Document:

THIS  SECURED  DEBENTURE,  AND  THE  SECURITIES  INTO  WHICH  IT IS  CONVERTIBLE
(COLLECTIVELY,  THE  "SECURITIES"),  HAVE NOT BEEN  REGISTERED  WITH THE  UNITED
STATES  SECURITIES AND EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY
STATE.  THE  SECURITIES  ARE  BEING  OFFERED  PURSUANT  TO A  SAFE  HARBOR  FROM
REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT").  THE SECURITIES ARE  "RESTRICTED" AND MAY NOT BE OFFERED OR
SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT,  PURSUANT TO REGULATION
D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION  REQUIREMENTS OF THE
ACT AND THE  COMPANY  WILL BE  PROVIDED  WITH  OPINION  OF COUNSEL OR OTHER SUCH
INFORMATION  AS IT MAY  REASONABLY  REQUIRE TO CONFIRM THAT SUCH  EXEMPTIONS ARE
AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE MADE
EXCEPT IN COMPLIANCE WITH THE ACT.

                                SECURED DEBENTURE

                         NANOSCIENCE TECHNOLOGIES, INC.

                        5% SECURED CONVERTIBLE DEBENTURE

                               DECEMBER ___, 2007

No. _____                                                          US$__________

         This Secured  Debenture  (the  "DEBENTURE")  is issued on December ___,
2004  (the  "CLOSING  DATE")  by  Nanoscience   Technologies,   Inc.,  a  Nevada
corporation (the "COMPANY"),  to __________________ (together with its permitted
successors and assigns,  the "HOLDER")  pursuant to exemptions from registration
under the Securities Act of 1933, as amended.

                                   ARTICLE I.

         SECTION 1.01 PRINCIPAL AND INTEREST.  For value  received,  the Company
hereby  promises  to pay to the order of the  Holder on  December  ___,  2005 in
lawful money of the United States of America and in immediately  available funds
the principal sum of ______________________________ ($_________),  together with
interest on the unpaid  principal of this  Debenture at the rate of five percent
(5%) per year  (computed  on the basis of a  365-day  year and the  actual  days
elapsed) from the date of this  Debenture  until paid. At the Company's  option,
the entire principal amount and all accrued interest shall be either (a) paid to
the  Holder on the third  (3rd)  year  anniversary  from the date  hereof or (b)
converted in accordance with Section 1.02 herein provided,  however,  that in no
event  shall the Holder be entitled to convert  this  Debenture  for a number of
shares of Common Stock in excess of that number of shares of Common Stock which,

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upon  giving  effect to such  conversion,  would cause the  aggregate  number of
shares of Common Stock  beneficially  owned by the Holder and its  affiliates to
exceed  4.99% of the  outstanding  shares of the  Common  Stock  following  such
conversion.

         SECTION  1.02  OPTIONAL  CONVERSION.  The  Holder is  entitled,  at its
option, to convert, and sell on the same day, at any time and from time to time,
until payment in full of this Debenture, all or any part of the principal amount
of the Debenture,  plus accrued interest,  into shares (the "CONVERSION SHARES")
of the Company's common stock, par value US$0.001 per share ("COMMON STOCK"), at
the price per  share  (the  "CONVERSION  PRICE")  equal to the  lesser of (a) an
amount equal to one hundred  twenty  percent  (120%) of the closing bid price of
the Common Stock as listed on a Principal Market (as defined herein),  as quoted
by Bloomberg  L.P. (the "FIXED  PRICE") as of the date hereof,  or (b) an amount
equal to eighty  percent (80%) of the lowest  closing bid price of the Company's
Common  Stock,  as  quoted  by  Bloomberg,  LP,  for the five (5)  trading  days
immediately preceding the Conversion Date (as defined herein). Subparagraphs (a)
and (b) above are  individually  referred to as a  "CONVERSION  PRICE".  As used
herein,  "PRINCIPAL  MARKET" shall mean The National  Association  of Securities
Dealers Inc.'s  Over-The-Counter  Bulletin  Board,  Nasdaq SmallCap  Market,  or
American  Stock  Exchange.  If the  Common  Stock is not  traded on a  Principal
Market,  the Closing Bid Price and/or the VWAP shall mean, the reported  Closing
Bid  Price  or the VWAP for the  Common  Stock,  as  furnished  by the  National
Association of Securities Dealers, Inc., for the applicable periods. No fraction
of  shares  or  scrip  representing  fractions  of  shares  will  be  issued  on
conversion,  but the number of shares  issuable  shall be rounded to the nearest
whole share. To convert this Debenture,  the Holder hereof shall deliver written
notice thereof, substantially in the form of Exhibit "A" to this Debenture, with
appropriate  insertions (the "CONVERSION NOTICE"), to the Company at its address
as set forth herein.  The date upon which the conversion shall be effective (the
"CONVERSION  DATE")  shall be deemed to be the date set forth in the  Conversion
Notice.

         SECTION 1.03 RESERVATION OF COMMON STOCK. The Company shall reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the  conversion of this  Debenture,  such number of
shares of Common Stock as shall from time to time be  sufficient  to effect such
conversion, based upon the Conversion Price. If at any time the Company does not
have a sufficient number of Conversion Shares authorized and available, then the
Company shall call and hold a special meeting of its  stockholders  within forty
five (45) days of that time for the sole  purpose  of  increasing  the number of
authorized shares of Common Stock.

         SECTION 1.04 RIGHT OF REDEMPTION.  The Company at its option shall have
the right to redeem,  with three (3) business days advance  written  notice (the
"REDEMPTION NOTICE"), a portion or all outstanding  convertible  debenture.  The
redemption  price shall be equal to the Fixed  Price (as defined  herein) of the
amount redeemed plus accrued interest.

         In the event the  Company  exercises  a  redemption  of either all or a
portion  the  Convertible  Debenture,  the  Holder  shall  receive a warrant  to
purchase fifty thousand  (50,000) shares of the Company's Common Stock for every
One  Hundred  Thousand  U.S.  Dollars  (US$100,000)   redeemed,  pro  rata  (the
"WARRANT").  The  Warrant  shall be  exercisable  on a "cash  basis" and have an
exercise  price of one hundred twenty percent (120%) of the Closing Bid Price of
the

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<PAGE>

Company's Common Stock on the Closing Date. The Warrant shall have  "piggy-back"
and  demand  registration  rights and shall  survive  for two (2) years from the
Closing Date.

         SECTION 1.05 REGISTRATION  RIGHTS. The Company is obligated to register
the  resale of the  Conversion  Shares  under  the  Securities  Act of 1933,  as
amended,  pursuant to the terms of a Registration Rights Agreement,  between the
Company and the Holder of even date herewith (the "INVESTOR  REGISTRATION RIGHTS
AGREEMENT").

         SECTION 1.06 INTEREST  PAYMENTS.  The interest payable pursuant to this
Debenture will be paid to the Holder at the time of maturity or  conversion,  as
the case may be,  with  respect  to the  principal  amount  hereunder  repaid or
converted,  as applicable.  At the time such interest is payable, the Holder, in
its sole  discretion,  may  elect to  receive  such  interest  in cash (via wire
transfer or certified funds) or in the form of Common Stock. If paid in the form
of Common Stock, the number of shares of Common Stock to be issued will equal to
the quotient of (x) aggregate  interest  payment to be made,  divided by (y) the
Closing Bid Price on the date the interest payment is made. No fractional shares
will be issued;  therefore,  in the event that the value of the Common Stock per
share does not equal the total interest due, the Company will pay the balance in
cash.

         SECTION 1.07 PAYING AGENT AND  REGISTRAR.  Initially,  the Company will
act as paying  agent and  registrar.  The Company  may change any paying  agent,
registrar,  or  Company-registrar  by giving  the  Holder not less than ten (10)
business  days' written  notice of its election to do so,  specifying  the name,
address, telephone number and facsimile number of the paying agent or registrar.
The Company may act in any such capacity.

         SECTION 1.08 SECURED NATURE OF DEBENTURE.  This Debenture is secured by
all of the assets and  property  of the Company as set forth on Exhibit A to the
Security Agreement dated the date hereof between the Company and the Holder (the
"SECURITY AGREEMENT"). As set forth in the Security Agreement, Holder's security
interest shall terminate upon the satisfaction by the Company of its obligations
under this Debenture.

                                  ARTICLE II.

         SECTION 2.01 AMENDMENTS AND WAIVER OF DEFAULT. The Debenture may not be
amended.  Notwithstanding  the above,  without the  consent of the  Holder,  the
Debenture may be amended to cure any ambiguity,  defect or inconsistency,  or to
provide for assumption of the Company obligations to the Holder.

                                  ARTICLE III.

         SECTION  3.01  EVENTS OF  DEFAULT.  An Event of  Default  is defined as
follows:  (a) failure by the Company to pay amounts due hereunder within fifteen
(15) days of the date of maturity of this Debenture;  (b) failure by the Company
to comply with the terms of the Irrevocable Transfer Agent Instructions attached
to the  Securities  Purchase  Agreement;  (c) failure by the Company's  transfer
agent to issue freely  tradeable Common Stock to the Holder within five (5) days
of the Company's  receipt of the attached Notice of Conversion from Holder;  (d)
failure by the Company  for ten (10) days after  notice to it to comply with any
of its other  agreements in the  Debenture;  (e) the Company (1) makes a general
assignment for the benefit of its  creditors;

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<PAGE>

(2) applies for or consent to the appointment of a receiver,  trustee, assignee,
custodian, sequestrator, liquidator or similar official for itself or any of its
assets and  properties;  (3)  commences a voluntary  case for relief as a debtor
under the United States  Bankruptcy  Code; (4) files with or otherwise submit to
any governmental  authority any petition,  answer or other document seeking: (A)
reorganization,  (B) an  arrangement  with creditors or (C) to take advantage of
any   other   present   or  future   applicable   law   respecting   bankruptcy,
reorganization,   insolvency,   readjustment   of  debts,   relief  of  debtors,
dissolution or liquidation;  (5) files or otherwise  submits any answer or other
document admitting or failing to contest the material  allegations of a petition
or other  document  filed or otherwise  submitted  against it in any  proceeding
under  any such  applicable  law,  or (6) is to be  adjudicated  a  bankrupt  or
insolvent by a court of competent  jurisdiction;  (f) a breach by the Company of
its  obligations  under  the  Securities  Purchase  Agreement  or  the  Investor
Registration  Rights Agreement which is not cured by the Company within ten (10)
days after receipt of written notice thereof. Upon the occurrence of an Event of
Default,  the Holder may, in its sole  discretion,  accelerate full repayment of
all debentures outstanding and accrued interest thereon or may,  notwithstanding
any  limitations  contained in this  Debenture  and/or the  Securities  Purchase
Agreement  dated the date hereof  between  the Company and the Buyers  listed on
Schedule I attached thereto (the "SECURITIES PURCHASE  AGREEMENT"),  convert all
debentures  outstanding and accrued interest thereon into shares of Common Stock
pursuant to Section 1.02 herein.

         SECTION 3.02 FAILURE TO ISSUE  UNRESTRICTED  COMMON STOCK. As indicated
in Article III Section  3.01, a breach by the Company of its  obligations  under
the Investor  Registration Rights Agreement shall be deemed an Event of Default,
which if not cured within ten (10) days,  shall entitle the Holder to accelerate
full repayment of all debentures  outstanding and accrued  interest  thereon or,
notwithstanding   any  limitations   contained  in  this  Debenture  and/or  the
Securities Purchase Agreement, to convert all debentures outstanding and accrued
interest  thereon into shares of Common  Stock  pursuant to Section 1.02 herein.
The Company  acknowledges  that  failure to honor a Notice of  Conversion  shall
cause irreparable harm to the Holder.

                                  ARTICLE IV.

         SECTION 4.01 RIGHTS AND TERMS OF CONVERSION.  This Debenture,  in whole
or in part, may be converted at any time following the Closing Date, into shares
of Common Stock at a price equal to the Conversion Price as described in Section
1.02 above.

         SECTION  4.02  RE-ISSUANCE  OF  DEBENTURE.  When the  Holder  elects to
convert a part of the Debenture,  then the Company shall reissue a new Debenture
in the same form as this Debenture to reflect the new principal amount.

         SECTION 4.03  TERMINATION OF CONVERSION  RIGHTS.  The Holder's right to
convert the Debenture  into the Common Stock in accordance  with  paragraph 4.01
shall  terminate on the date that is the third (3rd) year  anniversary  from the
date hereof and this Debenture shall be automatically  converted on that date in
accordance  with  the  formula  set  forth  in  Section  4.01  hereof,  and  the
appropriate shares of Common Stock and amount of interest shall be issued to the
Holder.

                                       4
<PAGE>

                                   ARTICLE V.

         SECTION 5.01 ANTI-DILUTION.  In the event that the Company shall at any
time subdivide the  outstanding  shares of Common Stock,  or shall issue a stock
dividend  on the  outstanding  Common  Stock,  the  Conversion  Price in  effect
immediately  prior to such subdivision or the issuance of such dividend shall be
proportionately  decreased,  and in the event that the Company shall at any time
combine the outstanding  shares of Common Stock,  the Conversion Price in effect
immediately  prior  to such  combination  shall  be  proportionately  increased,
effective at the close of business on the date of such subdivision,  dividend or
combination as the case may be.

         SECTION 5.02 CONSENT OF HOLDER TO SELL CAPITAL STOCK OR GRANT  SECURITY
INTERESTS.  Except as contemplated by the Securities  Purchase Agreement between
the Company and the Buyers listed on Schedule I attached  thereto or the Standby
Equity  Distribution  Agreement  dated the date  hereof  between the Company and
Cornell Capital Partners,  LP, so long as any of the principal of or interest on
this Debenture  remains unpaid and  unconverted,  the Company shall not, without
the prior consent of the Holder, issue or sell (i) any Common Stock or Preferred
Stock without  consideration or for a consideration per share less than its fair
market value determined  immediately  prior to its issuance,  (ii) issue or sell
any Preferred Stock, warrant,  option, right, contract,  call, or other security
or  instrument  granting  the holder  thereof the right to acquire  Common Stock
without  consideration  or for a  consideration  per share less than such Common
Stock's fair market value determined  immediately  prior to its issuance,  (iii)
enter into any security  instrument  granting the holder a security  interest in
any of the assets of the  Company,  or (iv) file any  registration  statement on
Form S-8;  except that (i) the Company  may,  without the consent of the Holder,
provided,  however,  fifteen  (15)  days  prior  written  notice is given to the
Holder,  issue or sell  shares of Common  Stock or  warrants,  options  or other
rights to purchase in the  aggregate  up to one  million  (1,000,000)  shares of
Common Stock to its executive  officer,  directors  and employees  pursuant to a
Board  approved  option  plan or as  otherwise  may be  approved by the Board of
Directors of the Company and (ii)  commencing on the date hereof and terminating
thirty (30) days  following  the date hereof,  the Company shall be permitted to
issue or sell any  Common  Stock  or  Preferred  Stock  without  restriction  or
limitation  up to an aggregate  amount of Three  Million  Dollars  ($3,000,000),
provided,  however,  that the Company provides the Holder with at least ten (10)
days  prior  written  notice of such  issuance  (the  "DEFERRAL  PERIOD").  Upon
request,  the Company shall provide the Holder with any and all  information  or
documentation  without  limitation  evidencing such issuance during the Deferral
Period.  Following  the  declaration  of  effectiveness  by the  Securities  and
Exchange Commission of the registration statement filed pursuant to the Investor
Registration  Rights  Agreement  of even date  herewith,  the  Company  shall be
permitted  to  issue  or sell  any  Common  Stock  or  Preferred  Stock  without
restriction  or  limitation  in order to raise  amounts  not  raised  during the
Deferral Period up to an aggregate amount of Three Million Dollars ($3,000,000),
provided  the  Company  provides  the  Holder  with at least ten (10) days prior
written  notice of such  issuance.  The Holder  shall be entitled to any and all
information and documentation without limitation.

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<PAGE>

                                  ARTICLE VI.

         SECTION 6.01 NOTICE.  Notices regarding this Debenture shall be sent to
the  parties  at the  following  addresses,  unless a party  notifies  the other
parties, in writing, of a change of address:

If to the Company, to:            Nanoscience Technologies, Inc.
                                  45 Rockefeller Plaza - Suite 2000
                                  New York, NY 10111
                                  Attention:  David Rector
                                  Telephone:  (212) 332-3443
                                  Facsimile:  (212) 332-3401

With a copy to:                   Reitler Brown & Rosenblatt LLC
                                  800 Third Avenue, 21st Floor
                                  New York, NY 10022
                                  Attention:  Robert S. Brown, Esq.
                                  Telephone:  (212) 209-3050
                                  Facsimile:  (212) 371-5500

If to the Holder:                 __________________
                                  101 Hudson Street, Suite 3700
                                  Jersey City, NJ 07303
                                  Telephone:  (201) 985-8300
                                  Facsimile:  (201) 985-8266

With a copy to:                   David Gonzalez, Esq.
                                  101 Hudson Street - Suite 3700
                                  Jersey City, NJ 07302
                                  Telephone:  (201) 985-8300
                                  Facsimile:  (201) 985-8266

         SECTION 6.02 GOVERNING  LAW. This Debenture  shall be deemed to be made
under and shall be construed in accordance  with the laws of the State of Nevada
without giving effect to the principals of conflict of laws thereof. Each of the
parties consents to the  jurisdiction of the U.S.  District Court sitting in the
District  of the State of New  Jersey  or the  state  courts of the State of New
Jersey  sitting in Hudson  County,  New Jersey in  connection  with any  dispute
arising under this Debenture and hereby waives,  to the maximum extent permitted
by law, any objection,  including any objection based on FORUM NON CONVENIENS to
the bringing of any such proceeding in such jurisdictions.

         SECTION 6.03  SEVERABILITY.  The invalidity of any of the provisions of
this  Debenture  shall  not  invalidate  or  otherwise  affect  any of the other
provisions of this Debenture, which shall remain in full force and effect.

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<PAGE>

         SECTION 6.04 ENTIRE AGREEMENT AND AMENDMENTS. This Debenture represents
the entire  agreement  between  the parties  hereto with  respect to the subject
matter  hereof  and there are no  representations,  warranties  or  commitments,
except as set forth herein.  This Debenture may be amended only by an instrument
in writing executed by the parties hereto.

         SECTION 6.05  COUNTERPARTS.  This Debenture may be executed in multiple
counterparts,  each of which  shall be an  original,  but all of which  shall be
deemed to constitute on instrument.

         IN WITNESS  WHEREOF,  with the intent to be legally bound  hereby,  the
Company as executed this Debenture as of the date first written above.

                                            NANOSCIENCE TECHNOLOGIES, INC.

                                            By:
                                               ---------------------------------
                                            Name:  David Rector
                                            Title: President & CEO

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<PAGE>

                                   EXHIBIT "A"

                              NOTICE OF CONVERSION

        (TO BE EXECUTED BY THE HOLDER IN ORDER TO CONVERT THE DEBENTURE)

TO:

         The  undersigned  hereby  irrevocably  elects  to  convert  US$  of the
principal  amount  of the  above  Debenture  into  Shares  of  Common  Stock  of
Nanoscience  Technologies,  Inc., according to the conditions stated therein, as
of the Conversion Date written below.

CONVERSION DATE:
                                          --------------------------------------

APPLICABLE CONVERSION PRICE:
                                          --------------------------------------

SIGNATURE:
                                          --------------------------------------

NAME:
                                          --------------------------------------

ADDRESS:
                                          --------------------------------------

AMOUNT TO BE CONVERTED:                   US$
                                              ----------------------------------

AMOUNT OF DEBENTURE UNCONVERTED:          US$
                                              ----------------------------------

CONVERSION PRICE PER SHARE:               US$
                                              ----------------------------------

NUMBER OF SHARES OF COMMON STOCK TO BE
ISSUED:
                                          --------------------------------------

PLEASE ISSUE THE SHARES OF COMMON STOCK
IN THE FOLLOWING NAME AND TO THE
FOLLOWING ADDRESS:
                                          --------------------------------------

ISSUE TO:
                                          --------------------------------------

AUTHORIZED SIGNATURE:
                                          --------------------------------------

NAME:
                                          --------------------------------------

TITLE:
                                          --------------------------------------

PHONE NUMBER:
                                          --------------------------------------

BROKER DTC PARTICIPANT CODE:
                                          --------------------------------------

ACCOUNT NUMBER:
                                          --------------------------------------

                                       A-1WARRANT

THE SECURITIES  REPRESENTED BY THIS WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES  LAWS. THE
SECURITIES  HAVE BEEN ACQUIRED FOR  INVESTMENT  AND MAY NOT BE OFFERED FOR SALE,
SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT FOR THE SECURITIES  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR
APPLICABLE  STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY  TO THE ISSUER THAT  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE  STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.

                         NANOSCIENCE TECHNOLOGIES, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: _____                                     Number of Shares: _______

Date of Issuance: __________________

Nanoscience  Technologies,  Inc.,  Nevada  corporation (the  "COMPANY"),  hereby
certifies  that,  for Ten  United  States  Dollars  ($10.00)  and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,   __________,  a  Delaware  limited  partnership  ("______"),  the
registered holder hereof or its permitted assigns,  is entitled,  subject to the
terms set forth  below,  to purchase  from the Company  upon  surrender  of this
Warrant,  at any time or times on or after the date hereof,  but not after 11:59
P.M.  Eastern Time on the Expiration Date (as defined  herein)  ________________
fully paid and  nonassessable  shares of Common Stock (as defined herein) of the
Company  (the  "WARRANT  SHARES") at the  exercise  price per share  provided in
Section 1(b) below or as subsequently  adjusted;  provided,  however, that in no
event  shall the holder be entitled  to  exercise  this  Warrant for a number of
Warrant  Shares in excess of that number of Warrant  Shares  which,  upon giving
effect to such  exercise,  would cause the aggregate  number of shares of Common
Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the
outstanding  shares of the Common Stock  following such exercise,  except within
sixty (60) days of the Expiration  Date. For purposes of the foregoing  proviso,
the aggregate number of shares of Common Stock  beneficially owned by the holder
and its  affiliates  shall include the number of shares of Common Stock issuable
upon  exercise of this Warrant with respect to which the  determination  of such
proviso is being made,  but shall exclude  shares of Common Stock which would be
issuable upon (i) exercise of the remaining,  unexercised Warrants  beneficially
owned by the holder and its  affiliates  and (ii)  exercise or conversion of the
unexercised  or  unconverted  portion  of any other  securities  of the  Company
beneficially  owned  by  the  holder  and  its  affiliates  (including,  without
limitation, any convertible notes or preferred stock) subject to a limitation on
conversion or exercise analogous to the limitation  contained herein.  Except as
set forth in the preceding sentence, for purposes of this paragraph,  beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of

<PAGE>

1934, as amended.  For purposes of this Warrant,  in  determining  the number of
outstanding  shares  of  Common  Stock  a  holder  may  rely  on the  number  of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form  10-QSB  or Form  10-KSB,  as the case  may be,  (2) a more  recent  public
announcement  by the  Company  or (3) any  other  notice by the  Company  or its
transfer  agent setting forth the number of shares of Common Stock  outstanding.
Upon the written request of any holder,  the Company shall  promptly,  but in no
event later than one (1)  Business  Day  following  the receipt of such  notice,
confirm in writing to any such holder the number of shares of Common  Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the exercise of Warrants (as defined below)
by such  holder and its  affiliates  since the date as of which  such  number of
outstanding shares of Common Stock was reported.

         Section 1.

            (a)  This  Warrant  is  the  common  stock  purchase   warrant  (the
"WARRANT") issued pursuant to a secured convertible debenture dated December __,
2004 by and between the  Company and  Buyer(s)  listed on Schedule I attached to
the Securities  Purchase  Agreement  dated  December __, 2004 (the  "CONVERTIBLE
DEBENTURE").

            (b)  DEFINITIONS.  The  following  words  and  terms as used in this
Warrant shall have the following meanings:

               (i) "APPROVED  STOCK PLAN" means any employee  benefit plan which
has been  approved by the Board of Directors  of the Company,  pursuant to which
the Company's securities may be issued to any employee,  officer or director for
services provided to the Company.

               (ii) "BUSINESS DAY" means any day other than Saturday,  Sunday or
other day on which  commercial  banks in the City of New York are  authorized or
required by law to remain closed.

               (iii)  "CLOSING  BID PRICE" means the closing bid price of Common
Stock as quoted on the  Principal  Market (as  reported by  Bloomberg  Financial
Markets ("BLOOMBERG") through its "Volume at Price" function).

               (iv) "COMMON  STOCK" means (i) the Company's  common  stock,  par
value $0.001 per share,  and (ii) any capital stock into which such Common Stock
shall have been changed or any capital stock  resulting from a  reclassification
of such Common Stock.

               (v) "EXCLUDED SECURITIES" means, provided such security is issued
at a price  which is  greater  than or equal to the  arithmetic  average  of the
Closing Bid Prices of the Common Stock for the ten (10) consecutive trading days
immediately  preceding  the  date of  issuance,  any of the  following:  (a) any
issuance by the Company of securities in connection with a strategic partnership
or a joint  venture  (the  primary  purpose  of  which  is not to  raise  equity
capital),  (b) any issuance by the Company of securities as consideration  for a
merger or consolidation or the acquisition of a business,  product,  license, or
other assets of another  person or entity and (c) options to purchase  shares of
Common  Stock,  provided  (I) such  options  are  issued  after the date of this
Warrant to employees of the Company  within thirty (30) days of such

                                       2
<PAGE>

employee's starting his employment with the Company, and (II) the exercise price
of such  options is not less than the Closing  Bid Price of the Common  Stock on
the date of issuance of such option.

               (vi)  "EXPIRATION  DATE"  means the date two (2)  years  from the
Issuance  Date of this  Warrant or, if such date falls on a Saturday,  Sunday or
other day on which banks are required or  authorized to be closed in the City of
New York or the State of New York or on which trading does not take place on the
Principal  Exchange or automated  quotation  system on which the Common Stock is
traded (a "HOLIDAY"), the next date that is not a Holiday.

               (vii) "ISSUANCE DATE" means the date hereof.

               (viii)  "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe for or purchase Common Stock or Convertible Securities.

               (ix) "OTHER  SECURITIES"  means (i) those options and warrants of
the Company  issued  prior to, and  outstanding  on, the  Issuance  Date of this
Warrant,  (ii) the shares of Common  Stock  issuable on exercise of such options
and  warrants,  provided  such options and  warrants  are not amended  after the
Issuance Date of this Warrant and (iii) the shares of Common Stock issuable upon
exercise of this Warrant.

               (x) "PERSON" means an individual,  a limited liability company, a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization and a government or any department or agency thereof.

               (xi) "PRINCIPAL  MARKET" means the New York Stock  Exchange,  the
American Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market,
whichever  is at the time the  principal  trading  exchange  or market  for such
security,  or the  over-the-counter  market on the electronic bulletin board for
such  security as reported by  Bloomberg  or, if no bid or sale  information  is
reported for such security by  Bloomberg,  then the average of the bid prices of
each of the market  makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc.

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

               (xiii)  "WARRANT"  means this Warrant and all Warrants  issued in
exchange, transfer or replacement thereof.

               (xiv)  "WARRANT  EXERCISE  PRICE"  shall  be one  hundred  twenty
percent  (120%)  of the  Closing  Bid  Price  (as  defined  in  the  Convertible
Debenture) of the Company's  Common Stock on the Closing Date (as defined in the
Convertible  Debenture)  or as  subsequently  adjusted  as provided in Section 8
hereof.

               (xv) "WARRANT  SHARES" means the shares of Common Stock  issuable
at any time upon exercise of this Warrant.

                                       3
<PAGE>

            (c) Other Definitional Provisions.

               (i) Except as otherwise  specified herein,  all references herein
(A) to the Company shall be deemed to include the Company's  successors  and (B)
to any applicable  law defined or referred to herein shall be deemed  references
to  such  applicable  law as the  same  may  have  been  or  may be  amended  or
supplemented from time to time.

               (ii) When used in this Warrant, the words "HEREIN", "HEREOF", and
"HEREUNDER" and words of similar import,  shall refer to this Warrant as a whole
and not to any provision of this Warrant,  and the words "SECTION",  "SCHEDULE",
and  "EXHIBIT"  shall refer to Sections of, and  Schedules and Exhibits to, this
Warrant unless otherwise specified.

               (iii)  Whenever  the  context  so  requires,  the  neuter  gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.

         Section 2.  EXERCISE  OF WARRANT.  Subject to the terms and  conditions
hereof,  this Warrant may be exercised by the holder  hereof then  registered on
the books of the Company, pro rata as hereinafter  provided,  at any time on any
Business  Day on or  after  the  opening  of  business  on  such  Business  Day,
commencing  with the first day after the date  hereof,  and prior to 11:59  P.M.
Eastern Time on the Expiration Date, by (i) delivery of a written notice, in the
form of the  subscription  notice  attached as EXHIBIT A hereto  (the  "EXERCISE
NOTICE"), of such holder's election to exercise this Warrant, which notice shall
specify  the  number of  Warrant  Shares to be  purchased,  (ii)  payment to the
Company of an amount equal to the Warrant  Exercise  Price(s)  applicable to the
Warrant Shares being  purchased,  multiplied by the number of Warrant Shares (at
the  applicable  Warrant  Exercise  Price)  as to which  this  Warrant  is being
exercised (plus any applicable issue or transfer taxes) (the "AGGREGATE EXERCISE
PRICE") in cash or wire transfer of  immediately  available  funds and (iii) the
surrender of this  Warrant (or an  indemnification  undertaking  with respect to
this Warrant in the case of its loss,  theft or destruction) to a common carrier
for  overnight  delivery to the Company as soon as  practicable  following  such
date. In the event of any exercise of the rights  represented by this Warrant in
compliance with this Section 2(a), the Company shall on the fifth (5th) Business
Day following the date of receipt of the Exercise Notice, the Aggregate Exercise
Price and this Warrant (or an  indemnification  undertaking with respect to this
Warrant in the case of its loss,  theft or  destruction)  and the receipt of the
representations of the holder specified in Section 6 hereof, if requested by the
Company  (the  "EXERCISE  DELIVERY  DOCUMENTS"),  and if the Common Stock is DTC
eligible  credit such  aggregate  number of shares of Common  Stock to which the
holder shall be entitled to the holder's or its designee's  balance account with
The Depository Trust Company; provided, however, if the holder who submitted the
Exercise Notice requested physical delivery of any or all of the Warrant Shares,
or, if the Common Stock is not DTC eligible then the Company shall, on or before
the  fifth  (5th)  Business  Day  following  receipt  of the  Exercise  Delivery
Documents, issue and surrender to a common carrier for overnight delivery to the
address specified in the Exercise Notice, a certificate,  registered in the name
of the  holder,  for the  number of shares of Common  Stock to which the  holder
shall be entitled pursuant to such request. Upon delivery of the Exercise Notice
and Aggregate Exercise Price referred to in clause (ii) above the holder of this
Warrant shall be deemed for all corporate  purposes to have become the holder of
record of the  Warrant  Shares  with  respect  to which  this  Warrant  has been
exercised.  In the case of a  dispute  as to the  determination  of the  Warrant
Exercise  Price,  the

                                       4
<PAGE>

Closing  Bid Price or the  arithmetic  calculation  of the Warrant  Shares,  the
Company shall  promptly issue to the holder the number of Warrant Shares that is
not  disputed  and  shall  submit  the  disputed  determinations  or  arithmetic
calculations to the holder via facsimile  within one (1) Business Day of receipt
of the  holder's  Exercise  Notice.  If the holder and the Company are unable to
agree  upon the  determination  of the  Warrant  Exercise  Price  or  arithmetic
calculation  of  the  Warrant  Shares  within  one  (1)  day  of  such  disputed
determination or arithmetic  calculation being submitted to the holder, then the
Company shall immediately submit via facsimile (i) the disputed determination of
the Warrant Exercise Price or the Closing Bid Price to an independent, reputable
investment  banking  firm or (ii) the  disputed  arithmetic  calculation  of the
Warrant Shares to its independent,  outside accountant.  The Company shall cause
the investment  banking firm or the  accountant,  as the case may be, to perform
the  determinations or calculations and notify the Company and the holder of the
results as soon as practicable but no later than five (5) business days from the
time it receives the disputed  determinations  or calculations.  Such investment
banking firm's or accountant's determination or calculation, as the case may be,
shall be deemed conclusive absent manifest error.

            (a) Unless the rights represented by this Warrant shall have expired
or shall have been fully  exercised,  the Company shall,  as soon as practicable
and in no event later than five (5) Business  Days after any exercise and at its
own  expense,  issue a new Warrant  identical  in all  respects to this  Warrant
exercised  except it shall  represent  rights to purchase  the number of Warrant
Shares  purchasable  immediately  prior  to such  exercise  under  this  Warrant
exercised,  less the number of Warrant Shares with respect to which such Warrant
is exercised.

            (b) No fractional  Warrant Shares are to be issued upon any pro rata
exercise of this  Warrant,  but rather the number of Warrant  Shares issued upon
such  exercise of this Warrant  shall be rounded up or down to the nearest whole
number.

            (c) If the Company or its  Transfer  Agent shall fail for any reason
or for no reason to issue to the  holder  within ten (10) days of receipt of the
Exercise Delivery  Documents,  a certificate for the number of Warrant Shares to
which the holder is entitled or to credit the holder's  balance account with The
Depository  Trust Company for such number of Warrant  Shares to which the holder
is entitled upon the holder's  exercise of this Warrant,  the Company shall,  in
addition  to any other  remedies  under  this  Warrant  or the  Placement  Agent
Agreement or otherwise  available to such holder,  pay as additional  damages in
cash to such  holder on each day the  issuance of such  certificate  for Warrant
Shares is not timely  effected  an amount  equal to 0.025% of the product of (A)
the sum of the  number of  Warrant  Shares  not issued to the holder on a timely
basis and to which the holder is entitled,  and (B) the Closing Bid Price of the
Common Stock for the trading day  immediately  preceding  the last possible date
which the Company  could have issued  such  Common  Stock to the holder  without
violating this Section 2.

            (d) If within  ten (10)  days  after the  Company's  receipt  of the
Exercise Delivery  Documents,  the Company fails to deliver a new Warrant to the
holder  for the  number of  Warrant  Shares  to which  such  holder is  entitled
pursuant to Section 2 hereof,  then, in addition to any other available remedies
under this Warrant or the Placement Agent Agreement,  or otherwise  available to
such holder,  the Company shall pay as additional damages in cash to such holder
on each day after such tenth  (10th) day that such  delivery of such new Warrant
is not timely  effected  in an amount  equal to 0.25% of the  product of (A) the
number of Warrant Shares

                                       5
<PAGE>

represented by the portion of this Warrant which is not being  exercised and (B)
the  Closing  Bid Price of the  Common  Stock for the  trading  day  immediately
preceding  the last  possible  date which the  Company  could have  issued  such
Warrant to the holder without violating this Section 2.

         Section 3. COVENANTS AS TO COMMON STOCK.  The Company hereby  covenants
and agrees as follows:

            (a) This Warrant is, and any Warrants issued in substitution  for or
replacement  of this Warrant will upon issuance be, duly  authorized and validly
issued.

            (b) All Warrant  Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable  and free from all taxes,  liens and charges with respect
to the issue thereof.

            (c) During the period  within which the rights  represented  by this
Warrant may be  exercised,  the Company  will at all times have  authorized  and
reserved at least one hundred  percent  (100%) of the number of shares of Common
Stock needed to provide for the exercise of the rights then  represented by this
Warrant and the par value of said shares will at all times be less than or equal
to the applicable  Warrant  Exercise  Price. If at any time the Company does not
have a sufficient  number of shares of Common Stock  authorized  and  available,
then the  Company  shall  call and hold a special  meeting  of its  stockholders
within forty five (45) days of that time for the sole purpose of increasing  the
number of authorized shares of Common Stock.

            (d) If at any time after the date  hereof the  Company  shall file a
registration statement, the Company shall include the Warrant Shares issuable to
the holder, pursuant to the terms of this Warrant and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all Warrant
Shares 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.

            (e)  The  Company   will  not,  by  amendment  of  its  Articles  of
Incorporation or through any reorganization,  transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the  observance or  performance of any of the terms 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.  The  Company  will not  increase  the par value of any shares of
Common Stock  receivable  upon the  exercise of this  Warrant  above the Warrant
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.

                                       6
<PAGE>

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

         Section 4. TAXES.  The Company shall pay any and all taxes,  except any
applicable  withholding,  which may be payable  with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

         Section 5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically  provided  herein,  no holder,  as such,  of this Warrant  shall be
entitled  to vote or  receive  dividends  or be deemed  the  holder of shares of
capital stock of the Company for any purpose,  nor shall  anything  contained in
this Warrant be construed to confer upon the holder hereof,  as such, any of the
rights of a  stockholder  of the Company or any right to vote,  give or withhold
consent to any corporate  action  (whether any  reorganization,  issue of stock,
reclassification  of stock,  consolidation,  merger,  conveyance or  otherwise),
receive  notice of  meetings,  receive  dividends  or  subscription  rights,  or
otherwise,  prior to the  issuance to the holder of this  Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant.  In addition,  nothing  contained in this Warrant shall be construed as
imposing  any  liabilities  on such  holder to  purchase  any  securities  (upon
exercise of this  Warrant or  otherwise)  or as a  stockholder  of the  Company,
whether  such  liabilities  are  asserted by the Company or by  creditors of the
Company.  Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other  information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.

         Section 6.  REPRESENTATIONS OF HOLDER.  The holder of this Warrant,  by
the  acceptance  hereof,  represents  that it is acquiring  this Warrant and the
Warrant  Shares  for its own  account  for  investment  only and not with a view
towards,  or for resale in connection  with, the public sale or  distribution of
this  Warrant or the Warrant  Shares,  except  pursuant to sales  registered  or
exempted  under the  Securities  Act;  provided,  however,  that by  making  the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a  registration  statement or an exemption  under the  Securities
Act. The holder of this Warrant further represents,  by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule  501(a)(1) of Regulation D promulgated  by the  Securities  and Exchange
Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of
this Warrant the holder shall, if requested by the Company,  confirm in writing,
in a form satisfactory to the Company,  that the Warrant Shares so purchased are
being acquired  solely for the holder's own account and not as a nominee for any
other party, for investment,  and not with a view toward  distribution or resale
and that such holder is an Accredited Investor.  If such holder cannot make such
representations  because  they  would  be  factually  incorrect,  it  shall be a
condition to such  holder's  exercise of this  Warrant that the Company  receive
such other  representations  as the Company  considers  reasonably  necessary to
assure the Company that the  issuance of its  securities  upon  exercise of this
Warrant shall not violate any United States or state securities laws.

                                       7
<PAGE>

         Section 7. OWNERSHIP AND TRANSFER.

            (a) 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.  The  Company may
treat the person in whose name any Warrant is  registered on the register as the
owner and holder  thereof for all  purposes,  notwithstanding  any notice to the
contrary,  but in all events  recognizing  any transfers made in accordance with
the terms of this Warrant.

         Section 8.  ADJUSTMENT OF WARRANT  EXERCISE PRICE AND NUMBER OF SHARES.
The Warrant  Exercise  Price and the number of shares of Common  Stock  issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:

            (a)  ADJUSTMENT OF WARRANT  EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK.  If and whenever on or after the Issuance Date of this
Warrant,  the Company issues or sells,  or is deemed to have issued or sold, any
shares of Common Stock (other than (i)  Excluded  Securities  and (ii) shares of
Common  Stock  which are issued or deemed to have been  issued by the Company in
connection  with an Approved  Stock Plan or upon  exercise or  conversion of the
Other  Securities)  for a  consideration  per  share  less  than  a  price  (the
"APPLICABLE  PRICE") equal to the Warrant  Exercise Price in effect  immediately
prior to such issuance or sale,  then  immediately  after such issue or sale the
Warrant  Exercise  Price then in effect  shall be reduced to an amount  equal to
such  consideration per share. Upon each such adjustment of the Warrant Exercise
Price  hereunder,  the number of Warrant  Shares  issuable upon exercise of this
Warrant shall be adjusted to the number of shares  determined by multiplying the
Warrant  Exercise Price in effect  immediately  prior to such  adjustment by the
number of Warrant  Shares  issuable  upon  exercise of this Warrant  immediately
prior to such  adjustment  and  dividing  the  product  thereof  by the  Warrant
Exercise Price resulting from such adjustment. Notwithstanding the foregoing, in
the event an  adjustment  is made  under  this  Section  8(a) as a result of the
issuance  of a  convertible  security  and  such  convertible  security  expires
unexercised or  unconverted as the case may be, then the Warrant  Exercise Price
and the  number  of shares  issuable  upon  exercise  of this  Warrant  shall be
readjusted as if such convertible security had never been issued.

            (b) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Warrant Exercise Price under Section 8(a) above, the
following shall be applicable:

               (i) ISSUANCE OF OPTIONS. If after the date hereof, the Company in
any manner grants any Options and the lowest price per share for which one share
of  Common  Stock is  issuable  upon the  exercise  of any such  Option  or upon
conversion or exchange of any convertible  securities  issuable upon exercise of
any such  Option is less than the  Applicable  Price,  then such share of Common
Stock shall be deemed to be outstanding  and to have been issued and sold by the
Company at the time of the  granting  or sale of such  Option for such price per
share.  For  purposes of this  Section  8(b)(i),  the lowest price per share for
which one share of Common  Stock is issuable  upon  exercise of such  Options or
upon conversion or exchange of such Convertible Securities shall be equal to the
sum of the lowest  amounts of  consideration  (if

                                       8
<PAGE>

any)  received or  receivable  by the Company  with  respect to any one share of
Common  Stock upon the  granting  or sale of the  Option,  upon  exercise of the
Option or upon conversion or exchange of any convertible  security issuable upon
exercise of such Option.  No further  adjustment of the Warrant  Exercise  Price
shall  be made  upon  the  actual  issuance  of  such  Common  Stock  or of such
convertible  securities  upon the  exercise  of such  Options or upon the actual
issuance of such Common Stock upon  conversion  or exchange of such  convertible
securities.

               (ii) ISSUANCE OF  CONVERTIBLE  SECURITIES.  If the Company in any
manner issues or sells any convertible securities and the lowest price per share
for which one share of Common Stock is issuable upon the  conversion or exchange
thereof is less than the Applicable Price, then such share of Common Stock shall
be deemed to be  outstanding  and to have been issued and sold by the Company at
the time of the issuance or sale of such  convertible  securities for such price
per share. For the purposes of this Section 8(b)(ii), the lowest price per share
for which one share of Common Stock is issuable upon such conversion or exchange
shall  be equal  to the sum of the  lowest  amounts  of  consideration  (if any)
received or  receivable by the Company with respect to one share of Common Stock
upon the issuance or sale of the  convertible  security and upon  conversion  or
exchange of such  convertible  security.  No further  adjustment  of the Warrant
Exercise Price shall be made upon the actual  issuance of such Common Stock upon
conversion or exchange of such convertible securities,  and if any such issue or
sale of such  convertible  securities  is made upon  exercise of any Options for
which  adjustment  of the  Warrant  Exercise  Price  had  been or are to be made
pursuant to other provisions of this Section 8(b), no further  adjustment of the
Warrant Exercise Price shall be made by reason of such issue or sale.

               (iii)  CHANGE  IN  OPTION  PRICE  OR RATE OF  CONVERSION.  If the
purchase price provided for in any Options,  the  additional  consideration,  if
any,  payable  upon  the  issue,  conversion  or  exchange  of  any  convertible
securities, or the rate at which any convertible securities are convertible into
or exchangeable for Common Stock changes at any time, the Warrant Exercise Price
in effect at the time of such change  shall be adjusted to the Warrant  Exercise
Price  which  would  have  been in  effect  at such  time  had such  Options  or
convertible  securities  provided for such changed  purchase  price,  additional
consideration  or  changed  conversion  rate,  as the case  may be,  at the time
initially granted, issued or sold and the number of Warrant Shares issuable upon
exercise of this Warrant shall be  correspondingly  readjusted.  For purposes of
this Section 8(b)(iii),  if the terms of any Option or convertible security that
was  outstanding  as of the  Issuance  Date of this  Warrant  are changed in the
manner  described in the  immediately  preceding  sentence,  then such Option or
convertible  security  and the  Common  Stock  deemed  issuable  upon  exercise,
conversion  or  exchange  thereof  shall be deemed to have been issued as of the
date of such change.  No adjustment  pursuant to this Section 8(b) shall be made
if such  adjustment  would result in an increase of the Warrant  Exercise  Price
then in effect.

            (c) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable:

               (i) CALCULATION OF CONSIDERATION  RECEIVED.  If any Common Stock,
Options  or  convertible  securities  are  issued or sold or deemed to have been
issued or sold for

                                       9
<PAGE>

cash, the consideration  received  therefore will be deemed to be the net amount
received by the Company therefore.  If any Common Stock,  Options or convertible
securities are issued or sold for a consideration other than cash, the amount of
such  consideration  received  by the  Company  will be the  fair  value of such
consideration,   except  where  such   consideration   consists  of   marketable
securities,  in which case the amount of  consideration  received by the Company
will be the  market  price of such  securities  on the date of  receipt  of such
securities. If any Common Stock, Options or convertible securities are issued to
the owners of the  non-surviving  entity in connection  with any merger in which
the Company is the surviving entity, the amount of consideration  therefore will
be deemed to be the fair value of such portion of the net assets and business of
the  non-surviving  entity 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  jointly by the Company and the
holders of Warrants  representing at least  two-thirds (b) of the Warrant Shares
issuable  upon exercise of the Warrants  then  outstanding.  If such parties are
unable to reach agreement  within ten (10) days after the occurrence of an event
requiring   valuation  (the   "VALUATION   EVENT"),   the  fair  value  of  such
consideration  will be determined  within five (5) Business Days after the tenth
(10th) day following the Valuation Event by an independent,  reputable appraiser
jointly  selected by the Company  and the  holders of Warrants  representing  at
least  two-thirds  (b) of the  Warrant  Shares  issuable  upon  exercise  of the
Warrants then  outstanding.  The  determination of such appraiser shall be final
and binding upon all parties and the fees and expenses of such  appraiser  shall
be borne jointly by the Company and the holders of Warrants.

               (ii)  INTEGRATED  TRANSACTIONS.  In case any  Option is issued in
connection with the issue or sale of other  securities of the Company,  together
comprising one  integrated  transaction  in which no specific  consideration  is
allocated to such Options by the parties thereto,  the Options will be deemed to
have been issued for a consideration of $.01.

               (iii)  TREASURY  SHARES.  The  number of  shares of Common  Stock
outstanding  at any given time does not include  shares  owned or held by or for
the account of the Company,  and the  disposition of any shares so owned or held
will be considered an issue or sale of Common Stock.

               (iv) RECORD DATE. If the Company takes a record of the holders of
Common  Stock for the  purpose of  entitling  them (1) to receive a dividend  or
other distribution payable in Common Stock, Options or in convertible securities
or (2) to  subscribe  for or  purchase  Common  Stock,  Options  or  convertible
securities,  then such record date will be deemed to be the date of the issue or
sale of the shares of Common  Stock  deemed to have been issued or sold upon the
declaration  of such  dividend or the making of such other  distribution  or the
date of the granting of such right of subscription or purchase,  as the case may
be.

            (d)  ADJUSTMENT  OF  WARRANT  EXERCISE  PRICE  UPON  SUBDIVISION  OR
COMBINATION  OF  COMMON  STOCK.  If the  Company  at any time  after the date of
issuance  of this  Warrant  subdivides  (by any  stock  split,  stock  dividend,
recapitalization  or otherwise) one or more classes of its outstanding shares of
Common  Stock into a greater  number of shares,  any Warrant  Exercise  Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock  obtainable  upon  exercise of this Warrant
will be proportionately  increased. If the Company at any time after the date of
issuance  of this  Warrant

                                       10
<PAGE>

combines (by combination,  reverse stock split or otherwise) one or more classes
of its outstanding  shares of Common Stock into a smaller number of shares,  any
Warrant Exercise Price in effect  immediately  prior to such combination will be
proportionately  increased  and the  number  of  Warrant  Shares  issuable  upon
exercise of this Warrant will be proportionately decreased. Any adjustment under
this Section  8(d) shall  become  effective at the close of business on the date
the subdivision or combination becomes effective.

            (e) DISTRIBUTION OF ASSETS. If the Company shall declare or make any
dividend or other  distribution  of its assets (or rights to acquire its assets)
to holders of Common Stock, by way of return of capital or otherwise (including,
without  limitation,  any  distribution  of cash,  stock  or  other  securities,
property or options by way of a dividend, spin off, reclassification,  corporate
rearrangement  or other similar  transaction)  (a  "Distribution"),  at any time
after the issuance of this Warrant, then, in each such case:

               (i) any Warrant Exercise Price in effect immediately prior to the
close of business on the record date fixed for the  determination  of holders of
Common Stock entitled to receive the Distribution shall be reduced, effective as
of the  close  of  business  on  such  record  date,  to a price  determined  by
multiplying such Warrant Exercise Price by a fraction of which (A) the numerator
shall  be the  Closing  Sale  Price  of the  Common  Stock  on the  trading  day
immediately  preceding such record date minus the value of the  Distribution (as
determined in good faith by the Company's Board of Directors)  applicable to one
share of Common Stock,  and (B) the denominator  shall be the Closing Sale Price
of the Common Stock on the trading day  immediately  preceding such record date;
and

               (ii)  either  (A) the number of Warrant  Shares  obtainable  upon
exercise of this  Warrant  shall be increased to a number of shares equal to the
number of shares of Common Stock  obtainable  immediately  prior to the close of
business  on the record  date fixed for the  determination  of holders of Common
Stock entitled to receive the  Distribution  multiplied by the reciprocal of the
fraction set forth in the immediately  preceding clause (i), or (B) in the event
that the  Distribution  is of common  stock of a company  whose  common stock is
traded on a  national  securities  exchange  or a national  automated  quotation
system,  then the holder of this Warrant shall receive an additional  warrant to
purchase  Common  Stock,  the terms of which shall be identical to those of this
Warrant,  except that such warrant shall be  exercisable  into the amount of the
assets that would have been  payable to the holder of this  Warrant  pursuant to
the Distribution had the holder exercised this Warrant immediately prior to such
record date and with an exercise price equal to the amount by which the exercise
price of this Warrant was decreased with respect to the Distribution pursuant to
the terms of the immediately preceding clause (i).

            (f) CERTAIN EVENTS.  If any event occurs of the type contemplated by
the  provisions  of  this  Section  8 but  not  expressly  provided  for by such
provisions  (including,  without limitation,  the granting of stock appreciation
rights,  phantom  stock rights or other rights with equity  features),  then the
Company's Board of Directors will make an appropriate  adjustment in the Warrant
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this  Warrant so as to protect  the  rights of the  holders of the  Warrants;
provided,  except as set forth in section 8(d),that no such adjustment  pursuant
to this Section 8(f) will  increase the

                                       11
<PAGE>

Warrant  Exercise  Price or  decrease  the  number of  shares  of  Common  Stock
obtainable as otherwise determined pursuant to this Section 8.

            (g) NOTICES.

               (i)  Immediately  upon any  adjustment  of the  Warrant  Exercise
Price,  the  Company  will give  written  notice  thereof  to the holder of this
Warrant, setting forth in reasonable detail, and certifying,  the calculation of
such adjustment.

               (ii) The Company will give  written  notice to the holder of this
Warrant at least ten (10) days prior to the date on which the Company closes its
books or takes a record (A) with  respect to any dividend or  distribution  upon
the Common Stock, (B) with respect to any pro rata subscription offer to holders
of  Common  Stock or (C) for  determining  rights to vote  with  respect  to any
Organic Change (as defined  below),  dissolution or  liquidation,  provided that
such  information  shall be made known to the public prior to or in  conjunction
with such notice being provided to such holder.

               (iii) The Company will also give written  notice to the holder of
this  Warrant  at least  ten (10) days  prior to the date on which  any  Organic
Change,   dissolution  or  liquidation  will  take  place,  provided  that  such
information  shall be made known to the public prior to or in  conjunction  with
such notice being provided to such holder.

         Section   9.   PURCHASE   RIGHTS;   REORGANIZATION,   RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.

            (a) In addition to any  adjustments  pursuant to Section 8 above, if
at any  time the  Company  grants,  issues  or sells  any  Options,  Convertible
Securities or rights to purchase stock,  warrants,  securities or other property
pro rata to the  record  holders  of any class of Common  Stock  (the  "PURCHASE
RIGHTS"),  then the holder of this Warrant 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  exercise of this  Warrant  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.

            (b)   Any   recapitalization,    reorganization,   reclassification,
consolidation,  merger, sale of all or substantially all of the Company's assets
to another Person or other  transaction in each case which is effected in such a
way that  holders of Common Stock are  entitled to receive  (either  directly or
upon subsequent  liquidation) stock,  securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "ORGANIC CHANGE." Prior to
the  consummation of any (i) sale of all or  substantially  all of the Company's
assets to an acquiring  Person or (ii) other Organic Change  following which the
Company is not a  surviving  entity,  the  Company  will  secure from the Person
purchasing  such assets or the successor  resulting from such Organic Change (in
each case,  the "ACQUIRING  ENTITY") a written  agreement (in form and substance
satisfactory to the holders of Warrants  representing at least  two-thirds (iii)
of the Warrant Shares  issuable upon exercise of the Warrants then  outstanding)
to deliver to

                                       12
<PAGE>

each  holder of  Warrants  in  exchange  for such  Warrants,  a security  of the
Acquiring Entity evidenced by a written instrument substantially similar in form
and  substance to this Warrant and  satisfactory  to the holders of the Warrants
(including an adjusted  warrant exercise price equal to the value for the Common
Stock  reflected  by the  terms  of such  consolidation,  merger  or  sale,  and
exercisable for a corresponding  number of shares of Common Stock acquirable and
receivable  upon exercise of the Warrants  without regard to any  limitations on
exercise, if the value so reflected is less than any Applicable Warrant Exercise
Price immediately  prior to such  consolidation,  merger or sale).  Prior to the
consummation  of any other Organic  Change,  the Company shall make  appropriate
provision  (in  form and  substance  satisfactory  to the  holders  of  Warrants
representing  a majority of the Warrant  Shares  issuable  upon  exercise of the
Warrants  then  outstanding)  to insure that each of the holders of the Warrants
will  thereafter have the right to acquire and receive in lieu of or in addition
to (as the case may be) the Warrant Shares immediately  theretofore issuable and
receivable  upon the exercise of such holder's  Warrants  (without regard to any
limitations on exercise),  such shares of stock, securities or assets that would
have been  issued or  payable  in such  Organic  Change  with  respect  to or in
exchange  for the number of Warrant  Shares  which would have been  issuable and
receivable  upon the  exercise of such  holder's  Warrant as of the date of such
Organic Change  (without  taking into account any limitations or restrictions on
the exercisability of this Warrant).

         Section 10.  LOST,  STOLEN,  MUTILATED OR  DESTROYED  WARRANT.  If this
Warrant is lost, stolen,  mutilated or destroyed, the Company shall promptly, on
receipt  of an  indemnification  undertaking  (or,  in the  case of a  mutilated
Warrant,  the Warrant),  issue a new Warrant of like  denomination  and tenor as
this Warrant so lost, stolen, mutilated or destroyed.

         Section  11.   NOTICE.   Any  notices,   consents,   waivers  or  other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered:  (i) upon receipt,
when delivered  personally;  (ii) upon receipt, when sent by facsimile (provided
confirmation  of  receipt is  received  by the  sending  party  transmission  is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally  recognized  overnight
delivery  service,  in each case properly  addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

If to Highgate:                   Highgate House, LP
                                  101 Hudson Street - Suite 3700
                                  Jersey City, NJ  07302
                                  Attention:  Mark A. Angelo
                                  Telephone:  (201) 985-8300
                                  Facsimile:  (201) 985-8266

With Copy to:                     David Gonzalez, Esq.
                                  101 Hudson Street - Suite 3700
                                  Jersey City, NJ 07302
                                  Telephone:  (201) 985-8300
                                  Facsimile:  (201) 985-8266

                                       13
<PAGE>

If to the Company, to:            Nanoscience Technologies, Inc.
                                  45 Rockefeller Plaza - Suite 2000
                                  New York, NY 10111
                                  Attention:  David Rector
                                  Telephone:  (212) 332-3443
                                  Facsimile:  (212) 332-3401

With a copy to:                   Reitler Brown & Rosenblatt LLC
                                  800 Third Avenue, 21st Floor
                                  New York, NY 10022
                                  Attention:  Robert S. Brown, Esq.
                                  Telephone:  (212) 209-3050
                                  Facsimile:  (212) 371-5500

If to a holder of this Warrant,  to it at the address and  facsimile  number set
forth on EXHIBIT C hereto,  with copies to such holder's  representatives as set
forth on EXHIBIT C, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this  Warrant.  Each party shall
provide  five days'  prior  written  notice to the other  party of any change in
address or facsimile  number.  Written  confirmation of receipt (A) given by the
recipient of such notice, consent, facsimile, waiver or other communication, (or
(B) provided by a nationally  recognized  overnight  delivery  service  shall be
rebuttable evidence of personal service,  receipt by facsimile or receipt from a
nationally  recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

         Section  12.  DATE.  The date of this  Warrant  is set  forth on page 1
hereof. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date,  except that  notwithstanding  any
other provisions  hereof,  the provisions of Section 8(b) shall continue in full
force and effect  after such date as to any Warrant  Shares or other  securities
issued upon the exercise of this Warrant.

         Section 13. AMENDMENT AND WAIVER.  Except as otherwise provided herein,
the  provisions  of the  Warrants  may be amended  and the  Company may take any
action  herein  prohibited,  or omit to perform  any act herein  required  to be
performed  by it, only if the Company has  obtained  the written  consent of the
holders of Warrants  representing  at least  two-thirds  of the  Warrant  Shares
issuable upon exercise of the Warrants then  outstanding;  provided that, except
for Section  8(d),  no such action may  increase the Warrant  Exercise  Price or
decrease the number of shares or class of stock  obtainable upon exercise of any
Warrant without the written consent of the holder of such Warrant.

         Section  14.  DESCRIPTIVE  HEADINGS;  GOVERNING  LAW.  The  descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience  only and do not  constitute a part of this  Warrant.  The corporate
laws of the State of Nevada  shall  govern all issues  concerning  the  relative
rights of the Company and its stockholders.  All other questions  concerning the
construction,  validity,  enforcement and interpretation of this Agreement shall
be governed by the  internal  laws of the State of New  Jersey,  without  giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New Jersey or any other

                                       14
<PAGE>

jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New Jersey. Each party hereby irrevocably submits to the
exclusive  jurisdiction of the state and federal courts sitting in Hudson County
and the United  States  District  Court for the District of New Jersey,  for the
adjudication of any dispute hereunder or in connection herewith or therewith, or
with any  transaction  contemplated  hereby  or  discussed  herein,  and  hereby
irrevocably  waives, and agrees not to assert in any suit, action or proceeding,
any claim  that it is not  personally  subject to the  jurisdiction  of any such
court, that such suit, action or proceeding is brought in an inconvenient  forum
or that the venue of such suit,  action or  proceeding  is improper.  Each party
hereby  irrevocably  waives personal  service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall  constitute  good and sufficient  service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.

         Section 15.  WAIVER OF JURY TRIAL.  AS A MATERIAL  INDUCEMENT  FOR EACH
PARTY HERETO TO ENTER INTO THIS  WARRANT,  THE PARTIES  HERETO  HEREBY WAIVE ANY
RIGHT  TO  TRIAL  BY JURY IN ANY  LEGAL  PROCEEDING  RELATED  IN ANY WAY TO THIS
WARRANT  AND/OR  ANY  AND  ALL OF  THE  OTHER  DOCUMENTS  ASSOCIATED  WITH  THIS
TRANSACTION.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the date first set forth above.

                                            NANOSCIENCE TECHNOLOGIES, INC.

                                            By:
                                               ---------------------------------
                                            Name:  David Rector
                                            Title: President & CEO

                                       15
<PAGE>

                              EXHIBIT A TO WARRANT

                                 EXERCISE NOTICE

                                 TO BE EXECUTED

                BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
                         NANOSCIENCE TECHNOLOGIES, INC.

         The  undersigned   holder  hereby   exercises  the  right  to  purchase
______________  of the shares of Common Stock ("WARRANT  SHARES") of Nanoscience
Technologies,  Inc.,  a Nevada  corporation  (the  "COMPANY"),  evidenced by the
attached  Warrant  (the  "WARRANT").  Capitalized  terms  used  herein  and  not
otherwise defined shall have the respective meanings set forth in the Warrant.

         1. FORM OF WARRANT  EXERCISE PRICE.  The Holder intends that payment of
the Warrant  Exercise  Price shall be made as a "CASH  EXERCISE" with respect to
______________ Warrant Shares.

         2. PAYMENT OF WARRANT  EXERCISE PRICE.  The holder shall pay the sum of
$______________ to the Company in accordance with the terms of the Warrant.

         3. DELIVERY OF WARRANT SHARES.  The Company shall deliver to the holder
_________ Warrant Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______

Name of Registered Holder

By:
   -----------------------------------------
Name:
     ---------------------------------------
Title:
      --------------------------------------

                                       A-1

<PAGE>

                              EXHIBIT B TO WARRANT

                              FORM OF WARRANT POWER

         FOR VALUE RECEIVED,  the undersigned does hereby assign and transfer to
________________,  Federal Identification No. __________,  a warrant to purchase
____________  shares of the capital stock of Nanoscience  Technologies,  Inc., a
Nevada corporation,  represented by warrant  certificate no. _____,  standing in
the name of the  undersigned on the books of said  corporation.  The undersigned
does  hereby  irrevocably  constitute  and appoint  ______________,  attorney to
transfer the warrants of said  corporation,  with full power of  substitution in
the premises.

Dated:
      ------------------------------     ---------------------------------------

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------

                                       B-1

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