SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "Agreement") is dated as of
February __, 2004, among QT 5, Inc., a Delaware corporation (the "Company"), and
the purchasers identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").

      WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                    ARTICLE I

                                   DEFINITIONS

      1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein), and (b) the
following terms have the meanings indicated in this Section 1.1:

            "Affiliate" means any Person 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.

            "Capital Shares" means the Common Stock and any shares of any other
      class of common stock whether now or hereafter authorized, having the
      right to participate in the distribution of earnings and assets of the
      Company.

            "Capital Shares Equivalents" means any securities, rights or
      obligations that are convertible into or exchangeable for or give any
      right to subscribe for or purchase, directly or indirectly, any Capital
      Shares of the Company or any warrants, options or other rights to
      subscribe for or purchase, directly or indirectly, Capital Shares or any
      such convertible or exchangeable securities.

            "Closing Dates" means, collectively, the dates of the First Closing
      and Second Closing.


<PAGE>

            "Closing Price" means on any particular date (a) the last reported
      closing bid price per share of Common Stock on such date on the Principal
      Market (as reported by Bloomberg L.P. at 4:15 PM (New York time), or (b)
      if there is no such price on such date, then the closing bid price on the
      Principal Market on the date nearest preceding such date (as reported by
      Bloomberg L.P. at 4:15 PM (New York time) for the closing bid price for
      regular session trading on such day), or (c) if the Common Stock is not
      then listed or quoted on the Principal Market and if prices for the Common
      Stock are then reported in the "pink sheets" published by the National
      Quotation Bureau Incorporated (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid
      price per share of the Common Stock so reported, or (d) if the shares of
      Common Stock are not then publicly traded the fair market value of a share
      of Common Stock as determined by a qualified independent appraiser
      selected in good faith by the Purchasers of a majority in interest of the
      principal amount of Debentures then outstanding.

            "Closings" means collectively, the closings of the purchase and sale
      of the Securities pursuant to Section 2.1, and any reference to "Closing"
      or "Closings" shall be construed to include the First Closing and the
      Second Closing unless only one such closing is expressly referred to.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common stock of the Company, par value
      $0.001 per share, and any securities into which such common stock shall
      hereinafter have been reclassified into.

            "Company Counsel" means Sichenzia Ross Friedman Ference LLP.

            "Debentures" means, the Convertible Debentures due 24 months from
      their date of issuance, issued by the Company to the Purchasers hereunder,
      in the form of Exhibit A.

            "Disclosure Schedules" shall have the meaning ascribed to such term
      in Section 3.1 hereof.

            "Effective Date" means the date that the initial Registration
      Statement filed by the Company pursuant to the Registration Rights
      Agreement is first declared effective by the Commission.

            "Escrow Agent" shall have the meaning set forth in the Escrow
      Agreement.

            "Escrow Agreement" means the Escrow Agreement in substantially the
      form of Exhibit E hereto executed and delivered contemporaneously with
      this Agreement.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

            "First Closing" shall have the meaning ascribed to such term in
      Section 2.1 hereof.

            "First Closing Date" means the date of the First Closing.


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<PAGE>

            "FW" means Feldman Weinstein LLP with offices at 420 Lexington
      Avenue, Suite 2620, New York, New York 10170-0002.

            "GAAP" shall have the meaning ascribed to such term in Section
      3.1(h) hereof.

            "Liens" shall have the meaning ascribed to such term in Section
      3.1(a) hereof.

            "Losses" means any and all losses, claims, damages, liabilities,
      settlement costs and expenses, including without limitation costs of
      preparation and reasonable attorneys' fees.

            "Material Adverse Effect" shall have the meaning assigned to such
      term in Section 3.1(b) hereof.

            "Person" means an individual or corporation, partnership, trust,
      incorporated or unincorporated association, joint venture, limited
      liability company, joint stock company, government (or an agency or
      subdivision thereof) or other entity of any kind.

            "Principal Amount" shall mean, as to each Purchaser, the amounts set
      forth below such Purchaser's signature block on the signature pages hereto
      and next to the heading "First Closing Principal Amount" and "Second
      Closing Principal Amount", in United States Dollars, which shall be 125%
      of the corresponding Subscription Amount.

            "Principal Market" means initially the OTC Bulletin Board and shall
      also include the American Stock Exchange, New York Stock Exchange, the
      NASDAQ Small-Cap Market or the NASDAQ National Market, whichever is at the
      time the principal trading exchange or market for the Common Stock, based
      upon share volume.

            "Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated the Closing Date, among the Company and the Purchasers,
      in the form of Exhibit B.

            "Registration Statement" means the registration statement to be
      filed by the Company pursuant to the Registration Rights Agreement.

            "Required Approvals" shall have the meaning ascribed to such term in
      Section 3.1(e) hereof.

            "Required Minimum" means, as of any date, the maximum aggregate
      number of shares of Common Stock then issued or potentially issuable in
      the future pursuant to the Transaction Documents, including any Underlying
      Shares issuable upon exercise or conversion in full of all Warrants and
      Debentures, ignoring any conversion or exercise limits set forth therein,
      and assuming that the Set Price is at all times on and after the date of
      determination the lesser of (a) the Set Price then in effect and (b) 75%
      of the Closing Price on the Trading Day immediately prior to the date of
      determination.


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<PAGE>

            "Rule 144" means Rule 144 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

            "SEC Reports" shall have the meaning ascribed to such term in
      Section 3.1(h) hereof.

            "Second Closing" shall have the meaning ascribed to such term in
      Section 2.1 hereof.

            "Second Closing Date" means the date of the Second Closing.

            "Securities" means the Debentures, the Warrants and the Underlying
      Shares.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Set Price" shall have the meaning ascribed to such term in the
      Debentures.

            "Subscription Amount" means, as to each Purchaser, the amounts set
      forth below such Purchaser's signature block on the signature pages hereto
      and next to the headings "First Closing Subscription Amount" and "Second
      Closing Subscription Amount", in United States Dollars and in immediately
      available funds.

            "Subsidiary" means any subsidiary of the Company as set forth in the
      SEC Reports.

            "Trading Day" means any day during which the Principal Market shall
      be open for business.

            "Transaction Documents" means this Agreement, the Debentures, the
      Warrants, the Registration Rights Agreement, the Escrow Agreement and any
      other documents or agreements executed in connection with the transactions
      contemplated hereunder.

            "Underlying Shares" means the shares of Common Stock issuable upon
      conversion of the Debentures and upon exercise of the Warrants and issued
      and issuable in lieu of the cash payment of interest on the Debentures.

            "Warrants" means collectively the Common Stock purchase warrants, in
      the form of Exhibit C delivered to the Purchasers at the Closing in
      accordance with Section 2.2 hereof.

            "Warrant Shares" means the shares of Common Stock issuable upon
      exercise of the Warrants.


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<PAGE>

                                   ARTICLE II

                                PURCHASE AND SALE

      2.1 Closing. Each Purchaser shall purchase at each Closing, severally and
not jointly with the other Purchasers, the Principal Amount of Debentures equal
to such Purchaser's Principal Amount applicable to such Closing and the Company
shall sell such Principal Amount of Debentures to each such Purchaser. The
Principal Amount of each Debenture shall be convertible in accordance with its
terms at the applicable Set Price. The Closing shall take place in two stages as
set forth below (respectively, the "First Closing" and the "Second Closing").
The aggregate Principal Amount of debentures purchased at all of the Closings
shall be up to $1,000,000.

            (a) First Closing. The First Closing shall be limited to $500,000 in
      aggregate Principal Amount of Debentures, and shall occur within 5 Trading
      Days of the date hereof.

            (b) Second Closing. The Second Closing shall be limited to $500,000
      in aggregate Principal Amount of Debentures, and shall occur on the 5th
      Trading Day following the Effective Date.

      2.2 Closing Conditions. Each Closing shall take place at the offices of
the Escrow Agent, or at such other location as the parties may agree, pursuant
to the terms of the Escrow Agreement. Upon satisfaction or waiver by the party
sought to be benefited thereby of the conditions set forth in this Section 2.2,
as applicable, each Closing shall occur.

            (a) At or prior to each Closing, unless otherwise indicated below,
      the Company shall deliver or cause to be delivered to the Escrow Agent the
      following:

                  (i) a Debenture for each Purchaser with a principal amount
            equal to such Purchaser's Principal Amount as to the applicable
            Closing, registered in the name of such Purchaser;

                  (ii) as to the First Closing only, a Warrant registered in the
            name of each Purchaser to purchase up to a number of shares of
            Common Stock equal to 50% of such Purchaser's aggregate Principal
            Amount for both Closings divided by the Set Price, with a term of 5
            years and an exercise price equal to $0.01, as adjusted therein;

                  (iii) as to the First Closing only, the legal opinion of
            Company Counsel, in the form of Exhibit D attached hereto, addressed
            to the Purchasers;

                  (iv) as to the First Closing only, the Escrow Agreement duly
            executed by the Company, in the form of Exhibit E attached hereto;

                  (v) as to the First Closing only, the Registration Rights
            Agreement duly executed by the Company in the form of Exhibit B
            attached hereto;


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<PAGE>

                  (vi) as to the First Closing only, this Agreement, duly
            executed by the Company.

            (b) At or prior to each Closing, unless otherwise indicated below,
      each Purchaser shall deliver or cause to be delivered to the Escrow Agent
      the following:

                  (i) such Purchaser's Subscription Amount, as to the applicable
            Closing, by wire transfer;

                  (ii) as to the First Closing only, the Escrow Agreement duly
            executed by such Purchaser;

                  (iii) as to the First Closing only, this Agreement, duly
            executed by such Purchaser; and

                  (iv) as to the First Closing only, the Registration Rights
            Agreement duly executed by such Purchaser.

            (c) All representations and warranties of the other party contained
      herein shall remain true and correct as of each Closing Date and all
      covenants of the other party shall have been performed if due prior to
      such date.

            (d) There shall have been no Material Adverse Effect (as defined in
      Section 3.1(b)) with respect to the Company since the date hereof.

            (e) From the date hereof to each Closing Date, trading in the Common
      Stock shall not have been suspended by the Commission (except for any
      suspension of trading of limited duration agreed to by the Company, which
      suspension shall be terminated prior to the applicable Closing), and, at
      any time prior to each Closing Date, trading in securities generally as
      reported by Bloomberg Financial Markets shall not have been suspended or
      limited, or minimum prices shall not have been established on securities
      whose trades are reported by such service, or on the Principal Market, nor
      shall a banking moratorium have been declared either by the United States
      or New York State authorities.

            (f) As to the Second Closing only, the Company shall have filed with
      the Commission the Registration Statement registering all of the
      Underlying Shares and, within the time period specified in the
      Registration Rights Agreement, such Registration Statement shall have been
      declared effective by the Commission as to all such securities and been
      maintained effective since such date.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently herewith (the "Disclosure Schedules") which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.


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<PAGE>

            (a) Subsidiaries. The Company owns, directly or indirectly, all of
      the capital stock or other equity interests of each Subsidiary free and
      clear of any lien, charge, security interest, encumbrance, right of first
      refusal or other restriction (collectively, "Liens"), and all the issued
      and outstanding shares of capital stock of each Subsidiary are validly
      issued and are fully paid, non-assessable and free of preemptive and
      similar rights. If the Company has no Subsidiaries, then references in the
      Transaction Documents to the Subsidiaries will be disregarded.

            (b) Organization and Qualification. Each of the Company and the
      Subsidiaries is an entity duly incorporated or otherwise organized,
      validly existing and in good standing under the laws of the jurisdiction
      of its incorporation or organization (as applicable), with the requisite
      power and authority to own and use its properties and assets and to carry
      on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational
      or charter documents. Each of the Company and the Subsidiaries is duly
      qualified to do business and is in good standing as a foreign corporation
      or other entity in each jurisdiction in which the nature of the business
      conducted or property owned by it makes such qualification necessary,
      except where the failure to be so qualified or in good standing, as the
      case may be, could not, individually or in the aggregate: (i) adversely
      affect the legality, validity or enforceability of any Transaction
      Document, (ii) have or result in or be reasonably likely to have or result
      in a material adverse effect on the results of operations, assets,
      prospects, business or condition (financial or otherwise) of the Company
      and the Subsidiaries, taken as a whole, or (iii) adversely impair the
      Company's ability to perform fully on a timely basis its obligations under
      any of the Transaction Documents (any of (i), (ii) or (iii), a "Material
      Adverse Effect").

            (c) Authorization; Enforcement. The Company has the requisite
      corporate power and authority to enter into and to consummate the
      transactions contemplated by each of the Transaction Documents and
      otherwise to carry out its obligations hereunder or thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and the consummation by it of the transactions contemplated hereby or
      thereby have been duly authorized by all necessary action on the part of
      the Company and no further consent or action is required by the Company
      other than Required Approvals. Each of the Transaction Documents has been
      (or upon delivery will be) duly executed by the Company and, when
      delivered in accordance with the terms hereof, will constitute the valid
      and binding obligation of the Company enforceable against the Company in
      accordance with its terms, subject to applicable bankruptcy, insolvency,
      fraudulent conveyance, reorganization, moratorium and similar laws
      affecting creditors' rights and remedies generally and general principles
      of equity. Neither the Company nor any Subsidiary is in violation of any
      of the provisions of its respective certificate or articles of
      incorporation, by-laws or other organizational or charter documents except
      where such violation could not, individually or in the aggregate,
      constitute a Material Adverse Effect.


                                      -7-
<PAGE>

            (d) No Conflicts. The execution, delivery and performance of the
      Transaction Documents by the Company and the consummation by the Company
      of the transactions contemplated thereby do not and will not: (i) conflict
      with or violate any provision of the Company's or any Subsidiary's
      certificate or articles of incorporation, bylaws or other organizational
      or charter documents, or (ii) subject to obtaining the Required Approvals,
      conflict with, or constitute a default (or an event that with notice or
      lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or
      without notice, lapse of time or both) of, any agreement, credit facility,
      debt or other instrument (evidencing a Company or Subsidiary debt or
      otherwise) or other understanding to which the Company or any Subsidiary
      is a party or by which any property or asset of the Company or any
      Subsidiary is bound or affected, or (iii) result, in a violation of any
      law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any court or governmental authority to which the Company or
      a Subsidiary is subject (including federal and state securities laws and
      regulations), or by which any property or asset of the Company or a
      Subsidiary is bound or affected; such as could not, individually or in the
      aggregate, have or result in a Material Adverse Effect.

            (e) Filings, Consents and Approvals. Neither the Company nor any
      Subsidiary is required to obtain any consent, waiver, authorization or
      order of, give any notice to, or make any filing or registration with, any
      court or other federal, state, local or other governmental authority or
      other Person in connection with the execution, delivery and performance by
      the Company of the Transaction Documents, other than (i) the filings
      required under Section 4.7, (ii) the filing with the Commission of the
      Registration Statement, (iii) the notice and/or application(s) to each
      applicable Principal Market for the issuance and sale of the Debentures
      and Warrants and the listing of the Underlying Shares for trading thereon
      in the time and manner required thereby, and (iv) the filing of Form D
      with the Commission and applicable Blue Sky filings (collectively, the
      "Required Approvals").

            (f) Issuance of the Securities. The Securities are duly authorized
      and, when issued and paid for in accordance with the applicable
      Transaction Documents, will be duly and validly issued, fully paid and
      non-assessable, free and clear of all Liens. The Company has reserved from
      its duly authorized capital stock a number of shares of Common Stock for
      issuance of the Underlying Shares at least equal to the Required Minimum
      on the date hereof. The Company has not, and to the knowledge of the
      Company, no Affiliate of the Company has sold, offered for sale or
      solicited offers to buy or otherwise negotiated in respect of any security
      (as defined in Section 2 of the Securities Act) that would be integrated
      with the offer or sale of the Securities in a manner that would require
      the registration under the Securities Act of the sale of the Securities to
      the Purchasers, or that would be integrated with the offer or sale of the
      Securities for purposes of the rules and regulations of any Principal
      Market.


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<PAGE>

            (g) Capitalization. The number of shares and type of all authorized,
      issued and outstanding capital stock of the Company is set forth in the
      Disclosure Schedules attached hereto. No securities of the Company are
      entitled to preemptive or similar rights, and no Person has any right of
      first refusal, preemptive right, right of participation, or any similar
      right to participate in the transactions contemplated by the Transaction
      Documents. Except as a result of the purchase and sale of the Securities,
      there are no outstanding options, warrants, script rights to subscribe to,
      calls or commitments of any character whatsoever relating to, or
      securities, rights or obligations convertible into or exchangeable for, or
      giving any Person any right to subscribe for or acquire, any shares of
      Common Stock, or contracts, commitments, understandings or arrangements by
      which the Company or any Subsidiary is or may become bound to issue
      additional shares of Common Stock, or securities or rights convertible or
      exchangeable into shares of Common Stock. The issuance and sale of the
      Securities will not obligate the Company to issue shares of Common Stock
      or other securities to any Person (other than the Purchasers) and will not
      result in a right of any holder of Company securities to adjust the
      exercise, conversion, exchange or reset price under such securities. The
      Company acknowledges and agrees that the Purchasers are acquiring the
      Debentures for an original issue discount to the Principal Amount of the
      Debentures.

            (h) SEC Reports; Financial Statements. The Company has filed all
      reports required to be filed by it under the Securities Act and the
      Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
      the two years preceding the date hereof (or such shorter period as the
      Company was required by law to file such material) (the foregoing
      materials being collectively referred to herein as the "SEC Reports") on a
      timely basis or has received a valid extension of such time of filing and
      has filed any such SEC Reports prior to the expiration of any such
      extension. As of their respective dates, the SEC Reports complied in all
      material respects with the requirements of the Securities Act and the
      Exchange Act and the rules and regulations of the Commission promulgated
      thereunder, and none of the SEC Reports, when filed, contained any untrue
      statement of a material fact or omitted 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 financial statements of the Company included in the SEC Reports comply
      in all material respects with applicable accounting requirements and the
      rules and regulations of the Commission with respect thereto as in effect
      at the time of filing. Such financial statements have been prepared in
      accordance with generally accepted accounting principles applied on a
      consistent basis during the periods involved ("GAAP"), except as may be
      otherwise specified in such financial statements or the notes thereto, and
      fairly present in all material respects the financial position of the
      Company and its consolidated subsidiaries as of and for the dates thereof
      and the results of operations and cash flows for the periods then ended,
      subject, in the case of unaudited statements, to normal, immaterial,
      year-end audit adjustments.


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<PAGE>

            (i) Material Changes. Since the date of the latest audited financial
      statements included within the SEC Reports, except as specifically
      disclosed in the SEC Reports: (i) there has been no event, occurrence or
      development that has had or that could result in a Material Adverse
      Effect, (ii) the Company has not incurred any liabilities (contingent or
      otherwise) other than (A) trade payables and accrued expenses incurred in
      the ordinary course of business consistent with past practice and (B)
      liabilities not required to be reflected in the Company's financial
      statements pursuant to GAAP or required to be disclosed in filings made
      with the Commission, (iii) the Company has not altered its method of
      accounting or the identity of its auditors, (iv) the Company has not
      declared or made any dividend or distribution of cash or other property to
      its stockholders or purchased, redeemed or made any agreements to purchase
      or redeem any shares of its capital stock, and (v) the Company has not
      issued any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option or similar plans.

            (j) Litigation. There is no action, suit, inquiry, notice of
      violation, proceeding or investigation pending or, to the knowledge of the
      Company, threatened against or affecting the Company, any Subsidiary or
      any of their respective properties before or by any court, arbitrator,
      governmental or administrative agency or regulatory authority (federal,
      state, county, local or foreign) (collectively, an "Action") which: (i)
      adversely affects or challenges the legality, validity or enforceability
      of any of the Transaction Documents or the Securities or (ii) could, if
      there were an unfavorable decision, individually or in the aggregate, have
      or reasonably be expected to result in a Material Adverse Effect. Neither
      the Company nor any Subsidiary, nor any director or officer thereof, is or
      has been the subject of any Action involving a claim of violation of or
      liability under federal or state securities laws or a claim of breach of
      fiduciary duty. The Company does not have pending before the Commission
      any request for confidential treatment of information. There has not been,
      and to the knowledge of the Company, there is not pending or contemplated,
      any investigation by the Commission involving the Company or any current
      or former director or officer of the Company. The Commission has not
      issued any stop order or other order suspending the effectiveness of any
      registration statement filed by the Company or any Subsidiary under the
      Exchange Act or the Securities Act.

            (k) Compliance. Neither the Company nor any Subsidiary: (i) is in
      default under or in violation of (and no event has occurred that has not
      been waived that, with notice or lapse of time or both, would result in a
      default by the Company or any Subsidiary under), nor has the Company or
      any Subsidiary received notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its properties is bound (whether or not such default or violation has
      been waived), (ii) is in violation of any order of any court, arbitrator
      or governmental body, or (iii) is or has been in violation of any statute,
      rule or regulation of any governmental authority, except in each case as
      could not, individually or in the aggregate, have or result in a Material
      Adverse Effect.

            (l) Labor Relations. No material labor dispute exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company.

            (m) Regulatory Permits. The Company and the Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate
      federal, state, local or foreign regulatory authorities necessary to
      conduct their respective businesses as described in the SEC Reports,
      except where the failure to possess such permits could not, individually
      or in the aggregate, have or reasonably be expected to result in a
      Material Adverse Effect ("Material Permits"), and neither the Company nor
      any Subsidiary has received any notice of proceedings relating to the
      revocation or modification of any Material Permit.


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<PAGE>

            (n) Title to Assets. The Company and the Subsidiaries have good and
      marketable title in fee simple to all real property owned by them that is
      material to the business of the Company and the Subsidiaries and good and
      marketable title in all personal property owned by them that is material
      to the business of the Company and the Subsidiaries, in each case free and
      clear of all Liens, except for Liens as do not materially affect the value
      of such property and do not materially interfere with the use made and
      proposed to be made of such property by the Company and the Subsidiaries.
      Any real property and facilities held under lease by the Company and the
      Subsidiaries are held under valid, subsisting and enforceable leases of
      which the Company and the Subsidiaries are in compliance.

            (o) Patents and Trademarks. The Company and the Subsidiaries have,
      or have rights to use, all patents, patent applications, trademarks,
      trademark applications, service marks, trade names, copyrights, licenses
      and other similar rights necessary or material for use in connection with
      their respective businesses as described in the SEC Reports and which the
      failure to so have could have a Material Adverse Effect (collectively, the
      "Intellectual Property Rights"). Neither the Company nor any Subsidiary
      has received a written notice that the Intellectual Property Rights used
      by the Company or any Subsidiary violates or infringes upon the rights of
      any Person. To the knowledge of the Company, all such Intellectual
      Property Rights are enforceable and there is no existing infringement by
      another Person of any of the Intellectual Property Rights.

            (p) Insurance. The Company and the Subsidiaries are insured by
      insurers of recognized financial responsibility against such losses and
      risks and in such amounts as are prudent and customary in the businesses
      in which the Company and the Subsidiaries are engaged. To the best of
      Company's knowledge, such insurance contracts and policies are accurate
      and complete. Neither the Company nor any Subsidiary has any reason to
      believe it will not be able to renew its existing insurance coverage as
      and when such coverage expires or to obtain similar coverage from similar
      insurers as may be necessary to continue its business without a
      significant increase in cost.

            (q) Transactions With Affiliates and Employees. Except as required
      to be set forth in the SEC Reports, none of the officers or directors of
      the Company and, to the knowledge of the Company, none of the employees of
      the Company is presently a party to any transaction with the Company or
      any Subsidiary (other than for services as employees, officers and
      directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real or personal property to or from, or otherwise requiring payments to
      or from any officer, director or such employee or, to the knowledge of the
      Company, any entity in which any officer, director, or any such employee
      has a substantial interest or is an officer, director, trustee or partner.


                                      -11-
<PAGE>

            (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in
      material compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are applicable to it as of the Closing Date. The Company and the
      Subsidiaries maintain a system of internal accounting controls sufficient
      to provide reasonable assurance that (i) transactions are executed in
      accordance with management's general or specific authorizations, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with GAAP and to maintain asset accountability,
      (iii) access to assets is permitted only in accordance with management's
      general or specific authorization, and (iv) the recorded accountability
      for assets is compared with the existing assets at reasonable intervals
      and appropriate action is taken with respect to any differences. The
      Company has established disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
      such disclosure controls and procedures to ensure that material
      information relating to the Company, including its subsidiaries, is made
      known to the certifying officers by others within those entities,
      particularly during the period in which the Company's most recently filed
      periodic report under the Exchange Act, as the case may be, is being
      prepared. The Company's certifying officers have evaluated the
      effectiveness of the Company's controls and procedures as of the date
      prior to the filing date of the most recently filed periodic report under
      the Exchange Act (such date, the "Evaluation Date"). The Company presented
      in its most recently filed periodic report under the Exchange Act the
      conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company's internal controls (as such term is defined in
      Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's
      knowledge, in other factors that could significantly affect the Company's
      internal controls.

            (s) Solvency/Indebtedness. Based on the financial condition of the
      Company as of each Closing Date: (i) the fair saleable value of the
      Company's assets exceeds the amount that will be required to be paid on or
      in respect of the Company's existing debts and other liabilities
      (including known contingent liabilities) as they mature; (ii) the
      Company's assets do not constitute unreasonably small capital to carry on
      its business for the current fiscal year as now conducted and as proposed
      to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company,
      and projected capital requirements and capital availability thereof; and
      (iii) the current cash flow of the Company, together with the proceeds the
      Company would receive, were it to liquidate all of its assets, after
      taking into account all anticipated uses of the cash, would be sufficient
      to pay all amounts on or in respect of its debt when such amounts are
      required to be paid. The Company does not intend to incur debts beyond its
      ability to pay such debts as they mature (taking into account the timing
      and amounts of cash to be payable on or in respect of its debt). The
      Company has no knowledge of any facts or circumstances which lead it to
      believe that it will file for reorganization or liquidation under the
      bankruptcy or reorganization laws of any jurisdiction within one year from
      the Closing Date. The SEC Reports set forth as of the dates thereof all
      outstanding secured and unsecured Indebtedness of the Company or any
      Subsidiary, or for which the Company or any Subsidiary has commitments.
      For the purposes of this Agreement, "Indebtedness" shall mean (a) any
      liabilities for borrowed money or amounts owed in excess of $50,000 (other
      than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations, whether
      or not the same are or should be reflected in the Company's balance sheet
      or the notes thereto, except guaranties by endorsement of negotiable
      instruments for deposit or collection in the ordinary course of business,
      and (c) the present value of any lease payments in excess of $50,000 due
      under leases required to be capitalized in accordance with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.


                                      -12-
<PAGE>

            (t) Certain Fees. Except as set forth in Section 5.2, no brokerage
      or finder's fees or commissions are or will be payable by the Company to
      any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement, and the Company has not taken any action
      that would cause any Purchaser to be liable for any such fees or
      commissions. The Company agrees that the Purchasers shall have no
      obligation with respect to any fees or with respect to any claims made by
      or on behalf of any Person for fees of the type contemplated by this
      Section with the transactions contemplated by this Agreement.

            (u) Private Placement. Assuming the accuracy of the representations
      and warranties of the Purchasers set forth in Sections 3.2(b)-(f), the
      offer, issuance and sale of the Securities to the Purchasers as
      contemplated hereby are exempt from the registration requirements of the
      Securities Act. The issuance and sale of the Securities hereunder does not
      contravene the rules and regulations of the Principal Market and no
      shareholder approval is required for the Company to fulfill its
      obligations under the Transaction Documents.

            (v) Listing and Maintenance Requirements. The Company has not, in
      the 12 months preceding the date hereof, received notice from any
      Principal Market on which the Common Stock is or has been listed or quoted
      to the effect that the Company is not in compliance with the listing or
      maintenance requirements of such Principal Market. The Company is, and has
      no reason to believe that it will not in the foreseeable future continue
      to be, in compliance with all such listing and maintenance requirements.

            (w) Registration Rights. The Company has not granted or agreed to
      grant to any Person any rights (including "piggy-back" registration
      rights) to have any securities of the Company registered with the
      Commission or any other governmental authority that have not been
      satisfied.

            (x) Application of Takeover Protections. The Company and its Board
      of Directors have taken all necessary action, if any, in order to render
      inapplicable any control share acquisition, business combination, poison
      pill (including any distribution under a rights agreement) or other
      similar anti-takeover provision under the Company's Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a
      result of the Purchasers and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including without
      limitation as a result of the Company's issuance of the Securities and the
      Purchasers' ownership of the Securities.


                                      -13-
<PAGE>

            (y) Seniority. As of each Closing Date, no indebtedness of the
      Company is senior to the Debentures in right of payment, whether with
      respect to interest or upon liquidation or dissolution, or otherwise,
      other than indebtedness secured by purchase money security interests
      (which is senior only as to underlying assets covered thereby) and capital
      lease obligations (which is senior only as to the property covered
      thereby).

            (z) Disclosure. The Company confirms that neither it nor any other
      Person acting on its behalf has provided any of the Purchasers or their
      agents or counsel with any information that constitutes or might
      constitute material, nonpublic information. The Company understands and
      confirms that the Purchasers will rely on the foregoing representations in
      effecting transactions in securities of the Company. All disclosure
      provided to the Purchasers regarding the Company, its business and the
      transactions contemplated hereby, including the Schedules to this
      Agreement, furnished by or on behalf of the Company with respect to the
      representations and warranties made herein are true and correct with
      respect to such representations and warranties and do not contain any
      untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading. The Company
      acknowledges and agrees that no Purchaser makes or has made any
      representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in Section 3.2
      hereof.

            (aa) Tax Status. The Company and each of its Subsidiaries has made
      or filed all federal, state and foreign income and all other tax returns,
      reports and declarations required by any jurisdiction to which it is
      subject (unless and only to the extent that the Company and each of its
      Subsidiaries has set aside on its books provisions reasonably adequate for
      the payment of all unpaid and unreported taxes) and has paid all taxes and
      other governmental assessments and charges that are material in amount,
      shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and has set aside on its books
      provisions reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations
      apply. There are no unpaid taxes in any material amount claimed to be due
      by the taxing authority of any jurisdiction, and the officers of the
      Company know of no basis for any such claim. The Company has not executed
      a waiver with respect to the statute of limitations relating to the
      assessment or collection of any foreign, federal, statue or local tax.
      None of the Company's tax returns is presently being audited by any taxing
      authority.

            (bb) Acknowledgment Regarding Purchasers' Purchase of Securities.
      The Company acknowledges and agrees that the Purchasers are acting solely
      in the capacity of arm's length purchasers with respect to this Agreement
      and the transactions contemplated hereby. The Company further acknowledges
      that no Purchaser is acting as a financial advisor or fiduciary of the
      Company (or in any similar capacity) with respect to this Agreement and
      the transactions contemplated hereby and any statement made by any
      Purchaser or any of their respective representatives or agents in
      connection with this Agreement and the transactions contemplated hereby is
      not advice or a recommendation and is merely incidental to the Purchasers'
      purchase of the Securities. The Company further represents to each
      Purchaser that the Company's decision to enter into this Agreement has
      been based solely on the independent evaluation of the Company and its
      representatives.

            (cc) No General Solicitation or Advertising in Regard to this
      Transaction. Neither the Company nor, to the knowledge of the Company, any
      of its directors or officers (i) has conducted or will conduct any general
      solicitation (as that term is used in Rule 502(c) of Regulation D) or
      general advertising with respect to the sale of the Debentures or the
      Warrants, or (ii) made any offers or sales of any security or solicited
      any offers to buy any security under any circumstances that would require
      registration of the Debentures, the Underlying Shares or the Warrants
      under the Securities Act or made any "directed selling efforts" as defined
      in Rule 902 of Regulation S.


                                      -14-
<PAGE>

            (dd) No Disagreements with Accountants and Lawyers. There are no
      disagreements of any kind presently existing, or reasonably anticipated by
      the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect
      to any fees owed to its accountants and lawyers.

      3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:

            (a) Organization; Authority. Such Purchaser is an entity duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its organization with the requisite corporate or
      partnership power and authority to enter into and to consummate the
      transactions contemplated by the Transaction Documents and otherwise to
      carry out its obligations thereunder. The purchase by such Purchaser of
      the Securities hereunder has been duly authorized by all necessary action
      on the part of such Purchaser. Each of this Agreement, the Escrow
      Agreement and the Registration Rights Agreement has been duly executed by
      such Purchaser, and when delivered by such Purchaser in accordance with
      the terms hereof, will constitute the valid and legally binding obligation
      of such Purchaser, enforceable against it in accordance with its terms.

            (b) Investment Intent. Such Purchaser is acquiring the Securities as
      principal for its own account for investment purposes only and not with a
      view to or for distributing or reselling such Securities or any part
      thereof, without prejudice, however, to such Purchaser's right, subject to
      the provisions of this Agreement, at all times to sell or otherwise
      dispose of all or any part of such Securities pursuant to an effective
      registration statement under the Securities Act or under an exemption from
      such registration and in compliance with applicable federal and state
      securities laws. Nothing contained herein shall be deemed a representation
      or warranty by such Purchaser to hold Securities for any period of time.
      Such Purchaser is acquiring the Securities hereunder in the ordinary
      course of its business. Such Purchaser does not have any agreement or
      understanding, directly or indirectly, with any Person to distribute any
      of the Securities.


                                      -15-
<PAGE>

            (c) Purchaser Status. At the time such Purchaser was offered the
      Securities, it was, and at the date hereof it is, and on each date on
      which it exercises any Warrants or converts any Debentures it will be, an
      "accredited investor" as defined in Rule 501(a) under the Securities Act.
      Such Purchaser has not been formed solely for the purpose of acquiring the
      Securities. Such Purchaser is not a registered broker-dealer under Section
      15 of the Exchange Act.

            (d) Experience of such Purchaser. Such 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.
      Such 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.

            (e) General Solicitation. Such 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.

      The Company acknowledges and agrees that each Purchaser does not make or
      has not made any representations or warranties with respect to the
      transactions contemplated hereby other than those specifically set forth
      in this Section 3.2.


                                   ARTICLE IV

                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The Securities may only be disposed of in compliance with state
      and federal securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement, to the Company
      or to an Affiliate of a Purchaser, the Company may require the transferor
      thereof to provide to the Company an opinion of counsel selected by the
      transferor and reasonably acceptable to the Company, the form and
      substance of which opinion shall be reasonably satisfactory to the
      Company, to the effect that such transfer does not require registration of
      such transferred Securities under the Securities Act. As a condition of
      transfer, any such transferee shall agree in writing to be bound by the
      terms of this Agreement and shall have the rights of a Purchaser under
      this Agreement and the Registration Rights Agreement.

            (b) Each Purchaser agrees to the imprinting, so long as is required
      by this Section 4.1(b), of the following legend on any certificate
      evidencing Securities:


                                      -16-
<PAGE>


      [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES
      ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES
      AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
      RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
      OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
      A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY
      ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
      REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES
      ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

            The Company acknowledges and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin agreement or grant a
      security interest in some or all of the Securities and, if required under
      the terms of such arrangement, such Purchaser may transfer pledged or
      secured Securities to the pledgees or secured parties. If required by the
      Company's transfer agent in order to effect a pledge, the Company shall
      cause its counsel, at no cost to the Purchasers, to issue an opinion of
      counsel to the Company's transfer agent. Further, no notice shall be
      required of such pledge. At the appropriate Purchaser's expense, the
      Company will execute and deliver such reasonable documentation as a
      pledgee or secured party of Securities may reasonably request in
      connection with a pledge or transfer of the Securities, including the
      preparation and filing of any required prospectus supplement under Rule
      424(b)(3) of the Securities Act or other applicable provision of the
      Securities Act to appropriately amend the list of Selling Stockholders
      thereunder.

            (c) Certificates evidencing Underlying Shares shall not contain any
      legend (including the legend set forth in Section 4.1(b) hereof): (i)
      while a registration statement (including the Registration Statement)
      covering the resale of such security is effective under the Securities
      Act, or (ii) following any sale of such Underlying Shares pursuant to Rule
      144, or (iii) if such Underlying Shares are eligible for sale under Rule
      144(k), or (iv) if such legend is not required under applicable
      requirements of the Securities Act (including judicial interpretations and
      pronouncements issued by the staff of the Commission); provided, however,
      in connection with the issuance of the Underlying Shares, each Purchaser,
      severally and not jointly with the other Purchasers, hereby agrees to
      adhere to and abide by all prospectus delivery requirements under the
      Securities Act and rules and regulations of the Commission. If all or any
      portion of a Debenture or Warrant is converted or exercised (as
      applicable) at a time when there is an effective registration statement to
      cover the resale of the Underlying Shares, or if such Underlying Shares
      may be sold under Rule 144(k) or if such legend is not otherwise required
      under applicable requirements of the Securities Act (including judicial
      interpretations thereof) then such Underlying Shares shall be issued free
      of all legends. The Company agrees that following the Effective Date or at
      such time as such legend is no longer required under this Section 4.1(c),
      it will, no later than three Trading Days following the delivery by a
      Purchaser to the Company or the Company's transfer agent of a certificate
      representing Underlying Shares issued with a restrictive legend (such
      third Trading Day, the "Legend Removal Date", deliver or cause to be
      delivered to such Purchaser a certificate representing such shares that is
      free from all restrictive and other legends. The Company may not make any
      notation on its records or give instructions to any transfer agent of the
      Company that enlarge the restrictions on transfer set forth in this
      Section.


                                      -17-
<PAGE>

            (d) In addition to such Purchaser's other available remedies, the
      Company shall pay to a Purchaser, in cash, as partial liquidated damages
      and not as a penalty, for each $5,000 of Underlying Shares (based on the
      Closing Price of the Common Stock on the date such Securities are
      submitted to the Company's transfer agent) delivered for removal of the
      restrictive legend and subject to this Section 4.1(c), $50 per Trading Day
      (increasing to $100 per Trading Day 3 Trading Days after such damages have
      begun to accrue) for each Trading Day after the Legend Removal Date until
      such certificate is delivered without a legend.

      4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Securities may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions. The
Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.

      4.3 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any Purchaser, the Company shall deliver to such Purchaser a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as any Purchaser owns Securities, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.

      4.4 Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Principal Market.


                                      -18-
<PAGE>

      4.5 Reservation and Listing of Securities.

            (a) The Company shall maintain a reserve from its duly authorized
      shares of Common Stock for issuance pursuant to the Transaction Documents
      in such amount as may be required to fulfill its obligations in full under
      the Transaction Documents. So long as at least 20% of the principal amount
      of the Debentures, in the aggregate, issued at either the First Closing or
      Second Closing are then outstanding, the Company will not undertake a
      forward or reverse stock split or reclassification of the Common Stock
      without the prior written consent of each Purchaser holding Debentures at
      such time.

            (b) If, on any date, the number of authorized but unissued (and
      otherwise unreserved) shares of Common Stock is less than the Required
      Minimum on such date, then the Board of Directors of the Company shall use
      commercially reasonable efforts to amend the Company's certificate or
      articles of incorporation to increase the number of authorized but
      unissued shares of Common Stock to at least the Required Minimum at such
      time, as soon as possible and in any event not later than the 75th day
      after such date.

            (c) The Company shall, if applicable: (i) in the time and manner
      required by the Principal Market, prepare and file with such Principal
      Market an additional shares listing application covering a number of
      shares of Common Stock at least equal to the Required Minimum on the date
      of such application, (ii) take all steps necessary to cause such shares of
      Common Stock to be approved for listing on the Principal Market as soon as
      possible thereafter, (iii) provide to the Purchasers evidence of such
      listing, and (iv) maintain the listing of such Common Stock on any date at
      least equal to the Required Minimum on such date on such Principal Market
      or another Principal Market.

      4.6 Conversion and Exercise Procedures. The form of Notice of Exercise
included in the Warrants and the form of Notice of Conversion included in the
Debentures set forth the totality of the procedures required of the Purchasers
in order to exercise the Warrants or convert the Debentures. No additional legal
opinion or other information or instructions shall be required of the Purchasers
to exercise their Warrants or convert their Debentures. The Company shall honor
exercises of the Warrants and conversions of the Debentures and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.

      4.7 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the First Closing Date, issue a press
release or file a Current Report on Form 8-K reasonably acceptable to each
Purchaser disclosing all material terms of the transactions contemplated hereby.
The Company and the Purchasers shall consult with each other in issuing any
press releases with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, other than in any registration statement filed
pursuant to the Registration Rights Agreement and filings related thereto, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Principal Market, without the prior written consent of such Purchaser, except
to the extent such disclosure is required by law or Principal Market
regulations, in which case the Company shall provide each Purchaser with prior
notice of such disclosure.


                                      -19-
<PAGE>

      4.8 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.9 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables, capital lease obligations, and accrued expenses in the ordinary course
of the Company's business and prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.

      4.10 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company,
solely as a result of such Purchaser's acquisition of the Securities under this
Agreement and without causation by any other activity, obligation, condition or
liability on the part of, or pertaining to such Purchaser and not to the
purchase of Securities pursuant to this Agreement, the Company will reimburse
such Purchaser, to the extent such reimbursement is not provided for in Section
4.11, for its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations (and limitations thereon) of the Company under this paragraph shall
be in addition to any liability which the Company may otherwise have, shall
extend upon the same terms and conditions to any Affiliates of the Purchasers
who are actually named in such action, proceeding or investigation, and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Purchasers and any such Affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement except to the extent any covenant or warranty owing to the
Company is breached.

      4.11 Indemnification of Purchasers. Subject to the provisions of this
Section 4.11, each party (the "Indemnifying Party") will indemnify and hold the
other parties and their directors, officers, shareholders, partners, employees
and agents (each, an "Indemnified Party") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such Indemnified Party may
suffer or incur as a result of or relating to any breach of any of the
representations, warranties, covenants or agreements made by the Indemnifying
Party in this Agreement or in the other Transaction Documents. If any action
shall be brought against any Indemnified Party in respect of which indemnity may
be sought pursuant to this Agreement, such Indemnified Party shall promptly
notify the Indemnifying Party in writing, and the Indemnifying Party shall have
the right to assume the defense thereof with counsel of its own choosing. Any
Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party except to the extent
that (i) the employment thereof has been specifically authorized by the
Indemnifying Party in writing, (ii) the Indemnifying Party has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Indemnifying
Party and the position of such Indemnified Party. The Indemnifying Party will
not be liable to any Indemnified Party under this Agreement (i) for any
settlement by an Indemnified Party effected without the Indemnifying Party's
prior written consent, which shall not be unreasonably withheld or delayed; or
(ii) to the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Indemnified Party's breach of any of the
representations, warranties, covenants or agreements made by the Purchasers in
this Agreement or in the other Transaction Documents. In no event shall the
liability of any Purchaser hereunder be greater in amount than the dollar amount
of the net proceeds received by such Purchaser upon the sale of the Securities.


                                      -20-
<PAGE>

      4.12 Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the Company
or any other Person that any Purchaser is an "Acquiring Person" under the plan
or in any way could be deemed to trigger the provisions of such plan by virtue
of receiving Securities under the Transaction Documents.

      4.13 Future Financings. From the date hereof until 90 days after the
Effective Date, other than as contemplated by this Agreement, neither the
Company nor any Subsidiary shall issue or sell any Capital Shares or Capital
Shares Equivalents. Notwithstanding anything herein to the contrary, the 90 day
period set forth in this Section 4.13 shall be extended for the number of
Trading Days during such period in which (y) trading in the Common Stock is
suspended by any Principal Market, or (z) following the Effective Date, the
Registration Statement is not effective or the prospectus included in the
Registration Statement may not be used by the Purchasers for the resale of the
Underlying Shares. Notwithstanding anything to the contrary herein, this Section
4.13 shall not apply to the following (a) the granting or issuance of shares of
Common Stock or options to employees, officers and directors of the Company
pursuant to any stock option plan or employee incentive plan or agreement duly
adopted or approved by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, (b) the exercise of a
Debenture or any other security issued by the Company in connection with the
offer and sale of this Company's securities pursuant to this Agreement, or (c)
the exercise of or conversion of any Capital Shares Equivalents issued and
outstanding on the date hereof, provided that such securities have not been
amended since the date hereof, or (d) the issuance of Capital Shares or Capital
Shares Equivalents in connection with acquisitions, strategic investments or
strategic partnering arrangements, the primary purpose of which is not to raise
capital.


                                      -21-
<PAGE>

      4.14 Participation in Future Financing. From the date hereof until 360
days after the Effective Date, the Company shall not effect a financing of its
Capital Shares or Capital Shares Equivalents (a "Subsequent Financing") unless
(i) the Company delivers to each Purchaser a written notice at least 5 Trading
Days prior to the closing of such Subsequent Financing (the "Subsequent
Financing Notice") of its intention to effect such Subsequent Financing, which
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Financing is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (ii) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the fifth (5th) Trading Day after its receipt
of the Subsequent Financing Notice of its willingness to provide (or to cause
its designee to provide), subject to completion of mutually acceptable
documentation, all or part of such financing to the Company on the same terms
set forth in the Subsequent Financing Notice. If one or more Purchasers shall
fail to so notify the Company of their willingness to participate in the
Subsequent Financing, the Company may effect the remaining portion of such
Subsequent Financing on the terms and to the Persons set forth in the Subsequent
Financing Notice; provided that the Company must provide the Purchasers with a
second Subsequent Financing Notice, and the Purchasers will again have the right
of first refusal set forth above in this Section 4.14, if the Subsequent
Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within
60 Trading Days after the date of the initial Subsequent Financing Notice with
the Person identified in the Subsequent Financing Notice. In the event the
Company receives responses to Subsequent Financing Notices from Purchasers
seeking to purchase more than the financing sought by the Company in the
Subsequent Financing such Purchasers shall have the right to purchase their Pro
Rata Portion (as defined below) of the Capital Shares or Capital Shares
Equivalents to be issued in such Subsequent Financing. "Pro Rata Portion" is the
ratio of (x) the principal amount of Debentures purchased by a Purchaser and (y)
the sum of the aggregate principal amount of Debentures issued hereunder.
Notwithstanding anything to the contrary herein, this Section 4.14 shall not
apply to the following (a) the granting of options to employees, officers and
directors of the Company pursuant to any stock option plan duly adopted by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non-employee directors established
for such purpose, or (b) the exercise of the Debenture or any other security
issued by the Company in connection with the offer and sale of this Company's
securities pursuant to this Agreement, or (c) the exercise of or conversion of
any Capital Shares Equivalents issued and outstanding on the date hereof,
provided such securities have not been amended since the date hereof, or (d) the
issuance of Capital Shares or Capital Shares Equivalents in connection with
acquisitions, strategic investments or strategic partnering arrangements, the
primary purpose of which is not to raise capital or subsequent exercise of any
such Capital Shares Equivalents.


                                      -22-
<PAGE>

                                    ARTICLE V

                                  MISCELLANEOUS

      5.1 Termination. This Agreement may be terminated by any Purchaser, by
written notice to the other parties, if the Closing has not been consummated on
or before August 22, 2003; provided that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

      5.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.

      5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

      5.4 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 on the signature page prior to 5:30 p.m. (New York City time) on a
Trading Day and an electronic confirmation of delivery is received by the
sender, (b) the next Trading 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 Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (c) three Trading Days following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The addresses for such notices and communications are those set forth on the
signature pages hereof, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.

      5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

      5.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.


                                      -23-
<PAGE>

      5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities.

      5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.

      5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) 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 contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

      5.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive each Closing and the delivery, exercise and/or
conversion of the Securities, as applicable.

      5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. 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.


                                      -24-
<PAGE>

      5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of a conversion of a Debenture or exercise
of a Warrant, the Purchaser shall be required to return any shares of Common
Stock subject to any such rescinded conversion or exercise notice.

      5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

      5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

      5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.


                                      -25-
<PAGE>

      5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist
any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the "Maximum Rate"),
and, without limiting the foregoing, in no event shall any deemed rate of
interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date forward, unless such application
is precluded by applicable law. If under any circumstances whatsoever, interest
in excess of the Maximum Rate is paid by the Company to any Purchaser with
respect to indebtedness evidenced by the Transaction Documents, such excess
shall be applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser's election.

      5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document 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 Transaction Document. Nothing contained herein or in any
Transaction Document, 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 the Transaction Document. 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 Transaction 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 has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only HPC Capital Management, the placement agent to the
transaction. The Company has elected to provide all Purchasers with the same
terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.

      5.19 Liquidated Damages. The Company's obligations to pay any liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid liquidated
damages and other amounts have been paid notwithstanding the fact that the
instrument or security pursuant to which such liquidated damages or other
amounts are due and payable shall have been canceled.

                             ***********************


                                      -26-
<PAGE>


      IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.


QT 5, INC.                                 Address for Notice:


By:_____________________________
   Name:                                   5655 Lindero Canyon Road
   Title:                                  Suite 120
                                           West Lake Village, CA 91362
                                           ATTN:

                                           Tel: 818.338.1510
                                           Fax:


With a copy to (which shall not constitute notice):

Darrin M. Ocasio, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]



                                      -27-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.


PALISADES MASTER FUND L.P.
By: Discovery Management Limited,          Address for Notice:
Authorized Signatory                       Harbour House
                                           Waterfront Drive
By: ____________________________________   Roadtown, Tortowa
    Name:                                  British Virgin Islands
    Title:                                 Attn: Paul T. Mannion, Jr.



Address for delivery of securities:
Westminster Securities
100 Wall Street, 7th Floor
New York, NY 10005


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:

With a copy to:
(which shall not constitute notice)


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]


                                      -28-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]

CRESCENT INTERNATIONAL LTD.                Address for Notice:
                                           c/o GreenLight (Switzerland) SA
                                           84, Avenue Louis-Casai
                                           CH 1216 Cointrin, Geneva

By: ____________________________           Switzerland
    Name:                                  Attention: Mel Craw / Maxi Brezzi
    Title:                                 Tel.: + 41 22 791 7170
                                                 / +41 22 791 7256
                                           Fax : +41 22 791 7171


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:


                           [SIGNATURE PAGE CONTINUED]



                                      -29-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]


ALPHA CAPITAL AG                           Address for Notice:
                                           Lettstrasse 32
                                           Furstentum 9490
By:  __________________________            Vaduz, Liechtenstein
     Name:                                 Fax: 011-423 232 3196
     Title:                                Attn: Director


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:


                           [SIGNATURE PAGE CONTINUED]



                                      -30-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]


BRISTOL INVESTMENT FUND, LTD.              Address for Notice:
                                           c/o Bristol DLP, LLC
                                           6363 Sunset Boulevard, 5th Floor
                                           Hollywood, California 90028
By:_________________________               Attn:  Amy Wang, Esq.
   Name:                                   Fax:  (323) 468-8307
   Title:


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:


                           [SIGNATURE PAGE CONTINUED]


                                      -31-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]



ELLIS INTERNATIONAL LTD                    Address for Notice:
                                           53rd Street, Urbanization Obarrio
By:  __________________________            Attn: Swiss Tower, 16th Floor, Panama
     Name:                                 Republic of Panama
     Title:                                Tel:  917-748-3501


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:


                           [SIGNATURE PAGE CONTINUED]



                                      -32-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]


ZENNY TRADING LIMITED

By: ____________________________
         Name:
         Title:


Address for Notice:

Suites 7B & 8B
50 Town Range
Gibralter
Tel:
Fax:
Attn:  Annette Brittendon
abrittenden@mutrust.com


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:


                           [SIGNATURE PAGE CONTINUED]


                                      -33-
<PAGE>


        [PURCHASER SIGNATURE PAGES TO QTFV SECURITIES PURCHASE AGREEMENT]



[PURCHASER] Address for Notice:

By:  __________________________
     Name:
     Title:


First Closing Subscription Amount:  $
First Closing Principal Amount: $
Second Closing Subscription Amount: $
Second Closing Principal Amount: $
Warrant Shares:



                           [SIGNATURE PAGE CONTINUED]


                                      -34-