EXHIBIT 10.16

                          REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (this  "AGREEMENT")  is made and
entered  into as of August 19, 2003,  among QT 5, Inc.,  a Delaware  corporation
(the "COMPANY"),  and the purchasers  signatory hereto (each such purchaser is a
"PURCHASER" and all such purchasers are, collectively, the "PURCHASERS").

               This  Agreement  is  made  pursuant  to the  Securities  Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"PURCHASE AGREEMENT").

               The Company and the Purchasers hereby agree as follows:

        1. DEFINITIONS

               CAPITALIZED  TERMS USED AND NOT OTHERWISE DEFINED HEREIN THAT ARE
DEFINED IN THE PURCHASE  AGREEMENT  SHALL HAVE THE MEANINGS  GIVEN SUCH TERMS IN
THE PURCHASE  AGREEMENT.  As used in this  Agreement,  the following terms shall
have the following meanings:

                       "EFFECTIVENESS   DATE"  means  the  150th   calendar  day
         following the First  Closing Date and,  with respect to any  additional
         Registration Statements which may be required pursuant to Section 3(c),
         the 90th  calendar day  following  the date on which the Company  first
         knows,   or  reasonably   should  have  known,   that  such  additional
         Registration Statement is required hereunder; PROVIDED, HOWEVER, in the
         event the Company is notified by the  Commission  that one of the above
         Registration Statements will not be reviewed or is no longer subject to
         further  review  and  comments,  the  Effectiveness  Date  as  to  such
         Registration  Statement  shall be the fifth  Trading Day  following the
         date on which the  Company is so  notified  if such date  precedes  the
         dates required above.

                        "EFFECTIVENESS  PERIOD" shall have the meaning set forth
         in Section 2(a).

                       "FILING  DATE"  means  the 30th day  following  the First
         Closing  Date  and,  with  respect  to  any   additional   Registration
         Statements which may be required pursuant to Section 3(c), the 15th day
         following  the date on which the Company  first  knows,  or  reasonably
         should  have  known  that such  additional  Registration  Statement  is
         required hereunder.

                       "HOLDER" or "HOLDERS" means the holder or holders, as the
         case may be, from time to time of Registrable Securities.

                      "INDEMNIFIED  PARTY"  shall have the  meaning set forth in
         Section 5(c) hereof.

                      "INDEMNIFYING  PARTY"  shall have the meaning set forth in
         Section 5(c) hereof.


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                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "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.

                       "PROSPECTUS"   means  the   prospectus   included   in  a
         Registration  Statement  (including,  without limitation,  a prospectus
         that  includes  any  information  previously  omitted from a prospectus
         filed as part of an effective  registration  statement in reliance upon
         Rule  430A  promulgated  under  the  Securities  Act),  as  amended  or
         supplemented by any prospectus supplement, with respect to the terms of
         the offering of any portion of the Registrable  Securities covered by a
         Registration Statement, and all other amendments and supplements to the
         Prospectus,  including  post-effective  amendments,  and  all  material
         incorporated  by reference or deemed to be incorporated by reference in
         such Prospectus.

                      "REGISTRABLE SECURITIES" means all of the shares of Common
         Stock issuable upon  conversion in full of the  Debentures,  all shares
         issuable as interest on the Debentures  assuming all interest  payments
         are made in  shares of Common  Stock  and the  Debentures  are held for
         [three]  years  or  maturity,  if  earlier,  exercise  in  full  of the
         Warrants, shares issuable in lieu of the payment of liquidated damages,
         together with any  securities  issued or issuable upon any stock split,
         dividend or other distribution  recapitalization  or similar event with
         respect  to the  foregoing  or in  connection  with  any  anti-dilution
         provisions in the Debentures.

                       "REGISTRATION    STATEMENT"    means   the   registration
         statements   required  to  be  filed   hereunder  and  any   additional
         registration  statements  contemplated  by Section 3(c),  including (in
         each  case)  the   Prospectus,   amendments  and  supplements  to  such
         registration statement or Prospectus, including pre- and post-effective
         amendments,  all exhibits  thereto,  and all material  incorporated  by
         reference   or  deemed  to  be   incorporated   by  reference  in  such
         registration statement.

                       "RULE 415" means Rule 415  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  purpose and effect as such
         Rule.

                      "RULE 424" means Rule 424  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  purpose and effect as such
         Rule.

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

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                       "WARRANTS" shall mean the Common Stock purchase  warrants
         issued to the Purchasers pursuant to the Purchase Agreement.

                   "WARRANT  SHARES"  shall  mean the  shares  of  Common  Stock
         issuable upon exercise of the Warrants.

        2. SHELF REGISTRATION

               (a) On or prior to each Filing Date,  the Company  shall  prepare
and file with the  Commission  a "Shelf"  Registration  Statement  covering  the
resale of 130% of the Registrable Securities on such Filing Date for an offering
to be  made  on a  continuous  basis  pursuant  to Rule  415.  The  Registration
Statement  shall be on Form S-3  (unless  the  Company is not then  eligible  to
register for resale the  Registrable  Securities on Form S-3, in which case such
registration  shall be on another  appropriate form in accordance  herewith) and
shall contain (unless otherwise directed by the Holders) substantially the "Plan
of  Distribution"  attached  hereto  as ANNEX A.  Subject  to the  terms of this
Agreement,  the  Company  shall use its best  efforts to cause the  Registration
Statement  to be  declared  effective  under the  Securities  Act as promptly as
possible  after the filing  thereof,  but in any event  prior to the  applicable
Effectiveness  Date,  and shall use its best  efforts to keep such  Registration
Statement  continuously  effective under the Securities Act until the date which
is two  years  after  the date  that such  Registration  Statement  is  declared
effective by the Commission or such earlier date when all Registrable Securities
covered by such  Registration  Statement  have been sold or may be sold  without
volume restrictions  pursuant to Rule 144(k) as determined by the counsel to the
Company  pursuant to a written  opinion  letter to such  effect,  addressed  and
acceptable  to the  Company's  transfer  agent  and the  affected  Holders  (the
"EFFECTIVENESS  PERIOD").  The Company shall immediately  notify the Holders via
facsimile of the  effectiveness  of the  Registration  Statement on the same day
that the Company receives notification of the effectiveness from the Commission.

               (b) If: (i) a Registration  Statement is not filed on or prior to
its Filing Date (if the Company files a Registration Statement without affording
the  Holders  the  opportunity  to review and comment on the same as required by
Section 3(a), the Company shall not be deemed to have satisfied  clause (i)), or
(ii) the Company fails to file with the Commission a request for acceleration in
accordance  with Rule 461  promulgated  under the  Securities  Act,  within five
Trading  Days of the date that the  Company is  notified  (orally or in writing,
whichever is earlier) by the Commission  that a Registration  Statement will not
be  "reviewed,"  or not  subject  to  further  review,  or  (iii)  prior  to its
Effectiveness  Date,  the Company  fails to file a  pre-effective  amendment and
otherwise  respond in writing to comments  made by the  Commission in respect of
such Registration Statement within 10 Trading Days after the receipt of comments
by or notice from the Commission  that such amendment is required in order for a
Registration  Statement  to  be  declared  effective,  or  (iv)  a  Registration
Statement filed or required to be filed  hereunder is not declared  effective by
the Commission by its Effectiveness Date, or (v) after the Effectiveness Date, a
Registration Statement ceases for any reason to remain continuously effective as
to all Registrable  Securities for which it is required to be effective,  or the
Holders  are not  permitted  to utilize  the  Prospectus  therein to resell such
Registrable Securities for 15 consecutive Trading Days or in any individual case
an aggregate  of 25 Trading  Days during any 12 month period  (which need not be
consecutive  Trading  Days) (any such failure or breach being  referred to as an
"EVENT",  and for  purposes  of clause  (i) or (iv) the date on which such Event
occurs,  or for  purposes of clause (ii) the date on which such five Trading Day
period is  exceeded,  or for  purposes  of clause  (iii) the date  which such 10
Trading Day period is exceeded,  or for purposes of clause (v) the date on which

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such 15 or 25 Trading Day period,  as applicable,  is exceeded being referred to
as "EVENT  DATE"),  then, on each such Event Date and every monthly  anniversary
thereof  until the  applicable  Event is cured,  the  Company  shall pay to each
Holder an amount in cash, as liquidated  damages and not as a penalty,  equal to
2.0% per month, pro rata on a daily basis, of (i) the  Subscription  Amount paid
by such Holder  pursuant to the Purchase  Agreement for Debentures  then held by
such  Holder,  and (ii) if the  Warrants are "in the money" and then held by the
Holder, the value of any outstanding  Warrants (valued at the difference between
the average of the Closing Prices during the  applicable  month and the Exercise
Price  multiplied  by the  number of shares of  Common  Stock the  Warrants  are
exercisable  into). If the Company fails to pay any liquidated  damages pursuant
to this  Section in full within seven days after the date  payable,  the Company
will pay  interest  thereon at a rate of 18% per annum (or such  lesser  maximum
amount that is permitted to be paid by applicable  law) to the Holder,  accruing
daily from the date such liquidated damages are due until such amounts, plus all
such interest thereon,  are paid in full. The liquidated damages pursuant to the
terms hereof shall apply on a pro-rata basis for any portion of a month prior to
the cure of an Event.

        3. REGISTRATION PROCEDURES

               In  connection  with  the  Company's   registration   obligations
hereunder, the Company shall:

               (a) Not less than five  Trading  Days prior to the filing of each
Registration  Statement or any related Prospectus or any amendment or supplement
thereto  (including  any  document  that would be  incorporated  or deemed to be
incorporated  therein by  reference),  the  Company  shall,  (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other
than those  incorporated  or deemed to be  incorporated  by  reference)  will be
subject  to the  review  of such  Holders,  and  (ii)  cause  its  officers  and
directors,  counsel and independent  certified public  accountants to respond to
such inquiries as shall be necessary,  in the  reasonable  opinion of respective
counsel  to  conduct  a  reasonable  investigation  within  the  meaning  of the
Securities  Act. The Company  shall not file the  Registration  Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of
a majority of the  Registrable  Securities  shall  reasonably  and in good faith
object,  provided, the Company is notified of such objection in writing no later
than 3 Trading  Days after the  Holders  have been so  furnished  copies of such
documents.

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               (b) (i) Prepare  and file with the  Commission  such  amendments,
including  post-effective  amendments,  to  a  Registration  Statement  and  the
Prospectus  used  in  connection  therewith  as  may  be  necessary  to  keep  a
Registration  Statement  continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such  additional  Registration  Statements in order to register for resale under
the Securities  Act all of the  Registrable  Securities;  (ii) cause the related
Prospectus to be amended or supplemented by any required  Prospectus  supplement
(subject to the terms of this  Agreement),  and as so supplemented or amended to
be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible,
and in any event  within 10 Trading  Days,  to any  comments  received  from the
Commission with respect to a Registration Statement or any amendment thereto and
as promptly as reasonably  possible provide the Holders true and complete copies
of all  correspondence  from and to the  Commission  relating to a  Registration
Statement;  and (iv) comply in all material  respects with the provisions of the
Securities  Act and the  Exchange  Act with  respect to the  disposition  of all
Registrable Securities covered by a Registration Statement during the applicable
period in accordance  (subject to the terms of this Agreement) with the intended
methods of  disposition  by the Holders  thereof set forth in such  Registration
Statement as so amended or in such Prospectus as so supplemented.

               (c) If during the Effectiveness Period, the number of Registrable
Securities  at any time exceeds 90% of the number of shares of Common Stock then
registered in a Registration  Statement,  then the Company shall file as soon as
reasonably  practicable but in any case prior to the applicable  Filing Date, an
additional Registration Statement covering the resale by the Holders of not less
than 125% of the number of such Registrable Securities.

               (d)  Notify  the  Holders of  Registrable  Securities  to be sold
(which  notice  shall,  pursuant to clauses (ii)  through (vi) hereof,  shall be
accompanied by an  instruction  to suspend the use of the  Prospectus  until the
requisite  changes have been made) as promptly as reasonably  possible  (and, in
the case of (i)(A) below,  not less than five Trading Days prior to such filing)
and (if  requested by any such  Person)  confirm such notice in writing no later
than  one  Trading  Day  following  the  day  (i)(A)  when a  Prospectus  or any
Prospectus supplement or post-effective amendment to a Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether there
will be a "review" of such  Registration  Statement and whenever the  Commission
comments in writing on such  Registration  Statement  (the Company shall provide
true and complete  copies thereof and all written  responses  thereto to each of
the  Holders);  and  (C)  with  respect  to  a  Registration  Statement  or  any
post-effective  amendment,  when  the  same has  become  effective;  (ii) of any
request by the Commission or any other Federal or state  governmental  authority
for amendments or  supplements to a Registration  Statement or Prospectus or for
additional  information;  (iii) of the  issuance by the  Commission  of any stop
order suspending the effectiveness of a Registration  Statement  covering any or
all of the Registrable  Securities or the initiation of any Proceedings for that
purpose;  (iv) of the receipt by the Company of any notification with respect to
the suspension of the  qualification  or exemption from  qualification of any of
the Registrable  Securities for sale in any  jurisdiction,  or the initiation or
threatening  of any  Proceeding  for such purpose;  (v) of the occurrence of any

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event or passage  of time that  makes the  financial  statements  included  in a
Registration Statement ineligible for inclusion therein or any statement made in
a Registration Statement or Prospectus or any document incorporated or deemed to
be  incorporated  therein by reference  untrue in any  material  respect or that
requires  any  revisions  to  a  Registration  Statement,  Prospectus  or  other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue  statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading;  and (vi) the  occurrence  or  existence  of any pending
corporate  development with respect to the Company that the Company believes may
be material and that, in the  determination of the Company,  makes it not in the
best  interests  of  the  Company  to  allow   continued   availability  or  the
Registration  Statement  or  Prospectus;  provided  that  any  and  all of  such
information  shall remain  confidential  to each Holder  until such  information
otherwise  becomes  public,  unless  disclosure  by a Holder is required by law;
PROVIDED,  FURTHER,   notwithstanding  each  Holder's  agreement  to  keep  such
information  confidential,  the Holders  make no  acknowledgement  that any such
information is material, non-public information.

               (e) Promptly  deliver to each  Holder,  without  charge,  as many
copies of the Prospectus or Prospectuses (including each form of prospectus) and
each  amendment or supplement  thereto as such Persons may  reasonably  request.
Subject to the terms of this  Agreement,  the Company hereby consents to the use
of such  Prospectus  and each  amendment  or  supplement  thereto by each of the
selling  Holders in  connection  with the offering  and sale of the  Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.

               (f) Use  commercially  reasonable  efforts to register or qualify
the  resale  of  such  Registrable   Securities  as  required  under  applicable
securities or Blue Sky laws of each State within the United States as any Holder
requests  in  writing,  to keep  each such  registration  or  qualification  (or
exemption therefrom) effective during the Effectiveness Period;  provided,  that
the Company  shall not be required  to qualify  generally  to do business in any
jurisdiction  where it is not then so  qualified  or subject  the Company to any
material tax in any such jurisdiction where it is not then so subject.

               (g)  Cooperate   with  the  Holders  to  facilitate   the  timely
preparation and delivery of certificates  representing Registrable Securities to
be  delivered  to a  transferee  pursuant  to a  Registration  Statement,  which
certificates  shall be free, to the extent permitted by the Purchase  Agreement,
of all restrictive legends,  and to enable such Registrable  Securities to be in
such denominations and registered in such names as any such Holders may request.

               (h) Upon the occurrence of any event contemplated by this Section
3, as  promptly as  reasonably  possible,  prepare a  supplement  or  amendment,
including  a  post-effective   amendment,  to  a  Registration  Statement  or  a
supplement to the related  Prospectus or any document  incorporated or deemed to
be incorporated  therein by reference,  and file any other required  document so

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that,  as  thereafter  delivered,  neither  a  Registration  Statement  nor such
Prospectus will contain an untrue  statement of a material fact or omit to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  If the Company  notifies the Holders in accordance with clauses
(ii)  through  (vi) of Section  3(d) above to suspend  the use of the use of any
Prospectus until the requisite changes to such Prospectus have been made, or the
Company  otherwise   notifies  the  Holders  of  its  election  to  suspend  the
availability of a Registration  Statement and Prospectus pursuant to clause (vi)
of Section  3(d),  then the Holders shall  suspend use of such  Prospectus.  The
Company will use its best efforts to ensure that the use of the  Prospectus  may
be resumed as promptly as is practicable,  except that in the case of suspension
of the  availability  of a  Registration  Statement and  Prospectus  pursuant to
clause  (vi) of Section  3(d),  the  Company  shall not be required to take such
action until such time as it shall determine that the continued  availability of
the Registration Statement and Prospectus is no longer not in the best interests
of the Company.

               (i)  Comply  with all  applicable  rules and  regulations  of the
Commission.

               (j) Use its best efforts to avoid the issuance of, or, if issued,
obtain  the  withdrawal  of (i) any  order  suspending  the  effectiveness  of a
Registration  Statement,  or  (ii)  any  suspension  of  the  qualification  (or
exemption from  qualification) of any of the Registrable  Securities for sale in
any jurisdiction, at the earliest practicable moment.

               (k) The  Company  may  require,  at any time  prior to the  third
Trading  Day prior to the Filing  Date,  each Holder to furnish to the Company a
statement as to the number of shares of Common Stock  beneficially owned by such
Holder and, if requested by the  Commission,  the  controlling  person  thereof,
within three Trading days of the Company's request.  During any periods that the
Company  is  unable  to meet  its  obligations  hereunder  with  respect  to the
registration  of the Registrable  Securities  solely because any Holder fails to
furnish such information within three Trading Days of the Company's request, any
liquidated  damages that are accruing at such time shall be tolled and any Event
that may otherwise occur solely because of such delay shall be suspended,  until
such information is delivered to the Company.

        4.  REGISTRATION  EXPENSES.  All  fees  and  expenses  incident  to  the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company  whether or not any  Registrable  Securities are sold pursuant to
the Registration  Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required to be made with the Principal  Market on which the Common Stock is then
listed for trading,  and (B) in compliance with applicable  state  securities or
Blue Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue  Sky  qualifications  or  exemptions  of  the  Registrable  Securities  and
determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such jurisdictions as requested by the Holders), (ii) printing
expenses (including,  without limitation,  expenses of printing certificates for

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Registrable  Securities and of printing prospectuses  requested by the Holders),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, and (v) fees and expenses of all other Persons retained
by  the  Company  in  connection  with  the  consummation  of  the  transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or  similar  commissions  or,  except to the extent
provided for in the Transaction Documents,  any legal fees or other costs of the
Holders.

        5. INDEMNIFICATION

               (a)   Indemnification   by  the  Company.   The  Company   shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Holder,  the officers,  directors,  agents,  brokers (including brokers who
offer and sell  Registrable  Securities  as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them,  each Person who controls any such Holder (within
the meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange
Act) and the officers,  directors, agents and employees of each such controlling
Person,  to the fullest extent permitted by applicable law, from and against any
and  all  losses,  claims,  damages,  liabilities,   costs  (including,  without
limitation,  costs of preparation and reasonable  attorneys'  fees) and expenses
(collectively,  "LOSSES"), as incurred, arising out of or relating to any untrue
or alleged  untrue  statement of a material  fact  contained  in a  Registration
Statement,  any  Prospectus  or any form of  prospectus  or in any  amendment or
supplement  thereto  or in any  preliminary  prospectus,  or  arising  out of or
relating to any omission or alleged  omission of a material  fact required to be
stated therein or necessary to make the  statements  therein (in the case of any
Prospectus  or form  of  prospectus  or  supplement  thereto,  in  light  of the
circumstances under which they were made) not misleading,  except to the extent,
but only to the extent,  that (1) such untrue statements or omissions or alleged
untrue statements or omissions are based upon information  regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein, or
to the extent  that such  information  relates to such  Holder or such  Holder's
proposed method of  distribution of Registrable  Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a Registration
Statement,  such  Prospectus  or such form of  Prospectus or in any amendment or
supplement  thereto or (2) in the case of an  occurrence of an event of the type
specified  in Section  3(d)(ii)-(vi),  the use by such  Holder of an outdated or
defective  Prospectus after the Company has notified such Holder in writing that
the  Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(e). The Company shall notify the Holders
promptly of the institution,  threat or assertion of any Proceeding arising from
or in connection with the  transactions  contemplated by this Agreement of which
the Company is aware.

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               (b) Indemnification by Holders. Each Holder shall,  severally and
not jointly,  indemnify and hold harmless the Company, its directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents or employees of such controlling  Persons,  to the
fullest  extent  permitted by  applicable  law,  from and against all Losses (as
determined by a court of competent  jurisdiction in a final judgment not subject
to appeal or review)  arising  out of or based upon any  untrue  statement  of a
material fact contained in any Registration  Statement,  any Prospectus,  or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based  solely  upon:  (i) such  Holder's  failure  to comply  with the
prospectus delivery requirements of the Securities Act or (ii) any omission of a
material fact required to be stated  therein or necessary to make the statements
therein  not  misleading  to the  extent,  but only to the  extent,  such untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the  Company  specifically  for  inclusion  in such  Registration
Statement or such Prospectus or to the extent that (1) such untrue statements or
omissions are based upon information  regarding such Holder furnished in writing
to the Company by such Holder  expressly for use therein,  or to the extent such
information  relates  to  such  Holder  or  such  Holder's  proposed  method  of
distribution of Registrable  Securities and was reviewed and expressly  approved
in writing by such Holder expressly for use in the Registration Statement,  such
Prospectus or such form of Prospectus or in any amendment or supplement  thereto
or (2) in the case of an occurrence of an event of the type specified in Section
3(d)(ii)-(vi),  the use by such Holder of an outdated  or  defective  Prospectus
after the Company has  notified  such Holder in writing that the  Prospectus  is
outdated  or  defective  and prior to the  receipt by such  Holder of the Advice
contemplated  in Section  6(e).  In no event shall the  liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable  Securities giving rise
to such indemnification obligation.

               (c) Conduct of  Indemnification  Proceedings.  If any  Proceeding
shall be brought or asserted against any Person entitled to indemnity  hereunder
(an  "INDEMNIFIED  PArty"),  such  Indemnified  Party shall promptly  notify the
Person from whom indemnity is sought (the "INDEMNIFYING  PARTY") in writing, and
the  Indemnifying  Party  shall  assume  the  defense  thereof,   including  the
employment of counsel  reasonably  satisfactory to the Indemnified Party and the
payment of all fees and expenses  incurred in connection  with defense  thereof;
provided,  that the failure of any  Indemnified  Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this  Agreement,  except (and only) to the extent that such  failure  shall have
prejudiced the Indemnifying Party.

               An  Indemnified  Party  shall  have the right to employ  separate
counsel in any such  Proceeding and to participate in the defense  thereof,  but
the  fees  and  expenses  of  such  counsel  shall  be at the  expense  of  such
Indemnified  Party or Parties unless:  (1) the Indemnifying  Party has agreed in
writing to pay such fees and expenses;  or (2) the Indemnifying Party shall have
failed  promptly to assume the defense of such  Proceeding and to employ counsel

                                       9
<PAGE>

reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named  parties to any such  Proceeding  (including  any  impleaded  parties)
include  both  such  Indemnified  Party  and the  Indemnifying  Party,  and such
Indemnified Party shall have been advised by counsel that a material conflict of
interest  is  likely  to  exist  if the  same  counsel  were to  represent  such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
Party  notifies  the  Indemnifying  Party in  writing  that it  elects to employ
separate  counsel at the expense of the  Indemnifying  Party,  the  Indemnifying
Party shall not have the right to assume the defense  thereof and the expense of
one such  counsel  for each Holder  shall be at the expense of the  Indemnifying
Party).  The  Indemnifying  Party shall not be liable for any  settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably  withheld.  No Indemnifying Party shall,  without the prior written
consent  of  the  Indemnified  Party,  effect  any  settlement  of  any  pending
Proceeding  in respect of which any  Indemnified  Party is a party,  unless such
settlement includes an unconditional  release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

               Subject to the terms of this Agreement,  all fees and expenses of
the  Indemnified  Party  (including  reasonable  fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party,  as incurred,  within ten Trading Days of written  notice  thereof to the
Indemnifying  Party  (regardless of whether it is ultimately  determined that an
Indemnified Party is not entitled to indemnification  hereunder;  provided, that
the  Indemnifying  Party may require  such  Indemnified  Party to  undertake  to
reimburse  all such fees and  expenses  to the extent it is  finally  judicially
determined  that  such  Indemnified  Party is not  entitled  to  indemnification
hereunder).

               (d) Contribution.  If a claim for  indemnification  under Section
5(a) or 5(b) is unavailable to an Indemnified  Party (by reason of public policy
or  otherwise),  then each  Indemnifying  Party,  in lieu of  indemnifying  such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified  Party  as a  result  of  such  Losses,  in  such  proportion  as is
appropriate  to  reflect  the  relative  fault  of the  Indemnifying  Party  and
Indemnified  Party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  Indemnifying  Party and  Indemnified  Party shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied by, such Indemnifying  Party or Indemnified Party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent  such  action,  statement  or  omission.  The amount  paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable  fees or  expenses  incurred  by such  party in  connection  with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the  indemnification  provided for in this Section was  available to
such party in accordance with its terms.

                                       10
<PAGE>

               The parties  hereto agree that it would not be just and equitable
if  contribution  pursuant  to this  Section  5(d) were  determined  by pro rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds  actually  received  by such  Holder  from the sale of the  Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has  otherwise  been  required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.

               The  indemnity  and  contribution  agreements  contained  in this
Section are in addition to any liability that the Indemnifying  Parties may have
to the Indemnified Parties.

        6. MISCELLANEOUS

               (a)  Amendments and Waivers.  The  provisions of this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given,  unless the same shall be in writing and signed by the Company
and  all  of  the  Holders  of  the  then  outstanding  Registrable  Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof  with  respect  to a matter  that  relates  exclusively  to the rights of
Holders  and that does not  directly  or  indirectly  affect the rights of other
Holders may be given by Holders of all of the  Registrable  Securities  to which
such waiver or consent relates;  PROVIDED,  HOWEVER, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.

               (b) No  Inconsistent  Agreements.  Neither the Company nor any of
its  subsidiaries has entered,  as of the date hereof,  nor shall the Company or
any of its subsidiaries,  on or after the date of this Agreement, enter into any
agreement  with  respect  to its  securities,  that  would  have the  effect  of
impairing  the rights  granted to the  Holders in this  Agreement  or  otherwise
conflicts  with the  provisions  hereof.  Except as set forth on Schedule  6(b),
neither the Company nor any of its subsidiaries has previously  entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.

               (c)  No  Piggyback  on  Registrations.  Except  as set  forth  on
Schedule  6(c)  attached  hereto,  neither the  Company nor any of its  security
holders  (other than the Holders in such capacity  pursuant  hereto) may include
securities  of  the  Company  in  the  Registration  Statement  other  than  the
Registrable  Securities,  and the Company  shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.

                                       11
<PAGE>

               (d)  Compliance.  Each Holder  covenants  and agrees that it will
comply  with the  prospectus  delivery  requirements  of the  Securities  Act as
applicable to it in connection with sales of Registrable  Securities pursuant to
the Registration Statement.

               (e)   Discontinued   Disposition.   Each  Holder  agrees  by  its
acquisition of such  Registrable  Securities that, upon receipt of a notice from
the Company of the  occurrence  of any event of the kind  described  in Sections
3(d)(ii),  (iii) or (vi), such Holder will forthwith discontinue  disposition of
such Registrable  Securities under a Registration  Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement  contemplated  by Section 3(h), or until it is advised in writing (the
"ADVICE")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement.  The Company may provide
appropriate stop orders to enforce the provisions of this paragraph. The Company
agrees and acknowledges  that any periods during which the Holder is required to
discontinue  the disposition of the  Registrable  Securities  hereunder shall be
subject to the provisions of Section 2(b).

               (f)  Piggy-Back   Registrations.   If  at  any  time  during  the
Effectiveness Period there is not an effective  Registration  Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the  Commission a registration  statement  relating to an offering for
its own account or the account of others under the  Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents  relating to equity  securities to
be issued solely in connection with any acquisition of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder  shall  so  request  in  writing,  the  Company  shall  include  in  such
registration  statement  all or any  part of such  Registrable  Securities  such
holder  requests to be  registered;  provided,  that,  the Company  shall not be
required to register any  Registrable  Securities  pursuant to this Section 6(f)
that are  eligible  for resale  pursuant  to Rule 144(k)  promulgated  under the
Securities  Act  or  that  are  the  subject  of a then  effective  Registration
Statement.

               (g)  Notices.  Any and all  notices  or other  communications  or
deliveries  required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.

               (h)  Successors and Assigns.  This  Agreement  shall inure to the
benefit of and be binding upon the successors  and permitted  assigns of each of
the parties and shall inure to the benefit of each  Holder.  The Company may not
assign its rights or obligations  hereunder without the prior written consent of
all of the Holders of the then-outstanding  Registrable Securities.  Each Holder
may assign their respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

                                       12
<PAGE>

               (i) Counterparts. This Agreement may be executed in any number of
counterparts,  each of which when so executed  shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any  signature  is  delivered  by  facsimile  transmission,  such
signature shall create a valid binding  obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

               (j) Governing  Law. All questions  concerning  the  construction,
validity,  enforcement and interpretation of this Agreement 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,  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.  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 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.  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 Agreement or the transactions  contemplated  hereby.  If either party shall
commence a Proceeding  to enforce any  provisions  of this  Agreement,  then the
prevailing  party in such 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 Proceeding.

               (k)  Cumulative  Remedies.   The  remedies  provided  herein  are
cumulative and not exclusive of any remedies provided by law.

               (l) Severability. If any term, provision, covenant or restriction
of this  Agreement is held by a court of competent  jurisdiction  to be invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto  shall use their  reasonable  efforts to find and  employ an  alternative
means to achieve the same or substantially  the same result as that contemplated
by such term,  provision,  covenant or restriction.  It is hereby stipulated and
declared to be the  intention of the parties  that they would have  executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

               (m) Headings.  The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

                                       13
<PAGE>

               (n) Independent Nature of Purchasers' Obligations and Rights. The
obligations  of each  Purchaser  hereunder  is  several  and not joint  with the
obligations  of any  other  Purchaser  hereunder,  and  no  Purchaser  shall  be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser  hereunder.  Nothing  contained  herein or in any other  agreement  or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto  or  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 with
respect to such obligations or the transactions  contemplated by this Agreement.
Each  Purchaser  shall be entitled to protect and enforce its rights,  including
without limitation the rights arising out of this Agreement, and it shall not be
necessary  for any other  Purchaser to be joined as an  additional  party in any
proceeding for such purpose.

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

                                       14
<PAGE>




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


                                    QT 5, INC.


                                    By: ______________________________________
                                           Name:
                                           Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       15
<PAGE>



                       [SIGNATURE PAGE OF HOLDERS TO RRA]

                                    PALISADES MASTER FUND, L.P.
                                    By:  PEF ADVISORS, LLC, its authorized agent

                                    By: _____________________________________
                                           Name:
                                           Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       16
<PAGE>



                       [SIGNATURE PAGE OF HOLDERS TO RRA]

                                    CRESCENT INTERNATIONAL LTD.


                                    By: ____________________________
                                    Name:
                                    Title:


                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       17
<PAGE>



                       [SIGNATURE PAGE OF HOLDERS TO RRA]

                                    ALPHA CAPITAL AG


                                    By: _____________________________________
                                           Name:
                                           Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       18
<PAGE>



                       [PURCHASER'S SIGNATURE PAGE TO RRA]

                                    BRISTOL INVESTMENT FUND, LTD.


                                    By: ___________________________
                                            Name:
                                            Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       19
<PAGE>



                       [SIGNATURE PAGE OF HOLDERS TO RRA]


                                    ELLIS INTERNAIONAL LTD

                                    By:  __________________________
                                         Name:
                                           Title:

                                    ZENNY TRADING LIMITED


                                    By: ____________________________
                                            Name:
                                            Title:


                                       20
<PAGE>




                              PLAN OF DISTRIBUTION

         The  selling  stockholders  and any of their  pledgees,  assignees  and
successors-in-interest  may, from time to time,  sell any or all of their shares
of common stock on any stock exchange,  market or trading  facility on which the
shares  are traded or in private  transactions.  These  sales may be at fixed or
negotiated  prices.  The  selling  stockholders  may  use any one or more of the
following methods when selling shares:

         o        ordinary brokerage  transactions and transactions in which the
                  broker-dealer solicits purchasers;

         o        block trades in which the  broker-dealer  will attempt to sell
                  the shares as agent but may  position  and resell a portion of
                  the block as principal to facilitate the transaction;

         o        purchases by a  broker-dealer  as principal  and resale by the
                  broker-dealer for its account;

         o        an exchange  distribution  in accordance with the rules of the
                  applicable exchange;

         o        privately negotiated transactions;

         o        broker-dealers may agree with the selling stockholders to sell
                  a specified  number of such shares at a  stipulated  price per
                  share;

         o        a combination of any such methods of sale; and

         o        any other method permitted pursuant to applicable law.

     The  selling  stockholders  may also sell  shares  under Rule 144 under the
Securities Act, if available, rather than under this prospectus.  Broker-dealers
engaged by the selling  stockholders  may arrange for other  brokers-dealers  to
participate in sales.  Broker-dealers may receive  commissions or discounts from
the  selling  stockholders  (or,  if any  broker-dealer  acts as  agent  for the
purchaser  of shares,  from the  purchaser)  in amounts  to be  negotiated.  The
selling  stockholders  do not expect these  commissions  and discounts to exceed
what is customary in the types of transactions involved.

         The  selling  stockholder  may  from  time to time  pledge  or  grant a
security  interest in some or all of the Shares or common stock or Warrant owned
by them and, if they default in the  performance  of their secured  obligations,
the  pledgees or secured  parties may offer and sell the shares of common  stock
from  time  to time  under  this  prospectus,  or  under  an  amendment  to this
prospectus under Rule 424(b)(3) or other applicable  provision of the Securities
Act of 1933  amending the list of selling  stockholders  to include the pledgee,
transferee or other  successors in interest as selling  stockholders  under this
prospectus.


                                       21
<PAGE>

         The selling  stockholders  also may transfer the shares of common stock
in  other  circumstances,  in  which  case the  transferees,  pledgees  or other
successors  in interest  will be the selling  beneficial  owners for purposes of
this prospectus.

         The  selling  stockholders  and any  broker-dealers  or agents that are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. The selling stockholders have
informed  the Company  that none of them have any  agreement  or  understanding,
directly or indirectly, with any person to distribute the common stock.

         The Company is required  to pay all fees and  expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the selling stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.



                                       22
<PAGE>



                                  SCHEDULE 6(B)

                                       23
<PAGE>



                                  SCHEDULE 6(C)



                                       24