Document:

Exhibit 10.16

THIS WARRANT  CERTIFICATE AND THE UNDERLYING  SHARES OF COMMON STOCK REPRESENTED
BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION  STATEMENT  UNDER SAID ACT OR  PURSUANT TO AN  AVAILABLE  EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER SAID ACT.

Series B Warrant No. _________                                 __________, 2005

                              PHARMAFRONTIERS CORP.

                          COMMON STOCK PURCHASE WARRANT

         This  Common   Stock   Purchase   Warrant  (the   "Warrant")   entitles
________________________  (including any  successors or assigns,  the "Holder"),
for value received, to purchase from PHARMAFRONTIERS  CORP., a Texas corporation
(the  "Company"),  at any time and from time to time,  subject  to the terms and
conditions  set forth herein,  during the period  starting from 5:00 a.m. on the
date  hereof to 5:00 p.m.,  New York City  time,  on the  "Expiration  Date" (as
defined in Section 1 below) immediately  following which time this Warrant shall
expire and become void,  all or any portion of the "Warrant  Shares" (as defined
in Section 1 below) at the  "Exercise  Price"  (as  defined in Section 1 below).
This Warrant is issued subject to the following terms and conditions:

     1. DEFINITIONS As used in this Warrant,  the following terms shall have the
respective meanings set forth in the Registration Statement,  below or elsewhere
in this Warrant as referred to below:

         "ADDITIONAL SHARES" shall have the meaning given to it in Section 3.6.

         "AFFILIATE"  means,  with  respect  to any  Person,  any  other  Person
directly or indirectly  controlling or controlled by or under direct or indirect
common  control with such  specified  Person.  For the purposes of this Warrant,
"control,"  when used with  respect to any  specified  Person means the power to
direct or cause the  direction  of the  management  and policies of such Person,
directly or indirectly,  whether through the ownership of voting securities,  by
contract  or  otherwise;  and the  terms  "controlling"  and  "controlled"  have
meanings correlative to the foregoing.

         "Black  Scholes  Pricing  Model" means the value  determined  using the
Black Scholes pricing model and employing an interest rate equal to 30 day LIBOR
on the day prior to valuation  and a volatility  equal to the  volatility of the
Common  Stock  for  the 30  Trading  Days  prior  to the  date of  valuation  as
reasonably  determined by the Board of Directors;  provided that if the Majority
Holders  disagree  with such  volatility,  the Company and Largest  Holder shall
jointly  select an appraiser who is experienced in such matters and the decision
of such appraiser shall be final and conclusive,  and the cost of such appraiser
shall be borne by the Company.  "Majority  Holders" means holders of outstanding
Warrants  representing  the right to  purchase  a majority  of the Common  Stock
issuable upon exercise of all outstanding Warrants.  "Largest Holder" means that
holder,  who is a member of the objecting  Majority Holders,  and holds Warrants
that  entitle  it to acquire  more  shares  than any other  holder who is in the
objecting Majority Holders.

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         "BUSINESS  DAY" (whether such term is capitalized or not) means any day
except Saturday,  Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of New York or the State of Texas
are authorized or required by law or other governmental action to close.

         "CLOSING  DATE"  shall have the meaning  given to it in the  Securities
Purchase Agreement.

         "COMMON  STOCK" means the common stock,  $0.05 par value per share,  of
the Company (including any securities into which or for which such shares may be
exchanged for, or converted into,  pursuant to any stock dividend,  stock split,
stock combination, recapitalization,  reclassification,  reorganization or other
similar event occurring prior to the Closing Date).

         "COMMON STOCK  EQUIVALENTS"  means any securities of the Company or the
Subsidiaries  which  would  entitle  the  holder  thereof to acquire at any time
Common Stock,  including without limitation,  any debt, preferred stock, rights,
options,  warrants or other  instrument that is at any time  convertible into or
exchangeable  for, or otherwise  entitles the holder thereof to receive,  Common
Stock.

         "COMPANY" has the meaning set forth in the preamble hereof.

         "EXERCISE  PRICE" means  initially the Initial  Exercise Price, as such
amount may be adjusted from time to time pursuant to Section 3 hereof.

         "EXPIRATION DATE" means the later of (i) September __, 2006 or (ii) the
date twelve months after a registration  statement for the resale of the Warrant
Shares is declared effective,  provided, however, that the Expiration Date shall
be  extended  for a  number  of  additional  days  equal to the  number  of days
following  the SEC  Effective  Date that sales  cannot be made  pursuant  to the
Registration Statement for any reason (including without limitation by reason of
a stop order, or the Company's failure to update the Registration Statement).

         "FLOOR EXERCISE PRICE" means $2.00 per share provided such amount shall
be  proportionately  reduced  for any stock  split,  stock  dividend  or similar
corporate  action and  proportionately  increased for any stock  combination  or
similar corporate action.

         "HOLDER" has the meaning set forth in the preamble of hereof.

         "INITIAL EXERCISE PRICE" means $2.90 per share of Common Stock.

         "NASDAQ" means the Nasdaq Stock Market.

         "OTCBB" means the OTC Bulletin Board.

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         "PERSON"  (whether or not  capitalized)  means an  individual,  entity,
partnership,  limited liability company, corporation,  association, trust, joint
venture,   unincorporated   organization,   and  any  government,   governmental
department or agency or political subdivision thereof.

         "PURCHASE  PRICE" shall  initially mean $1.50 per share but such amount
shall be adjusted  proportionately  for any stock split,  stock  combination  or
stock dividend effected with respect to the Company's Common Stock.

         "REGISTRATION  RIGHTS AGREEMENT" means that certain Registration Rights
Agreement,  dated as of the date hereof, as it may be amended from time to time,
by and among the Company and the  individuals  named  therein (the  "INVESTORS")
including the initial Holder.

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES PURCHASE AGREEMENT" means the Securities Purchase Agreement
dated as of the date  hereof,  as it may be  amended  from time to time,  by and
among the  Company  and the  individuals  named  therein  including  the initial
Holder.

         "SERIES A WARRANTS,"  "SERIES B WARRANTS," and "SERIES C WARRANTS" mean
all of those warrants issued by the Company under such titles  concurrently with
this Series B Warrant.

         "TRADING  DAY"  means a day on which  the  Common  Stock is traded on a
Trading Market.

         "TRADING MARKET" means the following  markets or exchanges on which the
Common  Stock is listed or quoted for trading on the date in  question:  the OTC
Bulletin Board, the Nasdaq SmallCap Market, the American Stock Exchange, the New
York Stock Exchange or the Nasdaq National Market.

         "VWAP" means,  for any date,  the price  determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common  Stock is then listed or quoted as reported by Bloomberg  Financial  L.P.
(based on a Trading Day from 9:30 a.m.  Eastern Time to 4:02 p.m. Eastern Time);
(b) if the Common Stock is not then listed or quoted on a Trading  Market and if
prices for the  Common  Stock are then  quoted on the OTC  Bulletin  Board,  the
volume weighted  average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin  Board;  (c) if the Common Stock is not then
listed or quoted on the OTC  Bulletin  Board and if prices for the Common  Stock
are then reported in the "Pink Sheets"  published by the Pink Sheets,  LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so  reported;  or (c) in
all other cases,  the fair market value of a share of Common Stock as determined
by an  independent  appraiser  selected  in good  faith  by the  Purchasers  and
reasonably acceptable to the Company.

         "WARRANTS" means the Series A Warrants,  Series B Warrants and Series C
Warrants.

         "WARRANT  SHARES" means ____ [50% of the number of shares  purchased by
the Investor  pursuant to Section 1.1(a) of the Securities  Purchase  Agreement]
shares of Common  Stock,  subject to  adjustment  in  accordance  with Section 3
below.

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2. EXERCISE OF WARRANT.

          2.1  METHOD  OF  EXERCISE;  PAYMENT.  Subject  to all of the terms and
     conditions hereof this Warrant may be exercised,  in whole or in part, with
     respect to any or all of the Warrant  Shares,  at any time and from time to
     time,  ending at 5:00 p.m., New York City Time, on the Expiration  Date, by
     surrender  of  this  Warrant  to  the  Company  at  its  principal  office,
     accompanied by a subscription  substantially  in the form attached  hereto,
     executed by the Holder and  accompanied by (a) wire transfer of immediately
     available  funds or (b)  certified  or official  bank check  payable to the
     order of the Company,  in each case in the amount  obtained by  multiplying
     (i) the number of Warrant Shares for which the Warrant is being  exercised,
     as designated in such subscription,  by (ii) the Exercise Price. Thereupon,
     the Holder  shall be  entitled  to receive  the number of duly  authorized,
     validly issued,  fully paid and nonassessable  Warrant Shares determined as
     provided  for  herein.  Notwithstanding  anything  contained  herein to the
     contrary, this Warrant may only be exercised by an "accredited investor" as
     defined in Rule 501(a) of Regulation D under the Securities Act of 1933.

     2.2 EXERCISE LIMITATIONS.

          HOLDER'S RESTRICTIONS. The Holder shall not have the right to exercise
     any portion of this Warrant,  pursuant to Section 2.2 or otherwise,  to the
     extent that after giving effect to such issuance after exercise, the Holder
     (together  with the Holder's  affiliates),  as set forth on the  applicable
     Notice of Exercise, would beneficially own in excess of 4.99% of the number
     of shares of the Common Stock  outstanding  immediately after giving effect
     to such  issuance.  For purposes of the foregoing  sentence,  the number of
     shares of Common Stock  beneficially owned by the Holder and its affiliates
     shall  include the number of shares of Common Stock  issuable upon exercise
     of this Warrant with respect to which the determination of such sentence is
     being made,  but shall  exclude the number of shares of Common  Stock which
     would be issuable upon (A) exercise of the remaining,  nonexercised portion
     of this Warrant  beneficially  owned by the Holder or any of its affiliates
     and (B) exercise or conversion of the unexercised or  nonconverted  portion
     of any other securities of the Company (including,  without limitation, any
     other Warrants) subject to a limitation on conversion or exercise analogous
     to the limitation  contained herein beneficially owned by the Holder or any
     of its  affiliates.  Except as set  forth in the  preceding  sentence,  for
     purposes of this Section 2(d),  beneficial ownership shall be calculated in
     accordance with Section 13(d) of the Exchange Act, it being acknowledged by
     Holder that the Company is not representing to Holder that such calculation
     is in  compliance  with  Section  13(d) of the  Exchange  Act and Holder is
     solely  responsible  for any  schedules  required to be filed in accordance
     therewith.

          To the  extent  that the  limitation  contained  in this  Section  2.2
     applies,  the  determination  of whether  this Warrant is  exercisable  (in
     relation to other securities owned by the Holder) and of which a portion of
     this Warrant is exercisable shall be in the sole discretion of such Holder,
     and the  submission  of a Notice  of  Exercise  shall be  deemed to be such
     Holder's  determination of whether this Warrant is exercisable (in relation
     to other securities owned by such Holder) and of

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     which portion of this Warrant is exercisable,  in each case subject to such
     aggregate percentage  limitation,  and the Company shall have no obligation
     to verify or confirm the  accuracy of such  determination.  For purposes of
     this Section 2.3, in determining the number of outstanding shares of Common
     Stock,  the Holder may rely on the number of  outstanding  shares of Common
     Stock as  reflected  in (x) the  Company's  most recent Form 10-QSB or Form
     10-KSB,  as the case may be, (y) a more recent public  announcement  by the
     Company or (z) any other  notice by the Company or the  Company's  Transfer
     Agent setting forth the number of shares of Common Stock outstanding.  Upon
     the written or oral  request of the Holder,  the Company  shall  within two
     Trading  Days  confirm  orally  and in  writing to the Holder the number of
     shares  of Common  Stock  then  outstanding.  In any  case,  the  number of
     outstanding  shares of Common Stock shall be determined after giving effect
     to the conversion or exercise of securities of the Company,  including this
     Warrant,  by the Holder or its  affiliates  since the date as of which such
     number of outstanding  shares of Common Stock was reported.  The provisions
     of this  Section  2.2 may be waived by the Holder,  at the  election of the
     Holder,  upon not less than 61 days' prior notice to the  Company,  and the
     provisions of this Section 2.2 shall  continue to apply until such 61st day
     (or such later date, as  determined  by the Holder,  as may be specified in
     such notice of waiver).

          2.3  DELIVERY OF STOCK  CERTIFICATES  ON  EXERCISE.  Certificates  for
     shares  purchased  hereunder  shall be transmitted by the transfer agent of
     the Company to the Holder by crediting  the account of the  Holder's  prime
     broker with the  Depository  Trust Company  through its Deposit  Withdrawal
     Agent  Commission  ("DWAC")  system if the Company is a participant in such
     system (and so long as the legend may be removed in accordance with Section
     5.2 of the Purchase  Agreement),  and otherwise by physical delivery to the
     address  specified  by the Holder in the Notice of  Exercise  within  three
     Trading  Days from the  delivery  to the  Company of the Notice of Exercise
     Form, surrender of this Warrant and payment of the aggregate Exercise Price
     as set forth above ("WARRANT SHARE DELIVERY  DATE").  This Warrant shall be
     deemed to have been exercised on the date the Exercise Price is received by
     the Company.  The Warrant  Shares shall be deemed to have been issued,  and
     Holder  or any other  person so  designated  to be named  therein  shall be
     deemed to have become a holder of record of such  shares for all  purposes,
     as of the date the Warrant has been  exercised by payment to the Company of
     the Exercise Price.

          2.4  SHARES TO BE FULLY PAID AND  NONASSESSABLE.  All  Warrant  Shares
     issued upon the exercise of this Warrant shall be duly authorized,  validly
     issued, fully paid and nonassessable, free of all liens, taxes, charges and
     other  encumbrances  or  restrictions  on sale  (other than those set forth
     herein).

          2.5 ISSUANCE OF NEW WARRANTS; COMPANY ACKNOWLEDGMENT. Upon any partial
     exercise of this Warrant, the Company, at its expense,  will forthwith and,
     in any event  within  three (3)  business  days,  issue and  deliver to the
     Holder a new warrant or warrants of like tenor,  registered  in the name of
     the Holder,  exercisable,  in the aggregate, for the balance of the Warrant
     Shares.  Moreover,  the Company shall,  at the time of any exercise of this
     Warrant,  upon the  request  of the  Holder,  acknowledge  in  writing  its
     continuing  obligation  to afford  to the  Holder  any  rights to which the
     Holder shall continue to be entitled after such exercise in accordance with
     the provisions of this Warrant; PROVIDED, HOWEVER, that if the Holder shall
     fail to make any such request, such failure shall not affect the continuing
     obligation of the Company to afford to the Holder any such rights.

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          2.6  PAYMENT  OF  TAXES  AND  EXPENSES.  The  Company  shall  pay  any
     recording,  filing, stamp or similar tax which may be payable in respect of
     any transfer  involved in the issuance of, and the preparation and delivery
     of  certificates  (if  applicable)  representing,  (i) any  Warrant  Shares
     purchased  upon  exercise of this  Warrant  and/or (ii) new or  replacement
     warrants in the Holder's  name or the name of any  transferee of all or any
     portion of this Warrant.

          2.7  RESCISSION  RIGHTS.  If the Company  fails to cause its  transfer
     agent to transmit to the Holder a certificate or certificates  representing
     the Warrant Shares pursuant to this Section 2 by the Warrant Share Delivery
     Date, then the Holder will have the right to rescind such exercise.

          2.8 COMPENSATION FOR BUY-IN ON FAILURE TO TIMELY DELIVER  CERTIFICATES
     UPON EXERCISE.  In addition to any other rights available to the Holder, if
     the Company  fails to cause its transfer  agent to transmit to the Holder a
     certificate or certificates  representing the Warrant Shares pursuant to an
     exercise on or before the Warrant Share  Delivery  Date,  and if after such
     date the Holder is required  by its broker to  purchase  (in an open market
     transaction or otherwise) shares of Common Stock to deliver in satisfaction
     of a sale by the Holder of the Warrant Shares which the Holder  anticipated
     receiving  upon such exercise (a "BUY-IN"),  then the Company shall (1) pay
     in cash to the Holder the amount by which (x) the Holder's  total  purchase
     price (including  brokerage  commissions,  if any) for the shares of Common
     Stock so purchased  exceeds (y) the amount  obtained by multiplying (A) the
     number of Warrant  Shares that the  Company was  required to deliver to the
     Holder in  connection  with the  exercise  at issue  times (B) the price at
     which the sell order giving rise to such purchase  obligation was executed,
     and (2) at the option of the Holder,  either  reinstate  the portion of the
     Warrant and equivalent number of Warrant Shares for which such exercise was
     not  honored or deliver to the Holder the number of shares of Common  Stock
     that  would have been  issued  had the  Company  timely  complied  with its
     exercise and delivery  obligations  hereunder.  For example,  if the Holder
     purchases  Common Stock having a total purchase price of $11,000 to cover a
     Buy-In with respect to an attempted exercise of shares of Common Stock with
     an aggregate sale price giving rise to such purchase obligation of $10,000,
     under clause (1) of the immediately preceding sentence the Company shall be
     required to pay the Holder  $1,000.  The Holder  shall  provide the Company
     written notice  indicating the amounts  payable to the Holder in respect of
     the Buy-In,  together  with  applicable  confirmations  and other  evidence
     reasonably requested by the Company.  Nothing herein shall limit a Holder's
     right to pursue any other remedies available to it hereunder,  at law or in
     equity  including,  without  limitation,  a decree of specific  performance
     and/or  injunctive  relief with respect to the Company's  failure to timely
     deliver  certificates  representing shares of Common Stock upon exercise of
     the Warrant as required pursuant to the terms hereof.

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          2.9 NO  FRACTIONAL  SHARES OR  SCRIP.  No  fractional  shares or scrip
     representing  fractional  shares  shall be issued upon the exercise of this
     Warrant.  As to any  fraction of a share which  Holder  would  otherwise be
     entitled  to purchase  upon such  exercise,  the  Company  shall pay a cash
     adjustment  in respect of such final  fraction  in an amount  equal to such
     fraction multiplied by the VWAP.

          2.10 CONDITIONS.  Notwithstanding any other provision of this Warrant,
     if the  exercise  of all or any  portion  of this  Warrant is to be made in
     connection with a registered public offering,  a sale of the Company or any
     other  transaction  or event,  such  exercise  may, at the  election of the
     Holder,  be conditioned  upon  consummation of such transaction or event in
     which  case  such  exercise  shall  not  be  deemed   effective  until  the
     consummation of such transaction or event.

     3. ADJUSTMENT OF EXERCISE PRICE AND WARRANT SHARES.  The Exercise Price and
the number of Warrant  Shares shall be subject to  adjustment  from time to time
upon the happening of certain events as described in this Section 3.

          3.1  SUBDIVISION OR COMBINATION OF STOCK.  If at any time or from time
     to time after the date hereof, the Company shall subdivide (by way of stock
     dividend, stock split or otherwise) its outstanding shares of Common Stock,
     the Exercise Price in effect immediately prior to such subdivision shall be
     reduced proportionately and the number of Warrant Shares (calculated to the
     nearest whole share) shall be increased proportionately, and conversely, in
     the event the outstanding shares of Common Stock shall be combined (whether
     by stock  combination,  reverse  stock split or  otherwise)  into a smaller
     number of shares,  the Exercise Price in effect  immediately  prior to such
     combination  shall be multiplied by a fraction of which the numerator shall
     be the number of shares of Common Stock (excluding treasury shares, if any)
     outstanding  immediately  before  such  event and of which the  denominator
     shall be the number of shares of Common Stock outstanding immediately after
     such event and the number of shares  issuable upon exercise of this Warrant
     shall be  proportionately  adjusted.  The Exercise  Price and the number of
     Warrant Shares,  as so adjusted,  shall become effective  immediately after
     the effective date of such subdivision, combination or reclassification and
     readjusted in the same manner upon the happening of any successive event or
     events described in this Section 3.1.

          3.2 ADJUSTMENTS

               (a) ADJUSTMENT FOR STOCK DIVIDENDS. If at any time after the date
          hereof,  the  Company  shall  declare  a  dividend  or make any  other
          distribution  upon any class or series of stock of the Company payable
          in shares of Common Stock,  the Exercise  Price in effect  immediately
          prior to such  declaration  or  distribution  shall be multiplied by a
          fraction  of which  the  numerator  shall be the  number  of shares of
          Common  Stock  (excluding   treasury   shares,   if  any)  outstanding
          immediately  before such event and of which the  denominator  shall be
          the number of shares of Common  Stock  outstanding  immediately  after
          such event and the number of shares  issuable  upon  exercise  of this
          Warrant  shall  be  proportionately   adjusted.  Any  adjustment  made
          pursuant to this Section  3.2(a) shall  become  effective  immediately
          after the record date for the  determination of stockholders  entitled
          to receive such  dividend or  distribution  be  readjusted in the same
          manner upon the happening of any successive  event or events described
          in this Section 3.2.

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               (b)  ADJUSTMENTS FOR OTHER  DIVIDENDS AND  DISTRIBUTIONS.  In the
          event  the  Company  at any time or from  time to time  after the date
          hereof shall make or issue, or fix a record date for the determination
          of holders of Common  Stock  entitled to receive,  a dividend or other
          distribution  payable in securities of the Company  (other than shares
          of Common Stock) or in cash or other  property,  then and in each such
          event  provision  shall be made so that the Holder shall  receive upon
          exercise  hereof,  in addition to the number of shares of Common Stock
          issuable  hereunder,  the kind and amount of securities of the Company
          and/or  cash and other  property  which  the  Holder  would  have been
          entitled to receive had this Warrant been  exercised into Common Stock
          on the date of such  event and had the Holder  thereafter,  during the
          period from the date of such event to and including the exercise date,
          retained any such  securities  receivable,  giving  application to all
          adjustments  called for during such period  under this  Section 3 with
          respect to the rights of the Holder.

          3.3  ADJUSTMENTS FOR  RECLASSIFICATIONS.  If the Common Stock issuable
     upon the  conversion  of this  Warrant  shall be changed into the same or a
     different  number of shares of any  class(es) or series of stock and/or the
     right to receive property,  whether by reclassification or otherwise (other
     than an adjustment  under Sections 3.1 and 3.2 or a merger,  consolidation,
     or sale of assets  provided for under Section  3.4),  then and in each such
     event,  the Holder  hereof shall have the right  thereafter to convert each
     Warrant  Share  into the kind and  amount  of  shares  of stock  and  other
     securities and property  receivable  upon such  reclassification,  or other
     change by holders  of the number of shares of Common  Stock into which such
     Warrant  Shares  would  have  been  convertible  immediately  prior to such
     reclassification   or  change,   all  subject  to  successive   adjustments
     thereafter  from  time to time  pursuant  to and in  accordance  with,  the
     provisions of this Section 3.

          3.4  FUNDAMENTAL  TRANSACTION.  If, at any time while this  Warrant is
     outstanding,  (A) the Company  effects any merger or  consolidation  of the
     Company with or into another  Person,  (B) the Company  effects any sale of
     all or  substantially  all of its  assets  in one or a  series  of  related
     transactions,  (C) any  tender  offer or  exchange  offer  (whether  by the
     Company or another Person) is completed pursuant to which holders of Common
     Stock  are  permitted  to  tender  or  exchange   their  shares  for  other
     securities,   cash  or   property,   or  (D)  the   Company   effects   any
     reclassification  of the  Common  Stock or any  compulsory  share  exchange
     pursuant  to which  the  Common  Stock  is  effectively  converted  into or
     exchanged  for other  securities,  cash or  property  (in any such case,  a
     "FUNDAMENTAL  TRANSACTION"),  then,  upon any  subsequent  exercise of this
     Warrant, the Holder shall have the right to receive, for each Warrant Share
     that would have been issuable upon such exercise  immediately  prior to the
     occurrence of such  Fundamental  Transaction,  at the option of the Holder,
     (a) upon exercise of this Warrant,  the number of shares of Common Stock of
     the  successor or  acquiring  corporation  or of the Company,  if it is the
     surviving  corporation,  and any additional  consideration  (the "ALTERNATE
     CONSIDERATION")  receivable  upon or as a  result  of such  reorganization,
     reclassification,  merger,  consolidation  or  disposition  of  assets by a
     Holder of the number of shares of Common  Stock for which  this  Warrant is
     exercisable  immediately  prior  to such  event  or (b) if the  Company  is
     acquired  in an all cash  transaction,  cash  equal to to the value of this
     Warrant  determined using the Black Scholes Pricing Model as of the date of
     the acquisition.  For purposes of any such exercise,  the  determination of
     the  Exercise  Price  shall  be  appropriately  adjusted  to  apply to such
     Alternate  Consideration  based on the  amount of  Alternate  Consideration
     issuable  in  respect  of one  share of  Common  Stock in such  Fundamental
     Transaction,  and the Company shall  apportion the Exercise Price among the
     Alternate  Consideration  in a reasonable  manner  reflecting  the relative
     value  of any  different  components  of the  Alternate  Consideration.  If
     holders of Common Stock are given any choice as to the securities,  cash or
     property to be received in a Fundamental Transaction, then the Holder shall
     be given the same choice as to the Alternate Consideration it receives upon
     any exercise of this Warrant following such Fundamental Transaction. To the
     extent necessary to effectuate the foregoing  provisions,  any successor to
     the Company or surviving entity in such Fundamental Transaction shall issue
     to the Holder a new warrant  consistent  with the foregoing  provisions and
     evidencing  the Holder's  right to exercise  such  warrant  into  Alternate
     Consideration.  The terms of any agreement  pursuant to which a Fundamental
     Transaction is effected shall include terms requiring any such successor or
     surviving  entity to comply  with the  provisions  of this  Section 3.4 and
     insuring  that this  Warrant  (or any such  replacement  security)  will be
     similarly  adjusted  upon  any  subsequent   transaction   analogous  to  a
     Fundamental Transaction.

                                       8
<PAGE>

          3.5  CONTINUATION OF TERMS.  Upon any  reorganization,  consolidation,
     merger  or  transfer  (and any  dissolution  following  any such  transfer)
     referred to in this  Section 3, this Warrant  shall  continue in full force
     and effect and the terms hereof shall be applicable to the shares of Common
     Stock and other  securities  and property  receivable  upon the exercise of
     this Warrant after the consummation of such  reorganization,  consolidation
     or merger or the effective date of dissolution following any such transfer,
     as the case may be, and shall be binding upon the issuer of any such Common
     Stock or other securities, including, in the case of any such transfer, the
     Person  acquiring all or  substantially  all of the properties or assets or
     more than 50% of the voting  capital stock of the Company  (whether  issued
     and outstanding, newly issued or from treasury or any combination thereof),
     whether or not such Person shall have  expressly  assumed the terms of this
     Warrant.

          3.6 ANTIDILUTION ADJUSTMENT.

          (a) If the Company or any subsidiary  thereof,  as applicable,  at any
     time this  Warrant is  outstanding  shall issue  shares of Common  Stock or
     Common Stock  Equivalents  entitling any Person to acquire shares of Common
     Stock, at a price per share (determined, reduced and adjusted in accordance
     with Section 3.6(b)(v) below) less than the then current Purchase Price (if
     the holder of the Common Stock or Common Stock  Equivalent  so issued shall
     at any time,  whether by operation  of purchase  price  adjustments,  reset
     provisions,  floating conversion, exercise or exchange prices or otherwise,
     or due to  warrants,  options  or  rights  issued in  connection  with such
     issuance,  be  entitled to receive  shares of Common  Stock at a price less
     than the Purchase Price, such issuance shall be deemed to have occurred for
     less than the Purchase Price), then, the Exercise Price shall be reduced to
     equal the Floor Exercise Price. Such adjustment shall be made whenever such
     Common  Stock or Common Stock  Equivalents  are issued.  The Company  shall
     notify the Holder in writing,  no later than the Trading Day  following the
     issuance of any Common  Stock or Common  Stock  Equivalent  subject to this
     section, indicating therein the applicable issuance price, or of applicable
     reset price, exchange price, conversion price and other pricing terms.

                                       9
<PAGE>

          In no event  shall  the  Exercise  Price be  reduced  below  the Floor
     Exercise Price by operation of this Section 3.6.

               (b)  For  purposes  of  this   subsection   3.6,  the   following
          subsections shall also be applicable:

                    (i)  Issuance of Rights or Options.  In case at any time the
               Company shall in any manner grant (directly and not by assumption
               in a  merger  or  otherwise)  any  warrants  or other  rights  to
               subscribe for or to purchase, or any options for the purchase of,
               Common  Stock  or any  stock  or  security  convertible  into  or
               exchangeable  for Common Stock (such warrants,  rights or options
               being called "Options" and such convertible or exchangeable stock
               or securities being called "Convertible  Securities")  whether or
               not such  Options or the right to convert  or  exchange  any such
               Convertible Securities are immediately exercisable, and the price
               per share for which Common Stock is issuable upon the exercise of
               such  Options  or  upon  the   conversion  or  exchange  of  such
               Convertible Securities (determined by dividing (i) the sum (which
               sum shall  constitute  the applicable  consideration)  of (x) the
               total  amount,  if any,  received or receivable by the Company as
               consideration  for the  granting  of such  Options,  plus (y) the
               aggregate  amount  of  additional  consideration  payable  to the
               Company upon the exercise of all such  Options,  plus (z), in the
               case of such Options which relate to Convertible Securities,  the
               aggregate  amount of additional  consideration,  if any,  payable
               upon the issue or sale of such  Convertible  Securities  and upon
               the  conversion  or exchange  thereof,  by (ii) the total maximum
               number of shares of Common  Stock  issuable  upon the exercise of
               such  Options  or upon the  conversion  or  exchange  of all such
               Convertible   Securities  issuable  upon  the  exercise  of  such
               Options)  shall  be  less  than  the  Purchase  Price  in  effect
               immediately  prior to the time of the  granting of such  Options,
               then the total number of shares of Common Stock issuable upon the
               exercise of such  Options or upon  conversion  or exchange of the
               total amount of such  Convertible  Securities  issuable  upon the
               exercise of such Options  shall be deemed to have been issued for
               such price per share as of the date of granting  of such  Options
               or the issuance of such  Convertible  Securities  and  thereafter
               shall be deemed to be  outstanding  for purposes of adjusting the
               Exercise  Price.  Except  as  otherwise  provided  in  subsection
               3.6(b)(iii),  no adjustment  of the Exercise  Price shall be made
               upon the actual issue of such Common Stock or of such Convertible
               Securities upon exercise of such Options or upon the actual issue
               of  such  Common  Stock  upon  conversion  or  exchange  of  such
               Convertible Securities.

                                       10
<PAGE>

                    (ii) Issuance of Convertible Securities. In case the Company
               shall in any manner issue  (directly  and not by  assumption in a
               merger or otherwise) or sell any Convertible Securities,  whether
               or not the rights to  exchange  or convert  any such  Convertible
               Securities are immediately  exercisable,  and the price per share
               for  which  Common  Stock is  issuable  upon such  conversion  or
               exchange  (determined  by  dividing  (i) the sum (which sum shall
               constitute the applicable  consideration) of (x) the total amount
               received or  receivable by the Company as  consideration  for the
               issue  or sale  of  such  Convertible  Securities,  plus  (y) the
               aggregate amount of additional consideration,  if any, payable to
               the Company upon the conversion or exchange thereof,  by (ii) the
               total  number  of  shares  of  Common  Stock  issuable  upon  the
               conversion or exchange of all such Convertible  Securities) shall
               be less than the Purchase  Price in effect  immediately  prior to
               the time of such issue or sale,  then the total maximum number of
               shares of Common Stock  issuable  upon  conversion or exchange of
               all such  Convertible  Securities  shall be  deemed  to have been
               issued  for such  price  per share as of the date of the issue or
               sale of such  Convertible  Securities  and  thereafter  shall  be
               deemed to be  outstanding  for purposes of adjusting the Exercise
               Price,   provided  that  (a)  except  as  otherwise  provided  in
               subsection 3.6(b)(iii), no adjustment of the Exercise Price shall
               be made  upon the  actual  issuance  of such  Common  Stock  upon
               conversion or exchange of such Convertible  Securities and (b) no
               further  adjustment of the Exercise Price shall be made by reason
               of the issue or sale of Convertible  Securities  upon exercise of
               any Options to purchase any such Convertible Securities for which
               adjustments  of the Exercise Price have been made pursuant to the
               other  provisions  of  subsection  3.6. If the  Company  issues a
               variable rate security,  despite the  prohibition  thereon in the
               Securities  Purchase  Agreement,  the Company  shall be deemed to
               have  issued  Common  Stock or Common  Stock  Equivalents  at the
               lowest  possible  conversion  or  exercise  price at  which  such
               securities  may  be  converted  or  exercised  in the  case  of a
               Variable Rate Transaction (as defined in the Securities  Purchase
               Agreement).

                    (iii) Change in Option Price or  Conversion  Rate.  Upon the
               happening of any of the following events, namely, if the purchase
               price  provided  for  in any  Option  referred  to in  subsection
               3.6(b)(i) hereof, the additional  consideration,  if any, payable
               upon the  conversion  or exchange of any  Convertible  Securities
               referred to in subsections  3.6(b)(i) or 3.6(b)(ii),  or the rate
               at  which  Convertible  Securities  referred  to  in  subsections
               3.6(b)(i) or 3.6(b)(ii) are convertible  into or exchangeable for
               Common Stock shall change at any time (including, but not limited
               to, changes under or by reason of provisions  designed to protect
               against  dilution),  the Exercise  Price in effect at the time of
               such event shall  forthwith 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  purchase price,  additional  consideration or conversion
               rate, as the case may be, at the time initially  granted,  issued
               or  sold.  On  the  termination  of  any  Option  for  which  any
               adjustment was made pursuant to this  subsection 3.6 or any right
               to  convert  or  exchange  Convertible  Securities  for which any
               adjustment  was made pursuant to this  subsection  3.6 (including
               without   limitation   upon  the   redemption   or  purchase  for
               consideration of such Convertible Securities by the Company), the
               Exercise  Price  then in  effect  hereunder  shall  forthwith  be
               changed to the Exercise  Price which would have been in effect at
               the time of such  termination  had  such  Option  or  Convertible
               Securities,  to the extent outstanding  immediately prior to such
               termination, never been issued.

                                       11
<PAGE>

                    (iv)  Stock  Dividends.  Subject to the  provisions  of this
               Section 3.6, in case the Company shall declare a dividend or make
               any other  distribution upon any stock of the Company (other than
               the Common Stock) payable in Common Stock, Options or Convertible
               Securities,   then  any  Common  Stock,  Options  or  Convertible
               Securities,  as the  case may be,  issuable  in  payment  of such
               dividend or  distribution  shall be deemed to have been issued or
               sold without consideration.

                    (v)  Consideration  for Stock.  In case any shares of Common
               Stock, Options or Convertible  Securities shall be issued or sold
               for cash, the consideration  received therefor shall be deemed to
               be the  net  amount  received  by  the  Company  therefor,  after
               deduction  therefrom of any expenses incurred or any underwriting
               commissions  or  concessions  paid or allowed  by the  Company in
               connection therewith. In case any shares of Common Stock, Options
               or  Convertible   Securities  shall  be  issued  or  sold  for  a
               consideration  other than cash,  the amount of the  consideration
               other than cash received by the Company shall be deemed to be the
               fair value of such  consideration  as determined in good faith by
               the Board of  Directors of the  Company,  after  deduction of any
               expenses incurred or any underwriting  commissions or concessions
               paid or allowed by the Company in connection  therewith.  In case
               any Options shall be issued in connection with the issue and sale
               of other  securities  of the  Company,  together  comprising  one
               integral  transaction  in  which  no  specific  consideration  is
               allocated  to such Options by the parties  thereto,  such Options
               shall be deemed to have been  issued  for such  consideration  as
               determined  in  good  faith  by the  Board  of  Directors  of the
               Company. If Common Stock, Options or Convertible Securities shall
               be issued or sold by the Company  and, in  connection  therewith,
               other Options or Convertible Securities (the "Additional Rights")
               are  issued,  then the  consideration  received  or  deemed to be
               received by the Company shall be reduced by the fair market value
               of the Additional  Rights (as determined using the  Black-Scholes
               Pricing Model as of the date received).

                                       12
<PAGE>

                    (vi) Record Date. In case the Company shall take a record of
               the holders of its Common Stock for the purpose of entitling them
               (i) to receive a dividend or other distribution payable in Common
               Stock, Options or Convertible Securities or (ii) to subscribe for
               or purchase Common Stock, Options or Convertible Securities, then
               such  record  date shall 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.

               (c)  Notwithstanding  the foregoing,  no adjustment  will be made
          under this Section 3.6 in respect of: (i) the  issuance of  securities
          upon the exercise or conversion of any Common Stock Equivalents issued
          by the Company  prior to the Closing  Date (but this  Section 3.6 will
          apply to any amendments, modifications, and reissuances thereof and as
          a result of any changes,  resets or  adjustments  to a  Conversion  or
          Exchange Price thereunder whether or not as a result of any amendment,
          modification  or  reissuance),  (ii) the  issuance of Common  Stock or
          Common Stock  Equivalents  pursuant to the agreement dated December 1,
          2004 with Lippert  Heilshorn & Associates,  an agreement dated January
          8, 2005 with Blausen and  Associates,  and the Financing and Strategic
          Advisory  Agreement  dated  June  12,  2004  and the  Placement  Agent
          Agreement  with  Sanders  Morris  Harris,  and any  amendments  to the
          foregoing  and any other  placement  agent  agreement,  approved  by a
          majority  of the Board of  Directors,  (iii)  Common  Stock  issued or
          deemed to be issued upon  approval  of a majority of the  non-employee
          members of the Board of  Directors of the Company or a majority of the
          members of a committee of non-employee  directors established for such
          purpose,   pursuant  to  options  or  similar   awards  to  employees,
          directors,  and  consultants  pursuant  to the  Company's  2004  Stock
          Incentive  Plan or any successor plan  similarly  approved,  as may be
          amended  from time to time,  (iv) Common  Stock issued or deemed to be
          issued to any bank or equipment  lessor in connection with a financing
          or equipment  lease, (v) Common Stock issued or deemed to be issued as
          a result of a reduction in the  exercise  price of any of the Series A
          Warrants, the Series B Warrants or Series C Warrants, (vi) issuance of
          Common Stock, at a value of $1.50 per share, Series A Warrants, Series
          B Warrants and/or Series C Warrants and up to 20,000 additional shares
          per  $100,000 of  principle  (or such  additional  number of shares as
          approved by a majority of the Board of Directors) to holders of Bridge
          Notes in  exchange  for the  Bridge  Notes and  Bridge  Warrants  in a
          transaction  approved  by a  majority  of the  members of the Board of
          Directors,  (vii)  the  issuance  of  Common  Stock  or  Common  Stock
          Equivalents  pursuant to the Amended and  Restated  License  Agreement
          dated December 30, 2004 with the University of Chicago,  including any
          amendments thereto,  (viii) Common Stock issued or deemed to be issued
          pursuant to a  "Strategic  Transaction"  approved by a majority of the
          Board of  Directors.  A  "Strategic  Transaction"  shall  mean (x) any
          transaction  with an acquiror,  acquisition  target  company or merger
          partner,  or  (y)  a  joint  venture,  corporate  alliance,   research
          agreement  or  licensing  transaction  with  respect  to one  or  more
          technologies, assets, compounds, compound families, and/or products or
          product  candidates,  but shall not include a transaction in which the
          Company is issuing  securities  primarily  for the  purpose of raising
          capital  or to an  entity  whose  primary  business  is  investing  in
          securities;  or (ix) shares issued to purchasers in a Second  Offering
          as provided for in the Securities  Purchase Agreement including shares
          issuable to such  purchasers  upon exercise of Warrants  issued in the
          Second Offering.

                                       13
<PAGE>

          3.7 COMPANY  REDUCTION OF EXERCISE PRICE. The Company may, at any time
     and in its sole discretion, reduce the Exercise Price to any amount for any
     period  deemed  appropriate  by  a  majority  of  the  Company's  Board  of
     Directors.

               3.8 NUMBER OF WARRANT SHARES.  Simultaneously with any adjustment
          to the  Exercise  Price  pursuant  to this  Section  3, the  number of
          Warrant  Shares that may be  purchased  upon  exercise of this Warrant
          shall be increased or  decreased  proportionately,  so that after such
          adjustment  the aggregate  Exercise  Price  payable  hereunder for the
          adjusted  number of Warrant  Shares shall be the same as the aggregate
          Exercise Price in effect immediately prior to such adjustment.

               3.9 MINIMUM  ADJUSTMENT OF EXERCISE  PRICE.  If the amount of any
          adjustment of the Exercise Price  required  pursuant to this Section 3
          would  be  less  than  one-tenth  (1/10)  of one  percent  (1%) of the
          Exercise  Price in effect at the time such  adjustment is otherwise so
          required  to be  made,  such  amount  shall  be  carried  forward  and
          adjustment  with respect thereto made at the time of and together with
          any  subsequent  adjustment  which,  together with such amount and any
          other amount or amounts so carried  forward,  shall aggregate at least
          one tenth  (1/10) of one  percent  (1%) of such  Exercise  Price.  For
          purposes  of this  Section  3, the  number of  shares of Common  Stock
          deemed to be issued  and  outstanding  as of a given date shall be the
          sum of the  number  of  shares of  Common  Stock  (excluding  treasury
          shares, if any) issued and outstanding.

               3.10 CERTIFICATE AS TO ADJUSTMENTS.  The Company shall notify the
          Holder  in  writing,  no later  than the  Trading  Day  following  the
          issuance of any Common  Stock or Common Stock  Equivalents  subject to
          this section,  indicating therein the applicable issuance price, or of
          applicable  reset price,  exchange price,  conversion  price and other
          pricing  terms  (such  notice the  "DILUTIVE  ISSUANCE  NOTICE").  For
          purposes  of  clarification,  whether  or not the  Company  provides a
          Dilutive  Issuance  Notice  pursuant  to this  Section  3.9,  upon the
          occurrence of any Dilutive  Issuance,  after the date of such Dilutive
          Issuance the Holder is entitled to receive a number of Warrant  Shares
          based upon the  adjusted  Exercise  Price  regardless  of whether  the
          Holder  accurately refers to the adjusted Exercise Price in the Notice
          of Exercise.

     4. REGISTRATION  RIGHTS. The initial holders of the Warrant Shares shall be
entitled to the registration  rights and other rights  applicable to such shares
provided by the Registration Rights Agreement.

                                       14
<PAGE>

     5. NOTICES OF RECORD DATE. Upon (a) any  establishment  by the Company of a
record  date of the  holders  of any  class of  securities  for the  purpose  of
determining  the  holders  thereof who are  entitled to receive any  dividend or
other distribution,  or right or option to acquire securities of the Company, or
any  other  right,   or  (b)  any  capital   reorganization,   reclassification,
recapitalization,  merger or consolidation of the Company with or into any other
Person,  any transfer of all or substantially all the assets of the Company,  or
any  voluntary  or  involuntary  dissolution,  liquidation  or winding up of the
Company,  or the sale, in a single  transaction,  of a majority of the Company's
voting stock (whether newly issued,  or from treasury,  or previously issued and
then  outstanding,  or any combination  thereof),  the Company shall mail to the
Holder at least  fifteen (15)  business  days,  or such longer  period as may be
required by law, prior to the record date specified therein and at least fifteen
(15) business days prior to the date specified in clause (ii) or (iii) hereof, a
notice  (but  only  to the  extent  such  disclosure  would  not  result  in the
dissemination of material,  non-public information to the Holder) specifying (i)
the date  established  as the  record  date for the  purpose  of such  dividend,
distribution,  option or right and a description of such dividend, distribution,
option   or   right,   (ii)  the  date  on   which   any  such   reorganization,
reclassification,  transfer, consolidation,  merger, dissolution, liquidation or
winding up, or sale is expected to become  effective and (iii) the date, if any,
fixed as to when the  holders of record of Common  Stock  shall be  entitled  to
exchange  their  shares  of  Common  Stock  for  securities  or  other  property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger,  dissolution,  liquidation  or winding up. Nothing herein shall prohibit
the Holder from  exercising  this Warrant  during the fifteen (15)  business day
period commencing on the date of such notice.

     6. EXCHANGE OF WARRANT.  Subject to the  provisions of Section 7 hereof (if
and to the extent  applicable),  this Warrant  shall be  exchangeable,  upon the
surrender hereof by the Holder at the principal  office of the Company,  for new
warrants of like tenor, each registered in the name of the Holder or, subject to
compliance with  applicable  federal and state  securities  laws, in the name of
such other  Persons as the Holder may direct (upon  payment by the Holder of any
applicable  transfer taxes).  Each of such new warrants shall be exercisable for
such number of Warrant  Shares as the Holder shall direct,  PROVIDED that all of
such new warrants shall represent,  in the aggregate,  the right to purchase the
same number of Warrant Shares and cash,  securities or other  property,  if any,
which may be purchased  by the Holder upon  exercise of this Warrant at the time
of its surrender.

7. TRANSFER PROVISIONS, ETC.

          7.1 LEGENDS.  Each certificate  representing any Warrant Shares issued
     upon exercise of this Warrant, and of any shares of Common Stock into which
     such Warrant Shares may be converted, shall bear the legend, if any, as may
     be required by the Securities Purchase Agreement.

          7.2 MECHANICS OF TRANSFER.

               (a) Any  transfer of all or any portion of this  Warrant (and the
          Warrant  Shares),  or of any  interest  herein  or  therein,  that  is
          otherwise  in  compliance  with  applicable  law shall be  effected by
          surrendering  this  Warrant to the  Company at its  principal  office,
          together with a duly executed form of assignment, in the form attached
          hereto. In the event of any such transfer of this Warrant,  subject to
          compliance  with  applicable  federal and state  securities  laws, the
          Company  shall  issue a new  warrant or  warrants of like tenor to the
          transferee(s),  representing,  in the aggregate, the right to purchase
          the same  number  of  Warrant  Shares  and cash,  securities  or other
          property,  if any,  which may be purchased by the Holder upon exercise
          of this  Warrant  at the time of its  surrender,  in  accordance  with
          Section 2 hereof.

                                       15
<PAGE>

               (b) In the event of any  transfer  of all or any  portion of this
          Warrant in accordance  with Section  7.2(a)  above,  the Company shall
          issue (i) a new warrant of like tenor to the transferee,  representing
          the  right to  purchase  the  number  of  Warrant  Shares,  and  cash,
          securities or other  property,  if any, which were  purchasable by the
          Holder of the transferred  portion of this Warrant at the time of said
          transfer,  and  (ii) a new  warrant  of  like  tenor  to  the  Holder,
          representing  the right to purchase the number of Warrant  Shares,  if
          any, and cash,  securities or other property,  if any,  purchasable by
          the Holder of the un-transferred  portion of this Warrant.  Until this
          Warrant  or any  portion  thereof is  transferred  on the books of the
          Company,  the Company may treat the Holder as the  absolute  holder of
          this  Warrant  and all  right,  title  and  interest  therein  for all
          purposes, notwithstanding any notice to the contrary.

          7.3 NO RESTRICTIONS ON TRANSFER. Subject to compliance with applicable
     federal and state securities laws, this Warrant and any portion hereof, the
     Warrant Shares and the rights hereunder may be transferred by the Holder in
     its sole  discretion  at any time and to any Person or  Persons,  including
     without limitation Affiliates and affiliated groups of such Holder, without
     the consent of the Company.

          7.4 WARRANT REGISTER. The Company shall keep at its principal office a
     register  for the  registration,  and  registration  of  transfers,  of the
     Warrants.  The  name  and  address  of  each  Holder  of one or more of the
     Warrants, each transfer thereof and the name and address of each transferee
     of one or more of the Warrants  shall be registered in such  register.  The
     Company  shall  give to any  Holder  of a  Warrant  promptly  upon  request
     therefor,  a complete  and correct  copy of the names and  addresses of all
     registered Holders of the Warrants.

     8. LOST,  STOLEN OR  DESTROYED  WARRANT.  Upon  receipt  by the  Company of
evidence  satisfactory to it of loss,  theft,  destruction or mutilation of this
Warrant  and,  in the  case of loss,  theft or  destruction,  on  delivery  of a
customary affidavit of the Holder and customary  unsecured indemnity  agreement,
or, in the case of mutilation,  upon  surrender of this Warrant,  the Company at
its expense  will execute and deliver,  or will  instruct its transfer  agent to
execute and deliver,  a new Warrant of like tenor and date and  representing the
same rights represented by such lost, stolen, destroyed or mutilated warrant and
any such lost,  stolen,  mutilated or destroyed  Warrant  thereupon shall become
void.

                                       16
<PAGE>

     9. General.

          9.1  AUTHORIZED  SHARES,  RESERVATION  OF SHARES FOR ISSUANCE.  At all
     times while this Warrant is  outstanding,  the Company  shall  maintain its
     corporate  authority to issue,  and shall have  authorized and reserved for
     issuance  upon  exercise of this  Warrant,  such number of shares of Common
     Stock,  and any  other  capital  stock  or  other  securities  as  shall be
     sufficient  to perform its  obligations  under this Warrant  (after  giving
     effect to any and all  adjustments to the number and kind of Warrant Shares
     purchasable upon exercise of this Warrant).  The Company further  covenants
     that its issuance of this Warrant shall  constitute  full  authority to its
     officers who are charged with the duty of executing  stock  certificates to
     execute and issue the necessary  certificates  for the Warrant  Shares upon
     the exercise of the purchase  rights under this  Warrant.  The Company will
     take all such  reasonable  action as may be  necessary  to assure that such
     Warrant Shares may be issued as provided  herein  without  violation of any
     applicable law or regulation,  or of any requirements of the Trading Market
     upon which the Common Stock may be listed.

          9.2  NO  IMPAIRMENT.  The  Company  will  not,  by  amendment  of  its
     Certificate of  Incorporation  or through any  reorganization,  transfer of
     assets, consolidation, merger, dissolution, issuance or sale of securities,
     sale or other  transfer  of any of its assets or  properties,  or any other
     voluntary  action,  avoid or seek to avoid the observance or performance of
     any of the  terms  of this  Warrant,  but will at all  times in good  faith
     assist in the  carrying out of all such terms and in the taking of all such
     action as may be necessary or appropriate in order to protect the rights of
     the Holder hereunder against impairment. Without limiting the generality of
     the  foregoing,  the  Company  (a) will not  increase  the par value of any
     shares of Common Stock  receivable  upon the exercise of this Warrant above
     the amount payable therefor on such exercise, (b) will take all action that
     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.,  and (c) use commercially  reasonable efforts to
     obtain all such  authorizations,  exemptions  or  consents  from any public
     regulatory body having  jurisdiction  thereof as may be necessary to enable
     the Company to perform its obligations under this Warrant.

          9.3 NO RIGHTS AS  STOCKHOLDER.  Except as provided  herein  (including
     Sections 3 and 5), the Holder  shall not be  entitled to vote or to receive
     dividends  or to be deemed the holder of Common  Stock that may at any time
     be issuable upon exercise of this Warrant for any purpose  whatsoever,  nor
     shall anything  contained herein be construed to confer upon the Holder any
     of the rights of a stockholder  of the Company or any right to vote for the
     election of directors or upon any matter  submitted to  stockholders at any
     meeting  thereof,  or to give or withhold  consent to any corporate  action
     (whether upon any recapitalization,  issuance or reclassification of stock,
     change  of par value or  change  of stock to no par  value,  consolidation,
     merger or  conveyance  or  otherwise),  or to  receive  notice of  meetings
     (except to the extent  otherwise  provided in this Warrant),  or to receive
     dividends or  subscription  rights,  until the Holder shall have  exercised
     this  Warrant  and  been  issued  Warrant  Shares  in  accordance  with the
     provisions hereof and continues to hold Warrant Shares.

                                       17
<PAGE>

          9.4 NOTICES. Any notices, reports or other correspondence (hereinafter
     collectively  referred to as "correspondence")  required or permitted to be
     given  hereunder  shall  be sent  by  postage  prepaid  first  class  mail,
     overnight  courier or facsimile  transmission,  or delivered by hand to the
     party to whom such  correspondence  is  required or  permitted  to be given
     hereunder.  The date of giving any  notice  shall be the date of its actual
     receipt.

               (a) All  correspondence  to the  Company  shall be  addressed  as
          follows:

                                    PharmaFrontiers Corp.
                                    2408 Timberloch, Suite B-7
                                    The Woodlands, Texas 77380
                                    Attn:  Chief Financial Officer

                                    with a copy to:

                                    Vinson & Elkins LLP
                                    First City Tower
                                    1001 Fannin Street, Suite 2300
                                    Houston, Texas 77002
                                    Attn:  Michael C. Blaney

               (b) All  correspondence  to the Holder  shall be addressed to the
          Holder  at its  address  appearing  in  the  books  maintained  by the
          Company.

          9.5  AMENDMENT  AND WAIVER.  This Warrant may only be amended upon the
     written  consent of the Company and the Holder.  No failure or delay of the
     Holder in exercising any power or right hereunder shall operate as a waiver
     thereof,  nor shall any  single or  partial  exercise  of any such right or
     power,  or any  abandonment  or  discontinuance  of steps to enforce such a
     right or power,  preclude  any other or  further  exercise  thereof  or the
     exercise of any other right or power. The rights and remedies of the Holder
     are  cumulative  and not exclusive of any rights or remedies which it would
     otherwise  have.  If the Company fails to comply with any provision of this
     Warrant,  which results in any material damages to the Holder,  the Company
     shall pay to Holder such amounts as shall be  sufficient to cover any costs
     and expenses  including,  but not limited to,  reasonable  attorneys' fees,
     including those of appellate proceedings,  incurred by Holder in collecting
     any  amounts  due  pursuant  hereto or in  otherwise  enforcing  any of its
     rights, powers or remedies hereunder.

          9.6 GOVERNING LAW. This Warrant will be governed by and interpreted in
     accordance  with the laws of the  State of New York  without  regard to the
     principles  of conflict of laws.  The parties  hereto  hereby submit to the
     jurisdiction  of the United States  federal and state courts located in the
     State of New York with respect to any dispute arising under this Agreement,
     the  agreements  entered into in  connection  herewith or the  transactions
     contemplated hereby or thereby.

                                       18
<PAGE>

          9.7  COVENANTS  TO  BIND   SUCCESSOR  AND  ASSIGNS.   All   covenants,
     stipulations,  promises and  agreements in this Warrant  contained by or on
     behalf of the Company  shall bind its  successors  and assigns,  whether so
     expressed or not.

          9.8 SEVERABILITY.  In case any one or more of the provisions contained
     in this Warrant shall be invalid,  illegal or unenforceable in any respect,
     the  validity,  legality and  enforceability  of the  remaining  provisions
     contained herein shall not in any way be affected or impaired thereby.  The
     parties shall endeavor in good faith  negotiations  to replace the invalid,
     illegal or  unenforceable  provisions  with valid  provisions  the economic
     effect of which comes as close as possible to that of the invalid,  illegal
     or unenforceable provisions.

          9.9 CONSTRUCTION.  The definitions of this Warrant shall apply equally
     to both the singular and the plural  forms of the terms  defined.  Wherever
     the  context  may  require,  any pronoun  shall  include the  corresponding
     masculine,  feminine and neuter forms.  The section and paragraph  headings
     used herein are for  convenience  of reference  only,  are not part of this
     Warrant  and  are  not to  affect  the  construction  of or be  taken  into
     consideration in interpreting this Warrant.

          9.10 REMEDIES.  The Holder,  in addition to being entitled to exercise
     all rights granted by law, including recovery of damages,  will be entitled
     to  specific  performance  of its rights  under this  Warrant.  The Company
     agrees that  monetary  damages would not be adequate  compensation  for any
     loss incurred by reason of a breach by it of the provisions of this Warrant
     and  hereby  agrees  to  waive  the  defense  in any  action  for  specific
     performance  that a remedy  at law  would be  adequate.  In any  action  or
     proceeding  brought to enforce any  provision  of this Warrant or where any
     provision hereof is validly asserted as a defense,  the successful party to
     such  action  or  proceeding  shall  be  entitled  to  recover   reasonable
     attorneys' fees in addition to any other available remedy.

                           [SIGNATURE PAGE TO FOLLOW]

<PAGE>

          IN WITNESS  WHEREOF,  the  Company  has  executed  this  Common  Stock
     Purchase Warrant as of the date first written above.

                                       COMPANY:

                                       PHARMAFRONTIERS CORP.

                                       By:
                                           -------------------------------------
                                       Name:  David B. McWilliams, President

                               SIGNATURE PAGE TO
                     SERIES B COMMON STOCK PURCHASE WARRANT
<PAGE>

                                   NOTICE AND
                                  SUBSCRIPTION

To:       PharmaFrontiers Corp.
          2408 Timberloch, Suite B-7
          The Woodlands, Texas 77380

          The  undersigned  hereby  elects to  exercise  the  right of  purchase
represented by the attached Warrant for, and to exercise thereunder,  __________
shares of Common Stock,  of  PHARMAFRONTIERS  CORP.,  a Texas  corporation  (the
"COMPANY"),  and  tenders  herewith  payment of  $__________,  representing  the
aggregate  purchase  price for such shares based on the price per share provided
for in such  Warrant.  Such  payment is being made in  accordance  with  Section
2.1(a) of the attached Warrant.

          The undersigned hereby represents and warrants as follows:

          (a) the  undersigned  is acquiring such shares of Common Stock for its
own account  for  investment  and not for resale or with a view to  distribution
thereof  in  violation  of the  Securities  Act of  1933,  as  amended,  and the
regulations promulgated thereunder (the "Securities Act"); and

          (b) the undersigned is an "accredited investor" as defined in Rule 501
of Regulation D promulgated  under the  Securities Act and was not organized for
the  purpose of  acquiring  the  Warrant  or such  shares of Common  Stock.  The
undersigned's  financial  condition  is such that it is able to bear the risk of
holding such securities for an indefinite period of time and the risk of loss of
its entire investment.  The undersigned has sufficient  knowledge and experience
in investing  in  companies  similar to the Company so as to be able to evaluate
the risks and merits of its investment in the Company.

          Please issue a certificate or  certificates  for such shares of Common
Stock  in the  following  name or  names  and  denominations  and  deliver  such
certificate  or  certificates  to the  person or persons  listed  below at their
respective address set forth below:

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

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

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

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

          If said  number of shares of Common  Stock shall not be all the shares
of Common Stock issuable upon exercise of the attached Warrant, a new Warrant is
to be issued in the name of the  undersigned  for the remaining  balance of such
shares of Common Stock less any fraction of a share of Common Stock paid in cash
pursuant to Section 2.4 of the attached warrant.

Dated:
       -------------------                   --------------------------------
                                             Signature

                                        1
<PAGE>

          The undersigned  PharmaFrontiers  Corp. hereby acknowledges receipt of
this Notice and  Subscription  and  authorizes  issuance of the shares of Common
Stock described above.

PHARMAFRONTIERS CORP.

By:
   -----------------------------------------------------------
Title:
      --------------------------------------------------------
Date:
     ---------------------------------------------------------

                                       2
<PAGE>

                               FORM OF ASSIGNMENT

                   (To be executed upon assignment of Warrant)

          For value received,  __________________________________  hereby sells,
assigns and transfers unto  __________________  the attached Warrant [__% of the
attached Warrant], together with all right, title and interest therein, and does
hereby  irrevocably  constitute  and  appoint  ____________________  attorney to
transfer  said  Warrant  [said  percentage  of said  Warrant]  on the  books  of
PHARMAFRONTIERS  CORP., a Texas corporation,  with full power of substitution in
the premises.

          If not all of the  attached  Warrant  is to be so  transferred,  a new
Warrant is to be issued in the name of the  undersigned  for the balance of said
Warrant.

          The  undersigned  hereby  agrees  that it will not  sell,  assign,  or
transfer the right,  title and interest in and to the Warrant unless  applicable
federal and state securities laws have been complied with.

Dated:
       --------------------            --------------------------------------
                                       Signature

                                       1Exhibit 10.17

THIS WARRANT  CERTIFICATE AND THE UNDERLYING  SHARES OF COMMON STOCK REPRESENTED
BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION  STATEMENT  UNDER SAID ACT OR  PURSUANT TO AN  AVAILABLE  EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER SAID ACT.

Series C Warrant No. _________                               _____________, 2005

                              PHARMAFRONTIERS CORP.

                          COMMON STOCK PURCHASE WARRANT

     This   Common   Stock   Purchase    Warrant   (the   "Warrant")    entitles
________________________  (including any  successors or assigns,  the "Holder"),
for value received, to purchase from PHARMAFRONTIERS  CORP., a Texas corporation
(the  "Company"),  at any time and from time to time,  subject  to the terms and
conditions  set forth herein,  during the period  starting from 5:00 a.m. on the
date  hereof to 5:00 p.m.,  New York City  time,  on the  "Expiration  Date" (as
defined in Section 1 below) immediately  following which time this Warrant shall
expire and become void,  all or any portion of the "Warrant  Shares" (as defined
in Section 1 below) at the  "Exercise  Price"  (as  defined in Section 1 below).
This Warrant is issued subject to the following terms and conditions:

     1. Definitions As used in this Warrant,  the following terms shall have the
respective meanings set forth in the Registration Agreement,  below or elsewhere
in this Warrant as referred to below:

     "Additional Shares" shall have the meaning given to it in Section 3.6.

     "Affiliate" means, with respect to any Person, any other Person directly or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with such specified Person. For the purposes of this Warrant, "control,"
when used with  respect  to any  specified  Person  means the power to direct or
cause the direction of the management  and policies of such Person,  directly or
indirectly,  whether through the ownership of voting securities,  by contract or
otherwise;   and  the  terms   "controlling"   and  "controlled"  have  meanings
correlative to the foregoing.

     "Black Scholes  Pricing Model" means the value  determined  using the Black
Scholes  pricing  model and  employing an interest rate equal to 30 day LIBOR on
the day prior to  valuation  and a  volatility  equal to the  volatility  of the
Common  Stock  for  the 30  Trading  Days  prior  to the  date of  valuation  as
reasonably  determined by the Board of Directors;  provided that if the Majority
Holders  disagree  with such  volatility,  the Company and Largest  Holder shall
jointly  select an appraiser who is experienced in such matters and the decision
of such appraiser shall be final and conclusive, and the cost of such appraiser

                                       1

<PAGE>

shall be borne by the Company.  "Majority  Holders" means holders of outstanding
Warrants  representing  the right to  purchase  a majority  of the Common  Stock
issuable upon exercise of all outstanding Warrants.  "Largest Holder" means that
holder,  who is a member of the objecting  Majority Holders,  and holds Warrants
that  entitle  it to acquire  more  shares  than any other  holder who is in the
objecting Majority Holders.

         "Bridge Notes" means the 15% convertible promissory notes issued by the
Company that are outstanding on the Closing Date.

         "Business  day" (whether such term is capitalized or not) means any day
except Saturday,  Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of New York or the State of Texas
are authorized or required by law or other governmental action to close.

         "Closing  Date"  shall have the meaning  given to it in the  Securities
Purchase Agreement.

         "Common  Stock" means the common stock,  $0.05 par value per share,  of
the Company (including any securities into which or for which such shares may be
exchanged for, or converted into,  pursuant to any stock dividend,  stock split,
stock combination, recapitalization,  reclassification,  reorganization or other
similar event occurring prior to the Closing Date).

         "Common Stock  Equivalents"  means any securities of the Company or the
Subsidiaries  which  would  entitle  the  holder  thereof to acquire at any time
Common Stock,  including without limitation,  any debt, preferred stock, rights,
options,  warrants or other  instrument that is at any time  convertible into or
exchangeable  for, or otherwise  entitles the holder thereof to receive,  Common
Stock.

         "Company" has the meaning set forth in the preamble hereof.

         "Exercise  Price" means  initially the Initial  Exercise Price, as such
amount may be adjusted from time to time pursuant to Section 3 hereof.

         "Expiration Date" means May __, 2010.

         "Floor Exercise Price" means $3.00 per share provided such amount shall
be  proportionately  reduced  for any stock  split,  stock  dividend  or similar
corporate  action and  proportionately  increased for any stock  combination  or
similar corporate action.

         "Fundamental  Transaction"  has the  meaning  provided  in Section  3.4
herein.

         "Holder" has the meaning set forth in the preamble of hereof.

         "Initial Exercise Price" means $4.00 per share of Common Stock.

         "Nasdaq" means the Nasdaq Stock Market.

         "OTCBB" means the OTC Bulletin Board.

                                       2

<PAGE>

         "Person"  (whether or not  capitalized)  means an  individual,  entity,
partnership,  limited liability company, corporation,  association, trust, joint
venture,   unincorporated   organization,   and  any  government,   governmental
department or agency or political subdivision thereof.

         "Purchase  Price" shall  initially mean $1.50 per share but such amount
shall be adjusted  proportionately  for any stock split,  stock  combination  or
stock dividend effected with respect to the Company's Common Stock.

         "Registration  Rights Agreement" means that certain Registration Rights
Agreement,  dated as of the date hereof, as it may be amended from time to time,
by and among the Company and the  individuals  named  therein (the  "Investors")
including the initial Holder.

         "Repurchase Condition" means each of the following events:

                  (i)  the  Registration  Statement  shall  have  been  declared
effective  and shall  continue to be effective  and available to each Holder for
the duration of the Warrant Redemption Period (as defined in Section 4.1) and at
all times thereafter  through the Warrant Redemption Date (as defined in Section
4.1),  and shall  cover the  number of shares of Common  Stock  required  by the
Registration Rights Agreement;

                  (ii) (x) the  Common  Stock  shall be listed  on the  American
Stock Exchange,  the New York Stock Exchange,  the Nasdaq National Market or the
Nasdaq  SmallCap  Market  and  trading  in the  Common  Stock on such  market or
exchange shall not then be suspended, (y) the Company shall be in compliance, in
all material  respects,  with each of the quantitative  and qualitative  listing
standards and  requirements  (without regards to any specified grace periods) of
such market,  and (z) the Company  shall not have received any notice (which has
not  subsequently  been resolved before the applicable  Repurchase  Period) from
such market that the Company may not be in such compliance; and

                  (iii) a  Fundamental  Transaction,  or an event  that with the
giving of notice,  would  constitute a Fundamental  Transaction,  shall not have
occurred and be continuing.

         "SEC" means the Securities and Exchange Commission.

         "Securities Purchase Agreement" means the Securities Purchase Agreement
dated as of the date  hereof,  as it may be  amended  from time to time,  by and
among the  Company  and the  individuals  named  therein  including  the initial
Holder.

         "Series A Warrants,"  "Series B Warrants," and "Series C Warrants" mean
all of those warrants issued by the Company under such titles  concurrently with
this Series C Warrant.

         "Trading  Day"  means a day on which  the  Common  Stock is traded on a
Trading Market.

         "Trading Market" means the following  markets or exchanges on which the
Common  Stock is listed or quoted for trading on the date in  question:  the OTC
Bulletin Board, the Nasdaq SmallCap Market, the American Stock Exchange, the New
York Stock Exchange or the Nasdaq National Market.

                                       3

<PAGE>

         "VWAP" means,  for any date,  the price  determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common  Stock is then listed or quoted as reported by Bloomberg  Financial  L.P.
(based on a Trading Day from 9:30 a.m.  Eastern Time to 4:02 p.m. Eastern Time);
(b) if the Common Stock is not then listed or quoted on a Trading  Market and if
prices for the  Common  Stock are then  quoted on the OTC  Bulletin  Board,  the
volume weighted  average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin  Board;  (c) if the Common Stock is not then
listed or quoted on the OTC  Bulletin  Board and if prices for the Common  Stock
are then reported in the "Pink Sheets"  published by the Pink Sheets,  LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so  reported;  or (c) in
all other cases,  the fair market value of a share of Common Stock as determined
by an  independent  appraiser  selected  in good  faith  by the  Purchasers  and
reasonably acceptable to the Company.

          "Warrants" means the Series A Warrants, Series B Warrants and Series C
Warrants.

         "Warrant  Shares" means ____ [100% of the number of shares purchased by
the Investor]  shares of Common Stock,  subject to adjustment in accordance with
Section 3 below.

          2.   Exercise of Warrant.

               2.1  Method of Exercise; Payment.

                    (a)  Payment  By Wire or Check.  Subject to all of the terms
               and conditions hereof this Warrant may be exercised,  in whole or
               in part, with respect to any or all of the Warrant Shares, at any
               time and from time to time,  ending at 5:00  p.m.,  New York City
               Time, on the Expiration Date, by surrender of this Warrant to the
               Company at its principal  office,  accompanied  by a subscription
               substantially in the form attached hereto, executed by the Holder
               and  accompanied  by (a) wire transfer of  immediately  available
               funds or (b)  certified  or  official  bank check  payable to the
               order of the  Company,  in each case in the  amount  obtained  by
               multiplying  (i) the  number  of  Warrant  Shares  for  which the
               Warrant is being exercised,  as designated in such  subscription,
               by (ii)  the  Exercise  Price.  Thereupon,  the  Holder  shall be
               entitled  to  receive  the  number  of duly  authorized,  validly
               issued, fully paid and nonassessable Warrant Shares determined as
               provided for herein. Notwithstanding anything contained herein to
               the   contrary,   this  Warrant  may  only  be  exercised  by  an
               "accredited  investor" as defined in Rule 501(a) of  Regulation D
               under the Securities Act of 1933.

                    (b)  Cashless  Exercise.  If at any  time  after  the  first
               anniversary of the issuance of this Warrant there is no effective
               Registration  Statement  registering,  or no  current  prospectus
               available  for,  the resale of the Warrant  Shares by the Holder,
               then this  Warrant may also be exercised at such time by means of
               a "cashless  exercise"  in which the Holder  shall be entitled to
               receive a certificate  for the number of Warrant  Shares equal to
               the quotient obtained by dividing [(A-B) (X)] by (A), where:

                                       4

<PAGE>

                    (A) = the VWAP on the Trading Day immediately  preceding the
               date of such election;

                    (B) = the Exercise Price of this Warrant, as adjusted; and

                    (X) = the number of Warrant Shares issuable upon exercise of
               this  Warrant  in  accordance  with the terms of this  Warrant by
               means of a cash exercise rather than a cashless exercise.

                    Holder  shall   exercise  the  Warrant  by  delivering   the
               documents  required in Section 2.1(a) except that in lieu of wire
               or check the Holder shall  deliver a notice that it is exercising
               its right to a cashless exercise.  The date of the election shall
               be  the  date  Company   receives  all  of  such   documentation.
               Notwithstanding  anything herein to the contrary,  if there is no
               Registration  Statement  effective on the Expiration  Date,  this
               Warrant shall be  automatically  exercised via cashless  exercise
               pursuant to this Section 2.1(b).

               2.2  Exercise Limitations. The Holder shall not have the right to
          exercise  any  portion of this  Warrant,  pursuant  to Section  2.2 or
          otherwise,  to the extent that after  giving  effect to such  issuance
          after exercise, the Holder (together with the Holder's affiliates), as
          set forth on the applicable Notice of Exercise, would beneficially own
          in  excess  of 4.99% of the  number  of  shares  of the  Common  Stock
          outstanding  immediately  after giving  effect to such  issuance.  For
          purposes  of the  foregoing  sentence,  the number of shares of Common
          Stock  beneficially  owned  by the  Holder  and its  affiliates  shall
          include the number of shares of Common Stock issuable upon exercise of
          this Warrant with respect to which the  determination of such sentence
          is being made,  but shall exclude the number of shares of Common Stock
          which  would  be  issuable   upon  (A)  exercise  of  the   remaining,
          nonexercised  portion of this Warrant beneficially owned by the Holder
          or any  of its  affiliates  and  (B)  exercise  or  conversion  of the
          unexercised  or  nonconverted  portion of any other  securities of the
          Company (including, without limitation, any other Warrants) subject to
          a limitation  on conversion  or exercise  analogous to the  limitation
          contained  herein  beneficially  owned  by  the  Holder  or any of its
          affiliates.  Except  as set  forth  in  the  preceding  sentence,  for
          purposes  of  this  Section  2(d),   beneficial   ownership  shall  be
          calculated  in  accordance  with Section 13(d) of the Exchange Act, it
          being  acknowledged by Holder that the Company is not  representing to
          Holder that such  calculation  is in compliance  with Section 13(d) of
          the Exchange Act and Holder is solely  responsible  for any  schedules
          required to be filed in accordance therewith.

               To the extent that the  limitation  contained in this Section 2.2
          applies,  the determination of whether this Warrant is exercisable (in
          relation  to  other  securities  owned by the  Holder)  and of which a
          portion of this Warrant is exercisable shall be in the sole discretion
          of such Holder,  and the  submission of a Notice of Exercise  shall be
          deemed to be such  Holder's  determination  of whether this Warrant is
          exercisable (in relation to other securities owned by such Holder) and
          of which portion of this Warrant is exercisable,  in each case subject
          to such aggregate percentage limitation, and the Company shall have no
          obligation  to verify or confirm the  accuracy of such  determination.
          For  purposes  of this  Section  2.2,  in  determining  the  number of
          outstanding  shares of Common Stock, the Holder may rely on the number

                                       5

<PAGE>

          of  outstanding  shares  of  Common  Stock  as  reflected  in (x)  the
          Company's most recent Form 10-QSB or Form 10-KSB,  as the case may be,
          (y) a more recent public  announcement by the Company or (z) any other
          notice by the Company or the  Company's  Transfer  Agent setting forth
          the number of shares of Common Stock outstanding.  Upon the written or
          oral request of the Holder,  the Company shall within two Trading Days
          confirm  orally  and in  writing to the Holder the number of shares of
          Common Stock then outstanding.  In any case, the number of outstanding
          shares of Common Stock shall be determined  after giving effect to the
          conversion or exercise of securities  of the Company,  including  this
          Warrant,  by the Holder or its  affiliates  since the date as of which
          such number of  outstanding  shares of Common Stock was reported.  The
          provisions  of this  Section 2.2 may be waived by the  Holder,  at the
          election  of the Holder,  upon not less than 61 days' prior  notice to
          the Company,  and the provisions of this Section 2.2 shall continue to
          apply until such 61st day (or such later date,  as  determined  by the
          Holder, as may be specified in such notice of waiver).

               2.3  Delivery of Stock Certificates on Exercise. Certificates for
          shares purchased  hereunder shall be transmitted by the transfer agent
          of the Company to the Holder by crediting  the account of the Holder's
          prime broker with the  Depository  Trust  Company  through its Deposit
          Withdrawal  Agent  Commission  ("DWAC")  system  if the  Company  is a
          participant  in such  system (and so long as the legend may be removed
          in  accordance  with  Section  5.2 of  the  Purchase  Agreement),  and
          otherwise by physical  delivery to the address specified by the Holder
          in the Notice of Exercise  within three Trading Days from the delivery
          to the  Company  of the Notice of  Exercise  Form,  surrender  of this
          Warrant and payment of the aggregate Exercise Price as set forth above
          ("Warrant Share Delivery Date").  This Warrant shall be deemed to have
          been  exercised  on the date the  Exercise  Price is  received  by the
          Company.  The Warrant Shares shall be deemed to have been issued,  and
          Holder or any other person so  designated to be named therein shall be
          deemed  to have  become a holder  of  record  of such  shares  for all
          purposes,  as of the date the Warrant has been exercised by payment to
          the Company of the Exercise Price.

               2.4  Shares  To Be Fully  Paid  and  Nonassessable.  All  Warrant
          Shares  issued  upon  the  exercise  of  this  Warrant  shall  be duly
          authorized, validly issued, fully paid and nonassessable,  free of all
          liens,  taxes,  charges and other encumbrances or restrictions on sale
          (other than those set forth herein).

               2.5  Issuance of New Warrants;  Company Acknowledgment.  Upon any
          partial exercise of this Warrant,  the Company,  at its expense,  will
          forthwith and, in any event within three (3) business days,  issue and
          deliver  to the  Holder  a new  warrant  or  warrants  of like  tenor,
          registered in the name of the Holder,  exercisable,  in the aggregate,
          for the balance of the Warrant Shares. Moreover, the Company shall, at
          the time of any  exercise  of this  Warrant,  upon the  request of the
          Holder,  acknowledge in writing its continuing obligation to afford to
          the  Holder  any  rights  to which the  Holder  shall  continue  to be
          entitled after such exercise in accordance with the provisions of this
          Warrant; provided,  however, that if the Holder shall fail to make any
          such request,  such failure shall not affect the continuing obligation
          of the Company to afford to the Holder any such rights.

                                       6

<PAGE>

               2.6  Payment of Taxes and  Expenses.  The  Company  shall pay any
          recording,  filing,  stamp or  similar  tax  which may be  payable  in
          respect  of  any  transfer  involved  in  the  issuance  of,  and  the
          preparation and delivery of certificates (if applicable) representing,
          (i) any Warrant Shares  purchased upon exercise of this Warrant and/or
          (ii) new or  replacement  warrants in the Holder's name or the name of
          any transferee of all or any portion of this Warrant.

               2.7  Rescission  Rights.  If  the  Company  fails  to  cause  its
          transfer agent to transmit to the Holder a certificate or certificates
          representing  the Warrant  Shares  pursuant  to this  Section 2 by the
          Warrant Share  Delivery  Date,  then the Holder will have the right to
          rescind such exercise.

               2.8  Compensation   for  Buy-In  on  Failure  to  Timely  Deliver
          Certificates Upon Exercise.  In addition to any other rights available
          to the Holder,  if the Company  fails to cause its  transfer  agent to
          transmit to the Holder a certificate or certificates  representing the
          Warrant Shares  pursuant to an exercise on or before the Warrant Share
          Delivery  Date,  and if after such date the Holder is  required by its
          broker to purchase (in an open market transaction or otherwise) shares
          of Common Stock to deliver in  satisfaction of a sale by the Holder of
          the Warrant  Shares which the Holder  anticipated  receiving upon such
          exercise (a  "Buy-In"),  then the Company shall (1) pay in cash to the
          Holder  the  amount by which (x) the  Holder's  total  purchase  price
          (including  brokerage  commissions,  if any) for the  shares of Common
          Stock so purchased  exceeds (y) the amount obtained by multiplying (A)
          the number of Warrant  Shares that the Company was required to deliver
          to the Holder in  connection  with the exercise at issue times (B) the
          price at which the sell order giving rise to such purchase  obligation
          was executed,  and (2) at the option of the Holder,  either  reinstate
          the portion of the Warrant and equivalent number of Warrant Shares for
          which  such  exercise  was not  honored  or  deliver to the Holder the
          number of shares of Common  Stock that would have been  issued had the
          Company  timely  complied  with its exercise and delivery  obligations
          hereunder.  For example, if the Holder purchases Common Stock having a
          total  purchase  price of $11,000 to cover a Buy-In with respect to an
          attempted  exercise of shares of Common Stock with an  aggregate  sale
          price giving rise to such purchase obligation of $10,000, under clause
          (1) of  the  immediately  preceding  sentence  the  Company  shall  be
          required  to pay the Holder  $1,000.  The  Holder  shall  provide  the
          Company written notice indicating the amounts payable to the Holder in
          respect of the Buy-In,  together  with  applicable  confirmations  and
          other  evidence  reasonably  requested by the Company.  Nothing herein
          shall limit a Holder's right to pursue any other remedies available to
          it hereunder,  at law or in equity including,  without  limitation,  a
          decree of specific  performance  and/or injunctive relief with respect
          to the Company's failure to timely deliver  certificates  representing
          shares of Common  Stock  upon  exercise  of the  Warrant  as  required
          pursuant to the terms hereof.

               2.9  No Fractional Shares or Scrip. No fractional shares or scrip
          representing  fractional  shares  shall be issued upon the exercise of
          this  Warrant.  As to any  fraction  of a  share  which  Holder  would
          otherwise  be  entitled to purchase  upon such  exercise,  the Company
          shall pay a cash  adjustment  in respect of such final  fraction in an
          amount equal to such fraction multiplied by the VWAP.

                                       7

<PAGE>

               2.10 Conditions.  Notwithstanding  any  other  provision  of this
          Warrant,  if the  exercise of all or any portion of this Warrant is to
          be made in connection with a registered public offering, a sale of the
          Company or any other  transaction or event,  such exercise may, at the
          election of the  Holder,  be  conditioned  upon  consummation  of such
          transaction  or event in which case such exercise  shall not be deemed
          effective until the consummation of such transaction or event.

          3.   Adjustment  of Exercise  Price and Warrant  Shares.  The Exercise
Price and the number of Warrant Shares shall be subject to adjustment  from time
to time upon the happening of certain events as described in this Section 3.

               3.1  Subdivision or Combination of Stock.  If at any time or from
     time to time after the date hereof,  the Company shall subdivide (by way of
     stock dividend,  stock split or otherwise) its outstanding shares of Common
     Stock, the Exercise Price in effect  immediately  prior to such subdivision
     shall  be  reduced   proportionately  and  the  number  of  Warrant  Shares
     (calculated to the nearest whole share) shall be increased proportionately,
     and conversely,  in the event the outstanding  shares of Common Stock shall
     be  combined  (whether  by  stock  combination,   reverse  stock  split  or
     otherwise)  into a smaller  number of shares,  the Exercise Price in effect
     immediately  prior to such combination shall be multiplied by a fraction of
     which  the  numerator  shall  be the  number  of  shares  of  Common  Stock
     (excluding  treasury shares,  if any) outstanding  immediately  before such
     event and of which the denominator  shall be the number of shares of Common
     Stock  outstanding  immediately  after  such event and the number of shares
     issuable upon exercise of this Warrant shall be  proportionately  adjusted.
     The Exercise Price and the number of Warrant Shares, as so adjusted,  shall
     become effective  immediately after the effective date of such subdivision,
     combination or reclassification  and readjusted in the same manner upon the
     happening of any successive event or events described in this Section 3.1.

               3.2  Adjustments

                    (a)  Adjustment  for Stock  Dividends.  If at any time after
               the date hereof, the Company shall declare a dividend or make any
               other  distribution  upon  any  class or  series  of stock of the
               Company payable in shares of Common Stock,  the Exercise Price in
               effect  immediately  prior to such  declaration  or  distribution
               shall be multiplied by a fraction of which the numerator shall be
               the number of shares of Common Stock (excluding  treasury shares,
               if any)  outstanding  immediately  before such event and of which
               the  denominator  shall be the  number of shares of Common  Stock
               outstanding immediately after such event and the number of shares
               issuable upon  exercise of this Warrant shall be  proportionately
               adjusted.  Any  adjustment  made pursuant to this Section  3.2(a)
               shall become effective  immediately after the record date for the
               determination  of stockholders  entitled to receive such dividend
               or  distribution  be  readjusted  in the  same  manner  upon  the
               happening  of any  successive  event or events  described in this
               Section 3.2.

                                       8

<PAGE>

                    (b)  Adjustments for Other Dividends and  Distributions.  In
               the event the  Company at any time or from time to time after the
               date  hereof  shall make or issue,  or fix a record  date for the
               determination  of holders of Common Stock entitled to receive,  a
               dividend  or other  distribution  payable  in  securities  of the
               Company  (other than shares of Common  Stock) or in cash or other
               property,  then and in each such event provision shall be made so
               that the Holder shall receive upon exercise  hereof,  in addition
               to the number of shares of Common Stock issuable  hereunder,  the
               kind and amount of  securities  of the  Company  and/or  cash and
               other  property  which the  Holder  would have been  entitled  to
               receive had this Warrant been  exercised into Common Stock on the
               date of such  event and had the  Holder  thereafter,  during  the
               period from the date of such event to and  including the exercise
               date, retained any such securities receivable, giving application
               to all  adjustments  called for  during  such  period  under this
               Section 3 with respect to the rights of the Holder.

               3.3  Adjustments  for  Reclassifications.  If  the  Common  Stock
     issuable upon the conversion of this Warrant shall be changed into the same
     or a different  number of shares of any class(es) or series of stock and/or
     the right to receive  property,  whether by  reclassification  or otherwise
     (other  than  an  adjustment  under  Sections  3.1  and  3.2  or a  merger,
     consolidation,  or sale of assets provided for under Section 3.4), then and
     in each such event,  the Holder  hereof shall have the right  thereafter to
     convert each Warrant  Share into the kind and amount of shares of stock and
     other  securities and property  receivable upon such  reclassification,  or
     other  change by holders of the number of shares of Common Stock into which
     such Warrant Shares would have been convertible  immediately  prior to such
     reclassification   or  change,   all  subject  to  successive   adjustments
     thereafter  from  time to time  pursuant  to and in  accordance  with,  the
     provisions of this Section 3.

               3.4  Fundamental Transaction.  If, at any time while this Warrant
     is outstanding,  (A) the Company effects any merger or consolidation of the
     Company with or into another  Person,  (B) the Company  effects any sale of
     all or  substantially  all of its  assets  in one or a  series  of  related
     transactions,  (C) any  tender  offer or  exchange  offer  (whether  by the
     Company or another Person) is completed pursuant to which holders of Common
     Stock  are  permitted  to  tender  or  exchange   their  shares  for  other
     securities,   cash  or   property,   or  (D)  the   Company   effects   any
     reclassification  of the  Common  Stock or any  compulsory  share  exchange
     pursuant  to which  the  Common  Stock  is  effectively  converted  into or
     exchanged  for other  securities,  cash or  property  (in any such case,  a
     "Fundamental  Transaction"),  then,  upon any  subsequent  exercise of this
     Warrant, the Holder shall have the right to receive, for each Warrant Share
     that would have been issuable upon such exercise  immediately  prior to the
     occurrence of such  Fundamental  Transaction,  at the option of the Holder,
     (a) upon exercise of this Warrant,  the number of shares of Common Stock of
     the  successor or  acquiring  corporation  or of the Company,  if it is the
     surviving  corporation,  and any additional  consideration  (the "Alternate
     Consideration")  receivable  upon or as a  result  of such  reorganization,
     reclassification,  merger,  consolidation  or  disposition  of  assets by a
     Holder of the number of shares of Common  Stock for which  this  Warrant is
     exercisable  immediately  prior  to such  event  or (b) if the  Company  is
     acquired  in an all  cash  transaction,  cash  equal  to the  value of this

                                       9

<PAGE>

     Warrant  determined using the Black Scholes Pricing Model as of the date of
     the acquisition.  For purposes of any such exercise,  the  determination of
     the  Exercise  Price  shall  be  appropriately  adjusted  to  apply to such
     Alternate  Consideration  based on the  amount of  Alternate  Consideration
     issuable  in  respect  of one  share of  Common  Stock in such  Fundamental
     Transaction,  and the Company shall  apportion the Exercise Price among the
     Alternate  Consideration  in a reasonable  manner  reflecting  the relative
     value  of any  different  components  of the  Alternate  Consideration.  If
     holders of Common Stock are given any choice as to the securities,  cash or
     property to be received in a Fundamental Transaction, then the Holder shall
     be given the same choice as to the Alternate Consideration it receives upon
     any exercise of this Warrant following such Fundamental Transaction. To the
     extent necessary to effectuate the foregoing  provisions,  any successor to
     the Company or surviving entity in such Fundamental Transaction shall issue
     to the Holder a new warrant  consistent  with the foregoing  provisions and
     evidencing  the Holder's  right to exercise  such  warrant  into  Alternate
     Consideration.  The terms of any agreement  pursuant to which a Fundamental
     Transaction is effected shall include terms requiring any such successor or
     surviving  entity to comply  with the  provisions  of this  Section 3.4 and
     insuring  that this  Warrant  (or any such  replacement  security)  will be
     similarly  adjusted  upon  any  subsequent   transaction   analogous  to  a
     Fundamental Transaction.

          3.5  Continuation of Terms.  Upon any  reorganization,  consolidation,
     merger  or  transfer  (and any  dissolution  following  any such  transfer)
     referred to in this  Section 3, this Warrant  shall  continue in full force
     and effect and the terms hereof shall be applicable to the shares of Common
     Stock and other  securities  and property  receivable  upon the exercise of
     this Warrant after the consummation of such  reorganization,  consolidation
     or merger or the effective date of dissolution following any such transfer,
     as the case may be, and shall be binding upon the issuer of any such Common
     Stock or other securities, including, in the case of any such transfer, the
     Person  acquiring all or  substantially  all of the properties or assets or
     more than 50% of the voting  capital stock of the Company  (whether  issued
     and outstanding, newly issued or from treasury or any combination thereof),
     whether or not such Person shall have  expressly  assumed the terms of this
     Warrant.

          3.6  Antidilution Adjustment.

               (a)  If prior to the third  anniversary  of the date hereof,  the
          Company or any subsidiary  thereof,  as  applicable,  at any time this
          Warrant is  outstanding  shall issue  shares of Common Stock or Common
          Stock  Equivalents  entitling  any Person to acquire  shares of Common
          Stock,  at a price per share  (determined,  reduced  and  adjusted  in
          accordance  with Section  3.6(c)(v)  below) less than the then current
          Purchase  Price (if the  holder of the  Common  Stock or Common  Stock
          Equivalent  so  issued  shall at any time,  whether  by  operation  of
          purchase price  adjustments,  reset provisions,  floating  conversion,
          exercise or exchange prices or otherwise, or due to warrants,  options
          or rights  issued in  connection  with such  issuance,  be entitled to
          receive  shares of  Common  Stock at a price  less  than the  Purchase
          Price,  such  issuance  shall be deemed to have occurred for less than
          the Purchase Price) then, the Exercise Price shall be reduced to equal
          $3.00.  Such  adjustment  shall be made  whenever such Common Stock or

                                       10

<PAGE>

          Common  Stock  Equivalents  are issued.  The Company  shall notify the
          Holder  in  writing,  no later  than the  Trading  Day  following  the
          issuance of any Common  Stock or Common  Stock  Equivalent  subject to
          this section,  indicating therein the applicable issuance price, or of
          applicable  reset price,  exchange price,  conversion  price and other
          pricing terms.

               (b)  If either

                    (i)  prior to the third anniversary of the date hereof,  the
               Company or any subsidiary  thereof,  as  applicable,  at any time
               this Warrant is outstanding shall issue shares of Common Stock or
               Common Stock  Equivalents  entitling any Person to acquire shares
               of Common Stock,  at a price per share  (determined,  reduced and
               adjusted in accordance  with Section  3.6(c)(v)  below) less than
               the then current Exercise Price but greater than the then current
               Purchase Price (if the holder of the Common Stock or Common Stock
               Equivalent  so issued shall at any time,  whether by operation of
               purchase   price   adjustments,   reset   provisions,    floating
               conversion,  exercise or exchange prices or otherwise,  or due to
               warrants,  options  or  rights  issued  in  connection  with such
               issuance,  be  entitled  to receive  shares of Common  Stock at a
               price less than the Exercise Price, such issuance shall be deemed
               to have occurred for less than the Exercise Price), or

                    (ii) after the third  anniversary  of the date  hereof,  the
               Company or any subsidiary  thereof,  as  applicable,  at any time
               this Warrant is outstanding shall issue shares of Common Stock or
               Common Stock  Equivalents  entitling any Person to acquire shares
               of Common Stock,  at a price per share  (determined,  reduced and
               adjusted in accordance  with Section  3.6(c)(v)  below) less than
               the then  current  Exercise  Price (if the  holder of the  Common
               Stock or Common  Stock  Equivalent  so issued  shall at any time,
               whether  by  operation  of  purchase  price  adjustments,   reset
               provisions,  floating conversion,  exercise or exchange prices or
               otherwise,  or due to  warrants,  options  or  rights  issued  in
               connection  with such issuance,  be entitled to receive shares of
               Common  Stock at a price  less  than  the  Exercise  Price,  such
               issuance  shall be  deemed  to have  occurred  for less  than the
               Exercise Price),

               then, the Exercise Price shall be reduced to equal the product of
          the then  effective  Exercise  Price  times a fraction  determined  as
          follows:

                    (x)  the numerator of which shall be the number of shares of
               Common Stock outstanding  immediately prior to such issuance plus
               the  number  of  shares  of  Common  Stock  which  the  aggregate
               consideration received by the Company for the newly issued shares
               of Common Stock or Common Stock Equivalents would purchase at the
               then current Exercise Price, and

                                       11

<PAGE>

                    (y)  the  denominator of which shall be the number of shares
               of Common Stock  outstanding  immediately  prior to such issuance
               plus the actual  number of shares of Common Stock or Common Stock
               Equivalents newly issued.

               Such  adjustment  shall be made  whenever  such  Common  Stock or
          Common  Stock  Equivalents  are issued.  The Company  shall notify the
          Holder  in  writing,  no later  than the  Trading  Day  following  the
          issuance of any Common  Stock or Common  Stock  Equivalent  subject to
          this section,  indicating therein the applicable issuance price, or of
          applicable  reset price,  exchange price,  conversion  price and other
          pricing terms.

               Notwithstanding  the foregoing  paragraphs 3.6(a) and 3.6(b), the
          Exercise  Price shall not be reduced below the Floor Exercise Price by
          operation of this Section 3.6.

               (c)  For  purposes  of  this   subsection   3.6,  the   following
          subsections shall also be applicable:

                    (i)  Issuance of Rights or Options.  In case at any time the
               Company shall in any manner grant (directly and not by assumption
               in a  merger  or  otherwise)  any  warrants  or other  rights  to
               subscribe for or to purchase, or any options for the purchase of,
               Common  Stock  or any  stock  or  security  convertible  into  or
               exchangeable  for Common Stock (such warrants,  rights or options
               being called "Options" and such convertible or exchangeable stock
               or securities being called "Convertible  Securities")  whether or
               not such  Options or the right to convert  or  exchange  any such
               Convertible Securities are immediately exercisable, and the price
               per share for which Common Stock is issuable upon the exercise of
               such  Options  or  upon  the   conversion  or  exchange  of  such
               Convertible Securities (determined by dividing (i) the sum (which
               sum shall  constitute  the applicable  consideration)  of (x) the
               total  amount,  if any,  received or receivable by the Company as
               consideration  for the  granting  of such  Options,  plus (y) the
               aggregate  amount  of  additional  consideration  payable  to the
               Company upon the exercise of all such  Options,  plus (z), in the
               case of such Options which relate to Convertible Securities,  the
               aggregate  amount of additional  consideration,  if any,  payable
               upon the issue or sale of such  Convertible  Securities  and upon
               the  conversion  or exchange  thereof,  by (ii) the total maximum
               number of shares of Common  Stock  issuable  upon the exercise of
               such  Options  or upon the  conversion  or  exchange  of all such
               Convertible   Securities  issuable  upon  the  exercise  of  such
               Options) shall be less than the Purchase Price or Exercise Price,
               as  applicable,  in effect  immediately  prior to the time of the
               granting  of such  Options,  then the  total  number of shares of
               Common Stock  issuable  upon the exercise of such Options or upon
               conversion  or exchange of the total  amount of such  Convertible
               Securities  issuable  upon the exercise of such Options  shall be

                                       12

<PAGE>

               deemed to have  been  issued  for such  price per share as of the
               date  of  granting  of  such  Options  or the  issuance  of  such
               Convertible  Securities  and  thereafter  shall be  deemed  to be
               outstanding for purposes of adjusting the Exercise Price.  Except
               as otherwise provided in subsection 3.6(c)(iii), no adjustment of
               the  Exercise  Price shall be made upon the actual  issue of such
               Common Stock or of such  Convertible  Securities upon exercise of
               such  Options or upon the actual  issue of such Common Stock upon
               conversion or exchange of such Convertible Securities.

                    (ii) Issuance of Convertible Securities. In case the Company
               shall in any manner issue  (directly  and not by  assumption in a
               merger or otherwise) or sell any Convertible Securities,  whether
               or not the rights to  exchange  or convert  any such  Convertible
               Securities are immediately  exercisable,  and the price per share
               for  which  Common  Stock is  issuable  upon such  conversion  or
               exchange  (determined  by  dividing  (i) the sum (which sum shall
               constitute the applicable  consideration) of (x) the total amount
               received or  receivable by the Company as  consideration  for the
               issue  or sale  of  such  Convertible  Securities,  plus  (y) the
               aggregate amount of additional consideration,  if any, payable to
               the Company upon the conversion or exchange thereof,  by (ii) the
               total  number  of  shares  of  Common  Stock  issuable  upon  the
               conversion or exchange of all such Convertible  Securities) shall
               be less than the Purchase Price or Exercise Price, as applicable,
               in effect  immediately  prior to the time of such  issue or sale,
               then the total maximum  number of shares of Common Stock issuable
               upon  conversion or exchange of all such  Convertible  Securities
               shall be deemed to have been  issued  for such price per share as
               of the date of the issue or sale of such  Convertible  Securities
               and thereafter  shall be deemed to be outstanding for purposes of
               adjusting  the  Exercise  Price,  provided  that  (a)  except  as
               otherwise  provided in subsection  3.6(c)(iii),  no adjustment of
               the Exercise Price shall be made upon the actual issuance of such
               Common  Stock upon  conversion  or exchange  of such  Convertible
               Securities  and (b) no further  adjustment of the Exercise  Price
               shall  be made by  reason  of the  issue  or sale of  Convertible
               Securities  upon  exercise of any  Options to  purchase  any such
               Convertible  Securities  for which  adjustments  of the  Exercise
               Price  have  been  made  pursuant  to  the  other  provisions  of
               subsection  3.6. If the Company  issues a variable rate security,
               despite  the  prohibition  thereon  in  the  Securities  Purchase
               Agreement,  the  Company  shall be deemed to have  issued  Common
               Stock  or  Common  Stock   Equivalents  at  the  lowest  possible
               conversion  or  exercise  price at which such  securities  may be
               converted or exercised in the case of a Variable Rate Transaction
               (as defined in the Securities Purchase Agreement).

                    (iii) Change in Option Price or  Conversion  Rate.  Upon the
               happening of any of the following events, namely, if the purchase
               price  provided  for  in any  Option  referred  to in  subsection
               3.6(c)(i) hereof, the additional  consideration,  if any, payable
               upon the  conversion  or exchange of any  Convertible  Securities

                                       13

<PAGE>

               referred to in subsections  3.6(c)(i) or 3.6(c)(ii),  or the rate
               at  which  Convertible  Securities  referred  to  in  subsections
               3.6(c)(i) or 3.6(c)(ii) are convertible  into or exchangeable for
               Common Stock shall change at any time (including, but not limited
               to, changes under or by reason of provisions  designed to protect
               against  dilution),  the Exercise  Price in effect at the time of
               such event shall  forthwith 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  purchase price,  additional  consideration or conversion
               rate, as the case may be, at the time initially  granted,  issued
               or  sold.  On  the  termination  of  any  Option  for  which  any
               adjustment was made pursuant to this  subsection 3.6 or any right
               to  convert  or  exchange  Convertible  Securities  for which any
               adjustment  was made pursuant to this  subsection  3.6 (including
               without   limitation   upon  the   redemption   or  purchase  for
               consideration of such Convertible Securities by the Company), the
               Exercise  Price  then in  effect  hereunder  shall  forthwith  be
               changed to the Exercise  Price which would have been in effect at
               the time of such  termination  had  such  Option  or  Convertible
               Securities,  to the extent outstanding  immediately prior to such
               termination, never been issued.

                    (iv)  Stock  Dividends.  Subject to the  provisions  of this
               Section 3.6, in case the Company shall declare a dividend or make
               any other  distribution upon any stock of the Company (other than
               the Common Stock) payable in Common Stock, Options or Convertible
               Securities,   then  any  Common  Stock,  Options  or  Convertible
               Securities,  as the  case may be,  issuable  in  payment  of such
               dividend or  distribution  shall be deemed to have been issued or
               sold without consideration.

                    (v)  Consideration  for Stock.  In case any shares of Common
               Stock, Options or Convertible  Securities shall be issued or sold
               for cash, the consideration  received therefor shall be deemed to
               be the  net  amount  received  by  the  Company  therefor,  after
               deduction  therefrom of any expenses incurred or any underwriting
               commissions  or  concessions  paid or allowed  by the  Company in
               connection therewith. In case any shares of Common Stock, Options
               or  Convertible   Securities  shall  be  issued  or  sold  for  a
               consideration  other than cash,  the amount of the  consideration
               other than cash received by the Company shall be deemed to be the
               fair value of such  consideration  as determined in good faith by
               the Board of  Directors of the  Company,  after  deduction of any
               expenses incurred or any underwriting  commissions or concessions
               paid or allowed by the Company in connection  therewith.  In case
               any Options shall be issued in connection with the issue and sale
               of other  securities  of the  Company,  together  comprising  one
               integral  transaction  in  which  no  specific  consideration  is
               allocated  to such Options by the parties  thereto,  such Options
               shall be deemed to have been  issued  for such  consideration  as
               determined  in  good  faith  by the  Board  of  Directors  of the

                                       14

<PAGE>

               Company. If Common Stock, Options or Convertible Securities shall
               be issued or sold by the Company  and, in  connection  therewith,
               other Options or Convertible Securities (the "Additional Rights")
               are  issued,  then the  consideration  received  or  deemed to be
               received by the Company shall be reduced by the fair market value
               of the Additional  Rights (as determined using the  Black-Scholes
               Pricing Model as of the date received).

                    (vi) Record Date. In case the Company shall take a record of
               the holders of its Common Stock for the purpose of entitling them
               (i) to receive a dividend or other distribution payable in Common
               Stock, Options or Convertible Securities or (ii) to subscribe for
               or purchase Common Stock, Options or Convertible Securities, then
               such  record  date shall 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)  Notwithstanding  the foregoing,  no adjustment  will be made
          under this Section 3.6 in respect of: (i) the  issuance of  securities
          upon the exercise or conversion of any Common Stock Equivalents issued
          by the Company  prior to the Closing  Date (but this  Section 3.6 will
          apply to any amendments, modifications, and reissuances thereof and as
          a result of any changes,  resets or  adjustments  to a  Conversion  or
          Exchange Price thereunder whether or not as a result of any amendment,
          modification  or  reissuance),  (ii) the  issuance of Common  Stock or
          Common Stock  Equivalents  pursuant to the agreement dated December 1,
          2004 with Lippert  Heilshorn & Associates,  an agreement dated January
          8, 2005 with Blausen and  Associates,  and the Financing and Strategic
          Advisory  Agreement  dated  June  12,  2004  and the  Placement  Agent
          Agreement  with  Sanders  Morris  Harris,  and any  amendments  to the
          foregoing  and any other  placement  agent  agreement,  approved  by a
          majority  of the Board of  Directors,  (iii)  Common  Stock  issued or
          deemed to be issued upon  approval  of a majority of the  non-employee
          members of the Board of  Directors of the Company or a majority of the
          members of a committee of non-employee  directors established for such
          purpose,   pursuant  to  options  or  similar   awards  to  employees,
          directors,  and  consultants  pursuant  to the  Company's  2004  Stock
          Incentive  Plan or any successor plan  similarly  approved,  as may be
          amended  from time to time,  (iv) Common  Stock issued or deemed to be
          issued to any bank or equipment  lessor in connection with a financing
          or equipment  lease, (v) Common Stock issued or deemed to be issued as
          a result of a reduction in the  exercise  price of any of the Series A
          Warrants, the Series B Warrants or Series C Warrants, (vi) issuance of
          Common Stock, at a value of $1.50 per share, Series A Warrants, Series
          B Warrants and/or Series C Warrants and up to 20,000 additional shares
          per  $100,000 of  principle  (or such  additional  number of shares as
          approved by a majority of the Board of Directors) to holders of Bridge
          Notes in  exchange  for the  Bridge  Notes and  Bridge  Warrants  in a
          transaction  approved  by a  majority  of the  members of the Board of
          Directors as permitted by the Securities Purchase Agreement, (vii) the
          issuance of Common Stock or Common Stock  Equivalents  pursuant to the

                                       15

<PAGE>

          Amended and Restated  License  Agreement  dated December 30, 2004 with
          the University of Chicago,  including any amendments  thereto,  (viii)
          Common  Stock  issued or deemed to be issued  pursuant to a "Strategic
          Transaction"  approved  by a  majority  of the Board of  Directors.  A
          "Strategic  Transaction"  shall  mean  (x)  any  transaction  with  an
          acquiror, acquisition target company or merger partner, or (y) a joint
          venture,   corporate   alliance,   research   agreement  or  licensing
          transaction  with  respect  to  one  or  more  technologies,   assets,
          compounds,  compound families,  and/or products or product candidates,
          but shall not  include a  transaction  in which the Company is issuing
          securities  primarily  for the  purpose  of  raising  capital or to an
          entity whose  primary  business is investing  in  securities;  or (ix)
          shares issued to  purchasers  in a Second  Offering as provided for in
          the Securities  Purchase  Agreement  including shares issuable to such
          purchasers upon exercise of Warrants issued in the Second Offering.

          3.7  Company Reduction of Exercise Price. The Company may, at any time
     and in its sole discretion, reduce the Exercise Price to any amount for any
     period  deemed  appropriate  by  a  majority  of  the  Company's  Board  of
     Directors.

          3.8  Number of Warrant Shares.  Simultaneously  with any adjustment to
     the Exercise Price pursuant to this Section 3, the number of Warrant Shares
     that may be purchased  upon  exercise of this Warrant shall be increased or
     decreased  proportionately,  so that after such  adjustment  the  aggregate
     Exercise Price payable  hereunder for the adjusted number of Warrant Shares
     shall be the same as the  aggregate  Exercise  Price in effect  immediately
     prior to such adjustment.

          3.9  Minimum  Adjustment  of  Exercise  Price.  If the  amount  of any
     adjustment of the Exercise Price required  pursuant to this Section 3 would
     be less than one-tenth  (1/10) of one percent (1%) of the Exercise Price in
     effect at the time such  adjustment  is  otherwise  so required to be made,
     such amount shall be carried  forward and adjustment  with respect  thereto
     made at the time of and  together  with any  subsequent  adjustment  which,
     together  with such  amount  and any other  amount or  amounts  so  carried
     forward,  shall  aggregate at least one tenth (1/10) of one percent (1%) of
     such Exercise  Price.  For purposes of this Section 3, the number of shares
     of Common  Stock  deemed to be issued  and  outstanding  as of a given date
     shall  be the sum of the  number  of  shares  of  Common  Stock  (excluding
     treasury shares, if any) issued and outstanding.

          3.10 Certificate  as to  Adjustments.  The  Company  shall  notify the
     Holder in writing,  no later than the Trading Day following the issuance of
     any Common  Stock or Common  Stock  Equivalents  subject  to this  section,
     indicating  therein the applicable  issuance price, or of applicable  reset
     price,  exchange  price,  conversion  price and other  pricing  terms (such
     notice the  "Dilutive  Issuance  Notice").  For purposes of  clarification,
     whether or not the Company provides a Dilutive  Issuance Notice pursuant to
     this Section 3.9, upon the occurrence of any Dilutive  Issuance,  after the
     date of such  Dilutive  Issuance the Holder is entitled to receive a number
     of Warrant  Shares based upon the adjusted  Exercise  Price  regardless  of
     whether the Holder  accurately refers to the adjusted Exercise Price in the
     Notice of Exercise.

                                       16

<PAGE>

     4.   Company's Right To Redeem the Warrant.

          4.1  Redemption  Price.  After the third  anniversary  of the  Closing
     Date, the Warrant will be redeemable at the option of the Company, in whole
     but not in part (a "Warrant Redemption"), at any time after the VWAP of the
     Common  Stock equals or exceeds  $7.00 (as  adjusted for any stock  splits,
     stock  dividends  or stock  combinations  after  the date  hereof)  on each
     Trading Day  occurring  during any period of 15  consecutive  Trading Days;
     provided,  however,  that the Repurchase Condition must be satisfied during
     the Redemption Period and at all times thereafter through the date on which
     such Warrants are redeemed (the "Warrant  Redemption Date"). The redemption
     price will be equal to $0.05 per  Warrant  Share (the  "Warrant  Redemption
     Price"), payable in cash.

          4.2  Notice of Redemption and Payment.  The Company shall deliver,  in
     accordance with the notice delivery  provisions of the Purchase  Agreement,
     notice of a Warrant  Redemption  (a  "Warrant  Redemption  Notice") to each
     Holder,  not less than 30 nor more than 60 days  prior to the date fixed in
     such notice as the Warrant  Redemption  Date.  Such notice  shall state (i)
     that the Company has elected to redeem the  Warrant,  as  specified in such
     notice,  (ii) the Warrant Redemption Price, (iii) the effective date of the
     redemption (the "Warrant  Redemption Date"), and (iv) any other information
     required by applicable  law to be included  therein.  A Warrant  Redemption
     Notice,  once delivered by the Company,  shall be irrevocable.  On or after
     the Warrant  Redemption  Date, the Holder shall deliver this Warrant to the
     Company at the place  designated  in the  Warrant  Redemption  Notice  and,
     immediately  upon  such  delivery,   the  Company  shall  pay  the  Warrant
     Redemption  Price to the Holder by wire transfer of  immediately  available
     funds to such account as the Holder shall designate in writing prior to the
     Warrant  Redemption  Date.  If the amount to be paid to Holder is less than
     $25,000, Company may pay such amount by mailing a Company check.

          4.3  Right To Exercise  Until  Warrant  Redemption  Date. If a Warrant
     Redemption  Notice has been given  pursuant  to this  Section 4, the Holder
     may, prior to the close of business on the Warrant Redemption Date, provide
     the  Company  with a Notice of  Exercise  pursuant  to Section 2 above with
     respect to the exercise of any or all of the  Warrants to be  redeemed;  if
     Holder  properly  exercises  this Warrant  pursuant to Section 2, then such
     redemption  shall not become effective as to such Warrants to be exercised,
     and such exercise shall become effective as provided in Section 2 above. If
     the Holder  fails to properly  exercise  the  Warrant  prior to the Warrant
     Redemption  Date, the Warrant will be deemed null and void and to represent
     only the right to payment of the five cents ($0.05).

     5.   Registration  Rights.  The initial holders of the Warrant Shares shall
be entitled  to the  registration  rights and other  rights  applicable  to such
shares provided by the Registration Rights Agreement.

     6.   Notices of Record Date. Upon (a) any establishment by the Company of a
record  date of the  holders  of any  class of  securities  for the  purpose  of
determining  the  holders  thereof who are  entitled to receive any  dividend or
other distribution,  or right or option to acquire securities of the Company, or
any  other  right,   or  (b)  any  capital   reorganization,   reclassification,

                                       17

<PAGE>

recapitalization,  merger or consolidation of the Company with or into any other
Person,  any transfer of all or substantially all the assets of the Company,  or
any  voluntary  or  involuntary  dissolution,  liquidation  or winding up of the
Company,  or the sale, in a single  transaction,  of a majority of the Company's
voting stock (whether newly issued,  or from treasury,  or previously issued and
then  outstanding,  or any combination  thereof),  the Company shall mail to the
Holder at least  fifteen (15)  business  days,  or such longer  period as may be
required by law, prior to the record date specified therein and at least fifteen
(15) business days prior to the date specified in clause (ii) or (iii) hereof, a
notice  (but  only  to the  extent  such  disclosure  would  not  result  in the
dissemination of material,  non-public information to the Holder) specifying (i)
the date  established  as the  record  date for the  purpose  of such  dividend,
distribution,  option or right and a description of such dividend, distribution,
option   or   right,   (ii)  the  date  on   which   any  such   reorganization,
reclassification,  transfer, consolidation,  merger, dissolution, liquidation or
winding up, or sale is expected to become  effective and (iii) the date, if any,
fixed as to when the  holders of record of Common  Stock  shall be  entitled  to
exchange  their  shares  of  Common  Stock  for  securities  or  other  property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger,  dissolution,  liquidation  or winding up. Nothing herein shall prohibit
the Holder from  exercising  this Warrant  during the fifteen (15)  business day
period commencing on the date of such notice.

     7.   Exchange of Warrant. Subject to the provisions of Section 8 hereof (if
and to the extent  applicable),  this Warrant  shall be  exchangeable,  upon the
surrender hereof by the Holder at the principal  office of the Company,  for new
warrants of like tenor, each registered in the name of the Holder or, subject to
compliance with  applicable  federal and state  securities  laws, in the name of
such other  Persons as the Holder may direct (upon  payment by the Holder of any
applicable  transfer taxes).  Each of such new warrants shall be exercisable for
such number of Warrant  Shares as the Holder shall direct,  provided that all of
such new warrants shall represent,  in the aggregate,  the right to purchase the
same number of Warrant Shares and cash,  securities or other  property,  if any,
which may be purchased  by the Holder upon  exercise of this Warrant at the time
of its surrender.

     8.   Transfer Provisions, etc.

          8.1  Legends. Each certificate  representing any Warrant Shares issued
     upon exercise of this Warrant, and of any shares of Common Stock into which
     such Warrant Shares may be converted, shall bear the legend, if any, as may
     be required by the Securities Purchase Agreement.

          8.2  Mechanics of Transfer.

               (a)  Any  transfer of all or any portion of this Warrant (and the
          Warrant  Shares),  or of any  interest  herein  or  therein,  that  is
          otherwise  in  compliance  with  applicable  law shall be  effected by
          surrendering  this  Warrant to the  Company at its  principal  office,
          together with a duly executed form of assignment, in the form attached
          hereto. In the event of any such transfer of this Warrant,  subject to
          compliance  with  applicable  federal and state  securities  laws, the
          Company  shall  issue a new  warrant or  warrants of like tenor to the
          transferee(s),  representing,  in the aggregate, the right to purchase
          the same  number  of  Warrant  Shares  and cash,  securities  or other

                                       18

<PAGE>

          property,  if any,  which may be purchased by the Holder upon exercise
          of this  Warrant  at the time of its  surrender,  in  accordance  with
          Section 2 hereof.

               (b)  In the event of any  transfer  of all or any portion of this
          Warrant in accordance  with Section  8.2(a)  above,  the Company shall
          issue (i) a new warrant of like tenor to the transferee,  representing
          the  right to  purchase  the  number  of  Warrant  Shares,  and  cash,
          securities or other  property,  if any, which were  purchasable by the
          Holder of the transferred  portion of this Warrant at the time of said
          transfer,  and  (ii) a new  warrant  of  like  tenor  to  the  Holder,
          representing  the right to purchase the number of Warrant  Shares,  if
          any, and cash,  securities or other property,  if any,  purchasable by
          the Holder of the un-transferred  portion of this Warrant.  Until this
          Warrant  or any  portion  thereof is  transferred  on the books of the
          Company,  the Company may treat the Holder as the  absolute  holder of
          this  Warrant  and all  right,  title  and  interest  therein  for all
          purposes, notwithstanding any notice to the contrary.

          8.3  No   Restrictions   on  Transfer.   Subject  to  compliance  with
     applicable  federal and state securities laws, this Warrant and any portion
     hereof,  the Warrant Shares and the rights  hereunder may be transferred by
     the Holder in its sole discretion at any time and to any Person or Persons,
     including  without  limitation  Affiliates  and  affiliated  groups of such
     Holder, without the consent of the Company.

          8.4  Warrant Register.  The Company shall keep at its principal office
     a register for the  registration,  and  registration  of transfers,  of the
     Warrants.  The  name  and  address  of  each  Holder  of one or more of the
     Warrants, each transfer thereof and the name and address of each transferee
     of one or more of the Warrants  shall be registered in such  register.  The
     Company  shall  give to any  Holder  of a  Warrant  promptly  upon  request
     therefor,  a complete  and correct  copy of the names and  addresses of all
     registered Holders of the Warrants.

     9.   Lost,  Stolen or  Destroyed  Warrant.  Upon  receipt by the Company of
evidence  satisfactory to it of loss,  theft,  destruction or mutilation of this
Warrant  and,  in the  case of loss,  theft or  destruction,  on  delivery  of a
customary affidavit of the Holder and customary  unsecured indemnity  agreement,
or, in the case of mutilation,  upon  surrender of this Warrant,  the Company at
its expense  will execute and deliver,  or will  instruct its transfer  agent to
execute and deliver,  a new Warrant of like tenor and date and  representing the
same rights represented by such lost, stolen, destroyed or mutilated warrant and
any such lost,  stolen,  mutilated or destroyed  Warrant  thereupon shall become
void.

     10.  General.

          10.1 Authorized  Shares,  Reservation  of Shares for Issuance.  At all
     times while this Warrant is  outstanding,  the Company  shall  maintain its
     corporate  authority to issue,  and shall have  authorized and reserved for
     issuance  upon  exercise of this  Warrant,  such number of shares of Common
     Stock,  and any  other  capital  stock  or  other  securities  as  shall be
     sufficient  to perform its  obligations  under this Warrant  (after  giving
     effect to any and all  adjustments to the number and kind of Warrant Shares

                                       19

<PAGE>

     purchasable upon exercise of this Warrant).  The Company further  covenants
     that its issuance of this Warrant shall  constitute  full  authority to its
     officers who are charged with the duty of executing  stock  certificates to
     execute and issue the necessary  certificates  for the Warrant  Shares upon
     the exercise of the purchase  rights under this  Warrant.  The Company will
     take all such  reasonable  action as may be  necessary  to assure that such
     Warrant Shares may be issued as provided  herein  without  violation of any
     applicable law or regulation,  or of any requirements of the Trading Market
     upon which the Common Stock may be listed.

          10.2 No  Impairment.  The  Company  will  not,  by  amendment  of  its
     Certificate of  Incorporation  or through any  reorganization,  transfer of
     assets, consolidation, merger, dissolution, issuance or sale of securities,
     sale or other  transfer  of any of its assets or  properties,  or any other
     voluntary  action,  avoid or seek to avoid the observance or performance of
     any of the  terms  of this  Warrant,  but will at all  times in good  faith
     assist in the  carrying out of all such terms and in the taking of all such
     action as may be necessary or appropriate in order to protect the rights of
     the Holder hereunder against impairment. Without limiting the generality of
     the  foregoing,  the  Company  (a) will not  increase  the par value of any
     shares of Common Stock  receivable  upon the exercise of this Warrant above
     the amount payable therefor on such exercise, (b) will take all action that
     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,  and (c) use commercially  reasonable  efforts to
     obtain all such  authorizations,  exemptions  or  consents  from any public
     regulatory body having  jurisdiction  thereof as may be necessary to enable
     the Company to perform its obligations under this Warrant.

          10.3 No Rights as Stockholder.  Except as provided herein,  the Holder
     shall not be entitled to vote or to receive  dividends  or to be deemed the
     holder of Common  Stock that may at any time be issuable  upon  exercise of
     this  Warrant  for any purpose  whatsoever,  nor shall  anything  contained
     herein  be  construed  to confer  upon the  Holder  any of the  rights of a
     stockholder  of the  Company  or any  right  to vote  for the  election  of
     directors  or upon any matter  submitted  to  stockholders  at any  meeting
     thereof,  or to give or withhold  consent to any corporate  action (whether
     upon any recapitalization, issuance or reclassification of stock, change of
     par  value or  change of stock to no par  value,  consolidation,  merger or
     conveyance or otherwise),  or to receive notice of meetings  (except to the
     extent  otherwise  provided in this  Warrant),  or to receive  dividends or
     subscription rights, until the Holder shall have exercised this Warrant and
     been issued  Warrant Shares in accordance  with the  provisions  hereof and
     continues to hold Warrant Shares.

          10.4 Notices.   Any   notices,   reports   or   other   correspondence
     (hereinafter  collectively  referred  to as  "correspondence")  required or
     permitted  to be given  hereunder  shall be sent by postage  prepaid  first
     class mail,  overnight courier or facsimile  transmission,  or delivered by
     hand to the party to whom such  correspondence  is required or permitted to
     be given hereunder.  The date of giving any notice shall be the date of its
     actual receipt.

               (a)  All  correspondence  to the Company  shall be  addressed  as
          follows:

                                       20

<PAGE>

                    PharmaFrontiers Corp.
                    2408 Timberloch, Suite B-7
                    The Woodlands, Texas 77380
                    Attn:  Chief Financial Officer

                    with a copy to:

                    Vinson & Elkins LLP
                    First City Tower
                    1001 Fannin Street, Suite 2300
                    Houston, Texas 77002
                    Attn:  Michael C. Blaney

               (b)  All  correspondence  to the Holder shall be addressed to the
          Holder  at its  address  appearing  in  the  books  maintained  by the
          Company.

          10.5 Amendment  and Waiver.  This Warrant may only be amended upon the
     written  consent  of the  Company  and  Holder.  No failure or delay of the
     Holder in exercising any power or right hereunder shall operate as a waiver
     thereof,  nor shall any  single or  partial  exercise  of any such right or
     power,  or any  abandonment  or  discontinuance  of steps to enforce such a
     right or power,  preclude  any other or  further  exercise  thereof  or the
     exercise of any other right or power. The rights and remedies of the Holder
     are  cumulative  and not exclusive of any rights or remedies which it would
     otherwise  have.  If the Company fails to comply with any provision of this
     Warrant,  which results in any material damages to the Holder,  the Company
     shall pay to Holder such amounts as shall be  sufficient to cover any costs
     and expenses  including,  but not limited to,  reasonable  attorneys' fees,
     including those of appellate proceedings,  incurred by Holder in collecting
     any  amounts  due  pursuant  hereto or in  otherwise  enforcing  any of its
     rights, powers or remedies hereunder.

          10.6 Governing  Law. This Warrant will be governed by and  interpreted
     in accordance  with the laws of the State of New York without regard to the
     principles  of conflict of laws.  The parties  hereto  hereby submit to the
     jurisdiction  of the United States  federal and state courts located in the
     State of New York with respect to any dispute arising under this Agreement,
     the  agreements  entered into in  connection  herewith or the  transactions
     contemplated hereby or thereby..

          10.7 Covenants  To  Bind   Successor  and  Assigns.   All   covenants,
     stipulations,  promises and  agreements in this Warrant  contained by or on
     behalf of the Company  shall bind its  successors  and assigns,  whether so
     expressed or not.

          10.8 Severability. In case any one or more of the provisions contained
     in this Warrant shall be invalid,  illegal or unenforceable in any respect,
     the  validity,  legality and  enforceability  of the  remaining  provisions
     contained herein shall not in any way be affected or impaired thereby.  The
     parties shall endeavor in good faith  negotiations  to replace the invalid,
     illegal or  unenforceable  provisions  with valid  provisions  the economic

                                       21

<PAGE>

     effect of which comes as close as possible to that of the invalid,  illegal
     or unenforceable provisions.

          10.9 Construction. The definitions of this Warrant shall apply equally
     to both the singular and the plural  forms of the terms  defined.  Wherever
     the  context  may  require,  any pronoun  shall  include the  corresponding
     masculine,  feminine and neuter forms.  The section and paragraph  headings
     used herein are for  convenience  of reference  only,  are not part of this
     Warrant  and  are  not to  affect  the  construction  of or be  taken  into
     consideration in interpreting this Warrant.

          10.10 Remedies.  The Holder, in addition to being entitled to exercise
     all rights granted by law, including recovery of damages,  will be entitled
     to  specific  performance  of its rights  under this  Warrant.  The Company
     agrees that  monetary  damages would not be adequate  compensation  for any
     loss incurred by reason of a breach by it of the provisions of this Warrant
     and  hereby  agrees  to  waive  the  defense  in any  action  for  specific
     performance  that a remedy  at law  would be  adequate.  In any  action  or
     proceeding  brought to enforce any  provision  of this Warrant or where any
     provision hereof is validly asserted as a defense,  the successful party to
     such  action  or  proceeding  shall  be  entitled  to  recover   reasonable
     attorneys' fees in addition to any other available remedy.

                           [SIGNATURE PAGE TO FOLLOW]

                                       22

<PAGE>

     IN WITNESS  WHEREOF,  the Company has executed  this Common Stock  Purchase
Warrant as of the date first written above.

                                          COMPANY:

                                          PHARMAFRONTIERS CORP.

                                          By:
                                             -----------------------------------
                                          Name: David B. McWilliams, President

<PAGE>

                                   NOTICE AND
                                  SUBSCRIPTION

To:  PharmaFrontiers Corp.
     2408 Timberloch, Suite B-7
     The Woodlands, Texas 77380

     The undersigned hereby elects to exercise the right of purchase represented
by the attached Warrant for, and to exercise  thereunder,  __________  shares of
Common Stock, of PHARMAFRONTIERS CORP., a Texas corporation (the "Company"), and
tenders  herewith payment of $__________,  representing  the aggregate  purchase
price for such shares based on the price per share provided for in such Warrant.
Such payment is being made in  accordance  with  Section  2.1(a) of the attached
Warrant.

     The undersigned hereby represents and warrants as follows:

     (a)  the  undersigned  is acquiring such shares of Common Stock for its own
account for investment and not for resale or with a view to distribution thereof
in violation of the  Securities  Act of 1933,  as amended,  and the  regulations
promulgated thereunder (the "Securities Act"); and

     (b)  the undersigned is an "accredited  investor" as defined in Rule 501 of
Regulation D promulgated  under the Securities Act and was not organized for the
purpose  of  acquiring  the  Warrant  or  such  shares  of  Common  Stock.   The
undersigned's  financial  condition  is such that it is able to bear the risk of
holding such securities for an indefinite period of time and the risk of loss of
its entire investment.  The undersigned has sufficient  knowledge and experience
in investing  in  companies  similar to the Company so as to be able to evaluate
the risks and merits of its investment in the Company.

     Please issue a certificate or certificates  for such shares of Common Stock
in the following name or names and denominations and deliver such certificate or
certificates to the person or persons listed below at their  respective  address
set forth below:

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

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

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

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

     If said  number of shares of Common  Stock  shall not be all the  shares of
Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to
be issued  in the name of the  undersigned  for the  remaining  balance  of such
shares of Common Stock less any fraction of a share of Common Stock paid in cash
pursuant to Section 2.4 of the attached warrant.

Dated:
      ----------------              --------------------------------
                                    Signature

                                       1

<PAGE>

     The undersigned  PharmaFrontiers  Corp. hereby acknowledges receipt of this
Notice and  Subscription  and authorizes  issuance of the shares of Common Stock
described above.

PharmaFrontiers Corp.

By:
   --------------------------------
Title:
      -----------------------------
Date:
     ------------------------------

                                       2

<PAGE>

                               FORM OF ASSIGNMENT

                   (To be executed upon assignment of Warrant)

     For  value  received,   __________________________________   hereby  sells,
assigns and transfers unto  __________________  the attached Warrant [__% of the
attached Warrant], together with all right, title and interest therein, and does
hereby  irrevocably  constitute  and  appoint  ____________________  attorney to
transfer  said  Warrant  [said  percentage  of said  Warrant]  on the  books  of
PHARMAFRONTIERS  CORP., a Texas corporation,  with full power of substitution in
the premises.

     If not all of the attached  Warrant is to be so transferred,  a new Warrant
is to be issued in the name of the undersigned for the balance of said Warrant.

     The undersigned  hereby agrees that it will not sell,  assign,  or transfer
the right,  title and interest in and to the Warrant unless  applicable  federal
and state securities laws have been complied with.

Dated:
      ----------------              --------------------------------
                                    Signature

                                       1

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