other than The Tail Wind Fund Ltd.
(the "Lead Investor") and Solomon Strategic Holdings, Inc.

                                       18
<PAGE>

                       ARTICLE VI - CONDITIONS TO CLOSING

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

      (a) The  Seller  shall  deliver  or cause to be  delivered  to each of the
Purchasers the following:

      1.    (i) (A) One or more certificates evidencing  the aggregate number of
Shares  of  the  Common  Stock,   duly  authorized,   issued,   fully  paid  and
non-assessable,  as is indicated on Schedule 1 to be purchased at the Closing by
such Purchaser,  registered in the name of such Purchaser, in such denominations
as is indicated on Schedule 1 for such Purchaser ("Share Certificates") or (B) a
copy of irrevocable  transfer agent instructions (I) that have been delivered to
the Seller's  transfer  agent and (II) instruct the Seller's  transfer  agent to
issue the Share  Certificates,  (III)  that are  acknowledged  in writing by the
Company's transfer agent and (IV) that are in form and substance satisfactory to
the Lead  Investor;  provided  that,  in any case,  the Company shall deliver or
cause to be delivered the original  Share  Certificates  as soon as  practicable
following the Closing;

            (ii) One or more certificates evidencing the Warrants, registered in
the name of such Purchaser,  in such denominations as is indicated on Schedule 1
for such Purchaser, pursuant to which such Purchaser shall be initially entitled
to purchase  that number of shares of Common Stock as is indicated on Schedule 1
or a facsimile  copy of such Warrant  Certificates,  provided that, in any case,
the  Company  shall  deliver  or  cause to be  delivered  the  original  Warrant
Certificates as soon as practicable following the Closing.

      2. The Investor Rights Agreement, in the form attached hereto as Exhibit C
(the "Investor Rights Agreement"), duly executed by the Seller.

      3. A legal opinion of Katten Muchin Zavis Rosenman  ("Seller's  Counsel"),
counsel to the Seller, in the form attached hereto as Exhibit D.

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

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

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

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

                                       19
<PAGE>

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

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

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

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

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

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

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

      (b) The Seller  shall have entered into a Closing  Escrow  Agreement  with
Peter J.  Weisman,  P.C.  (the "Escrow  Agent") in the form  attached  hereto as
Exhibit F (the "Closing  Escrow  Agreement")  pursuant to which the Escrow Agent
shall hold certain funds and documents described therein. Each of the Purchasers
authorizes the Lead Investor to enter into the Closing  Escrow  Agreement and to
act in the capacity described therein.

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

      (a) Each of the  Purchasers  shall deliver or cause to be delivered to the
Seller (i) upon  receipt of the Seller's  items  described in Section 6.1 above,
payment of the portion of the Purchase Price set forth opposite each Purchaser's
name on Schedule 1, in cash by wire transfer of immediately  available  funds to
an account  designated  in writing by Seller prior to the date  hereof;  (ii) an
executed copy of this  Agreement;  (iii) an executed copy of the Investor Rights
Agreement; and (iv) such other documents as the Seller shall reasonably request.

                                       20
<PAGE>

             ARTICLE VII - INDEMNIFICATION, TERMINATION AND DAMAGES

      7.1 Survival of Representations.  Except as otherwise provided herein, the
representations and warranties of the Seller and the Purchasers  contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date and shall continue in full force and effect for a
period of three (3) years from the Closing  Date;  provided,  however,  that the
Seller's  warranties  and  representations  under  Sections 3.13  (Taxes),  3.19
(Subsidiaries  and  Investments),  3.20  (Capitalization),  and  3.21  (Options,
Warrants, Rights), shall survive the Closing Date and continue in full force and
effect  until the  expiration  of all  applicable  statutes of  limitation;  and
further provided that the Seller's warranties and representations  under Section
3.25 (Environmental Matters) shall survive the Closing Date and continue in full
force and  effect  for a period  of six (6) years  from the  Closing  Date.  The
Seller's and the Purchasers'  warranties and representations  shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Seller or the Purchasers.

      7.2 Indemnification.

      (a) The Seller agrees to indemnify and hold harmless the Purchasers, their
Affiliates,  each of their officers,  directors,  employees and agents and their
respective  successors  and assigns,  from and against any losses,  damages,  or
expenses  which are  caused by or arise out of (i) any  breach or default in the
performance  by the Seller of any  covenant or  agreement  made by the Seller in
this Agreement or in any of the Related  Documents;  (ii) any breach of warranty
or representation  made by the Seller in this Agreement or in any of the Related
Documents  (iii) any and all third party actions,  suits,  proceedings,  claims,
demands,  judgments,  costs and expenses  (including  reasonable  legal fees and
expenses) incident to any of the foregoing.

      (b) Each  Purchaser,  severally  and not  jointly  and as to itself  only,
agrees to indemnify and hold harmless the Seller, its Affiliates,  each of their
officers,  directors,  employees and agents and their respective  successors and
assigns,  from and against any losses,  damages, or expenses which are caused by
or arise out of (A) any breach or default in the  performance  by such Purchaser
of any covenant or agreement  made by such Purchaser in this Agreement or in any
of the Related Documents;  (B) any breach of warranty or representation  made by
such Purchaser in this Agreement or in any of the Related Documents; and (C) any
and all third party actions, suits,  proceedings,  claims,  demands,  judgments,
costs and expenses  (including  reasonable legal fees and expenses)  incident to
any of the foregoing;  provided,  however, that such Purchaser's liability under
this Section  7.2(b) shall not exceed the Purchase  Price paid by such Purchaser
hereunder.

      7.3  Indemnity  Procedure.  A  party  or  parties  hereto  agreeing  to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred  to herein as the  "Indemnifying  Party" and the other party or parties
claiming  indemnity is referred to as the  "Indemnified  Party".  An Indemnified
Party under this Agreement  shall,  with respect to claims asserted against such
party by any third party,  give written notice to the Indemnifying  Party of any
liability  which might give rise to a claim for indemnity  under this  Agreement
within  sixty (60)  business  days of the receipt of any written  claim from any
such  third  party,  but not later than  twenty  (20) days prior to the date any
answer or  responsive  pleading is due,  and with  respect to other  matters for
which the Indemnified Party may seek indemnification, give prompt written notice
to the Indemnifying  Party of any liability which might give rise to a claim for
indemnity;  provided,  however,  that any  failure to give such  notice will not
waive any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced.

                                       21
<PAGE>

      The Indemnifying Party shall have the right, at its election, to take over
the  defense  or  settlement  of such  claim by  giving  written  notice  to the
Indemnified Party at least fifteen (15) days prior to the time when an answer or
other  responsive  pleading or notice with respect  thereto is required.  If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified  Party's approval of
such counsel,  which  approval  shall not be  unreasonably  withheld),  shall be
solely  responsible  for the  expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying  Party shall
not settle any such claim  without  prior  notice to and  consultation  with the
Indemnified  Party,  and no such  settlement  involving any equitable  relief or
which  might have an adverse  effect on the  Indemnified  Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably  withheld).  So  long  as  the  Indemnifying  Party  is  diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such  claim  only at its own  expense  and the  Indemnifying  Party  will not be
responsible  for the fees of separate  legal counsel to the  Indemnified  Party,
unless  the  named   parties  to  any   proceeding   include   both  parties  or
representation of both parties by the same counsel would be inappropriate due to
conflicts of interest or otherwise. If the Indemnifying Party does not make such
election,  or having made such election does not, in the  reasonable  opinion of
the  Indemnified  Party  proceed  diligently  to  defend  such  claim,  then the
Indemnified  Party may (after written notice to the Indemnifying  Party), at the
expense of the Indemnifying Party, elect to take over the defense of and proceed
to handle such claim in its discretion and the Indemnifying Party shall be bound
by any defense or settlement that the  Indemnified  Party may make in good faith
with respect to such claim. In connection therewith, the Indemnifying Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the  defense of any such  claim.  The parties  agree to  cooperate  in
defending such third party claims and the  Indemnified  Party shall provide such
cooperation  and  such  access  to its  books,  records  and  properties  as the
Indemnifying Party shall reasonably request with respect to any matter for which
indemnification  is sought hereunder;  and the parties hereto agree to cooperate
with each other in order to ensure the proper and adequate defense thereof.

      With  regard to  claims of third  parties  for  which  indemnification  is
payable hereunder,  such indemnification shall be paid by the Indemnifying Party
upon  the  earlier  to  occur  of:  (i) the  entry  of a  judgment  against  the
Indemnified  Party and the  expiration of any applicable  appeal  period,  or if
earlier,  five (5) days  prior to the date that the  judgment  creditor  has the
right to execute the  judgment;  (ii) the entry of an  unappealable  judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim.  Notwithstanding the foregoing, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party.  With  regard  to other  claims  for  which  indemnification  is  payable
hereunder, such indemnification shall be paid promptly by the Indemnifying Party
upon demand by the Indemnified Party.

                          ARTICLE VIII - MISCELLANEOUS

      8.1 Further  Assurances.  Each party  agrees to  cooperate  fully with the
other parties and to execute such further instruments,  documents and agreements
and to give such further  written  assurances as may be reasonably  requested by
any other party to better evidence and reflect the transactions described herein
and  contemplated  hereby and to carry into effect the  intents and  purposes of
this Agreement,  and further agrees to take promptly,  or cause to be taken, all
actions, and to do promptly,  or cause to be done, all things necessary,  proper
or  advisable  under  applicable  law  to  consummate  and  make  effective  the
transactions  contemplated hereby, to obtain all necessary waivers, consents and
approvals,  to effect all necessary registrations and filings, and to remove any
injunctions  or other  impediments  or delays,  legal or otherwise,  in order to
consummate and make effective the  transactions  contemplated  by this Agreement
for the purpose of securing to the parties hereto the benefits  contemplated  by
this Agreement.

                                       22
<PAGE>

      8.2 Fees and  Expenses.  The parties  hereto shall pay their own costs and
expenses in connection herewith,  except that the Company shall pay to Tail Wind
Advisory and Management  Ltd. a  non-refundable  sum equal to $40,000 as and for
legal and due diligence expenses incurred in connection herewith,  half of which
amount has been previously  paid. The Company shall pay all fees and expenses of
any placement agents or finders in connection with the transactions contemplated
by this Agreement pursuant to a separate agreement between such parties.

      8.3 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
specified in this Section  prior to 5:00 p.m. (New York City time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication  is delivered via facsimile at the facsimile  number  specified in
this  Section on a day that is not a business  day or later than 5:00 p.m.  (New
York City time) on any business  day, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express.  The address for such notices and communications shall be as
follows:

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

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

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have  designated in writing to the other parties  hereto
by such notice.  Copies of notices to the Seller shall be sent to Katten  Muchin
Zavis Rosenman, 575 Madison Avenue, New York, NY 10022, Attn: Robert Kohl, Esq.,
Facsimile No. (212)  940-8776.  Copies of notices to any Purchaser shall be sent
to the addresses, if any, listed on Schedule 1 attached hereto.

      Unless otherwise stated above, such communications shall be effective when
they are received by the addressee thereof in conformity with this Section.  Any
party may change its address for such communications by giving notice thereof to
the other parties in conformity with this Section.

      8.4 Governing Law. All questions  concerning the  construction,  validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by and
enforced in accordance with the laws of the State of New York without  reference
to the conflicts of laws principles thereof.

                                       23
<PAGE>

      8.5  Jurisdiction  and  Venue.  This  Agreement  shall be  subject  to the
exclusive  jurisdiction of the Federal District Court,  Southern District of New
York and if such court does not have proper  jurisdiction,  the State  Courts of
New York County,  New York. The parties to this Agreement  agree that any breach
of any  term or  condition  of this  Agreement  shall be  deemed  to be a breach
occurring  in the State of New York by virtue of a  failure  to  perform  an act
required to be performed in the State of New York and  irrevocably and expressly
agree to submit to the  jurisdiction  of the Federal  District  Court,  Southern
District  of New York and if such court does not have proper  jurisdiction,  the
State  Courts of New York  County,  New York for the  purpose of  resolving  any
disputes  among the  parties  relating  to this  Agreement  or the  transactions
contemplated  hereby.  The parties  irrevocably  waive,  to the  fullest  extent
permitted by law,  any  objection  which they may now or  hereafter  have to the
laying of venue of any suit, action or proceeding  arising out of or relating to
this Agreement,  or any judgment  entered by any court in respect hereof brought
in New York County,  New York, and further  irrevocably waive any claim that any
suit, action or proceeding brought in Federal District Court,  Southern District
of New York and if such  court  does not have  proper  jurisdiction,  the  State
Courts of New York County,  New York has been brought in an inconvenient  forum.
Each of the parties  hereto  consents to process  being served in any such suit,
action or proceeding,  by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 8.5 shall  affect or limit any right to serve  process in any other
manner permitted by law.

      8.6  Successors  and  Assigns.  This  Agreement is personal to each of the
parties  and may not be  assigned  without  the  written  consent  of the  other
parties;  provided,  however,  that any of the Purchasers  shall be permitted to
assign this  Agreement to any Person to whom it assigns or transfers  securities
issued  or  issuable  pursuant  to  this  Agreement.  Any  assignee  must  be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act.

      8.7 Severability.  If any provision of this Agreement,  or the application
thereof, shall for any reason or to any extent be invalid or unenforceable,  the
remainder of this  Agreement and  application of such provision to other persons
or  circumstances  shall  continue  in full  force and  effect  and in no way be
affected, impaired or invalidated.

      8.8  Entire  Agreement.  This  Agreement  and  the  other  agreements  and
instruments  referenced herein constitute the entire understanding and agreement
of the parties  with respect to the subject  matter  hereof and  supersedes  all
prior agreements and understandings.

      8.9 Other  Remedies.  Except as  otherwise  provided  herein,  any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy  conferred  hereby or by law, or in equity
on such  party,  and the  exercise  of any one  remedy  shall not  preclude  the
exercise of any other.

                                       24
<PAGE>

      8.10 Amendment and Waivers. Subject to Section 5.12, any term or provision
of this  Agreement  may be  amended,  and  the  observance  of any  term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or  prospectively)  only by a writing signed by the Seller and the
Purchasers  purchasing at least 75% of the Shares hereunder,  and such waiver or
amendment, as the case may be, shall be binding upon all Purchasers.  The waiver
by a party of any breach hereof or default in the  performance  hereof shall not
be deemed to constitute a waiver of any other default or any  succeeding  breach
or  default.  This  Agreement  may not be amended or  supplemented  by any party
hereto  except  pursuant to a written  amendment  executed by the Seller and the
Purchasers  purchasing at least 75% of the Shares hereunder.  No amendment shall
be effected to impact a holder of  Securities  in a  disproportionately  adverse
fashion without the consent of such individual holder.

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

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

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

      8.14 No Third  Party  Beneficiary.  Nothing  expressed  or implied in this
Agreement is intended, or shall be construed,  to confer upon or give any person
other  than  the   parties   hereto  and  their   respective   heirs,   personal
representatives,  legal  representatives,  successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.

      8.15 Waiver of Trial by Jury. THE PARTIES HERETO  IRREVOCABLY  WAIVE TRIAL
BY JURY IN ANY SUIT,  ACTION OR  PROCEEDING  RELATING TO THIS  AGREEMENT  OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

                            [Signature Page Follows]

                                       25
<PAGE>

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

SELLER:

NEXMED, INC.

By: /s/ Y. Joseph Mo
    ----------------
Name:  Y. Joseph Mo, Ph. D.
Title: President & C.E.O.

<PAGE>

PURCHASER:

Print Exact Name:              The Tail Wind Fund Ltd.
By:                            Tail Wind ADVISORY & MANAGEMENT LTD.,
                               as investment manager

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

Address:                       c/o Tail Wind Advisory & Management Ltd.
                               1 Regent Street, 1st Floor
                               London SW1Y 4NS
                               England
                               Attn: David Crook

Telephone:                     011-44-207-468-7660

Facsimile:                     011-44-207-468-7657

Email:                         dcrook@tailwindam.com

Amount of Investment:          $   500,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Bristol Investment Fund, Ltd.

         By:                   /s/ Paul Kessler
         Name:                 Paul Kessler
         Title:                Director

Address:                       (for notice and delivery of securities)
                               c/o Bristol Capital Advisors, LLC
                               10990 Wilshire Boulevard, Suite 1410
                               Los Angeles, California  90024

Telephone:                     (310) 696-0333

Facsimile:                     (310) 696-0334

Email:                         pkessler@bristolcompanies.net,
                               amy@bristolcompanies.net

Amount of Investment:          $   650.000.00

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              XMark Opportunity Fund, L.P.

         By:                   /s/ David C. Cavalier
                               ----------------------
         Name:                 David C. Cavalier
         Title:                Chief Operating Officer

Address:                       152 West 57th Street, 21st Fl.
                               New York, NY 10019

Telephone:                     (212) 247-8200

Facsimile:                     (212) 247-1329

Email:                         dcavalier@xmarkfunds.com

Amount of Investment:          $   300,000.00

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              XMark Opportunity Fund, Ltd.

         By:                   /s/ David C. Cavalier
                               ----------------------
         Name:                 David C. Cavalier
         Title:                Chief Operating Officer

Address:                       152 West 57th Street, 21st Fl.
                               New York, NY 10019

Telephone:                     (212) 247-8200

Facsimile:                     (212) 247-1329

Email:                         dcavalier@xmarkfunds.com

Amount of Investment:          $   300,000.00

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              XMark Fund, L.P.

         By:                   /s/ David C. Cavalier
                               ----------------------
         Name:                 David C. Cavalier
         Title:                Chief Operating Officer

Address:                       152 West 57th Street, 21st Fl.
                               New York, NY 10019

Telephone:                     (212) 247-8200

Facsimile:                     (212) 247-1329

Email:                         dcavalier@xmarkfunds.com

Amount of Investment:          $   200,000.00

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              XMark Fund Ltd.

         By:                   /s/ David C. Cavalier
                               ----------------------
         Name:                 David C. Cavalier
         Title:                Chief Operating Officer

Address:                       152 West 57th Street, 21st Fl.
                               New York, NY 10019

Telephone:                     (212) 247-8200

Facsimile:                     (212) 247-1329

Email:                         dcavalier@xmarkfunds.com

Amount of Investment:          $   200,000.00

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Enable Growth Partners

         By:                   /s/ Mitch Levine
         Name:                 Mitch Levine
         Title:                Managing Partner

                               Address: One Ferry Building,
                               Suite 255
                               San Francisco, CA 94111

Telephone:                     415-677-1577

Facsimile:                     415-677-1580

Email:                         mlevine@enablecapital.com

Amount of Investment:          $   250,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Ronald S. Loshin

         By:                   /s/ Ronald S. Loshin
                               ---------------------
         Name:                 Ronald S. Loshin
         Title:                Purchaser

Address:                       130 Van Winkle Drive
                              San Anselmo, CA 94960

Telephone:                     415/460-1500

Facsimile:                     415-925-0990

Email:                         banklease@aol.com

Amount of Investment:          $   200,000.00

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Harvey Lamm

         By:                   /s/ Harvey Lamm
         Name:                 Harvey Lamm
         Title:

Address:                       Three Bala Plaza East
                               Suite 123
                               Bala Cynwyd, PA  19004-3482

Telephone:                     610-617-7388

Facsimile:                     610-617-7389

Email:                         Harlamm@aol.com

Amount of Investment:          $   64,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Randall McCathren

         By:                   /s/ Randall McCathren
         Name:                 Randall McCathren
         Title:

Address:                       Randall McCathren
                               Suite 100
                               2021 Richard Jones Rd.
                               Nashville, TN 37215

Telephone:                     615-383-1930

Facsimile:                     615-383-2588

Email:                         rmacathren@banklease.com

Amount of Investment:          $   200,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Richard T. Schliesmann

         By:                   /s/ Richard T. Schliesmann
                               ---------------------------
         Name:                 Richard T. Schliesmann
         Title:                Purchaser

Address:                       22 Olive Avenue
                               P.O. Box 1448
                               Ross, CA 94957

Telephone:                     415-456-2806  415-518-1680

Facsimile:                     415-925-0990

Email:                         RTSCHLIESMANN@YAHOO.COM

Amount of Investment:          $   50,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Jim Shroyer

         By:                   /s/ Jim Shroyer
         Name:                 Jim Shroyer
         Title:                Purchaser

Address:                       100 Larkspur Landing Circle #206
                               Larkspur, CA 94939

Telephone:                     415-328-9000

Facsimile:                     415-464-9017

Email:                         jimshroyer@homethrift.com

Amount of Investment:          $   200,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Daniel M. O'Neill

         By:                   /s/ Daniel M. O'Neill
                               ----------------------
         Name:                 Daniel M. O'Neill
         Title:

Address:                       592 10th Street #1
                               Brooklyn, NY 11215

Telephone:                     718-499-2224

Facsimile:

Email:                         dmo770@yahoo.com

Amount of Investment:          $   50,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Lawrence Zalk

         By:                   /s/ Lawrence Zalk
                               ------------------
         Name:                 Lawrence Zalk
         Title:

Address:                       51 Falmouth Street
                               Short Hills, NJ 07070

Telephone:                     973-564-5957

Facsimile:                     908-232-4650

Email:

Amount of Investment:          $   150,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Caduceus Capital Master Fund Limited

         By:                   /s/ Samuel D. Isaly
                               --------------------
         Name:                 Samuel D. Isaly
         Title:                Investment Advisor

Address:                       Attn: Jennifer Cronin
                               c/o: Bear Stearns
                               One Metrotech Center North
                               Brooklyn, NY 11201

Telephone:                     212-739-6400

Facsimile:                     212-739-6444

Email:                         kanareka@orbimed.com

Amount of Investment:          $   194,560

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Caduceus Capital II, L.P.

         By:                   /s/ Samuel D. Isaly
                               --------------------
         Name:                 Samuel D. Isaly
         Title:                General Partner

Address:                       Attn: Jennifer Cronin
                               c/o: Bear Stearns
                               One Metrotech Center North
                               Brooklyn, NY 11201

Telephone:                     212-739-6400

Facsimile:                     212-739-6444

Email:                         kanareka@orbimed.com

Amount of Investment:          $   97,280

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              UBS Eucaplyptus Fund, L.L.C.

         By:                   /s/ Samuel D. Isaly
                               --------------------
         Name:                 Samuel D. Isaly
         Title:                JV Partner

Address:                       Attn: Julie Whittaker
                               c/o FFPC Trust
                               8800 Tinicum Blvd.
                               Philadelphia, PA 19153

Telephone:                     212-739-6400

Facsimile:                     212-739-6444

Email:                         kanareka@orbimed.com

Amount of Investment:          $   160,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              PW Eucalyptus Fund, Ltd.

         By:                   /s/ Samuel D. Isaly
                               --------------------
         Name:                 Samuel D. Isaly
         Title:                JV Partner

Address:                       Attn: Julie Whittaker
                               c/o PFPC Trust
                               8800 Tinicum Blvd.
                               Philadelphia, PA 19153

Telephone:                     212-739-6400

Facsimile:                     212-739-6444

Email:                         kanareka@orbimed.com

Amount of Investment:          $   17,920

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              HFR SHC Aggressive Master Trust

         By:                   /s/ Samuel D. Isaly
                               --------------------
         Name:                 Samuel D. Isaly
         Title:                Investment Advisor

Address:                       Attn: Jennifer Cronin
                               c/o: Bear Stearns
                               One Metrotech Center North
                               Brooklyn, NY 11201

Telephone:                     212-739-6400

Facsimile:                     212-739-6444

Email:                         kanareka@orbimed.com

Amount of Investment:          $   30,240

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Omicron Master Trust

         By:                   /s/ Bruce Bernstein
                               --------------------
         Name:                 Bruce Bernstein
         Title:                Managing Partner

Address:                       650 Fifth Avenue, 24th Floor
                               New York, NY 10019
                                Attn: Brian Daly

Telephone:                     212-258-2302

Facsimile:                     212-258-2315

Email:                         bd@omicroncapital.com

Amount of Investment:          $   500,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Midsummer Investment, Ltd.

         By:                   /s/ Scott D. Kaufman
                               ---------------------
         Name:                 Scott D. Kaufman
         Title:                Managing Director,
                               Midsummer Capital LLC
                               Acting as investment manager of
                               Midsummer Investment, Ltd.

Address:                       485 Madison Avenue
                               23rd Floor
                               New York, NY 10022

Telephone:                     212-584.2143

Facsimile:                     212-584.2142

Email:                         sk@midsummercapital.com

Amount of Investment:          $   500,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Clarion Capital Corporation

         By:                   /s/ Martin A. Cohen
                               --------------------
         Name:                 Martin A. Cohen
         Title:                Chairman

Address:                       1301 East 9th Street, Suite 1120
                               Cleveland, Ohio 44114

Telephone:                     216-687-8948

Facsimile:                     216-694-3545

Email:                         tom@clariongrp.com

Amount of Investment:          $   150,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Chula Partners, L.P.

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

Address:                       504 North Fourth St.
                               Suite 102
                               Fairfield, IA 52556

Telephone:                     641-472-4887

Facsimile:                     641-472-6929

Email:                         ees@cisco.com

Amount of Investment:          $   240,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Allison L. Berman Trust

         By:                   /s/ Barry Prater
                               --------------------------
         Name:                 Barry Prater
         Title:                Trustee

Address:                       504 North Fourth St.
                               Suite 102
                               Fairfield, IA 52556

Telephone:                     641-472-4887

Facsimile:                     641-472-6929

Email:                         ees@cisco.com

Amount of Investment:          $   20,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Ann Berman Credit Shelter Trust

         By:                   /s/ Warren Berman
                               ------------------
         Name:                 Warren Berman
         Title:                Trustee

Address:                       504 North Fourth St.
                               Suite 102
                               Fairfield, IA 52556

Telephone:                     641-472-4887

Facsimile:                     641-472-6929

Email:                         ees@cisco.com

Amount of Investment:          $   20,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Ari D. Berman Trust

         By:                   /s/ Barry Prater
         Name:                 Barry Prater
         Title:                Trustee

Address:                       504 North Fourth St.
                               Suite 102
                               Fairfield, IA 52556

Telephone:                     641-472-4887

Facsimile:                     641-472-6929

Email:                         ees@cisco.com

Amount of Investment:          $   20,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Christopher H. Berg Revocable Trust
                               UA - 3-28-95

         By:                   /s/ Chris Berg
         Name:                 Chris Berg
         Title:                Trustee

Address:                       150 Dudley Avenue
                               Piedmont, CA 94611

Telephone:                     510-547-5176

Facsimile:                     510-547-0223

Email:                         chberg@pacbell.net

Amount of Investment:          $   350,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              ProMed Partners, L.P.

         By:                   /s/ Barry Kurokawa
                               -------------------
         Name:                 Barry Kurokawa
         Title:                Managing Director

Address:                       237 Park Avenue.  9th Floor
                               New York, NY 10017

Telephone:                     212-692-3625

Facsimile:                     212-692-3627

Email:                         bkurokawa@promedmgmt.com

Amount of Investment:          $   547,196.16
                                   427,497 shares
                                   170,998.8 A Warrants
                                   42,749.7 B Warrants

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              ProMed Partners II, L.P.

         By:                   /s/ Barry Kurokawa
                               -------------------
         Name:                 Barry Kurokawa
         Title:                Director

Address:                       237 Park Avenue.  9th Floor
                               New York, NY 10017

Telephone:                     212-692-3625

Facsimile:                     212-692-3627

Email:                         bkurokawa@promedmgmt.com

Amount of Investment:          $   130,455.04
                                 101,918 shares
                                   40,267.2 A Warrants
                                   10,191.8 B Warrants

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              ProMed Offshore Fund, Ltd.

         By:                   /s/ Barry Kurokawa
                               -------------------
         Name:                 Barry Kurokawa
         Title:                Director

Address:                       237 Park Avenue.  9th Floor
                               New York, NY 10017

Telephone:                     212-692-3625

Facsimile:                     212-692-3627

Email:                         bkurokawa@promedmgmt.com

Amount of Investment:          $   87,528.96
                                   68,382 shares
                                   27,352.8 A Warrants
                                   6,838.2 B Warrants

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              ProMed Offshore Fund II, Ltd.

         By:                   /s/ Barry Kurokawa
                               -------------------
         Name:                 Barry Kurokawa
         Title:                Director

Address:                       237 Park Avenue.  9th Floor
                               New York, NY 10017

Telephone:                     212-692-3625

Facsimile:                     212-692-3627

Email:                         bkurokawa@promedmgmt.com

Amount of Investment:          $   534,821.12
                                   417,829 shares
                                   167,131.6 A Warrants
                                   41,782.9 B Warrants

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Robert C. Ciricillo

         By:                   /s/ Robert C. Ciricillo
                               ------------------------
         Name:                 Robert C. Ciricillo
         Title:

Address:                       335 East 51st Street
                               Apartment#11A
                               New York, NY 10022

Telephone:                     212-980-5409

Facsimile:                     212-758-4496

Email:                         ciricillo@aol.com

Amount of Investment:          $   50,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

PURCHASER:

Print Exact Name:              Rosmor Limited Partnership

         By:                   /s/ Martin A. Boher
                               --------------------
         Name:                 Martin A. Boher
         Title:                General Partner

Address:                       1801 East 9th Street
                               Suite 1120
                               Cleveland, Ohio 44114

Telephone:                     216-697-8748

Facsimile:                     216-694-3545

Email:                         tom@clariongrp.com

Amount of Investment:          $   70,000

                     [Omnibus NexMed, Inc. Common Stock and
                   Warrant Purchase Agreement Signature Page]

<PAGE>

            SCHEDULE 1 TO COMMON STOCK AND WARRANT PURCHASE AGREEMENT

               PURCHASERS AND SHARES OF COMMON STOCK AND WARRANTS

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
THE TAIL WIND FUND LTD.                    Peter J. Weisman, P.C.             390,625         156,250        39,063      $500,000

c/o Tail Wind Advisory & Management Ltd.   335 Madison Avenue
1 Regent Street, First Floor               Suite 1702
London, SW1Y 4NS, UK                       New York, NY  10017
Fax:  011-44-207-468-7657                  Fax: 212-317-8666
Email: dcrook@tailwindam.com               Email: pweisman@pweisman.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
BRISTOL INVESTMENT FUND, LTD.                                                 507,812         203,125        50,781      $650,000
c/o Bristol Capital Advisors, LLC
10990 Wilshire Blvd.
Suite 1410
Los Angeles, Ca  90024
Fax: 310-696-0334
Email: pkessler@bristolcompanies.net;
amy@bristolcompanies.net
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
                                           Xmark Asset Management, LLC
                                           Attn: Anne (212) 247-1329
                                           301 Tresser Boulevard, Ste 1315
XMARK OPPORTUNITY FUND, L.P.               Stamford, CT 06901
c/o Xmark Asset Management, LLC            Attn: Anne Abramczyk
152 West 57th Street                       Fax: 212-247-1329
21st Floor                                 and                                234,375         93,750         23,438      $300,000
                                           ---
New York, NY 10019                         Lowenstein Sandler PC
Attn: Anne Abramczyk                       65 Livingston Avenue
Fax (212) 247-1329                         Roseland, New Jersey 07068
Email: dcavalier@xmarkfunds.com            Attn:  Steven E. Siesser, Esq.
       ------------------------
                                           Fax: (973) 597-2507
                                           Email: ssiesser@lowenstein.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                           Xmark Asset Management, LLC
                                           Attn: Anne (212) 247-1329
                                           301 Tresser Boulevard, Ste 1315
XMARK OPPORTUNITY FUND, LTD.               Stamford, CT 06901
c/o Xmark Asset Management, LLC            Attn: Anne Abramczyk
152 West 57th Street                       Fax: 212-247-1329
21st Floor                                 and                                234,375         93,750         23,438      $300,000
                                           ---
New York, NY 10019                         Lowenstein Sandler PC
Attn: Anne Abramczyk                       65 Livingston Avenue
Fax (212) 247-1329                         Roseland, New Jersey 07068
Email: dcavalier@xmarkfunds.com            Attn:  Steven E. Siesser, Esq.
       ------------------------
                                           Fax: (973) 597-2507
                                           Email: ssiesser@lowenstein.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
                                           Xmark Asset Management, LLC
                                           Attn: Anne (212) 247-1329
                                           301 Tresser Boulevard, Ste 1315
XMARK FUND, L.P.                           Stamford, CT 06901
c/o Xmark Asset Management, LLC            Attn: Anne Abramczyk
152 West 57th Street                       Fax: 212-247-1329
21st Floor                                 and                                156,250         62,500         15,625      $200,000
                                           ---
New York, NY 10019                         Lowenstein Sandler PC
Attn: Anne Abramczyk                       65 Livingston Avenue
Fax (212) 247-1329                         Roseland, New Jersey 07068
Email: dcavalier@xmarkfunds.com            Attn:  Steven E. Siesser, Esq.
       ------------------------
                                           Fax: (973) 597-2507
                                           Email: ssiesser@lowenstein.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                           Xmark Asset Management, LLC
                                           Attn: Anne (212) 247-1329
                                           301 Tresser Boulevard, Ste 1315
XMARK FUND, LTD.                           Stamford, CT 06901
c/o Xmark Asset Management, LLC            Attn: Anne Abramczyk
152 West 57th Street                       Fax: 212-247-1329
21st Floor                                 and                                156,250         62,500         15,625      $200,000
                                           ---
New York, NY 10019                         Lowenstein Sandler PC
Attn: Anne Abramczyk                       65 Livingston Avenue
Fax (212) 247-1329                         Roseland, New Jersey 07068
Email: dcavalier@xmarkfunds.com            Attn:  Steven E. Siesser, Esq.
       ------------------------
                                           Fax: (973) 597-2507
                                           Email: ssiesser@lowenstein.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
ENABLE GROWTH PARTNERS
One Ferry Bldg, # 255
San Francisco, CA  94111
Attn: Mitch Levine                                                            195,312         78,125         19,531      $250,000
T:415.677.1577
F:415.677.1580
mlevine@enablecapital.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
RONALD S. LOSHIN
130 Van Winkle Drive
San Anselino, CA  94960                                                       156,250         62,500         15,625      $200,000
Fax: (415) 925-0990
Banklease@aol.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
HARVEY LAMM
3 Bala Plaza East, Ste 123
Bala Cynwyd, PA 19004-3482                                                    50,000          20,000         5,000        $64,000
Fax: 610-617-7389
HARLAMM@aol.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
RANDALL R. MCCATHREN
2021 Richard Jones Rd.
Suite 100
Nashville, TN 37215                                                           156,250         62,500         15,625      $200,000
Fax: (615) 383-2588
rmccathren@banklease.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------

RICHARD T. SCHLIESMANN
22 Olive Avenue
P.O. Box 1448                                                                 39,062          15,625         3,906        $50,000
Ross, CA 94957
Fax: 415-925-0990
rtschliesmann@yahoo.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
JIM SHROYER
100 Larkspur Landing Circle Suite 206
Larkspur, CA  94939                                                           156,250         62,500         15,625      $200,000
Fax: 415-464-9017
jimshroyer@homethrift.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------

DANIEL M. O'NEILL
592 10th Street #1
Brooklyn, NY 11215                                                            39,062          15,625         3,906        $50,000
Fax: 212-697-0682
dmo770@yahoo.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
LAURENCE ZALK
51 Falmouth St.
Short Hills, NJ  07078                                                        117,187         46,875         11,719      $150,000
Fax: (908) 232-4650
sdeluca@mycomcast.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
CADUCEUS CAPITAL MASTER FUND LIMITED
c/o Bear Stearns
One MetroTech Center North
Brooklyn, NY  11201
Attn: Jennifer Cronin                                                         152,000         60,800         15,200      $194,560
T: (212) 739-6400
F: (212) 739-6444
borhos@orbimed.com
kanareka@orbimed.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
CADUCEUS CAPITAL II, L.P.
c/o Bear Stearns
One MetroTech Center North
Brooklyn, NY  11201
Attn: Jennifer Cronin                                                         76,000          30,400         7,600        $97,280
T: (212) 739-6400
F: (212) 739-6444
borhos@orbimed.com
kanareka@orbimed.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
UBS EUCALYPTUS FUND, L.L.C.
c/o PFPC Trust
8800 Tinicum Blvd.
Philadelphia, PA  19153
Attn: Julie Whittaker Cronin                                                  125,000         50,000         12,500      $160,000
T: (212) 739-6400
F: (212) 739-6444
borhos@orbimed.com
kanareka@orbimed.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
PW EUCALYPTUS FUND, LTD.
c/o PFPC Trust
8800 Tinicum Blvd.
Philadelphia, PA  19153
Attn: Julie Whittaker Cronin                                                  14,000           5,600         1,400        $17,920
T: (212) 739-6400
F: (212) 739-6444
borhos@orbimed.com
kanareka@orbimed.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
HFR SHC AGGRESSIVE MASTER TRUST
c/o Bear Stearns
One MetroTech Center North
Brooklyn, NY  11201
Attn: Jennifer Cronin                                                         23,625           9,450         2,363        $30,240
T: (212) 739-6400
F: (212) 739-6444
borhos@orbimed.com
kanareka@orbimed.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------

OMICRON MASTER TRUST
c/o Omicron Capital L.P.
650 Fifth Avenue, 24th Fl
New York, NY  10019                                                           390,625         156,250        39,063      $500,000
Fax: 212-258-2315
Attn:  Brian Daly/Bruce Bernstein
bd@omicroncapital.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
MIDSUMMER INVESTMENT, LTD.
485 Madison Avenue, 23rd floor
New York, NY 10022
T: (212) 584-2140                                                             390,625         156,250        39,063      $500,000
F: (212) 584-2142
ma@midsummercapital.com
sk@midsummercapital.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
CLARION CAPITAL CORPORATION
1801 East Ninth Street
Suite 1120
Cleveland, OH 44114                                                           117,188         46,875         11,719     $150,000.64
T: (216) 687-8948
F: (216) 694-3545
tom@clariongrp.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
CHULA PARTNERS, LP
504 North Fourth Street, Suite 102
Fairfield, IA 52556
Attn: Warren Berman
T: (641) 472-4887                                                             187,500         75,000         18,750      $240,000
F: (641) 472-6929
berman@lisco.com
ees@lisco.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------

ALLISON L. BERMAN TRUST
504 North 4th Street, Suite 102
Fairfield, LA 52556
Attn: Barry Praver                                                            15,625           6,250         1,563        $20,000
T: (641) 472-4887
F: (641) 472-6929
Email: ees@lisco.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
ANN BERMAN CREDIT SHELTER TRUST
504 North Fourth Street, Suite 102
Fairfield, IA 52556
T: (641) 472-4887                                                             15,625           6,250         1,563        $20,000
F: (641) 472-6929
Contact: Warren Berman
berman@lisco.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
ARI D. BERMAN TRUST
504 North Fourth Street, Suite 102
Fairfield, IA 52556
Attn: Barry Praver                                                            15,625           6,250         1,563        $20,000
T: (641) 472-4887
F: (641) 472-6929
berman@lisco.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
CHRISTOPHER H. BERG REVOCABLE TRUST
U/T/A/D 3-28-95
150 Dudley Ave.
Piedmont, CA  94611
Attn: Christopher Berg                                                        273,437         109,375        27,344      $350,000
T: (510) 547-5176
F: (510) 547-0223
chberg@pacbell.net
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
PROMED PARTNERS, L.P.
237 Park Ave., 9th Fl
New York, NY  10017
Attn:  Barry Kurokawa                                                         427,497         170,999        42,750     $547,196.16
T: (212) 692-3625
F: (212) 692-3627
Bkurokawa@promedmgmt.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
PROMED PARTNERS II, L.P.
237 Park Ave., 9th Fl
New York, NY  10017
Attn:  Barry Kurokawa                                                         101,918         40,767         10,192     $130,455.04
T: (212) 692-3625
F: (212) 692-3627
Bkurokawa@promedmgmt.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
PROMED OFFSHORE FUND, LTD.
237 Park Ave., 9th Fl
New York, NY  10017
Attn:  Barry Kurokawa                                                         68,382          27,353         6,838      $87,528.96
T: (212) 692-3625
F: (212) 692-3627
Bkurokawa@promedmgmt.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
                                                                                             COMMON STOCK
NAME, ADDRESS AND FAX NUMBER OF PURCHASER          COPIES OF NOTICES TO   SHARES OF COMMON UNDERLYING WARRANTS            PURCHASE
                                                                           STOCK PURCHASED  A WARRANTS    B WARRANTS      PRICE
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
<S>                                                                           <C>             <C>            <C>         <C>
PROMED OFFSHORE FUND II, LTD.
237 Park Ave., 9th Fl
New York, NY  10017
Attn:  Barry Kurokawa                                                         417,829         167,132        41,783     $534,821.12
T: (212) 692-3625
F: (212) 692-3627
Bkurokawa@promedmgmt.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------

ROBERT C. CIRICILLO
335 East 51st Street
Apt. 11A                                                                      39,062          15,625         3,906        $50,000
New York, NY 10022
ciricillo@aol.com
Fax: (212) 758-4496
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
ROSMOR LIMITED PARTNERSHIP
c/o Clarion Capital Corporation
1801 East Ninth Street
Suite 1120
Cleveland, OH 44114                                                           54,687          21,875         5,469        $70,000
T: (216) 687-8948
F: (216) 694-3545
tom@clariongrp.com
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
TOTALS:                                                                      5,495,310       2,198,126      549,536   $7,034,001.92
------------------------------------------ -------------------------------- -------------- ------------- ------------ --------------
</TABLE>

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