Exhibit 10.18

                                                                       EXHIBIT A

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
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 TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES  ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                                            Date of Issuance: _________ __, 2003

                                                                $_______________


                            6% CONVERTIBLE DEBENTURE
                           DUE __________ __, 2006/1/

            THIS  DEBENTURE is one of a series of duly  authorized and issued 6%
Convertible Debentures of QT 5, Inc., a Delaware corporation, having a principal
place of business at 5655 Lindero  Canyon Road,  Suite 120,  West Lake  Village,
California  91362 (the "Company"),  designated as its 6% Convertible  Debenture,
due __________ __, 2006 (the "Debentures").

         FOR   VALUE    RECEIVED,    the    Company    promises    to   pay   to
________________________ or its registered assigns (the "Holder"), the principal
sum of  $_______________  on  ___________  __, 2006 or such  earlier date as the
Debentures  are required or permitted  to be repaid as provided  hereunder  (the
"Maturity Date"), and to pay interest to the Holder on the aggregate unconverted
and then  outstanding  principal  amount of this Debenture at the rate of 6% per
annum,  payable  quarterly  on March 1,  June 1,  September  1 and  December  1,
beginning  on the first  such date  after the  Original  Issue  Date and on each
Conversion  Date (as to that principal  amount then being  converted) and on the
Maturity  Date (except  that,  if any such date is not a Business Day, then such

--------
/1/    36 months from the Original Issue Date.



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payment  shall be due on the next  succeeding  Business Day) (each such date, an
"Interest  Payment  Date"),  in cash or shares of Common  Stock at the  Interest
Conversion Rate, or a combination thereof; provided,  however, payment in shares
of Common Stock may only occur if: (i) there is an effective  Underlying  Shares
Registration  Statement pursuant to which the Holder is permitted to utilize the
prospectus  thereunder  to resell all of the shares of Common Stock to be issued
in  lieu  of  cash  (and  the  Company  believes,   in  good  faith,  that  such
effectiveness will continue  uninterrupted for the foreseeable future), (ii) the
Common  Stock is listed  for  trading on a  Principal  Market  (and the  Company
believes,  in good faith, that trading of the Common Stock on a Principal Market
will  continue  uninterrupted  for the  foreseeable  future),  (iii)  there is a
sufficient number of authorized but unissued and otherwise  unreserved shares of
Common  Stock for the  issuance  of all of the share  issuable  pursuant  to the
Transaction Documents, including the shares to be issued for interest in lieu of
cash and (iv) such  issuance  would be permitted in full without  violating  the
limitations set forth in Section  4(a)(ii).  Subject to the terms and conditions
herein, the decision whether to pay interest hereunder in shares of Common Stock
or cash shall be at the discretion of the Company. Not less than 20 Trading Days
prior to each Interest  Payment Date,  the Company shall provide the Holder with
written  notice of its  election  to pay  interest  hereunder  either in cash or
shares of Common  Stock  (the  Company  may  indicate  in such  notice  that the
election  contained  in such  notice  shall  continue  for later  periods  until
revised).  Within  20  Trading  Days  prior to an  Interest  Payment  Date,  the
Company's  election (whether specific to an Interest Payment Date or continuous)
shall  be  irrevocable  as  to  such  Interest  Payment  Date.  Subject  to  the
aforementioned  conditions,  failure to timely provide such written notice shall
be deemed an  election  by the  Company  to pay the  interest  on such  Interest
Payment Date in cash.  Interest  shall be  calculated  on the basis of a 360-day
year and shall accrue daily  commencing on the Original Issue Date until payment
in full of the principal sum,  together with all accrued and unpaid interest and
other amounts which may become due hereunder, has been made. Payment of interest
in shares of Common  Stock shall  otherwise  occur  pursuant to Section 4(b) and
only for  purposes of the payment of interest in shares,  the  Interest  Payment
Date shall be deemed the  Conversion  Date.  Interest shall cease to accrue with
respect to any  principal  amount  converted,  provided that the Company in fact
delivers  the  Underlying  Shares  within the time  period  required  by Section
4(b)(i).  Interest  hereunder  will be paid to the  Person  in whose  name  this
Debenture is registered on the records of the Company regarding registration and
transfers of Debentures (the "Debenture Register"). Except as otherwise provided
herein, if at anytime the Company pays interest  partially in cash and partially
in shares of Common Stock, then such payment shall be distributed  ratably among
the Holders based upon the principal  amount of Debentures  held by each Holder.
All overdue accrued and unpaid interest to be paid hereunder shall entail a late
fee at the rate of 15% per  annum (or such  lower  maximum  amount  of  interest
permitted  to be charged  under  applicable  law) ("Late Fee") which will accrue
daily,  from the date such interest is due  hereunder  through and including the
date of payment.  The Company may not prepay any portion of the principal amount
of this Debenture without the prior written consent of the Holder.


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<PAGE>

         This Debenture is subject to the following additional provisions:

         Section  1.  This  Debenture  is  exchangeable  for an equal  aggregate
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested by the Holder  surrendering  the same. No service  charge will be made
for such registration of transfer or exchange.

         Section 2. This Debenture has been issued subject to certain investment
representations  of the original Holder set forth in the Purchase  Agreement and
may be transferred or exchanged only in compliance  with the Purchase  Agreement
and applicable  federal and state securities laws and regulations.  Prior to due
presentment to the Company for transfer of this  Debenture,  the Company and any
agent of the Company may treat the Person in whose name this  Debenture  is duly
registered  on the  Debenture  Register  as the owner  hereof for the purpose of
receiving payment as herein provided and for all other purposes,  whether or not
this  Debenture is overdue,  and neither the Company nor any such agent shall be
affected by notice to the contrary.

         Section 3.          Events of Default.

                  a) "Event of Default",  wherever used herein, means any one of
         the  following  events  (whatever  the reason  and  whether it shall be
         voluntary or involuntary or effected by operation of law or pursuant to
         any  judgment,  decree or order of any  court,  or any  order,  rule or
         regulation of any administrative or governmental body):

                           i) any  default in the payment of the  principal  of,
                  interest  on,  or  liquidated   damages  in  respect  of,  any
                  Debentures,  free of any claim of  subordination,  as and when
                  the same shall become due and payable (whether on a Conversion
                  Date or the Maturity  Date or by  acceleration  or  otherwise)
                  which  default is not cured,  if possible  to cure,  within 15
                  days of notice of such default sent by the Holder;

                           ii) the Company  shall fail to observe or perform any
                  other  covenant,   agreement  or  warranty  contained  in,  or
                  otherwise   commit  any  breach  of  any  of  the  Transaction
                  Documents   (other  than  a  breach  by  the  Company  of  its
                  obligations  to deliver  shares of Common  Stock to the Holder
                  upon conversion or interest  payment which breach is addressed
                  in clause (x) below) which is not cured,  if possible to cure,
                  within 10 days of notice of such default sent by the Holder;

                           iii) the  Company  or any of its  subsidiaries  shall
                  commence,  or there shall be commenced  against the Company or
                  any such subsidiary a case under any applicable  bankruptcy or
                  insolvency laws as now or hereafter in effect or any successor
                  thereto,  or the Company  commences any other proceeding under
                  any reorganization, arrangement, adjustment of debt, relief of
                  debtors, dissolution, insolvency or liquidation or similar law
                  of  any  jurisdiction  whether  now  or  hereafter  in  effect
                  relating to the Company or any subsidiary  thereof or there is
                  commenced  against the Company or any  subsidiary  thereof any
                  such bankruptcy,  insolvency or other proceeding which remains
                  undismissed  for a period of 60 days;  or the  Company  or any
                  subsidiary  thereof is adjudicated  insolvent or bankrupt;  or
                  any order of relief or other order  approving any such case or
                  proceeding  is  entered;  or the  Company  or  any  subsidiary
                  thereof  suffers any  appointment of any custodian or the like
                  for it or any substantial part of its property which continues
                  undischarged  or  unstayed  for a period  of 60  days;  or the


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<PAGE>

                  Company or any subsidiary  thereof makes a general  assignment
                  for the benefit of  creditors;  or the  Company  shall fail to
                  pay,  or shall  state  that it is unable  to pay,  or shall be
                  unable to pay, its debts  generally as they become due; or the
                  Company or any subsidiary  thereof shall call a meeting of its
                  creditors with a view to arranging a  composition,  adjustment
                  or   restructuring  of  its  debts;  or  the  Company  or  any
                  subsidiary  thereof  shall  by  any  act  or  failure  to  act
                  expressly indicate its consent to, approval of or acquiescence
                  in any of the  foregoing;  or any corporate or other action is
                  taken by the Company or any subsidiary thereof for the purpose
                  of effecting any of the foregoing;

                           iv)  the  Company   shall   default  in  any  of  its
                  obligations under any other Debenture or any mortgage,  credit
                  agreement or other facility,  indenture  agreement,  factoring
                  agreement or other instrument under which there may be issued,
                  or by which there may be secured or evidenced any indebtedness
                  for borrowed money or money due under any long term leasing or
                  factoring  arrangement  of the Company in an amount  exceeding
                  $150,000,  whether  such  indebtedness  now  exists  or  shall
                  hereafter  be created and such  default  shall  result in such
                  indebtedness  becoming or being declared due and payable prior
                  to the  date  on  which  it  would  otherwise  become  due and
                  payable,  which  default is not cured,  if  possible  to cure,
                  within 15 days of notice of such default sent by the Holder;

                           v)  the  Common  Stock  shall  not  be  eligible  for
                  quotation  on or quoted for trading on a Principal  Market and
                  shall  not again be  eligible  for and  quoted  or listed  for
                  trading thereon within seven Trading Days;

                           vi) the  Company  shall be a party to any  Change  of
                  Control Transaction , shall agree to sell or dispose of all or
                  in  excess of 40% of its  assets  in one or more  transactions
                  (whether or not such sale would constitute a Change of Control
                  Transaction)  or shall  redeem  or  repurchase  more than a de
                  minimis  number of its  outstanding  shares of Common Stock or
                  other equity securities of the Company (other than redemptions
                  of Underlying Shares and repurchases of shares of Common Stock
                  or other equity securities of departing officers and directors
                  of the Company;  provided no repurchase  shall exceed $100,000
                  for any officer or director);

                           vii)  an  Underlying  Shares  Registration  Statement
                  shall not have been declared effective by the Commission on or
                  prior to the 150th calendar day after the Original Issue Date;


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<PAGE>

                           viii) if, during the Effectiveness Period (as defined
                  in the Registration  Rights  Agreement),  the effectiveness of
                  the Underlying  Shares  Registration  Statement lapses for any
                  reason  or  the  Holder  shall  not  be  permitted  to  resell
                  Registrable  Securities (as defined in the Registration Rights
                  Agreement) under the Underlying Shares Registration Statement,
                  in either case, for more than 15  consecutive  Trading Days or
                  25 non-consecutive Trading Days during any 12 month period;

                           ix) an Event (as defined in the  Registration  Rights
                  Agreement)  shall not have been cured to the  satisfaction  of
                  the Holder  prior to the  expiration  of thirty  days from the
                  Event Date (as defined in the Registration  Rights  Agreement)
                  relating thereto (other than an Event resulting from a failure
                  of an Underlying Shares Registration  Statement to be declared
                  effective by the  Commission on or prior to the  Effectiveness
                  Date (as defined in the Registration Rights Agreement),  which
                  shall be covered by Section 3(a)(vii));

                           x) the  Company  shall fail for any reason to deliver
                  certificates  to a Holder  prior to the  seventh  Trading  Day
                  after a Conversion  Date  pursuant to and in  accordance  with
                  Section  4(b)  or the  Company  shall  provide  notice  to the
                  Holder, including by way of public announcement,  at any time,
                  of its intention  not to comply with requests for  conversions
                  of any Debentures in accordance with the terms hereof; or

                           (xi) the Company shall fail for any reason to deliver
                  the payment in cash  pursuant to a Buy-In (as defined  herein)
                  within five days after notice thereof is delivered hereunder.

                  b) If any Event of Default occurs and is continuing,  the full
         principal  amount of this  Debenture,  together with interest and other
         amounts owing in respect  thereof,  to the date of  acceleration  shall
         become at the Holder's  election,  immediately due and payable in cash.
         The aggregate amount payable upon an Event of Default shall be equal to
         the Mandatory Prepayment Amount. Interest shall accrue on the Mandatory
         Prepayment  Amount hereunder from the fifth (5th) day after such amount
         is due  (being  the date of an Event of  Default)  through  the date of
         prepayment  in full  thereof  in an amount  equal to the Late  Fee,  to
         accrue  daily from the date such payment is due  hereunder  through and
         including  the date of  payment.  All  Debentures  for  which  the full
         prepayment price hereunder shall have been paid in accordance  herewith
         shall  promptly be  surrendered  to or as directed by the Company.  The
         Holder need not provide and the Company hereby waives any  presentment,
         demand,  protest  or other  notice  of any  kind,  and the  Holder  may
         immediately and without  expiration of any grace period enforce any and
         all of its  rights  and  remedies  hereunder  and  all  other  remedies
         available to it under applicable law. Such declaration may be rescinded
         and annulled by Holder at any time prior to payment  hereunder  and the
         Holder shall have all rights as a Debenture  holder until such time, if


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<PAGE>

         any, as the full payment under this Section shall have been received by
         it. No such rescission or annulment  shall affect any subsequent  Event
         of Default or impair any right consequent thereon.

         Section 4.          Conversion.

                  a) i) At any time  after the  Original  Issue  Date until this
                  Debenture is no longer  outstanding,  this Debenture  shall be
                  convertible  into shares of Common  Stock at the option of the
                  Holder,  in whole or in part at any time and from time to time
                  (subject to the limitations on conversion set forth in Section
                  4(a)(ii)  hereof).  The Holder  shall  effect  conversions  by
                  delivering  to the  Company  the form of Notice of  Conversion
                  attached  hereto  as  Annex  A  (a  "Notice  of  Conversion"),
                  specifying  therein the  principal  amount of Debentures to be
                  converted  and the  date on  which  such  conversion  is to be
                  effected  (a  "Conversion  Date").  If no  Conversion  Date is
                  specified in a Notice of Conversion, the Conversion Date shall
                  be the  date  that  such  Notice  of  Conversion  is  provided
                  hereunder.  To effect conversions hereunder,  the Holder shall
                  not be  required to  physically  surrender  Debentures  to the
                  Company unless the entire  principal  amount of this Debenture
                  plus all  accrued  and  unpaid  interest  thereon  has been so
                  converted.  Conversions  hereunder  shall  have the  effect of
                  lowering the outstanding principal amount of this Debenture in
                  an amount equal to the applicable  conversion.  The Holder and
                  the Company  shall  maintain  records  showing  the  principal
                  amount converted and the date of such conversions. The Company
                  shall deliver any objection to any Notice of Conversion within
                  1 Business Day of receipt of such notice.  In the event of any
                  dispute or  discrepancy,  the  records of the Holder  shall be
                  controlling  and  determinative  in the  absence  of  manifest
                  error.  The Holder and any  assignee,  by  acceptance  of this
                  Debenture,  acknowledge  and  agree  that,  by  reason  of the
                  provisions  of  this  paragraph,  following  conversion  of  a
                  portion  of  this   Debenture,   the  unpaid  and  unconverted
                  principal amount of this Debenture may be less than the amount
                  stated on the face hereof.

                           ii) The  Holder  shall not have the right to  convert
                  any portion of this  Debenture,  pursuant to Section  4(a)(i),
                  Section  5b) or  otherwise,  to the extent  that after  giving
                  effect  to such  conversion,  the  Holder  (together  with the
                  Holder's affiliates), as set forth on the applicable Notice of
                  Conversion,  would  beneficially own in excess of 4.99% of the
                  number of shares of the Common Stock  outstanding  immediately
                  after giving  effect to such  conversion.  For purposes of the
                  foregoing  sentence,  the  number of  shares  of Common  Stock
                  beneficially  owned by the  Holder  and its  affiliates  shall
                  include  the number of shares of Common  Stock  issuable  upon
                  conversion  of  this  Debenture  with  respect  to  which  the
                  determination  of such  sentence  is  being  made,  but  shall
                  exclude  the number of shares of Common  Stock  which would be
                  issuable upon (A)  conversion of the  remaining,  nonconverted
                  portion of this Debenture  beneficially owned by the Holder or
                  any of its  affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of


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                  the  Company  (including,   without   limitation,   any  other
                  Debentures  or  the  Warrants)  subject  to  a  limitation  on
                  conversion or exercise  analogous to the limitation  contained
                  herein  beneficially  owned  by  the  Holder  or  any  of  its
                  affiliates. Except as set forth in the preceding sentence, for
                  purposes of this Section 4(a)(ii),  beneficial ownership shall
                  be calculated in accordance with Section 13(d) of the Exchange
                  Act.  To the  extent  that the  limitation  contained  in this
                  section applies,  the  determination of whether this Debenture
                  is convertible (in relation to other  securities  owned by the
                  Holder)  and  of  which  a  portion  of  this   Debenture   is
                  convertible shall be in the sole discretion of such Holder. To
                  ensure  compliance with this  restriction,  the Holder will be
                  deemed to  represent  to the  Company  each time it delivers a
                  Notice of Conversion  that such Notice of  Conversion  has not
                  violated the  restrictions set forth in this paragraph and the
                  Company  shall have no  obligation  to verify or  confirm  the
                  accuracy of such  determination.  For purposes of this Section
                  4(a)(ii),  in determining the number of outstanding  shares of
                  Common Stock, the Holder may rely on the number of outstanding
                  shares of Common Stock as reflected in (x) the Company's  most
                  recent Form 10-Q or Form 10-K,  as the case may be, (y) a more
                  recent  public  announcement  by the  Company or (z) any other
                  notice by the Company or the Company's  Transfer Agent setting
                  forth the number of shares of Common Stock  outstanding.  Upon
                  the written or oral request of the Holder,  the Company  shall
                  within two Trading Days  confirm  orally and in writing to the
                  Holder the number of shares of Common Stock then  outstanding.
                  In any case, the number of outstanding  shares of Common Stock
                  shall be determined  after giving effect to the  conversion or
                  exercise  of  securities  of  the  Company,   including   this
                  Debenture,  by the Holder or its affiliates  since the date as
                  of which such number of outstanding shares of Common Stock was
                  reported.  The  provisions  of this  Section  4(a)(ii)  may be
                  waived by the Holder upon, at the election of the Holder,  not
                  less  than 61  days'  prior  notice  to the  Company,  and the
                  provisions  of this  Section  4(a)i)  shall  continue to apply
                  until such 61st day (or such later date,  as determined by the
                  Holder, as may be specified in such notice of waiver).

                           ii) Underlying  Shares  Issuable Upon  Conversion and
                  Pursuant to the Conversion of Principal Amount.  The number of
                  shares of Common Stock  issuable  upon a  conversion  shall be
                  determined  by the  quotient  obtained  by  dividing  (x)  the
                  outstanding principal amount of this Debenture to be converted
                  by (y) the Set Price.

                  (b) i) Not later than five Trading  Days after any  Conversion
                  Date,  the Company will deliver to the Holder a certificate or
                  certificates representing the Underlying Shares which shall be
                  free of restrictive  legends and trading  restrictions  (other
                  than those  required by the Purchase  Agreement)  representing
                  the number of shares of Common Stock being  acquired  upon the
                  conversion of Debentures  (including,  if so timely elected by
                  the Company,  shares of Common Stock  representing the payment
                  of  accrued  interest)  and (B) a bank  check in the amount of
                  accrued and unpaid interest (if the Company is required to pay


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<PAGE>

                  accrued interest in cash). The Company shall, if available and
                  if allowed  under  applicable  securities  laws,  use its best
                  efforts to deliver any certificate or certificates required to
                  be delivered by the Company under this Section  electronically
                  through   the   Depository   Trust   Corporation   or  another
                  established clearing corporation performing similar functions.
                  If in the case of any Notice of Conversion such certificate or
                  certificates  are  not  delivered  to or as  directed  by  the
                  applicable  Holder by the fifth Trading Day after a Conversion
                  Date,  the Holder  shall be entitled by written  notice to the
                  Company  at  any  time  on  or  before  its  receipt  of  such
                  certificate  or  certificates  thereafter,   to  rescind  such
                  conversion,  in which  event  the  Company  shall  immediately
                  return the  certificates  representing the principal amount of
                  Debentures tendered for conversion.

                  ii) If the  Company  fails for any  reason to  deliver  to the
                  Holder such  certificate or  certificates  pursuant to Section
                  4(b)(i) by the fifth  Trading Day after the  Conversion  Date,
                  the Company  shall pay to such Holder,  in cash, as liquidated
                  damages  and not as a penalty,  for each  $5,000 of  principal
                  amount being  converted,  $50 per Trading Day  (increasing  to
                  $100 per Trading Day after 3 Trading  Days after such  damages
                  begin to accrue) for each Trading Day after such third Trading
                  Day until  such  certificates  are  delivered.  In the event a
                  Holder of this Debenture  shall elect to convert any or all of
                  the outstanding  principal amount hereof,  the Company may not
                  refuse  conversion  based on any claim  that the Holder or any
                  one  associated  or  affiliated  with the  Holder  of has been
                  engaged in any  violation  of law,  agreement or for any other
                  reason,  unless,  an  injunction  from  a  court,  on  notice,
                  restraining and or enjoining conversion of all or part of this
                  Debenture  shall have been sought and obtained and the Company
                  posts a  surety  bond for the  benefit  of the  Holder  in the
                  amount  of  150% of the  principal  amount  of this  Debenture
                  outstanding,  which is subject to the  injunction,  which bond
                  shall   remain   in   effect   until   the    completion    of
                  arbitration/litigation  of the  dispute  and the  proceeds  of
                  which shall be payable to such Holder to the extent it obtains
                  judgment. In the absence of an injunction precluding the same,
                  the Company shall issue  Conversion  Shares or, if applicable,
                  cash, upon a properly noticed conversion. Nothing herein shall
                  limit a Holder's  right to pursue actual damages or declare an
                  Event  of  Default  pursuant  to  Section  3  herein  for  the
                  Company's  failure to  deliver  Conversion  Shares  within the
                  period  specified  herein and such Holder shall have the right
                  to pursue  all  remedies  available  to it at law or in equity
                  including,   without   limitation,   a  decree   of   specific
                  performance and/or injunctive relief. The exercise of any such
                  rights  shall not prohibit the Holders from seeking to enforce
                  damages   pursuant  to  any  other  Section  hereof  or  under
                  applicable law.

                  (iii) In addition to any other rights available to the Holder,
                  if the  Company  fails for any reason to deliver to the Holder
                  such  certificate or certificates  pursuant to Section 4(b)(i)
                  by the third  Trading Day after the  Conversion  Date,  and if
                  after such third  Trading  Day the Holder is  required  by its


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<PAGE>

                  brokerage  firm to purchase (in an open market  transaction or
                  otherwise)  Common Stock to deliver in  satisfaction of a sale
                  by such  Holder of the  Underlying  Shares  which  the  Holder
                  anticipated receiving upon such conversion (a "Buy-In"),  then
                  the Company  shall (A) pay in cash to the Holder (in  addition
                  to any  remedies  available  to or elected by the  Holder) the
                  amount  by  which  (x)  the  Holder's   total  purchase  price
                  (including brokerage commissions, if any) for the Common Stock
                  so  purchased  exceeds  (y) the  product of (1) the  aggregate
                  number of shares of Common Stock that such Holder  anticipated
                  receiving from the  conversion at issue  multiplied by (2) the
                  actual sale price of the Common  Stock at the time of the sale
                  (including brokerage commissions,  if any) giving rise to such
                  purchase  obligation  and  (B) at the  option  of the  Holder,
                  either  reissue  Debentures  in principal  amount equal to the
                  principal amount of the attempted conversion or deliver to the
                  Holder  the  number of shares of Common  Stock that would have
                  been issued had the Company timely  complied with its delivery
                  requirements under Section 4(b)(i). For example, if the Holder
                  purchases  Common  Stock  having  a total  purchase  price  of
                  $11,000  to  cover  a  Buy-In  with  respect  to an  attempted
                  conversion of Debentures with respect to which the actual sale
                  price  of the  Underlying  Shares  at  the  time  of the  sale
                  (including brokerage commissions,  if any) giving rise to such
                  purchase obligation was a total of $10,000 under clause (A) of
                  the  immediately  preceding  sentence,  the  Company  shall be
                  required to pay the Holder  $1,000.  The Holder shall  provide
                  the Company  written notice  indicating the amounts payable to
                  the Holder in respect of the Buy-In.  Notwithstanding anything
                  contained  herein to the  contrary,  if a Holder  requires the
                  Company to make payment in respect of a Buy-In for the failure
                  to  timely  deliver  certificates  hereunder  and the  Company
                  timely pays in full such  payment,  the  Company  shall not be
                  required to pay such Holder  liquidated  damages under Section
                  4(b)(ii)  in respect  of the  certificates  resulting  in such
                  Buy-In.

                  (iv) Notwithstanding anything herein to the contrary, if after
                  the  Effective  Date  each of the  Closing  Prices  for any 20
                  consecutive  Trading Days (such period  commencing  only after
                  the Effective Price) exceeds 200% of the Set Price (subject to
                  adjustment  for  reverse  and  forward  stock  splits,   stock
                  dividends,  stock combinations and other similar  transactions
                  of the  Common  Stock  that  occur  after  the  date  of  this
                  Agreement),  the Company may, within 2 Trading Days of the end
                  of any such period,  deliver a notice to the Holder (a "Forced
                  Conversion Notice" and the date such notice is received by the
                  Holder,  the  "Forced  Conversion  Notice  Date") to cause the
                  Holder  to  immediately  convert  all or part  (and  if  part,
                  pro-rata in proportion to each Holders initial purchase of the
                  Debentures)  of  the  then  outstanding  principal  amount  of
                  Debentures  pursuant to Section 4(a)(i).  The Company may only
                  effect a Forced  Conversion  Notice  if each of the  following
                  shall be true:  (i) the  Company  shall have duly  honored all
                  conversions  occurring  by  virtue  of one or more  Conversion
                  Notices prior to the Forced  Conversion Date, (ii) there is an
                  effective Underlying Shares Registration Statement pursuant to


                                       9
<PAGE>

                  which the  Holder  is  permitted  to  utilize  the  prospectus
                  thereunder  to resell all of the  Underlying  Shares issued to
                  the Holder and all of the Underlying Shares as are issuable to
                  the Holder upon  conversion in full of this Debenture  subject
                  to the Forced Conversion Notice (and the Company believes,  in
                  good   faith,   that   such    effectiveness   will   continue
                  uninterrupted  for the foreseeable  future),  (iii) the Common
                  Stock is listed for  trading on a  Principal  Market  (and the
                  Company  believes,  in good faith,  that trading of the Common
                  Stock on a Principal  Market will continue  uninterrupted  for
                  the foreseeable future), (iv) all liquidated damages and other
                  amounts  owing in respect  of the  Debentures  and  Underlying
                  Shares  shall  have been paid or will,  concurrently  with the
                  issuance of the Underlying  Shares, be paid in cash; (v) there
                  is  a  sufficient   number  of  authorized  but  unissued  and
                  otherwise  unreserved  shares of Common Stock for the issuance
                  of all the  Underlying  Shares as are  issuable  to the Holder
                  upon  conversion  in full  of the  Debentures  subject  to the
                  Forced  Conversion  Notice;  (vi) no Event of Default  nor any
                  event that with the passage of time would  constitute an Event
                  of Default has occurred and is continuing; (vii) such issuance
                  would be permitted in full without  violating the  limitations
                  set  forth  in   Section   4(a)(ii)   and   (viii)  no  public
                  announcement  of a  pending  or  proposed  Change  of  Control
                  Transaction or Fundamental  Transaction  has occurred that has
                  not been consummated.

                  (c) i) The conversion  price in effect on any Conversion  Date
                  shall be equal to $0.__/2/ (subject to adjustment  herein)(the
                  "Set Price"); provided, however, in the event that the Company
                  loses  its  patent  relating  to NICO  Water or  otherwise  is
                  legally unable to sell NICO Water,  the conversion price shall
                  thereafter  equal the  lesser of (A) the Set Price and (B) 60%
                  of the average of the 5 Closing  Prices for the 5 Trading Days
                  immediately prior to the applicable Conversion Date.

                  ii) If the  Company,  at any time  while  the  Debentures  are
                  outstanding:  (A) shall pay a stock dividend or otherwise make
                  a distribution or  distributions on shares of its Common Stock
                  or any other equity or equity equivalent securities payable in
                  shares of Common Stock (which,  for avoidance of doubt,  shall
                  not include any shares of Common  Stock  issued by the Company
                  pursuant to this Debenture,  including interest thereon),  (B)
                  subdivide  outstanding  shares of Common  Stock  into a larger
                  number of shares,  (C)  combine  (including  by way of reverse
                  stock split) outstanding shares of Common Stock into a smaller
                  number of shares, or (D) issue by  reclassification  of shares
                  of the  Common  Stock  any  shares  of  capital  stock  of the
                  Company,  then the Set Price shall be multiplied by a fraction
                  of which the numerator shall be the number of shares of Common
                  Stock (excluding  treasury shares, if any) outstanding  before
                  such event and of which the denominator shall be the number of
                  shares of Common  Stock  outstanding  after  such  event.  Any

---------------
/2/  As to the Debentures issued at the First Closing, $0.075 and as to the
Debentures issued at the Second Closing, the lesser of (1) $0.075 and (2) the
average of the 5 Closing Prices immediately prior to the Second Closing Date.

                                       10
<PAGE>

                  adjustment   made   pursuant  to  this  Section  shall  become
                  effective   immediately   after  the   record   date  for  the
                  determination   of  stockholders   entitled  to  receive  such
                  dividend   or   distribution   and  shall   become   effective
                  immediately  after  the  effective  date  in  the  case  of  a
                  subdivision, combination or re-classification.

                  iii)  If  the  Company,  at  any  time  while  Debentures  are
                  outstanding,  shall issue  rights,  options or warrants to all
                  holders of Common Stock (and not to Holders) entitling them to
                  subscribe  for or  purchase  shares of  Common  Stock or other
                  securities  exercisable,  convertible into or exchangeable for
                  Common Stock (the "Common Stock  Equivalents")  at a price per
                  share less than the Closing Price at the record date mentioned
                  below, then the Set Price shall be adjusted by multiplying the
                  Set Price in effect immediately prior to such record date by a
                  fraction,  of which  the  denominator  shall be the  number of
                  shares of the Common Stock (excluding treasury shares, if any)
                  outstanding on the date of issuance of such rights or warrants
                  plus the number of  additional  shares of Common Stock offered
                  for subscription or purchase, and of which the numerator shall
                  be the  number  of  shares  of  the  Common  Stock  (excluding
                  treasury  shares,  if any) outstanding on the date of issuance
                  of such rights or warrants plus the number of shares which the
                  aggregate  offering  price of the  total  number  of shares so
                  offered  would  purchase  at the  Closing  Price on the record
                  date.  Such  adjustment  shall be made  whenever  such rights,
                  options or warrants  are issued,  and shall  become  effective
                  immediately  after the record  date for the  determination  of
                  stockholders  entitled  to  receive  such  rights,  options or
                  warrants.

                  iv) If the Company or any subsidiary  thereof,  as applicable,
                  at any time while  Debentures  are  outstanding,  shall offer,
                  sell, grant any option to purchase or offer, sell or grant any
                  right to reprice its  securities,  or otherwise  dispose of or
                  issue (or  announce  any offer,  sale,  grant or any option to
                  purchase  or other  disposition)  any  Common  Stock or Common
                  Stock  Equivalent  entitling  any Person to acquire  shares of
                  Common  Stock,  at an effective  price per share less than the
                  then Set Price ("Dilutive  Issuance"),  as adjusted  hereunder
                  (if the holder of the Common Stock or Common Stock  Equivalent
                  so issued shall at any time,  whether by operation of purchase
                  price  adjustments,  reset  provisions,  floating  conversion,
                  exercise or exchange prices or otherwise,  or due to warrants,
                  options or rights per share which is issued in connection with
                  such  issuance,  be entitled to receive shares of Common Stock
                  at an  effective  price per  share  which is less than the Set
                  Price, such issuance shall be deemed to have occurred for less
                  than the Set  Price),  then the Set Price  shall be reduced to
                  equal the effective conversion, exchange or purchase price for
                  such Common Stock or Common Stock  Equivalents  (including any
                  reset provisions  thereof) at issue.  Such adjustment shall be
                  made  whenever  such Common Stock or Common Stock  Equivalents
                  are issued. The Company shall notify the Holder in writing, no
                  later than the 3rd business day  following the issuance of any
                  Common  Stock  or  Common  Stock  Equivalent  subject  to this


                                       11
<PAGE>

                  section,  indicating therein the applicable issuance price, or
                  of applicable  reset price,  exchange price,  conversion price
                  and other pricing terms.

                  v)  If  the  Company,   at  any  time  while   Debentures  are
                  outstanding,  shall  distribute to all holders of Common Stock
                  (and not to Holders)  evidences of its  indebtedness or assets
                  or  rights  or  warrants  to  subscribe  for or  purchase  any
                  security,  then in each  such  case  the Set  Price  shall  be
                  determined  by  multiplying  such price in effect  immediately
                  prior  to  the  record   date  fixed  for   determination   of
                  stockholders  entitled  to  receive  such  distribution  by  a
                  fraction of which the  denominator  shall be the Closing Price
                  determined as of the record date mentioned above, and of which
                  the numerator  shall be such Closing Price on such record date
                  less the then fair  market  value at such  record  date of the
                  portion  of  such  assets  or  evidence  of   indebtedness  so
                  distributed  applicable to one outstanding share of the Common
                  Stock as  determined  by the Board of Directors in good faith.
                  In  either  case  the  adjustments  shall  be  described  in a
                  statement  provided to the Holders of the portion of assets or
                  evidences of indebtedness so distributed or such  subscription
                  rights   applicable  to  one  share  of  Common  Stock.   Such
                  adjustment  shall be made  whenever any such  distribution  is
                  made and shall become effective  immediately  after the record
                  date mentioned above.

                  vi) All calculations under this Section 4 shall be made to the
                  nearest cent or the nearest 1/100th of a share, as the case
                  may be. For purposes of this Section 4, the number of shares
                  of Common Stock deemed to be outstanding as of a given date
                  shall be the sum of the number of shares of Common Stock
                  (excluding treasury shares, if any) outstanding on a fully
                  diluted basis.

                  vii) Whenever the Set Price is adjusted pursuant to any of
                  Section 4(c)(ii) - (v), the Company shall promptly mail to
                  each Holder a notice setting forth the Set Price after such
                  adjustment and setting forth a brief statement of the facts
                  requiring such adjustment.

                  viii) If (A) the Company shall declare a dividend (or any
                  other distribution) on the Common Stock; (B) the Company shall
                  declare a special nonrecurring cash dividend on or a
                  redemption of the Common Stock; (C) the Company shall
                  authorize the granting to all holders of the Common Stock
                  rights or warrants to subscribe for or purchase any shares of
                  capital stock of any class or of any rights; (D) the approval
                  of any stockholders of the Company shall be required in
                  connection with any reclassification of the Common Stock, any
                  consolidation or merger to which the Company is a party, any
                  sale or transfer of all or substantially all of the assets of
                  the Company, of any compulsory share exchange whereby the
                  Common Stock is converted into other securities, cash or
                  property; (E) the Company shall authorize the voluntary or
                  involuntary dissolution, liquidation or winding up of the
                  affairs of the Company; then, in each case, the Company shall
                  cause to be filed at each office or agency maintained for the
                  purpose of conversion of the Debentures, and shall cause to be


                                       12
<PAGE>

                  mailed to the Holders at their last addresses as they shall
                  appear upon the stock books of the Company, at least 20
                  calendar days prior to the applicable record or effective date
                  hereinafter specified, a notice stating (x) the date on which
                  a record is to be taken for the purpose of such dividend,
                  distribution, redemption, rights or warrants, or if a record
                  is not to be taken, the date as of which the holders of the
                  Common Stock of record to be entitled to such dividend,
                  distributions, redemption, rights or warrants are to be
                  determined or (y) the date on which such reclassification,
                  consolidation, merger, sale, transfer or share exchange is
                  expected to become effective or close, and the date as of
                  which it is expected that holders of the Common Stock of
                  record shall be entitled to exchange their shares of the
                  Common Stock for securities, cash or other property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange; provided, that the failure
                  to mail such notice or any defect therein or in the mailing
                  thereof shall not affect the validity of the corporate action
                  required to be specified in such notice. Holders are entitled
                  to convert Debentures during the 20-day period commencing the
                  date of such notice to the effective date of the event
                  triggering such notice.

                  ix) If, at any time while this Debenture is outstanding, (A)
                  the Company effects any merger or consolidation of the Company
                  with or into another Person, (B) the Company effects any sale
                  of all or substantially all of its assets in one or a series
                  of related transactions, (C) any tender offer or exchange
                  offer (whether by the Company or another Person) is completed
                  pursuant to which holders of Common Stock are permitted to
                  tender or exchange their shares for other securities, cash or
                  property, or (D) the Company effects any reclassification of
                  the Common Stock or any compulsory share exchange pursuant to
                  which the Common Stock is effectively converted into or
                  exchanged for other securities, cash or property (in any such
                  case, a "Fundamental Transaction"), then upon any subsequent
                  conversion of this Debenture, the Holder shall have the right
                  to receive, for each Underlying Share that would have been
                  issuable upon such conversion absent such Fundamental
                  Transaction, the same kind and amount of securities, cash or
                  property as it would have been entitled to receive upon the
                  occurrence of such Fundamental Transaction if it had been,
                  immediately prior to such Fundamental Transaction, the holder
                  of one share of Common Stock (the "Alternate Consideration").
                  For purposes of any such conversion, the determination of the
                  Set Price shall be appropriately adjusted to apply to such
                  Alternate Consideration based on the amount of Alternate
                  Consideration issuable in respect of one share of Common Stock
                  in such Fundamental Transaction, and the Company shall
                  apportion the Set Price among the Alternate Consideration in a
                  reasonable manner reflecting the relative value of any
                  different components of the Alternate Consideration. If
                  holders of Common Stock are given any choice as to the
                  securities, cash or property to be received in a Fundamental
                  Transaction, then the Holder shall be given the same choice as
                  to the Alternate Consideration it receives upon any conversion
                  of this Debenture following such Fundamental Transaction. To


                                       13
<PAGE>

                  the extent necessary to effectuate the foregoing provisions,
                  any successor to the Company or surviving entity in such
                  Fundamental Transaction shall issue to the Holder a new
                  Debenture consistent with the foregoing provisions and
                  evidencing the Holder's right to convert such Debenture into
                  Alternate Consideration. The terms of any agreement pursuant
                  to which a Fundamental Transaction is effected shall include
                  terms requiring any such successor or surviving entity to
                  comply with the provisions of this paragraph (c) and insuring
                  that this Debenture (or any such replacement security) will be
                  similarly adjusted upon any subsequent transaction analogous
                  to a Fundamental Transaction.

                  (x) Notwithstanding the foregoing, no adjustment will be made
                  under this paragraph (c) in respect of (A) the granting or
                  issuance of shares of capital stock or of options to
                  employees, officers, directors and consultants of the Company
                  pursuant to any stock option plan agreement or arrangement
                  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) upon the exercise of this
                  Debenture or any other Debenture of this series or of any
                  other series or security issued by the Company in connection
                  with the offer and sale of this Company's securities pursuant
                  to the Purchase Agreement, or (C) upon the exercise of or
                  conversion of any Common Stock Equivalents, rights, options or
                  warrants issued and outstanding on the Original Issue Date,
                  provided such securities have not been amended since the date
                  of the Purchase Agreement except as a result of the Purchase
                  Agreement, or (D) issuance of securities in connection with
                  acquisitions, strategic investments, or strategic partnering
                  arrangements, the primary purpose of which is not to raise
                  capital.

                  (d) The Company  covenants  that it will at all times  reserve
         and keep available out of its authorized and unissued  shares of Common
         Stock  solely  for the  purpose  of  issuance  upon  conversion  of the
         Debentures, each as herein provided, free from preemptive rights or any
         other  actual  contingent  purchase  rights of  persons  other than the
         Holders,  not less than such  number of shares of the  Common  Stock as
         shall  (subject  to any  additional  requirements  of the Company as to
         reservation  of such  shares set forth in the  Purchase  Agreement)  be
         issuable  (taking  into account the  adjustments  and  restrictions  of
         Section 4(b)) upon the conversion of the outstanding  principal  amount
         of the  Debentures  and  payment of  interest  hereunder.  The  Company
         covenants  that all shares of Common  Stock  that shall be so  issuable
         shall,  upon issue,  be duly and validly  authorized,  issued and fully
         paid,   nonassessable  and,  if  the  Underlying  Shares   Registration
         Statement  has  been  declared  effective  under  the  Securities  Act,
         registered for public sale in accordance  with such  Underlying  Shares
         Registration Statement.

                  (e) Upon a  conversion  hereunder  the  Company  shall  not be
         required to issue stock certificates  representing  fractions of shares
         of the  Common  Stock,  but  may if  otherwise  permitted,  make a cash
         payment  in  respect  of any  final  fraction  of a share  based on the


                                       14
<PAGE>

         Closing Price at such time. If the Company elects not, or is unable, to
         make such a cash payment,  the Holder shall be entitled to receive,  in
         lieu of the final fraction of a share, one whole share of Common Stock.

                  (f) The  issuance  of  certificates  for  shares of the Common
         Stock on conversion of the  Debentures  shall be made without charge to
         the Holders thereof for any documentary stamp or similar taxes that may
         be payable in respect  of the issue or  delivery  of such  certificate,
         provided that the Company shall not be required to pay any tax that may
         be payable in respect of any  transfer  involved  in the  issuance  and
         delivery of any such  certificate  upon conversion in a name other than
         that of the Holder of such  Debentures  so  converted  and the  Company
         shall not be required to issue or deliver such  certificates  unless or
         until the person or persons  requesting the issuance thereof shall have
         paid to the Company the amount of such tax or shall have established to
         the satisfaction of the Company that such tax has been paid.

                  (g) Any and all notices or other  communications or deliveries
         to be provided by the Holders hereunder, including, without limitation,
         any Notice of Conversion, shall be in writing and delivered personally,
         by  facsimile,  sent  by  a  nationally  recognized  overnight  courier
         service,  addressed  to the  Company,  at the address set forth  above,
         facsimile number (____) ___-_______,  Attn: _____________ or such other
         address  or  facsimile  number  as the  Company  may  specify  for such
         purposes by notice to the Holders  delivered  in  accordance  with this
         Section.  Any and all notices or other  communications or deliveries to
         be provided by the Company  hereunder shall be in writing and delivered
         personally,  by facsimile,  sent by a nationally  recognized  overnight
         courier  service  addressed to each Holder at the  facsimile  telephone
         number or address of such Holder appearing on the books of the Company,
         or if no such facsimile  telephone  number or address  appears,  at the
         principal  place  of  business  of the  Holder.  Any  notice  or  other
         communication  or  deliveries  hereunder  shall  be  deemed  given  and
         effective  on the  earliest  of (i) the date of  transmission,  if such
         notice or  communication  is delivered  via  facsimile at the facsimile
         telephone number specified in this Section prior to 5:30 p.m. (New York
         City  time),  (ii) the date  after  the date of  transmission,  if such
         notice or  communication  is delivered  via  facsimile at the facsimile
         telephone  number  specified in this Section  later than 5:30 p.m. (New
         York City time) on any date and earlier than 11:59 p.m.  (New York City
         time) on such date, (iii) the second Business Day following the date of
         mailing, if sent by nationally recognized overnight courier service, or
         (iv) upon  actual  receipt by the party to whom such notice is required
         to be given.

         Section 5. Reserved.

         Section 6. Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) the following terms shall have the following meanings:


                                       15
<PAGE>

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

                  "Change of Control Transaction" means the occurrence after the
         date  hereof of any of (i) an  acquisition  after the date hereof by an
         individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
         promulgated  under the  Exchange  Act) of  effective  control  (whether
         through legal or beneficial  ownership of capital stock of the Company,
         by contract or otherwise) of in excess of 40% of the voting  securities
         of the  Company,  or (ii) a  replacement  at one time or within a three
         year period of more than one-half of the members of the Company's board
         of directors  which is not approved by a majority of those  individuals
         who are  members of the board of  directors  on the date  hereof (or by
         those  individuals who are serving as members of the board of directors
         on any date whose  nomination to the board of directors was approved by
         a majority of the members of the board of directors  who are members on
         the date hereof), or (iii) the execution by the Company of an agreement
         to which the Company is a party or by which it is bound,  providing for
         any of the events set forth above in (i) or (ii).

                  "Commission" means the Securities and Exchange Commission.

                  "Common  Stock" means the common  stock,  $0.001 par value per
         share,  of the  Company  and stock of any other  class  into which such
         shares may hereafter have been reclassified or changed.

                  "Conversion Date" shall have the meaning set forth in Section
         4(a)(i) hereof.

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

                  "Interest  Conversion  Rate"  means the  lesser of (i) the Set
         Price and (ii) 90% of the  lesser of (a) the  average of the 20 Closing
         Prices immediately prior to the applicable Interest Payment Date or (b)
         the average of the 20 Closing Prices  immediately prior to the date the
         applicable  interest  payment  shares are issued and delivered if after
         the Interest Payment Date.

                  "Late Fees" shall have the meaning set forth in the second
         paragraph to this Debenture.

                  "Mandatory  Prepayment  Amount" for any Debentures shall equal
         the sum of (i) the  greater  of:  (A) 130% of the  principal  amount of
         Debentures to be prepaid,  plus all accrued and unpaid interest thereon
         and all other  accrued  and unpaid  amounts due  hereunder,  or (B) the
         principal  amount of Debentures  to be prepaid,  plus all other accrued
         and unpaid interest hereon and other amounts due hereunder,  divided by
         the Set  Price on (x) the  date  the  Mandatory  Prepayment  Amount  is
         demanded  or  otherwise  due or (y) the date the  Mandatory  Prepayment


                                       16
<PAGE>

         Amount is paid in full,  whichever is less,  multiplied  by the Closing
         Price on (x) the date the  Mandatory  Prepayment  Amount is demanded or
         otherwise due or (y) the date the Mandatory  Prepayment  Amount is paid
         in full,  whichever  is  greater,  and (ii) all other  amounts,  costs,
         expenses and liquidated damages due in respect of such Debentures.

                  "Original  Issue  Date"  shall  mean  the  date  of the  first
         issuance of the Debentures regardless of the number of transfers of any
         Debenture  and  regardless  of the number of  instruments  which may be
         issued to evidence such Debenture.

                  "Person" means a corporation,  an association,  a partnership,
         organization,  a business,  an  individual,  a government  or political
         subdivision thereof or a governmental agency.

                  "Purchase  Agreement" means the Securities Purchase Agreement,
         dated as of August __,  2003,  to which the  Company  and the  original
         Holder are parties,  as amended,  modified or supplemented from time to
         time in accordance with its terms.

                  "Registration  Rights Agreement" means the Registration Rights
         Agreement, dated as of the date of the Purchase Agreement, to which the
         Company and the original  Holder are parties,  as amended,  modified or
         supplemented from time to time in accordance with its terms.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.

                  "Set Price" shall have the meaning set forth in Section
         4(c)(i).

                  "Trading  Day"  means (a) a day on which the  shares of Common
         Stock are  traded on a  Principal  Market on which the shares of Common
         Stock are then listed or quoted,  or (b) if the shares of Common  Stock
         are not  quoted on a  Principal  Market,  a day on which the  shares of
         Common Stock are quoted in the  over-the-counter  market as reported by
         the National Quotation Bureau Incorporated (or any similar organization
         or agency succeeding its functions of reporting prices); provided, that
         in the event that the  shares of Common  Stock are not listed or quoted
         as set forth in (a), (b) and (c) hereof,  then Trading Day shall mean a
         Business Day.

                  "Transaction Documents" shall have the meaning set forth in
         the Purchase Agreement.

                  "Underlying  Shares" means the shares of Common Stock issuable
         upon  conversion  of Debentures or as payment of interest in accordance
         with the terms hereof.


                                       17
<PAGE>

                  "Underlying   Shares    Registration    Statement"   means   a
         registration  statement  meeting  the  requirements  set  forth  in the
         Registration  Rights Agreement,  covering among other things the resale
         of  the  Underlying   Shares  and  naming  the  Holder  as  a  "selling
         stockholder" thereunder.

      Section 7. Except as  expressly  provided  herein,  no  provision  of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional,  to pay the principal of, interest and liquidated damages (if
any) on,  this  Debenture  at the  time,  place,  and  rate,  and in the coin or
currency,  herein prescribed.  This Debenture is a direct debt obligation of the
Company.  This  Debenture  ranks  pari passu  with all other  Debentures  now or
hereafter issued under the terms set forth herein.  As long as this Debenture is
outstanding,  the  Company  shall not and shall  cause it  subsidiaries  not to,
without the consent of the Holders,  (a) amend its certificate of incorporation,
bylaws or other  charter  documents so as to adversely  affect any rights of the
Holders;  (b)  repay,  repurchase  or offer to repay,  repurchase  or  otherwise
acquire shares of its Common Stock or other equity  securities  other than as to
the Underlying  Shares to the extent permitted or required under the Transaction
Documents or as otherwise permitted by the Transaction  Documents;  or (c) enter
into any agreement with respect to any of the foregoing.

      Section  8.  If  this  Debenture  shall  be  mutilated,  lost,  stolen  or
destroyed,  the Company shall execute and deliver,  in exchange and substitution
for  and  upon  cancellation  of a  mutilated  Debenture,  or in  lieu  of or in
substitution for a lost, stolen or destroyed Debenture,  a new Debenture for the
principal amount of this Debenture so mutilated,  lost,  stolen or destroyed but
only upon  receipt  of  evidence  of such  loss,  theft or  destruction  of such
Debenture,  and of the  ownership  hereof,  and  indemnity,  if  requested,  all
reasonably satisfactory to the Company.

      Section  9.  Except as  provided  below in this  Section 9, so long as any
portion of this  Debenture  is  outstanding,  the Company  will not and will not
permit any of its subsidiaries to, directly or indirectly,  enter into,  create,
incur,  assume  or  suffer to exist  any  indebtedness  of any kind,  on or with
respect to any of its property or assets now owned or hereafter  acquired or any
interest  therein  or any  income  or  profits  therefrom  that is senior in any
respect to the  Company's  obligations  under the  Debentures  without the prior
consent of the Holder, which consent shall not be unreasonably withheld.

      Notwithstanding  the  foregoing  and anything else to the contrary in this
Debenture or any other Transaction Document, the Company shall have the right in
its sole and absolute discretion to enter into one or more factoring  agreements
and/or other type of  receivables  financing  with any party or parties on terms
acceptable  to the  Company  so long as it  shall  first  offer  such  factoring
agreement  and  terms  (the  "Factoring  Proposal")  on a pro rata  basis to the
Purchasers,  who shall have a right of first refusal with respect  thereto.  The
Company  shall send each  Factoring  Proposal,  if any,  to the  Purchasers  via
facsimile  and the  Purchasers  shall have 2 Business Days in which to deliver a
binding written commitment accepting such Factoring Proposal. Failure to respond
within  such  time  shall be deemed a waiver of such  right of  refusal  and the
Company shall have the right to enter into the  Factoring  Proposal with a party
or parties  other than the  Purchasers.  To the extent the  Purchasers  exercise
their  right  of  first  refusal,  they  may  apportion  the  factoring  amongst


                                       18
<PAGE>

themselves  in any manner,  so long as in the  aggregate the amount and terms of
factoring  provided  is  equal  to or more  favorable  to the  Company  than the
Factoring Proposal.

      Section  10.  All  questions   concerning  the   construction,   validity,
enforcement  and  interpretation  of this  Debenture  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
agrees that all legal proceedings  concerning the  interpretations,  enforcement
and defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts  sitting in the City of New York,  Borough of Manhattan (the "New
York  Courts").  Each party hereto hereby  irrevocably  submits to the exclusive
jurisdiction  of the  New  York  Courts  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, or such New York Courts are 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  Debenture  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.  Each  party  hereto  hereby
irrevocably  waives,  to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions  contemplated  hereby.  If either party shall
commence an action or  proceeding to enforce any  provisions of this  Debenture,
then the  prevailing  party in such action or proceeding  shall be reimbursed by
the other party for its reasonable  attorneys' fees and other costs and expenses
incurred with the  investigation,  preparation and prosecution of such action or
proceeding.

      Section  11.  Any  waiver by the  Company or the Holder of a breach of any
provision of this Debenture  shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this  Debenture.  The failure of the Company or the Holder to insist upon strict
adherence to any term of this  Debenture on one or more  occasions  shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict  adherence to that term or any other term of this  Debenture.  Any waiver
must be in writing.

      Section 12. If any  provision  of this  Debenture  is invalid,  illegal or
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance,  it shall  nevertheless
remain applicable to all other persons and  circumstances.  If it shall be found
that any  interest  or other  amount  deemed  interest  due  hereunder  violates
applicable laws governing  usury,  the applicable rate of interest due hereunder


                                       19
<PAGE>

shall  automatically be lowered to equal the maximum permitted rate of interest.
The Company  covenants  (to the extent that it may lawfully do so) that it shall
not at any time insist upon,  plead, or in any manner  whatsoever  claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would  prohibit  or forgive  the  Company  from paying all or any portion of the
principal of or interest on the  Debentures  as  contemplated  herein,  wherever
enacted,  now or at any time  hereafter  in  force,  or  which  may  affect  the
covenants or the performance of this  indenture,  and the Company (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

      Section 13.  Whenever any payment or other  obligation  hereunder shall be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding Business Day.


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


                                       20
<PAGE>




         IN WITNESS WHEREOF,  the Company has caused this Convertible  Debenture
to be duly  executed  by a duly  authorized  officer as of the date first  above
indicated.

                                    QT 5, INC.


                                    By:_________________________________________
                                        Name:
                                        Title:




                                       21

<PAGE>





                                     ANNEX A

                              NOTICE OF CONVERSION


The  undersigned  hereby elects to convert  principal  under the 6%  Convertible
Debenture of QT 5, Inc. (the "Company"), due on __________ __, 2008, into shares
of common stock, $0.001 par value per share (the "Common Stock"), of the Company
according to the conditions  hereof, as of the date written below. If shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all  transfer  taxes  payable with  respect  thereto and is  delivering
herewith such  certificates and opinions as reasonably  requested by the Company
in  accordance  therewith.  No fee  will  be  charged  to  the  holder  for  any
conversion, except for such transfer taxes, if any.

By the delivery of this Notice of  Conversion  the  undersigned  represents  and
warrants to the Company that its  ownership of the  Company's  Common Stock does
not exceed the  amounts  determined  in  accordance  with  Section  13(d) of the
Exchange Act, specified under Section 4 of this Debenture.

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable  securities laws in connection with any transfer of the aforesaid
shares of Common Stock.

Conversion calculations:
                    Date to Effect Conversion:

                    Principal Amount of Debentures to be Converted:

                    Payment of Interest in Common Stock __ yes  __ no
                             If yes,  $_____ of Interest  Accrued on Account of
                             Conversion at Issue.

                    Number of shares of Common  Stock to be issued:


                    Signature:

                    Name:

                    Address:





                                       22

<PAGE>




                                   Schedule 1

                               CONVERSION SCHEDULE

6%  Convertible  Debentures  due  on  ____________________  ___,  2008,  in  the
aggregate principal amount of $____________ issued by QT 5, Inc. This Conversion
Schedule  reflects  conversions  made  under  Section 4 of the above  referenced
Debenture.

                                     Dated:

<TABLE>
<CAPTION>
=============================== ------------------------- ======================= ------------------------------

                                                           Aggregate Principal
                                                             Amount Remaining
      Date of Conversion                                      Subsequent to
(or for first entry, Original                                   Conversion
         Issue Date)              Amount of Conversion         (or original              Company Attest
                                                            Principal Amount)
------------------------------- ------------------------- ----------------------- ------------------------------
<S>                             <C>                       <C>                     <C>


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


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


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


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


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


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


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


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


=============================== ========================= ======================= ------------------------------
</TABLE>




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