Document:

<PAGE>

                                                                   Exhibit 10.69

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
         SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
         AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT,
         OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR
         OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT
         REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR
         REGULATION S UNDER SAID ACT.

                          SECURED CONVERTIBLE DEBENTURE

Phoenix, Arizona
January 31, 2003                                                       $120,000

                  FOR VALUE RECEIVED, IBIZ TECHNOLOGY CORP., a Florida
corporation (hereinafter called the "BORROWER"), hereby promises to pay to the
order of AJW PARTNERS, LLC or registered assigns (the "HOLDER") the sum of One
Hundred Twenty Thousand Dollars ($120,000) on January 31, 2004 (the "MATURITY
Date"), and to pay interest on the unpaid principal balance hereof at the rate
of twelve percent (12%) per annum from January 31, 2003 (the "ISSUE DATE") until
the same becomes due and payable, whether at maturity or upon acceleration or by
prepayment or otherwise. Any amount of principal or interest on this Debenture
which is not paid when due shall bear interest at the rate of fifteen percent
(15%) per annum from the due date thereof until the same is paid ("DEFAULT
INTEREST"). Interest shall commence accruing on the issue date, shall be
computed on the basis of a 365-day year and the actual number of days elapsed
and shall be payable, at the option of the Holder, either quarterly on March 31,
June 30, September 30 and December 31 of each year beginning on March 31, 2003,
or at the time of conversion of the principal to which such interest relates in
accordance with Article I below. All payments due hereunder (to the extent not
converted into common stock, $.001 par value per share, of the Borrower (the
"COMMON STOCK") in accordance with the terms hereof) shall be made in lawful
money of the United States of America or, at the option of the Borrower, in
whole or in part, in shares of Common Stock of the Borrower valued at the then
applicable Conversion Price (as defined herein). All payments shall be made at
such address as the Holder shall hereafter give to the Borrower by written
notice made in accordance with the provisions of this Debenture. Whenever any
amount expressed to be due by the terms of this Debenture is due on any day
which is not a business day, the same shall instead be due on the next
succeeding day which is a business day and, in the case of any interest payment
date which is not the date on which this Debenture is paid in full, the

<PAGE>

extension of the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such date. As used in this
Debenture, the term "business day" shall mean any day other than a Saturday,
Sunday or a day on which commercial banks in the city of New York, New York are
authorized or required by law or executive order to remain closed. Each
capitalized term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in that certain Securities Purchase Agreement, dated January
31, 2003, pursuant to which this Debenture was originally issued (the "PURCHASE
AGREEMENT").

         This Debenture is free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive rights
or other similar rights of shareholders of the Borrower and will not impose
personal liability upon the holder thereof. The obligations of the Borrower
under this Debenture shall be secured by that certain Security Agreement dated
by and between the Borrower and the Holder of even date herewith.

         The following terms shall apply to this Debenture:

                          ARTICLE I. CONVERSION RIGHTS

                  1.1 CONVERSION RIGHT. The Holder shall have the right from
time to time, and at any time on or prior to the earlier of (i) the Maturity
Date and (ii) the date of payment of the Default Amount (as defined in Article
III) pursuant to Section 1.6(a) or Article III, the Optional Prepayment Amount
(as defined in Section 5.1 or any payments pursuant to Section 1.7, each in
respect of the remaining outstanding principal amount of this Debenture to
convert all or any part of the outstanding and unpaid principal amount of this
Debenture into fully paid and non-assessable shares of Common Stock, as such
Common Stock exists on the Issue Date, or any shares of capital stock or other
securities of the Borrower into which such Common Stock shall hereafter be
changed or reclassified at the conversion price (the "CONVERSION PRICE")
determined as provided herein (a "CONVERSION"); PROVIDED, HOWEVER, that in no
event shall the Holder be entitled to convert any portion of this Debenture in
excess of that portion of this Debenture upon conversion of which the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Debentures or the
unexercised or unconverted portion of any other security of the Borrower
(including, without limitation, the warrants issued by the Borrower pursuant to
the Purchase Agreement) subject to a limitation on conversion or exercise
analogous to the limitations contained herein) and (2) the number of shares of
Common Stock issuable upon the conversion of the portion of this Debenture with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Holder and its affiliates of more than 4.9% of
the outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulations 13D-G thereunder, except as otherwise provided in
clause (1) of such proviso. The Holder of this Debenture may waive the
limitations set forth herein by sixty-one (61) days written notice to the
Company. The number of shares of Common Stock to be issued upon each conversion
of this Debenture shall be determined by dividing the Conversion Amount (as

                                       2
<PAGE>

defined below) by the applicable Conversion Price then in effect on the date
specified in the notice of conversion, in the form attached hereto as Exhibit A
(the "NOTICE OF CONVERSION"), delivered to the Borrower by the Holder in
accordance with Section 1.4 below; provided that the Notice of Conversion is
submitted by facsimile (or by other means resulting in, or reasonably expected
to result in, notice) to the Borrower before 6:00 p.m., New York, New York time
on such conversion date (the "CONVERSION DATE"). The term "CONVERSION AMOUNT"
means, with respect to any conversion of this Debenture, the sum of (1) the
principal amount of this Debenture to be converted in such conversion PLUS (2)
accrued and unpaid interest, if any, on such principal amount at the interest
rates provided in this Debenture to the Conversion Date PLUS (3) Default
Interest, if any, on the amounts referred to in the immediately preceding
clauses (1) and/or (2) PLUS (4) at the Holder's option, any amounts owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section 2(c) of
that certain Registration Rights Agreement, dated as of January 31, 2003,
executed in connection with the initial issuance of this Debenture and the other
Debentures issued on the Issue Date (the "REGISTRATION RIGHTS AGREEMENT").

                  1.2 CONVERSION PRICE.

                           (a) CALCULATION OF CONVERSION PRICE. The Conversion
Price shall be the lesser of (i) the Variable Conversion Price (as
defined herein) and (ii) the Fixed Conversion Price (as defined herein)
(subject, in each case, to equitable adjustments for stock splits, stock
dividends or rights offerings by the Borrower relating to the Borrower's
securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar
events). The "VARIABLE CONVERSION PRICE" shall mean the Applicable Percentage
(as defined herein) multiplied by the Market Price (as defined herein). "MARKET
PRICE" means the average of the lowest three (3) Trading Prices (as defined
below) for the Common Stock during the twenty (20) Trading Day period ending one
Trading Day prior to the date the Conversion Notice is sent by the Holder to the
Borrower via facsimile (the "CONVERSION DATE"). "TRADING PRICE" means, for any
security as of any date, the intraday trading price on the "pink sheets" or the
Over-the-Counter Bulletin Board (the "OTCBB") as reported by a reliable
reporting service mutually acceptable to and hereafter designated by Holders of
a majority in interest of the Debentures and the Borrower or, if the "pink
sheets" or the OTCBB is not the principal trading market for such security, the
intraday trading price of such security on the principal securities exchange or
trading market where such security is listed or traded or, if no intraday
trading price of such security is available in any of the foregoing manners, the
average of the intraday trading prices of any market makers for such security
that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If
the Trading Price cannot be calculated for such security on such date in the
manner provided above, the Trading Price shall be the fair market value as
mutually determined by the Borrower and the holders of a majority in interest of
the Debentures being converted for which the calculation of the Trading Price is
required in order to determine the Conversion Price of such Debentures. "TRADING
DAY" shall mean any day on which the Common Stock is traded for any period on
the "pink sheets" or the OTCBB, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded. "APPLICABLE
PERCENTAGE" shall mean 50.0%. The "FIXED CONVERSION PRICE" shall mean $0.01.

                                       3
<PAGE>

                           (b) CONVERSION PRICE DURING MAJOR ANNOUNCEMENTS.
Notwithstanding anything contained in Section 1.2(a) to the contrary, in
the event the Borrower (i) makes a public announcement that it intends to
consolidate or merge with any other corporation (other than a merger in which
the Borrower is the surviving or continuing corporation and its capital stock is
unchanged) or sell or transfer all or substantially all of the assets of the
Borrower or (ii) any person, group or entity (including the Borrower) publicly
announces a tender offer to purchase 50% or more of the Borrower's Common Stock
(or any other takeover scheme) (the date of the announcement referred to in
clause (i) or (ii) is hereinafter referred to as the "ANNOUNCEMENT DATE"), then
the Conversion Price shall, effective upon the Announcement Date and continuing
through the Adjusted Conversion Price Termination Date (as defined below), be
equal to the lower of (x) the Conversion Price which would have been applicable
for a Conversion occurring on the Announcement Date and (y) the Conversion Price
that would otherwise be in effect. From and after the Adjusted Conversion Price
Termination Date, the Conversion Price shall be determined as set forth in this
Section 1.2(a). For purposes hereof, "ADJUSTED CONVERSION PRICE TERMINATION
DATE" shall mean, with respect to any proposed transaction or tender offer (or
takeover scheme) for which a public announcement as contemplated by this Section
1.2(b) has been made, the date upon which the Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above)
consummates or publicly announces the termination or abandonment of the proposed
transaction or tender offer (or takeover scheme) which caused this Section
1.2(b) to become operative.

                  1.3 AUTHORIZED SHARES. The Borrower covenants that, during the
period the conversion right exists, the Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares (subject to
Shareholder Approval (as defined in the Purchase Agreement)), free from
preemptive rights, to provide for the issuance of Common Stock upon the full
conversion of this Debenture and the other Debentures issued pursuant to the
Purchase Agreement. The Borrower is required at all times to have authorized and
reserved two times the number of shares that is actually issuable upon full
conversion of the Debentures (based on the Conversion Price of the Debentures or
the Exercise Price of the Warrants in effect from time to time) (the "RESERVED
AMOUNT") (subject to Shareholder Approval (as defined in the Purchase
Agreement)). The Reserved Amount shall be increased from time to time in
accordance with the Borrower's obligations pursuant to Section 4(h) of the
Purchase Agreement. The Borrower represents that upon issuance, such shares will
be duly and validly issued, fully paid and non-assessable. In addition, if the
Borrower shall issue any securities or make any change to its capital structure
which would change the number of shares of Common Stock into which the
Debentures shall be convertible at the then current Conversion Price, the
Borrower shall at the same time make proper provision so that thereafter there
shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of the outstanding Debentures. The
Borrower (i) acknowledges that it has irrevocably instructed its transfer agent
to issue certificates for the Common Stock issuable upon conversion of this
Debenture, and (ii) agrees that its issuance of this Debenture shall constitute
full authority to its officers and agents who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock in accordance with the terms and conditions of this
Debenture.

                                       4
<PAGE>

                  If, at any time a Holder of this Debenture submits a Notice of
Conversion, and the Borrower does not have sufficient authorized but unissued
shares of Common Stock available to effect such conversion in accordance with
the provisions of this Article I (a "CONVERSION DEFAULT"), subject to Section
4.8, the Borrower shall issue to the Holder all of the shares of Common Stock
which are then available to effect such conversion. The portion of this
Debenture which the Holder included in its Conversion Notice and which exceeds
the amount which is then convertible into available shares of Common Stock (the
"EXCESS AMOUNT") shall, notwithstanding anything to the contrary contained
herein, not be convertible into Common Stock in accordance with the terms hereof
until (and at the Holder's option at any time after) the date additional shares
of Common Stock are authorized by the Borrower to permit such conversion, at
which time the Conversion Price in respect thereof shall be the lesser of (i)
the Conversion Price on the Conversion Default Date (as defined below) and (ii)
the Conversion Price on the Conversion Date thereafter elected by the Holder in
respect thereof. In addition, the Borrower shall pay to the Holder payments
("CONVERSION DEFAULT PAYMENTS") for a Conversion Default in the amount of (x)
the SUM OF (1) the then outstanding principal amount of this Debenture PLUS (2)
accrued and unpaid interest on the unpaid principal amount of this Debenture
through the Authorization Date (as defined below) PLUS (3) Default Interest, if
any, on the amounts referred to in clauses (1) and/or (2), MULTIPLIED BY (y)
..24, MULTIPLIED BY (z) (N/365), where N = the number of days from the day the
holder submits a Notice of Conversion giving rise to a Conversion Default (the
"CONVERSION DEFAULT DATE") to the date (the "AUTHORIZATION DATE") that the
Borrower authorizes a sufficient number of shares of Common Stock to effect
conversion of the full outstanding principal balance of this Debenture. The
Borrower shall use its best efforts to authorize a sufficient number of shares
of Common Stock as soon as practicable following the earlier of (i) such time
that the Holder notifies the Borrower or that the Borrower otherwise becomes
aware that there are or likely will be insufficient authorized and unissued
shares to allow full conversion thereof and (ii) a Conversion Default. The
Borrower shall send notice to the Holder of the authorization of additional
shares of Common Stock, the Authorization Date and the amount of Holder's
accrued Conversion Default Payments. The accrued Conversion Default Payments for
each calendar month shall be paid in cash or shall be convertible into Common
Stock (at such time as there are sufficient authorized shares of Common Stock)
at the applicable Conversion Price, at the Holder's option, as follows:

                           (a) In the event Holder elects to take such payment
in cash, cash payment shall be made to Holder by the fifth (5th) day of the
month following the month in which it has accrued; and

                           (b) In the event Holder elects to take such payment
in Common Stock, the Holder may convert such payment amount into Common Stock at
the Conversion Price (as in effect at the time of conversion) at any time after
the fifth day of the month following the month in which it has accrued in
accordance with the terms of this Article I (so long as there is then a
sufficient number of authorized shares of Common Stock).

                  The Holder's election shall be made in writing to the Borrower
at any time prior to 6:00 p.m., New York, New York time, on the third day of the
month following the month in which Conversion Default payments have accrued. If
no election is made, the Holder shall be deemed to have elected to receive cash.
Nothing herein shall limit the Holder's right to pursue actual damages (to the

                                       5
<PAGE>

extent in excess of the Conversion Default Payments) for the Borrower's failure
to maintain a sufficient number of authorized shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

                  1.4 METHOD OF CONVERSION.

                           (a) MECHANICS OF CONVERSION. Subject to Section 1.1,
this Debenture may be converted by the Holder in whole or in part at
any time from time to time after the Issue Date, by (A) submitting to the
Borrower a Notice of Conversion (by facsimile or other reasonable means of
communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
New York time) and (B) subject to Section 1.4(b), surrendering this Debenture at
the principal office of the Borrower.

                           (b) SURRENDER OF DEBENTURE UPON CONVERSION.
Notwithstanding anything to the contrary set forth herein, upon conversion of
this Debenture in accordance with the terms hereof, the Holder shall not be
required to physically surrender this Debenture to the Borrower unless the
entire unpaid principal amount of this Debenture is so converted. The Holder and
the Borrower shall maintain records showing the principal amount so converted
and the dates of such conversions or shall use such other method, reasonably
satisfactory to the Holder and the Borrower, so as not to require physical
surrender of this Debenture upon each such conversion. In the event of any
dispute or discrepancy, such records of the Borrower shall be controlling and
determinative in the absence of manifest error. Notwithstanding the foregoing,
if any portion of this Debenture is converted as aforesaid, the Holder may not
transfer this Debenture unless the Holder first physically surrenders this
Debenture to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Debenture of like tenor, registered
as the Holder (upon payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid principal amount of
this Debenture. 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 represented by this Debenture may be less
than the amount stated on the face hereof.

                           (c) PAYMENT OF TAXES.The Borrower shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock or other securities
or property on conversion of this Debenture in a name other than that of the
Holder (or in street name), and the Borrower shall not be required to issue or
deliver any such shares or other securities or property unless and until the
person or persons (other than the Holder or the custodian in whose street name
such shares are to be held for the Holder's account) requesting the issuance
thereof shall have paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has been paid.

                           (d) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon
receipt by the Borrower from the Holder of a facsimile transmission (or
other reasonable means of communication) of a Notice of Conversion meeting the
requirements for conversion as provided in this Section 1.4, the Borrower shall

                                       6
<PAGE>

issue and deliver or cause to be issued and delivered to or upon the order of
the Holder certificates for the Common Stock issuable upon such conversion
within two (2) business days after such receipt (and, solely in the case of
conversion of the entire unpaid principal amount hereof, surrender of this
Debenture) (such second business day being hereinafter referred to as the
"DEADLINE") in accordance with the terms hereof and the Purchase Agreement
(including, without limitation, in accordance with the requirements of Section
2(g) of the Purchase Agreement that certificates for shares of Common Stock
issued on or after the effective date of the Registration Statement upon
conversion of this Debenture shall not bear any restrictive legend).

                           (e) OBLIGATION OF BORROWER TO DELIVER COMMON STOCK.
Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such
conversion, the outstanding principal amount and the amount of accrued and
unpaid interest on this Debenture shall be reduced to reflect such conversion,
and, unless the Borrower defaults on its obligations under this Article I, all
rights with respect to the portion of this Debenture being so converted shall
forthwith terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such conversion. If the
Holder shall have given a Notice of Conversion as provided herein, the
Borrower's obligation to issue and deliver the certificates for Common Stock
shall be absolute and unconditional, irrespective of the absence of any action
by the Holder to enforce the same, any waiver or consent with respect to any
provision thereof, the recovery of any judgment against any person or any action
to enforce the same, any failure or delay in the enforcement of any other
obligation of the Borrower to the holder of record, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any other
circumstance which might otherwise limit such obligation of the Borrower to the
Holder in connection with such conversion. The Conversion Date specified in the
Notice of Conversion shall be the Conversion Date so long as the Notice of
Conversion is received by the Borrower before 6:00 p.m., New York, New York
time, on such date.

                           (f) DELIVERY OF COMMON STOCK BY ELECTRONIC TRANSFER.
In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Borrower's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Holder and its compliance with
the provisions contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting
the account of Holder's Prime Broker with DTC through its Deposit Withdrawal
Agent Commission ("DWAC") system.

                           (g) FAILURE TO DELIVER COMMON STOCK PRIOR TO
DEADLINE. Without in any way limiting the Holder's right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of this Debenture
is more than two (2) days after the Deadline (other than a failure due to the
circumstances described in Section 1.3 above, which failure shall be governed by
such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for
each day beyond the Deadline that the Borrower fails to deliver such Common
Stock. Such cash amount shall be paid to Holder by the fifth day of the month

                                       7
<PAGE>

following the month in which it has accrued or, at the option of the Holder (by
written notice to the Borrower by the first day of the month following the month
in which it has accrued), shall be added to the principal amount of this
Debenture, in which event interest shall accrue thereon in accordance with the
terms of this Debenture and such additional principal amount shall be
convertible into Common Stock in accordance with the terms of this Debenture.

                  1.5 CONCERNING THE SHARES. The shares of Common Stock issuable
upon conversion of this Debenture may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or
(ii) the Borrower or its transfer agent shall have been furnished with an
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (iii) such shares are sold or transferred
pursuant to Rule 144 under the Act (or a successor rule) ("RULE 144") or (iv)
such shares are transferred to an "affiliate" (as defined in Rule 144) of the
Borrower who agrees to sell or otherwise transfer the shares only in accordance
with this Section 1.5 and who is an Accredited Investor (as defined in the
Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and
subject to the removal provisions set forth below), until such time as the
shares of Common Stock issuable upon conversion of this Debenture have been
registered under the Act as contemplated by the Registration Rights Agreement or
otherwise may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
each certificate for shares of Common Stock issuable upon conversion of this
Debenture that has not been so included in an effective registration statement
or that has not been sold pursuant to an effective registration statement or an
exemption that permits removal of the legend, shall bear a legend substantially
in the following form, as appropriate:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
         MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
         REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION
         OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF
         COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED
         UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER
         SAID ACT."

                  The legend set forth above shall be removed and the Borrower
shall issue to the Holder a new certificate therefor free of any transfer legend
if (i) the Borrower or its transfer agent shall have received an opinion of
counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Common Stock may be made without registration under the Act and the shares are
so sold or transferred, (ii) such Holder provides the Borrower or its transfer
agent with reasonable assurances that the Common Stock issuable upon conversion
of this Debenture (to the extent such securities are deemed to have been

                                       8
<PAGE>

acquired on the same date) can be sold pursuant to Rule 144 or (iii) in the case
of the Common Stock issuable upon conversion of this Debenture, such security is
registered for sale by the Holder under an effective registration statement
filed under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then
be immediately sold. Nothing in this Debenture shall (i) limit the Borrower's
obligation under the Registration Rights Agreement or (ii) affect in any way the
Holder's obligations to comply with applicable prospectus delivery requirements
upon the resale of the securities referred to herein.

                  1.6 EFFECT OF CERTAIN EVENTS.

                           (a) EFFECT OF MERGER, CONSOLIDATION, ETC. At the
option of the Holder, the sale, conveyance or disposition of all or
substantially all of the assets of the Borrower, the effectuation by the
Borrower of a transaction or series of related transactions in which more than
50% of the voting power of the Borrower is disposed of, or the consolidation,
merger or other business combination of the Borrower with or into any other
Person (as defined below) or Persons when the Borrower is not the survivor shall
either: (i) be deemed to be an Event of Default (as defined in Article III)
pursuant to which the Borrower shall be required to pay to the Holder upon the
consummation of and as a condition to such transaction an amount equal to the
Default Amount (as defined in Article III) or (ii) be treated pursuant to
Section 1.6(b) hereof. "PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or
organization.

                           (b) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If,
at any time when this Debenture is issued and outstanding and
prior to conversion of all of the Debentures, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Borrower shall
be changed into the same or a different number of shares of another class or
classes of stock or securities of the Borrower or another entity, or in case of
any sale or conveyance of all or substantially all of the assets of the Borrower
other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Debenture shall thereafter have the right to receive
upon conversion of this Debenture, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities or
assets which the Holder would have been entitled to receive in such transaction
had this Debenture been converted in full immediately prior to such transaction
(without regard to any limitations on conversion set forth herein), and in any
such case appropriate provisions shall be made with respect to the rights and
interests of the Holder of this Debenture to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Debenture)
shall thereafter be applicable, as nearly as may be practicable in relation to
any securities or assets thereafter deliverable upon the conversion hereof. The
Borrower shall not effect any transaction described in this Section 1.6(b)

                                       9
<PAGE>

unless (a) it first gives, to the extent practicable, thirty (30) days prior
written notice (but in any event at least fifteen (15) days prior written
notice) of the record date of the special meeting of shareholders to approve, or
if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time the Holder shall be entitled
to convert this Debenture) and (b) the resulting successor or acquiring entity
(if not the Borrower) assumes by written instrument the obligations of this
Section 1.6(b). The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share exchanges.

                           (c) ADJUSTMENT DUE TO DISTRIBUTION. If the Borrower
shall declare or make any distribution of its assets (or rights to
acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
by way of return of capital or otherwise (including any dividend or distribution
to the Borrower's shareholders in cash or shares (or rights to acquire shares)
of capital stock of a subsidiary (i.e., a spin-off)) (a "DISTRIBUTION"), then
the Holder of this Debenture shall be entitled, upon any conversion of this
Debenture after the date of record for determining shareholders entitled to such
Distribution, to receive the amount of such assets which would have been payable
to the Holder with respect to the shares of Common Stock issuable upon such
conversion had such Holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such Distribution.

                           (d) ADJUSTMENT DUE TO DILUTIVE ISSUANCE. If, at any
time when any Debentures are issued and outstanding, the Borrower issues
or sells, or in accordance with this Section 1.6(d) hereof is deemed to have
issued or sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) less than the
Fixed Conversion Price in effect on the date of such issuance (or deemed
issuance) of such shares of Common Stock (a "DILUTIVE ISSUANCE"), then
immediately upon the Dilutive Issuance, the Fixed Conversion Price will be
reduced to the amount of the consideration per share received by the Borrower in
such Dilutive Issuance; PROVIDED that only one adjustment will be made for each
Dilutive Issuance.

                           The Borrower shall be deemed to have issued or sold
shares of Common Stock if the Borrower in any manner issues or grants any
warrants, rights or options, whether or not immediately exercisable, to
subscribe for or to purchase Common Stock or other securities convertible into
or exchangeable for Common Stock ("CONVERTIBLE SECURITIES") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "OPTIONS") and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the Fixed
Conversion Price then in effect, then the Fixed Conversion Price shall be equal
to such price per share. For purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon the exercise of such Options" is
determined by dividing (i) the total amount, if any, received or receivable by
the Borrower as consideration for the issuance or granting of all such Options,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Borrower upon the exercise of all such Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Options, the minimum
aggregate amount of additional consideration payable upon the conversion or
exchange thereof at the time such Convertible Securities first become
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Conversion Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.

                                       10
<PAGE>

                           Additionally, the Borrower shall be deemed to have
issued or sold shares of Common Stock if the Borrower in any manner issues or
sells any Convertible Securities, whether or not immediately convertible (other
than where the same are issuable upon the exercise of Options), and the price
per share for which Common Stock is issuable upon such conversion or exchange is
less than the Fixed Conversion Price then in effect, then the Fixed Conversion
Price shall be equal to such price per share. For the purposes of the preceding
sentence, the "price per share for which Common Stock is issuable upon such
conversion or exchange" is determined by dividing (i) the total amount, if any,
received or receivable by the Borrower as consideration for the issuance or sale
of all such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Borrower upon the conversion or
exchange thereof at the time such Convertible Securities first become
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment to the Fixed Conversion Price will be made
upon the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.

                           (e) PURCHASE RIGHTS. If, at any time when any
Debentures are issued and outstanding, the Borrower issues any convertible
securities or rights to purchase stock, warrants, securities or other property
(the "PURCHASE RIGHTS") pro rata to the record holders of any class of Common
Stock, then the Holder of this Debenture will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
such Holder could have acquired if such Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Debenture (without
regard to any limitations on conversion contained herein) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

                           (f) NOTICE OF ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price as a result of
the events described in this Section 1.6, the Borrower, at its expense, shall
promptly compute such adjustment or readjustment and prepare and furnish to the
Holder of a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or
readjustment, (ii) the Conversion Price at the time in effect and (iii) the
number of shares of Common Stock and the amount, if any, of other securities or
property which at the time would be received upon conversion of the Debenture.

                  1.7 TRADING MARKET LIMITATIONS. Unless permitted by the
applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon
conversion of or otherwise pursuant to this Debenture and the other Debentures
issued pursuant to the Purchase Agreement more than the maximum number of shares
of Common Stock that the Borrower can issue pursuant to any rule of the
principal United States securities market on which the Common Stock is then
traded (the "MAXIMUM SHARE AMOUNT"), which, as of the Issue Date shall be
14,838,310 shares (19.99% of the total shares outstanding on the Issue Date),

                                       11
<PAGE>

subject to equitable adjustment from time to time for stock splits, stock
dividends, combinations, capital reorganizations and similar events relating to
the Common Stock occurring after the date hereof. Once the Maximum Share Amount
has been issued (the date of which is hereinafter referred to as the "MAXIMUM
CONVERSION DATE"), if the Borrower fails to eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Borrower or any of its securities on the Borrower's ability to issue shares
of Common Stock in excess of the Maximum Share Amount (a "TRADING MARKET
PREPAYMENT EVENT"), in lieu of any further right to convert this Debenture, and
in full satisfaction of the Borrower's obligations under this Debenture, the
Borrower shall pay to the Holder, within fifteen (15) business days of the
Maximum Conversion Date (the "TRADING MARKET PREPAYMENT DATE"), an amount equal
to 130% TIMES the SUM of (a) the then outstanding principal amount of this
Debenture immediately following the Maximum Conversion Date, PLUS (b) accrued
and unpaid interest on the unpaid principal amount of this Debenture to the
Trading Market Prepayment Date, PLUS (c) Default Interest, if any, on the
amounts referred to in clause (a) and/or (b) above, PLUS (d) any optional
amounts that may be added thereto at the Maximum Conversion Date by the Holder
in accordance with the terms hereof (the then outstanding principal amount of
this Debenture immediately following the Maximum Conversion Date, PLUS the
amounts referred to in clauses (b), (c) and (d) above shall collectively be
referred to as the "REMAINING CONVERTIBLE AMOUNT"). With respect to each Holder
of Debentures, the Maximum Share Amount shall refer to such Holder's PRO RATA
share thereof determined in accordance with Section 4.8 below. In the event that
the sum of (x) the aggregate number of shares of Common Stock issued upon
conversion of this Debenture and the other Debentures issued pursuant to the
Purchase Agreement PLUS (y) the aggregate number of shares of Common Stock that
remain issuable upon conversion of this Debenture and the other Debentures
issued pursuant to the Purchase Agreement, represents at least one hundred
percent (100%) of the Maximum Share Amount (the "TRIGGERING EVENT"), the
Borrower will use its best efforts to seek and obtain Shareholder Approval (or
obtain such other relief as will allow conversions hereunder in excess of the
Maximum Share Amount) as soon as practicable following the Triggering Event and
before the Maximum Conversion Date. As used herein, "SHAREHOLDER APPROVAL" means
approval by the shareholders of the Borrower to authorize the issuance of the
full number of shares of Common Stock which would be issuable upon full
conversion of the then outstanding Debentures but for the Maximum Share Amount.

                  1.8 STATUS AS SHAREHOLDER. Upon submission of a Notice of
Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder's
allocated portion of the Reserved Amount or Maximum Share Amount) shall be
deemed converted into shares of Common Stock and (ii) the Holder's rights as a
Holder of such converted portion of this Debenture shall cease and terminate,
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity
to such Holder because of a failure by the Borrower to comply with the terms of
this Debenture. Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the tenth (10th) business
day after the expiration of the Deadline with respect to a conversion of any
portion of this Debenture for any reason, then (unless the Holder otherwise
elects to retain its status as a holder of Common Stock by so notifying the
Borrower) the Holder shall regain the rights of a Holder of this Debenture with

                                       12
<PAGE>

respect to such unconverted portions of this Debenture and the Borrower shall,
as soon as practicable, return such unconverted Debenture to the Holder or, if
the Debenture has not been surrendered, adjust its records to reflect that such
portion of this Debenture has not been converted. In all cases, the Holder shall
retain all of its rights and remedies (including, without limitation, (i) the
right to receive Conversion Default Payments pursuant to Section 1.3 to the
extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect
to subsequent conversions determined in accordance with Section 1.3) for the
Borrower's failure to convert this Debenture.

                          ARTICLE II. CERTAIN COVENANTS

                  2.1 DISTRIBUTIONS ON CAPITAL STOCK. So long as the Borrower
shall have any obligation under this Debenture, the Borrower shall not without
the Holder's written consent (a) pay, declare or set apart for such payment, any
dividend or other distribution (whether in cash, property or other securities)
on shares of capital stock other than dividends on shares of Common Stock solely
in the form of additional shares of Common Stock or (b) directly or indirectly
or through any subsidiary make any other payment or distribution in respect of
its capital stock except for distributions pursuant to any shareholders' rights
plan which is approved by a majority of the Borrower's disinterested directors.

                  2.2 RESTRICTION ON STOCK REPURCHASES. So long as the Borrower
shall have any obligation under this Debenture, the Borrower shall not without
the Holder's written consent redeem, repurchase or otherwise acquire (whether
for cash or in exchange for property or other securities or otherwise) in any
one transaction or series of related transactions any shares of capital stock of
the Borrower or any warrants, rights or options to purchase or acquire any such
shares.

                  2.3 BORROWINGS. So long as the Borrower shall have any
obligation under this Debenture, the Borrower shall not, without the Holder's
written consent, create, incur, assume or suffer to exist any liability for
borrowed money, except (a) borrowings in existence or committed on the date
hereof and of which the Borrower has informed Holder in writing prior to the
date hereof, (b) indebtedness to trade creditors or financial institutions
incurred in the ordinary course of business or (c) borrowings, the proceeds of
which shall be used to repay this Debenture.

                  2.4 SALE OF ASSETS. So long as the Borrower shall have any
obligation under this Debenture, the Borrower shall not, without the Holder's
written consent, sell, lease or otherwise dispose of any significant portion of
its assets outside the ordinary course of business. Any consent to the
disposition of any assets may be conditioned on a specified use of the proceeds
of disposition.

                  2.5 ADVANCES AND LOANS. So long as the Borrower shall have any
obligation under this Debenture, the Borrower shall not, without the Holder's
written consent, lend money, give credit or make advances to any person, firm,
joint venture or corporation, including, without limitation, officers,
directors, employees, subsidiaries and affiliates of the Borrower, except loans,
credits or advances (a) in existence or committed on the date hereof and which

                                       13
<PAGE>

the Borrower has informed Holder in writing prior to the date hereof, (b) made
in the ordinary course of business or (c) not in excess of $50,000.

                  2.6 CONTINGENT LIABILITIES. So long as the Borrower shall have
any obligation under this Debenture, the Borrower shall not, without the
Holder's written consent, assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any person, firm,
partnership, joint venture or corporation, except by the endorsement of
negotiable instruments for deposit or collection and except assumptions,
guarantees, endorsements and contingencies (a) in existence or committed on the
date hereof and which the Borrower has informed Holder in writing prior to the
date hereof, and (b) similar transactions in the ordinary course of business.

                         ARTICLE III. EVENTS OF DEFAULT

                  If any of the following events of default (each, an "EVENT OF
DEFAULT") shall occur:

                  3.1 FAILURE TO PAY PRINCIPAL OR INTEREST. The Borrower fails
to pay the principal hereof or interest thereon when due on this Debenture,
whether at maturity, upon a Trading Market Prepayment Event pursuant to Section
1.7, upon acceleration or otherwise;

                  3.2 CONVERSION AND THE SHARES. The Borrower fails to issue
shares of Common Stock to the Holder (or announces or threatens that it will not
honor its obligation to do so) upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Debenture (for a
period of at least sixty (60) days, if such failure is solely as a result of the
circumstances governed by Section 1.3 and the Borrower is using its best efforts
to authorize a sufficient number of shares of Common Stock as soon as
practicable), fails to transfer or cause its transfer agent to transfer
(electronically or in certificated form) any certificate for shares of Common
Stock issued to the Holder upon conversion of or otherwise pursuant to this
Debenture as and when required by this Debenture or the Registration Rights
Agreement, or fails to remove any restrictive legend (or to withdraw any stop
transfer instructions in respect thereof) on any certificate for any shares of
Common Stock issued to the Holder upon conversion of or otherwise pursuant to
this Debenture as and when required by this Debenture or the Registration Rights
Agreement (or makes any announcement, statement or threat that it does not
intend to honor the obligations described in this paragraph) and any such
failure shall continue uncured (or any announcement, statement or threat not to
honor its obligations shall not be rescinded in writing) for ten (10) days after
the Borrower shall have been notified thereof in writing by the Holder;

                  3.3 FAILURE TO TIMELY FILE REGISTRATION OR EFFECT
REGISTRATION. The Borrower fails to file the Registration Statement within
seventy-five (75) days following the Closing Date (as defined in the Purchase
Agreement) or obtain effectiveness with the Securities and Exchange Commission
of the Registration Statement within one hundred twenty (120) days following the
Closing Date or such Registration Statement lapses in effect (or sales cannot

                                       14
<PAGE>

otherwise be made thereunder effective, whether by reason of the Borrower's
failure to amend or supplement the prospectus included therein in accordance
with the Registration Rights Agreement or otherwise) for more than twenty (20)
consecutive days or forty (40) days in any twelve month period after the
Registration Statement becomes effective;

                  3.4 BREACH OF COVENANTS. The Borrower breaches any material
covenant or other material term or condition contained in Sections 1.3, 1.6 or
1.7 of this Debenture, or Sections 4(c), 4(e), 4(h), 4(i), 4(j), 4(m), 4(n) or 5
of the Purchase Agreement and such breach continues for a period of ten (10)
days after written notice thereof to the Borrower from the Holder;

                  3.5 BREACH OF REPRESENTATIONS AND WARRANTIES. Any
representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection
herewith (including, without limitation, the Purchase Agreement and the
Registration Rights Agreement), shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will
have) a material adverse effect on the rights of the Holder with respect to this
Debenture, the Purchase Agreement or the Registration Rights Agreement;

                  3.6 RECEIVER OR TRUSTEE. The Borrower or any subsidiary of the
Borrower shall make an assignment for the benefit of creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such a receiver or trustee shall otherwise
be appointed;

                  3.7 JUDGMENTS. Any money judgment, writ or similar process
shall be entered or filed against the Borrower or any subsidiary of the Borrower
or any of its property or other assets for more than $50,000, and shall remain
unvacated, unbonded or unstayed for a period of twenty (20) days unless
otherwise consented to by the Holder, which consent will not be unreasonably
withheld;

                  3.8 BANKRUPTCY. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower or any subsidiary of the Borrower;

                  3.9 DELISTING OF COMMON STOCK. The Borrower shall fail to
maintain the listing of the Common Stock on at least one of the "pink sheets" or
the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the
Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock
Exchange;

                  3.10 DEFAULT UNDER OTHER DEBENTURES. An Event of Default has
occurred and is continuing under any of the other Debentures issued pursuant to
the Purchase Agreement;

then, upon the occurrence and during the continuation of any Event of Default
specified in Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
of the Holders of a majority of the aggregate principal amount of the
outstanding Debentures issued pursuant to the Purchase Agreement exercisable
through the delivery of written notice to the Borrower by such Holders (the
"DEFAULT NOTICE"), and upon the occurrence of an Event of Default specified in

                                       15
<PAGE>

Section 3.6 or 3.8, the Debentures shall become immediately due and payable and
the Borrower shall pay to the Holder, in full satisfaction of its obligations
hereunder, an amount equal to the greater of (i) 130% TIMES the SUM of (w) the
then outstanding principal amount of this Debenture PLUS (x) accrued and unpaid
interest on the unpaid principal amount of this Debenture to the date of payment
(the "MANDATORY PREPAYMENT DATE") PLUS (y) Default Interest, if any, on the
amounts referred to in clauses (w) and/or (x) PLUS (z) any amounts owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section 2(c) of
the Registration Rights Agreement (the then outstanding principal amount of this
Debenture to the date of payment PLUS the amounts referred to in clauses (x),
(y) and (z) shall collectively be known as the "DEFAULT SUM") or (ii) the
"parity value" of the Default Sum to be prepaid, where parity value means (a)
the highest number of shares of Common Stock issuable upon conversion of or
otherwise pursuant to such Default Sum in accordance with Article I, treating
the Trading Day immediately preceding the Mandatory Prepayment Date as the
"Conversion Date" for purposes of determining the lowest applicable Conversion
Price, unless the Default Event arises as a result of a breach in respect of a
specific Conversion Date in which case such Conversion Date shall be the
Conversion Date), MULTIPLIED BY (b) the highest Closing Price for the Common
Stock during the period beginning on the date of first occurrence of the Event
of Default and ending one day prior to the Mandatory Prepayment Date (the
"DEFAULT AMOUNT") and all other amounts payable hereunder shall immediately
become due and payable, all without demand, presentment or notice, all of which
hereby are expressly waived, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at law or in
equity. If the Borrower fails to pay the Default Amount within five (5) business
days of written notice that such amount is due and payable, then the Holder
shall have the right at any time, so long as the Borrower remains in default
(and so long and to the extent that there are sufficient authorized shares), to
require the Borrower, upon written notice, to immediately issue, in lieu of the
Default Amount, the number of shares of Common Stock of the Borrower equal to
the Default Amount divided by the Conversion Price then in effect.

                            ARTICLE IV. MISCELLANEOUS

                  4.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on
the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

                  4.2 NOTICES. Any notice herein required or permitted to be
given shall be in writing and may be personally served or delivered by courier
or sent by United States mail and shall be deemed to have been given upon
receipt if personally served (which shall include telephone line facsimile
transmission) or sent by courier or three (3) days after being deposited in the
United States mail, certified, with postage pre-paid and properly addressed, if
sent by mail. For the purposes hereof, the address of the Holder shall be as
shown on the records of the Borrower; and the address of the Borrower shall be
2238 West Lone Cactus Drive, Phoenix, Arizona 85027, facsimile number: (623)
492-9921. Both the Holder and the Borrower may change the address for service by
service of written notice to the other as herein provided.

                                       16
<PAGE>

                  4.3 AMENDMENTS. This Debenture and any provision hereof may
only be amended by an instrument in writing signed by the Borrower and the
Holder. The term "Debenture" and all reference thereto, as used throughout this
instrument, shall mean this instrument (and the other Debentures issued pursuant
to the Purchase Agreement) as originally executed, or if later amended or
supplemented, then as so amended or supplemented.

                  4.4 ASSIGNABILITY. This Debenture shall be binding upon the
Borrower and its successors and assigns, and shall inure to be the benefit of
the Holder and its successors and assigns. Each transferee of this Debenture
must be an "accredited investor" (as defined in Rule 501(a) of the 1933 Act).
Notwithstanding anything in this Debenture to the contrary, this Debenture may
be pledged as collateral in connection with a BONA FIDE margin account or other
lending arrangement.

                  4.5 COST OF COLLECTION. If default is made in the payment of
this Debenture, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys' fees.

                  4.6 GOVERNING LAW. THIS DEBENTURE SHALL BE ENFORCED, GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE BORROWER HEREBY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS DEBENTURE, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS DEBENTURE SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.

                  4.7 CERTAIN AMOUNTS. Whenever pursuant to this Debenture the
Borrower is required to pay an amount in excess of the outstanding principal
amount (or the portion thereof required to be paid at that time) plus accrued
and unpaid interest plus Default Interest on such interest, the Borrower and the
Holder agree that the actual damages to the Holder from the receipt of cash

                                       17
<PAGE>

payment on this Debenture may be difficult to determine and the amount to be so
paid by the Borrower represents stipulated damages and not a penalty and is
intended to compensate the Holder in part for loss of the opportunity to convert
this Debenture and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Debenture at a price in excess of the price
paid for such shares pursuant to this Debenture. The Borrower and the Holder
hereby agree that such amount of stipulated damages is not plainly
disproportionate to the possible loss to the Holder from the receipt of a cash
payment without the opportunity to convert this Debenture into shares of Common
Stock.

                  4.8 ALLOCATIONS OF MAXIMUM SHARE AMOUNT AND RESERVED AMOUNT.
The Maximum Share Amount and Reserved Amount shall be allocated pro rata among
the Holders of Debentures based on the principal amount of such Debentures
issued to each Holder. Each increase to the Maximum Share Amount and Reserved
Amount shall be allocated pro rata among the Holders of Debentures based on the
principal amount of such Debentures held by each Holder at the time of the
increase in the Maximum Share Amount or Reserved Amount. In the event a Holder
shall sell or otherwise transfer any of such Holder's Debentures, each
transferee shall be allocated a pro rata portion of such transferor's Maximum
Share Amount and Reserved Amount. Any portion of the Maximum Share Amount or
Reserved Amount which remains allocated to any person or entity which does not
hold any Debentures shall be allocated to the remaining Holders of Debentures,
pro rata based on the principal amount of such Debentures then held by such
Holders.

                  4.9 DAMAGES SHARES. The shares of Common Stock that may be
issuable to the Holder pursuant to Sections 1.3 and 1.4(g) hereof and pursuant
to Section 2(c) of the Registration Rights Agreement ("DAMAGES SHARES") shall be
treated as Common Stock issuable upon conversion of this Debenture for all
purposes hereof and shall be subject to all of the limitations and afforded all
of the rights of the other shares of Common Stock issuable hereunder, including
without limitation, the right to be included in the Registration Statement filed
pursuant to the Registration Rights Agreement. For purposes of calculating
interest payable on the outstanding principal amount hereof, except as otherwise
provided herein, amounts convertible into Damages Shares ("DAMAGES AMOUNTS")
shall not bear interest but must be converted prior to the conversion of any
outstanding principal amount hereof, until the outstanding Damages Amounts is
zero.

                  4.10 DENOMINATIONS. At the request of the Holder, upon
surrender of this Debenture, the Borrower shall promptly issue new Debentures in
the aggregate outstanding principal amount hereof, in the form hereof, in such
denominations of at least $50,000 as the Holder shall request.

                  4.11 PURCHASE AGREEMENT. By its acceptance of this Debenture,
each Holder agrees to be bound by the applicable terms of the Purchase
Agreement.

                  4.12 NOTICE OF CORPORATE EVENTS. Except as otherwise provided
below, the Holder of this Debenture shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Debenture into Common
Stock. The Borrower shall provide the Holder with prior notification of any
meeting of the Borrower's shareholders (and copies of proxy materials and other

                                       18
<PAGE>

information sent to shareholders). In the event of any taking by the Borrower of
a record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or
any other securities or property, or to receive any other right, or for the
purpose of determining shareholders who are entitled to vote in connection with
any proposed sale, lease or conveyance of all or substantially all of the assets
of the Borrower or any proposed liquidation, dissolution or winding up of the
Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20)
days prior to the record date specified therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date
on which any such record is to be taken for the purpose of such dividend,
distribution, right or other event, and a brief statement regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time. The Borrower shall make a public announcement of any event
requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section
4.12.

                  4.13 REMEDIES. The Borrower acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Holder, by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Borrower acknowledges that the remedy at law for a breach of
its obligations under this Debenture will be inadequate and agrees, in the event
of a breach or threatened breach by the Borrower of the provisions of this
Debenture, that the Holder shall be entitled, in addition to all other available
remedies at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any
breach of this Debenture and to enforce specifically the terms and provisions
thereof, without the necessity of showing economic loss and without any bond or
other security being required.

                         ARTICLE V. OPTIONAL PREPAYMENT

                  5.1. OPTIONAL PREPAYMENT. Notwithstanding anything to the
contrary contained in this Article V, so long as (i) no Event of Default or
Trading Market Prepayment Event shall have occurred and be continuing, and (ii)
the Borrower has a sufficient number of authorized shares of Common Stock
reserved for issuance upon full conversion of the Debentures, then at any time
after the Issue Date, the Borrower shall have the right, exercisable on not less
than ten (10) Trading Days prior written notice to the Holders of the Debentures
(which notice may not be sent to the Holders of the Debentures until the
Borrower is permitted to prepay the Debentures pursuant to this Section 5.1), to
prepay all of the outstanding Debentures in accordance with this Section 5.1.
Any notice of prepayment hereunder (an "OPTIONAL PREPAYMENT") shall be delivered
to the Holders of the Debentures at their registered addresses appearing on the
books and records of the Borrower and shall state (1) that the Borrower is
exercising its right to prepay all of the Debentures issued on the Issue Date
and (2) the date of prepayment (the "OPTIONAL PREPAYMENT NOTICE"). On the date
fixed for prepayment (the "OPTIONAL PREPAYMENT DATE"), the Borrower shall make

                                       19
<PAGE>

payment of the Optional Prepayment Amount (as defined below) to or upon the
order of the Holders as specified by the Holders in writing to the Borrower at
least one (1) business day prior to the Optional Prepayment Date. If the
Borrower exercises its right to prepay the Debentures, the Borrower shall make
payment to the holders of an amount in cash (the "OPTIONAL PREPAYMENT AMOUNT")
equal to 150% multiplied by the sum of (w) the then outstanding principal amount
of this Debenture PLUS (x) accrued and unpaid interest on the unpaid principal
amount of this Debenture to the Optional Prepayment Date PLUS (y) Default
Interest, if any, on the amounts referred to in clauses (w) and (x) PLUS (z) any
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
pursuant to Section 2(c) of the Registration Rights Agreement (the then
outstanding principal amount of this Debenture to the date of payment PLUS the
amounts referred to in clauses (x), (y) and (z) shall collectively be known as
the "OPTIONAL PREPAYMENT SUM"). Notwithstanding notice of an Optional
Prepayment, the Holders shall at all times prior to the Optional Prepayment Date
maintain the right to convert all or any portion of the Debentures in accordance
with Article I and any portion of Debentures so converted after receipt of an
Optional Prepayment Notice and prior to the Optional Prepayment Date set forth
in such notice and payment of the aggregate Optional Prepayment Amount shall be
deducted from the principal amount of Debentures which are otherwise subject to
prepayment pursuant to such notice. If the Borrower delivers an Optional
Prepayment Notice and fails to pay the Optional Prepayment Amount due to the
Holders of the Debentures within two (2) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to redeem the
Debentures pursuant to this Section 5.1.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

                  IN WITNESS WHEREOF, Borrower has caused this Debenture to be
signed in its name by its duly authorized officer this 31st day of January,
2003.

                                       IBIZ TECHNOLOGY CORP.

                                       By: /S/ Kenneth W. Schilling
                                           -------------------------------------
                                           Kenneth W. Schilling
                                           President and Chief Executive Officer

                                       21
<PAGE>

                                                                       EXHIBIT A

                              NOTICE OF CONVERSION
                    (To be Executed by the Registered Holder
                       in order to Convert the Debentures)

                  The undersigned hereby irrevocably elects to convert
$__________ principal amount of the Debenture (defined below) into shares of
common stock, par value $.001 per share ("COMMON STOCK"), of iBIZ Technology
Corp., a Florida corporation (the "BORROWER") according to the conditions of the
convertible debentures of the Borrower dated as of January 31, 2003, (the
"Debentures"), as of the date written below. If securities 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. No fee will be charged to the Holder for any conversion, except
for transfer taxes, if any. A copy of each Debenture is attached hereto (or
evidence of loss, theft or destruction thereof).

                  The Borrower shall electronically transmit the Common Stock
issuable pursuant to this Notice of Conversion to the account of the undersigned
or its nominee with DTC through its Deposit Withdrawal Agent Commission system
("DWAC TRANSFER").

         Name of DTC Prime Broker:
                                  ----------------------------------------------
         Account Number:
                        --------------------------------------------------------

                  In lieu of receiving shares of Common Stock issuable pursuant
to this Notice of Conversion by way of a DWAC Transfer, the undersigned hereby
requests that the Borrower issue a certificate or certificates for the number of
shares of Common Stock set forth below (which numbers are based on the Holder's
calculation attached hereto) in the name(s) specified immediately below or, if
additional space is necessary, on an attachment hereto:

         Name:
              ------------------------------------------------------------------
         Address:
                 ---------------------------------------------------------------

                  The undersigned represents and warrants that all offers and
sales by the undersigned of the securities issuable to the undersigned upon
conversion of the Debentures shall be made pursuant to registration of the
securities under the Securities Act of 1933, as amended (the "ACT"), or pursuant
to an exemption from registration under the Act.

                  Date of Conversion:___________________________
                  Applicable Conversion Price:__________________
                  Number of Shares of Common Stock to be Issued Pursuant to
                  Conversion of the Debentures:_________________
                  Signature:____________________________________
                  Name:_________________________________________
                  Address:______________________________________

                                       22
<PAGE>

The Borrower shall issue and deliver shares of Common Stock to an overnight
courier not later than three business days following receipt of the original
Debenture(s) to be converted, and shall make payments pursuant to the Debentures
for the number of business days such issuance and delivery is late.

                                       23<PAGE>

                                                                   Exhibit 10.70

         THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
         HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
         EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE
         AGREEMENT DATED AS OF JANUARY 31, 2003, NEITHER THIS WARRANT NOR ANY OF
         SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
         EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR,
         AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR
         OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS
         NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR
         REGULATION S UNDER SUCH ACT.

                                                      Right to Purchase 300,000
                                                      Shares of Common Stock,
                                                      $.001 par value per share

                             STOCK PURCHASE WARRANT

         THIS CERTIFIES THAT, for value received, AJW QUALIFIED PARTNERS, LLC or
its registered assigns, is entitled to purchase from iBIZ Technology Corp., a
Florida corporation (the "Company"), at any time or from time to time during the
period specified in Paragraph 2 hereof, Three Hundred Thousand (300,000) fully
paid and nonassessable shares of the Company's Common Stock, $.001 par value per
share (the "Common Stock"), at an exercise price per share equal to $0.01 (the
"Exercise Price"). The term "Warrant Shares," as used herein, refers to the
shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Paragraph 4 hereof. The
term "Warrants" means this Warrant and the other warrants issued pursuant to
that certain Securities Purchase Agreement, dated January 31, 2003, by and among
the Company and the Buyers listed on the execution page thereof (the "Securities
Purchase Agreement"), including any additional warrants issuable pursuant to
Section 4(l) thereof.

         This Warrant is subject to the following terms, provisions, and
conditions:

         1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
         --------------------------------------------------------------------

Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a

<PAGE>

completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been delivered, and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the holder
hereof and shall be registered in the name of such holder or such other name as
shall be designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised. In addition to all other available remedies
at law or in equity, if the Company fails to deliver certificates for the
Warrant Shares within three (3) business days after this Warrant is exercised,
then the Company shall pay to the holder in cash a penalty (the "Penalty") equal
to 2% of the number of Warrant Shares that the holder is entitled to multiplied
by the Market Price (as hereinafter defined) for each day that the Company fails
to deliver certificates for the Warrant Shares. For example, if the holder is
entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the
Company shall pay to the holder $4,000 for each day that the Company fails to
deliver certificates for the Warrant Shares. The Penalty shall be paid to the
holder by the fifth day of the month following the month in which it has
accrued.

                  Notwithstanding anything in this Warrant to the contrary, in
no event shall the holder of this Warrant be entitled to exercise a number of
Warrants (or portions thereof) in excess of the number of Warrants (or portions
thereof) upon exercise of which the sum of (i) the number of shares of Common
Stock beneficially owned by the holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants and the unexercised or unconverted portion of any other
securities of the Company (including the Debentures (as defined in the
Securities Purchase Agreement)) subject to a limitation on conversion or
exercise analogous to the limitation contained herein) and (ii) the number of
shares of Common Stock issuable upon exercise of the Warrants (or portions
thereof) with respect to which the determination described herein is being made,
would result in beneficial ownership by the holder and its affiliates of more
than 4.9% of the outstanding shares of Common Stock. For purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(i) of the preceding sentence. The holder of this Warrant may waive the
limitations set forth herein by sixty-one (61) days written notice to the
Company. Notwithstanding anything to the contrary contained herein, the
limitation on exercise of this Warrant set forth herein may not be amended
without (i) the written consent of the holder hereof and the Company and (ii)
the approval of a majority of shareholders of the Company.

                                       2
<PAGE>

         2. PERIOD OF EXERCISE.
         ----------------------

This Warrant is exercisable at any time or from time to time on or after the
date on which this Warrant is issued and delivered pursuant to the terms of the
Securities Purchase Agreement and before 6:00 p.m., New York, New York time on
the seventh (7th) anniversary of the date of issuance (the "Exercise Period").

         3. CERTAIN AGREEMENTS OF THE COMPANY.
         -------------------------------------

The Company hereby covenants and agrees as follows:

                  (a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
         issuance in accordance with the terms of this Warrant, be validly
         issued, fully paid, and nonassessable and free from all taxes, liens,
         and charges with respect to the issue thereof.

                  (b) RESERVATION OF SHARES. During the Exercise Period, the
         Company shall at all times have authorized, and reserved for the
         purpose of issuance upon exercise of this Warrant, a sufficient number
         of shares of Common Stock to provide for the exercise of this Warrant
         (subject to the Stock Split (as defined in the Securities Purchase
         Agreemetn)).

                  (c) LISTING. The Company shall promptly secure the listing of
         the shares of Common Stock issuable upon exercise of the Warrant upon
         each national securities exchange or automated quotation system, if
         any, upon which shares of Common Stock are then listed (subject to
         official notice of issuance upon exercise of this Warrant) and shall
         maintain, so long as any other shares of Common Stock shall be so
         listed, such listing of all shares of Common Stock from time to time
         issuable upon the exercise of this Warrant; and the Company shall so
         list on each national securities exchange or automated quotation
         system, as the case may be, and shall maintain such listing of, any
         other shares of capital stock of the Company issuable upon the exercise
         of this Warrant if and so long as any shares of the same class shall be
         listed on such national securities exchange or automated quotation
         system.

                  (d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
         amendment of its charter or through any reorganization, transfer of
         assets, consolidation, merger, dissolution, issue or sale of
         securities, or any other voluntary action, avoid or seek to avoid the
         observance or performance of any of the terms to be observed or
         performed by it hereunder, but will at all times in good faith assist
         in the carrying out of all the provisions of this Warrant and in the
         taking of all such action as may reasonably be requested by the holder
         of this Warrant in order to protect the exercise privilege of the
         holder of this Warrant against dilution or other impairment, consistent
         with the tenor and purpose of this Warrant. Without limiting the
         generality of the foregoing, the Company (i) will not increase the par
         value of any shares of Common Stock receivable upon the exercise of
         this Warrant above the Exercise Price then in effect, and (ii) will
         take all such actions as may be necessary or appropriate in order that
         the Company may validly and legally issue fully paid and nonassessable
         shares of Common Stock upon the exercise of this Warrant.

                                       3
<PAGE>

                  (e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
         any entity succeeding to the Company by merger, consolidation, or
         acquisition of all or substantially all the Company's assets.

         4. ANTIDILUTION PROVISIONS.
         ---------------------------

During the Exercise Period, the Exercise Price and the number of Warrant Shares
shall be subject to adjustment from time to time as provided in this Paragraph
4.

         In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
to the nearest cent.

                  (a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
         ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs
         4(c) and 4(e) hereof, if and whenever on or after the date of issuance
         of this Warrant, the Company issues or sells, or in accordance with
         Paragraph 4(b) hereof is deemed to have issued or sold, any shares of
         Common Stock for no consideration or for a consideration per share
         (before deduction of reasonable expenses or commissions or underwriting
         discounts or allowances in connection therewith) less than the Market
         Price (as hereinafter defined) on the date of issuance (a "Dilutive
         Issuance"), then immediately upon the Dilutive Issuance, the Exercise
         Price will be reduced to a price determined by multiplying the Exercise
         Price in effect immediately prior to the Dilutive Issuance by a
         fraction, (i) the numerator of which is an amount equal to the sum of
         (x) the number of shares of Common Stock actually outstanding
         immediately prior to the Dilutive Issuance, plus (y) the quotient of
         the aggregate consideration, calculated as set forth in Paragraph 4(b)
         hereof, received by the Company upon such Dilutive Issuance divided by
         the Market Price in effect immediately prior to the Dilutive Issuance,
         and (ii) the denominator of which is the total number of shares of
         Common Stock Deemed Outstanding (as defined below) immediately after
         the Dilutive Issuance.

                  (b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
         of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
         the following will be applicable:

                           (i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in
         any manner issues or grants any warrants, rights or options, whether or
         not immediately exercisable, to subscribe for or to purchase Common
         Stock or other securities convertible into or exchangeable for Common
         Stock ("Convertible Securities") (such warrants, rights and options to
         purchase Common Stock or Convertible Securities are hereinafter
         referred to as "Options") and the price per share for which Common
         Stock is issuable upon the exercise of such Options is less than the
         Market Price on the date of issuance or grant of such Options, then the
         maximum total number of shares of Common Stock issuable upon the
         exercise of all such Options will, as of the date of the issuance or
         grant of such Options, be deemed to be outstanding and to have been
         issued and sold by the Company for such price per share. For purposes
         of the preceding sentence, the "price per share for which Common Stock
         is issuable upon the exercise of such Options" is determined by
         dividing (i) the total amount, if any, received or receivable by the
         Company as consideration for the issuance or granting of all such
         Options, plus the minimum aggregate amount of additional consideration,
         if any, payable to the Company upon the exercise of all such Options,
         plus, in the case of Convertible Securities issuable upon the exercise

                                       4
<PAGE>

         of such Options, the minimum aggregate amount of additional
         consideration payable upon the conversion or exchange thereof at the
         time such Convertible Securities first become convertible or
         exchangeable, by (ii) the maximum total number of shares of Common
         Stock issuable upon the exercise of all such Options (assuming full
         conversion of Convertible Securities, if applicable). No further
         adjustment to the Exercise Price will be made upon the actual issuance
         of such Common Stock upon the exercise of such Options or upon the
         conversion or exchange of Convertible Securities issuable upon exercise
         of such Options.

                           (ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
         Company in any manner issues or sells any Convertible Securities,
         whether or not immediately convertible (other than where the same are
         issuable upon the exercise of Options) and the price per share for
         which Common Stock is issuable upon such conversion or exchange is less
         than the Market Price on the date of issuance, then the maximum total
         number of shares of Common Stock issuable upon the conversion or
         exchange of all such Convertible Securities will, as of the date of the
         issuance of such Convertible Securities, be deemed to be outstanding
         and to have been issued and sold by the Company for such price per
         share. For the purposes of the preceding sentence, the "price per share
         for which Common Stock is issuable upon such conversion or exchange" is
         determined by dividing (i) the total amount, if any, received or
         receivable by the Company as consideration for the issuance or sale of
         all such Convertible Securities, plus the minimum aggregate amount of
         additional consideration, if any, payable to the Company upon the
         conversion or exchange thereof at the time such Convertible Securities
         first become convertible or exchangeable, by (ii) the maximum total
         number of shares of Common Stock issuable upon the conversion or
         exchange of all such Convertible Securities. No further adjustment to
         the Exercise Price will be made upon the actual issuance of such Common
         Stock upon conversion or exchange of such Convertible Securities.

                           (iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If
         there is a change at any time in (i) the amount of additional
         consideration payable to the Company upon the exercise of any Options;
         (ii) the amount of additional consideration, if any, payable to the
         Company upon the conversion or exchange of any Convertible Securities;
         or (iii) the rate at which any Convertible Securities are convertible
         into or exchangeable for Common Stock (other than under or by reason of
         provisions designed to protect against dilution), the Exercise Price in
         effect at the time of such change will be readjusted to the Exercise
         Price which would have been in effect at such time had such Options or
         Convertible Securities still outstanding provided for such changed
         additional consideration or changed conversion rate, as the case may
         be, at the time initially granted, issued or sold.

                           (iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
         CONVERTIBLE SECURITIES. If, in any case, the total number of shares of
         Common Stock issuable upon exercise of any Option or upon conversion or
         exchange of any Convertible Securities is not, in fact, issued and the
         rights to exercise such Option or to convert or exchange such
         Convertible Securities shall have expired or terminated, the Exercise
         Price then in effect will be readjusted to the Exercise Price which
         would have been in effect at the time of such expiration or termination
         had such Option or Convertible Securities, to the extent outstanding
         immediately prior to such expiration or termination (other than in
         respect of the actual number of shares of Common Stock issued upon
         exercise or conversion thereof), never been issued.

                                       5
<PAGE>

                           (v) CALCULATION OF CONSIDERATION RECEIVED. If any
         Common Stock, Options or Convertible Securities are issued, granted or
         sold for cash, the consideration received therefor for purposes of this
         Warrant will be the amount received by the Company therefor, before
         deduction of reasonable commissions, underwriting discounts or
         allowances or other reasonable expenses paid or incurred by the Company
         in connection with such issuance, grant or sale. In case any Common
         Stock, Options or Convertible Securities are issued or sold for a
         consideration part or all of which shall be other than cash, the amount
         of the consideration other than cash received by the Company will be
         the fair value of such consideration, except where such consideration
         consists of securities, in which case the amount of consideration
         received by the Company will be the Market Price thereof as of the date
         of receipt. In case any Common Stock, Options or Convertible Securities
         are issued in connection with any acquisition, merger or consolidation
         in which the Company is the surviving corporation, the amount of
         consideration therefor will be deemed to be the fair value of such
         portion of the net assets and business of the non-surviving corporation
         as is attributable to such Common Stock, Options or Convertible
         Securities, as the case may be. The fair value of any consideration
         other than cash or securities will be determined in good faith by the
         Board of Directors of the Company.

                           (vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
         adjustment to the Exercise Price will be made (i) upon the exercise of
         any warrants, options or convertible securities granted, issued and
         outstanding on the date of issuance of this Warrant; (ii) upon the
         grant or exercise of any stock or options which may hereafter be
         granted or exercised under any employee benefit plan, stock option plan
         or restricted stock plan of the Company now existing or to be
         implemented in the future, so long as the issuance of such stock or
         options is approved by a majority of the independent members of the
         Board of Directors of the Company or a majority of the members of a
         committee of independent directors established for such purpose; or
         (iii) upon the exercise of the Warrants.

                  (c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company
         at any time subdivides (by any stock split, stock dividend,
         recapitalization, reorganization, reclassification or otherwise) the
         shares of Common Stock acquirable hereunder into a greater number of
         shares, then, after the date of record for effecting such subdivision,
         the Exercise Price in effect immediately prior to such subdivision will
         be proportionately reduced. If the Company at any time combines (by
         reverse stock split, recapitalization, reorganization, reclassification
         or otherwise) the shares of Common Stock acquirable hereunder into a
         smaller number of shares, then, after the date of record for effecting
         such combination, the Exercise Price in effect immediately prior to
         such combination will be proportionately increased.

                  (d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of
         the Exercise Price pursuant to the provisions of this Paragraph 4, the
         number of shares of Common Stock issuable upon exercise of this Warrant
         shall be adjusted by multiplying a number equal to the Exercise Price
         in effect immediately prior to such adjustment by the number of shares
         of Common Stock issuable upon exercise of this Warrant immediately
         prior to such adjustment and dividing the product so obtained by the
         adjusted Exercise Price.

                  (e) CONSOLIDATION, MERGER OR SALE. In case of any
         consolidation of the Company with, or merger of the Company into any
         other corporation, or in case of any sale or conveyance of all or
         substantially all of the assets of the Company other than in connection
         with a plan of complete liquidation of the Company, then as a condition
         of such consolidation, merger or sale or conveyance, adequate provision

                                       6
<PAGE>

         will be made whereby the holder of this Warrant will have the right to
         acquire and receive upon exercise of this Warrant in lieu of the shares
         of Common Stock immediately theretofore acquirable upon the exercise of
         this Warrant, such shares of stock, securities or assets as may be
         issued or payable with respect to or in exchange for the number of
         shares of Common Stock immediately theretofore acquirable and
         receivable upon exercise of this Warrant had such consolidation, merger
         or sale or conveyance not taken place. In any such case, the Company
         will make appropriate provision to insure that the provisions of this
         Paragraph 4 hereof will thereafter be applicable as nearly as may be in
         relation to any shares of stock or securities thereafter deliverable
         upon the exercise of this Warrant. The Company will not effect any
         consolidation, merger or sale or conveyance unless prior to the
         consummation thereof, the successor corporation (if other than the
         Company) assumes by written instrument the obligations under this
         Paragraph 4 and the obligations to deliver to the holder of this
         Warrant such shares of stock, securities or assets as, in accordance
         with the foregoing provisions, the holder may be entitled to acquire.

                  (f) DISTRIBUTION OF ASSETS. In case the Company shall declare
         or make any distribution of its assets (including cash) to holders of
         Common Stock as a partial liquidating dividend, by way of return of
         capital or otherwise, then, after the date of record for determining
         shareholders entitled to such distribution, but prior to the date of
         distribution, the holder of this Warrant shall be entitled upon
         exercise of this Warrant for the purchase of any or all of the shares
         of Common Stock subject hereto, to receive the amount of such assets
         which would have been payable to the holder had such holder been the
         holder of such shares of Common Stock on the record date for the
         determination of shareholders entitled to such distribution.

                  (g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event
         which requires any adjustment of the Exercise Price, then, and in each
         such case, the Company shall give notice thereof to the holder of this
         Warrant, which notice shall state the Exercise Price resulting from
         such adjustment and the increase or decrease in the number of Warrant
         Shares purchasable at such price upon exercise, setting forth in
         reasonable detail the method of calculation and the facts upon which
         such calculation is based. Such calculation shall be certified by the
         Chief Financial Officer of the Company.

                  (h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
         Exercise Price shall be made in an amount of less than 1% of the
         Exercise Price in effect at the time such adjustment is otherwise
         required to be made, but any such lesser adjustment shall be carried
         forward and shall be made at the time and together with the next
         subsequent adjustment which, together with any adjustments so carried
         forward, shall amount to not less than 1% of such Exercise Price.

                  (i) NO FRACTIONAL SHARES. No fractional shares of Common Stock
         are to be issued upon the exercise of this Warrant, but the Company
         shall pay a cash adjustment in respect of any fractional share which
         would otherwise be issuable in an amount equal to the same fraction of
         the Market Price of a share of Common Stock on the date of such
         exercise.

                  (j) OTHER NOTICES. In case at any time:

                                       7
<PAGE>

                           (i) the Company shall declare any dividend upon the
         Common Stock payable in shares of stock of any class or make any other
         distribution (including dividends or distributions payable in cash out
         of retained earnings) to the holders of the Common Stock;

                           (ii) the Company shall offer for subscription pro
         rata to the holders of the Common Stock any additional shares of stock
         of any class or other rights;

                           (iii) there shall be any capital reorganization of
         the Company, or reclassification of the Common Stock, or consolidation
         or merger of the Company with or into, or sale of all or substantially
         all its assets to, another corporation or entity; or

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

then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.

                  (k) CERTAIN EVENTS. If any event occurs of the type
         contemplated by the adjustment provisions of this Paragraph 4 but not
         expressly provided for by such provisions, the Company will give notice
         of such event as provided in Paragraph 4(g) hereof, and the Company's
         Board of Directors will make an appropriate adjustment in the Exercise
         Price and the number of shares of Common Stock acquirable upon exercise
         of this Warrant so that the rights of the holder shall be neither
         enhanced nor diminished by such event.

                  (l) CERTAIN DEFINITIONS.

                           (i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the
         number of shares of Common Stock actually outstanding (not including
         shares of Common Stock held in the treasury of the Company), plus (x)
         pursuant to Paragraph 4(b)(i) hereof, the maximum total number of
         shares of Common Stock issuable upon the exercise of Options, as of the
         date of such issuance or grant of such Options, if any, and (y)
         pursuant to Paragraph 4(b)(ii) hereof, the maximum total number of
         shares of Common Stock issuable upon conversion or exchange of
         Convertible Securities, as of the date of issuance of such Convertible
         Securities, if any.

                                       8
<PAGE>

                           (ii) "MARKET PRICE," as of any date, (i) means the
         average of the last reported sale prices for the shares of Common Stock
         on the "pink sheets" for the five (5) Trading Days (as hereinafter
         defined) immediately preceding such date as reported by Bloomberg
         Financial Markets or an equivalent service, or (ii) if the "pink
         sheets" is not the principal trading market for the shares of Common
         Stock, the average of the last reported sale prices on the principal
         trading market for the Common Stock during the same period as reported
         by Bloomberg Financial Markets or an equivalent service, or (iii) if
         market value cannot be calculated as of such date on any of the
         foregoing bases, the Market Price shall be the fair market value as
         reasonably determined in good faith by (a) the Board of Directors of
         the Company or, at the option of a majority-in-interest of the holders
         of the outstanding Warrants by (b) an independent investment bank of
         nationally recognized standing in the valuation of businesses similar
         to the business of the corporation. The manner of determining the
         Market Price of the Common Stock set forth in the foregoing definition
         shall apply with respect to any other security in respect of which a
         determination as to market value must be made hereunder.

                           (iii) "COMMON STOCK," for purposes of this Paragraph
         4, includes the Common Stock, par value $.001 per share, and any
         additional class of stock of the Company having no preference as to
         dividends or distributions on liquidation, provided that the shares
         purchasable pursuant to this Warrant shall include only shares of
         Common Stock, par value $.001 per share, in respect of which this
         Warrant is exercisable, or shares resulting from any subdivision or
         combination of such Common Stock, or in the case of any reorganization,
         reclassification, consolidation, merger, or sale of the character
         referred to in Paragraph 4(e) hereof, the stock or other securities or
         property provided for in such Paragraph.

                           (iv) "TRADING DAY," shall mean any day on which the
         Common Stock is traded for any period on the "pink sheets", or on the
         principal securities exchange or other securities market on which the
         Common Stock is then being traded.

         5. ISSUE TAX.
         -------------

The issuance of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the holder of this Warrant or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the holder of this Warrant.

         6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER.
         ---------------------------------------------

This Warrant shall not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Company. No provision of this Warrant, in the
absence of affirmative action by the holder hereof to purchase Warrant Shares,
and no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

                                       9
<PAGE>

         7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
         --------------------------------------------------

                  (a) RESTRICTION ON TRANSFER. This Warrant and the rights
         granted to the holder hereof are transferable, in whole or in part,
         upon surrender of this Warrant, together with a properly executed
         assignment in the form attached hereto, at the office or agency of the
         Company referred to in Paragraph 7(e) below, provided, however, that
         any transfer or assignment shall be subject to the conditions set forth
         in Paragraph 7(f) hereof and to the applicable provisions of the
         Securities Purchase Agreement. Until due presentment for registration
         of transfer on the books of the Company, the Company may treat the
         registered holder hereof as the owner and holder hereof for all
         purposes, and the Company shall not be affected by any notice to the
         contrary. Notwithstanding anything to the contrary contained herein,
         the registration rights described in Paragraph 8 are assignable only in
         accordance with the provisions of that certain Registration Rights
         Agreement, dated January 31, 2003, by and among the Company and the
         other signatories thereto (the "Registration Rights Agreement").

                  (b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
         Warrant is exchangeable, upon the surrender hereof by the holder hereof
         at the office or agency of the Company referred to in Paragraph 7(e)
         below, for new Warrants of like tenor representing in the aggregate the
         right to purchase the number of shares of Common Stock which may be
         purchased hereunder, each of such new Warrants to represent the right
         to purchase such number of shares as shall be designated by the holder
         hereof at the time of such surrender.

                  (c) REPLACEMENT OF WARRANT. Upon receipt of evidence
         reasonably satisfactory to the Company of the loss, theft, destruction,
         or mutilation of this Warrant and, in the case of any such loss, theft,
         or destruction, upon delivery of an indemnity agreement reasonably
         satisfactory in form and amount to the Company, or, in the case of any
         such mutilation, upon surrender and cancellation of this Warrant, the
         Company, at its expense, will execute and deliver, in lieu thereof, a
         new Warrant of like tenor.

                  (d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
         this Warrant in connection with any transfer, exchange, or replacement
         as provided in this Paragraph 7, this Warrant shall be promptly
         canceled by the Company. The Company shall pay all taxes (other than
         securities transfer taxes) and all other expenses (other than legal
         expenses, if any, incurred by the holder or transferees) and charges
         payable in connection with the preparation, execution, and delivery of
         Warrants pursuant to this Paragraph 7.

                  (e) REGISTER. The Company shall maintain, at its principal
         executive offices (or such other office or agency of the Company as it
         may designate by notice to the holder hereof), a register for this
         Warrant, in which the Company shall record the name and address of the
         person in whose name this Warrant has been issued, as well as the name
         and address of each transferee and each prior owner of this Warrant.

                  (f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time
         of the surrender of this Warrant in connection with any exercise,
         transfer, or exchange of this Warrant, this Warrant (or, in the case of
         any exercise, the Warrant Shares issuable hereunder), shall not be
         registered under the Securities Act of 1933, as amended (the
         "Securities Act") and under applicable state securities or blue sky
         laws, the Company may require, as a condition of allowing such
         exercise, transfer, or exchange, (i) that the holder or transferee of
         this Warrant, as the case may be, furnish to the Company a written

                                       10
<PAGE>

         opinion of counsel, which opinion and counsel are acceptable to the
         Company, to the effect that such exercise, transfer, or exchange may be
         made without registration under said Act and under applicable state
         securities or blue sky laws, (ii) that the holder or transferee execute
         and deliver to the Company an investment letter in form and substance
         acceptable to the Company and (iii) that the transferee be an
         "accredited investor" as defined in Rule 501(a) promulgated under the
         Securities Act; provided that no such opinion, letter or status as an
         "accredited investor" shall be required in connection with a transfer
         pursuant to Rule 144 under the Securities Act. The first holder of this
         Warrant, by taking and holding the same, represents to the Company that
         such holder is acquiring this Warrant for investment and not with a
         view to the distribution thereof.

         8. REGISTRATION RIGHTS.
         -----------------------

The initial holder of this Warrant (and certain assignees thereof) is entitled
to the benefit of such registration rights in respect of the Warrant Shares as
are set forth in Section 2 of the Registration Rights Agreement.

         9. NOTICES.
         -----------

All notices, requests, and other communications required or permitted to be
given or delivered hereunder to the holder of this Warrant shall be in writing,
and shall be personally delivered, or shall be sent by certified or registered
mail or by recognized overnight mail courier, postage prepaid and addressed, to
such holder at the address shown for such holder on the books of the Company, or
at such other address as shall have been furnished to the Company by notice from
such holder. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the Company shall be in writing,
and shall be personally delivered, or shall be sent by certified or registered
mail or by recognized overnight mail courier, postage prepaid and addressed, to
the office of the Company at 2238 West Lone Cactus Drive, Phoenix, Arizona
85027, Attention: Chief Executive Officer, or at such other address as shall
have been furnished to the holder of this Warrant by notice from the Company.
Any such notice, request, or other communication may be sent by facsimile, but
shall in such case be subsequently confirmed by a writing personally delivered
or sent by certified or registered mail or by recognized overnight mail courier
as provided above. All notices, requests, and other communications shall be
deemed to have been given either at the time of the receipt thereof by the
person entitled to receive such notice at the address of such person for
purposes of this Paragraph 9, or, if mailed by registered or certified mail or
with a recognized overnight mail courier upon deposit with the United States
Post Office or such overnight mail courier, if postage is prepaid and the
mailing is properly addressed, as the case may be.

         10. GOVERNING LAW.
         ------------------

THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY
DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON
A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE

                                       11
<PAGE>

SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL
FEES AND EXPENSES, INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY
IN CONNECTION WITH SUCH DISPUTE.

         11. MISCELLANEOUS.
         ------------------

                  (a) AMENDMENTS. This Warrant and any provision hereof may only
         be amended by an instrument in writing signed by the Company and the
         holder hereof.

                  (b) DESCRIPTIVE HEADINGS. The descriptive headings of the
         several paragraphs of this Warrant are inserted for purposes of
         reference only, and shall not affect the meaning or construction of any
         of the provisions hereof.

                  (c) CASHLESS EXERCISE. Notwithstanding anything to the
         contrary contained in this Warrant, if the resale of the Warrant Shares
         by the holder is not then registered pursuant to an effective
         registration statement under the Securities Act, this Warrant may be
         exercised by presentation and surrender of this Warrant to the Company
         at its principal executive offices with a written notice of the
         holder's intention to effect a cashless exercise, including a
         calculation of the number of shares of Common Stock to be issued upon
         such exercise in accordance with the terms hereof (a "Cashless
         Exercise"). In the event of a Cashless Exercise, in lieu of paying the
         Exercise Price in cash, the holder shall surrender this Warrant for
         that number of shares of Common Stock determined by multiplying the
         number of Warrant Shares to which it would otherwise be entitled by a
         fraction, the numerator of which shall be the difference between the
         then current Market Price per share of the Common Stock and the
         Exercise Price, and the denominator of which shall be the then current
         Market Price per share of Common Stock. For example, if the holder is
         exercising 100,000 Warrants with a per Warrant exercise price of $0.75
         per share through a cashless exercise when the Common Stock's current
         Market Price per share is $2.00 per share, then upon such Cashless
         Exercise the holder will receive 62,500 shares of Common Stock.

                  (d) REMEDIES. The Company acknowledges that a breach by it of
         its obligations hereunder will cause irreparable harm to the holder, by
         vitiating the intent and purpose of the transaction contemplated
         hereby. Accordingly, the Company acknowledges that the remedy at law
         for a breach of its obligations under this Warrant will be inadequate
         and agrees, in the event of a breach or threatened breach by the
         Company of the provisions of this Warrant, that the holder shall be
         entitled, in addition to all other available remedies at law or in
         equity, and in addition to the penalties assessable herein, to an

                                       12
<PAGE>

         injunction or injunctions restraining, preventing or curing any breach
         of this Warrant and to enforce specifically the terms and provisions
         thereof, without the necessity of showing economic loss and without any
         bond or other security being required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       13
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.

                                      IBIZ TECHNOLOGY CORP.

                                      By:  /S/ Kenneth W. Schilling
                                           -------------------------------------
                                           Kenneth W. Schilling
                                           President and Chief Executive Officer

Dated as of January 31, 2003

                                       14
<PAGE>

                           FORM OF EXERCISE AGREEMENT

                                                        Dated: ________ __, 200_

To:      iBIZ Technology Corp.

         The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by surrender of securities issued by the
Company (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:

                                    Name:    ___________________________

                                    Signature:
                                    Address:____________________________

                                            ____________________________

                                    Note: The above signature should correspond
                                    exactly with the name on the face of the
                                    within Warrant, if applicable.

and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.

<PAGE>

                               FORM OF ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:

NAME OF ASSIGNEE               ADDRESS                           NO OF SHARES
----------------               -------                           ------------

, and hereby irrevocably constitutes and appoints ___________________________
___________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power of
substitution in the premises.

Dated:   ________ __, 200_

In the presence of:                      ______________________________

                                    Name:______________________________

                                    Signature:_________________________
                                    Title of Signing Officer or Agent (if any):

                                             __________________________
                                    Address: __________________________
                                             __________________________

                                    Note: The above signature should correspond
                                    exactly with the name on the face of the
                                    within Warrant, if applicable.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}]]