Document:

Exhibit 4.1

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: December __, 2005
Original Conversion Price (subject to adjustment herein): $0.4544

                                                                $_______________

                            8% CONVERTIBLE DEBENTURE
                              DUE DECEMBER __, 2009

        THIS 8% CONVERTIBLE DEBENTURE is one of a series of duly authorized and
issued 8% Convertible Debentures of Electronic Sensor Technology, Inc., a Nevada
corporation, having a principal place of business at 1077 Business Center
Circle, Newbury Park, CA 91320 (the "Company"), designated as its 8% Convertible
Debenture, due December __, 2009 (this debenture, the "Debenture" and
collectively with the other such series of debentures, the "Debentures").

        FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the "Holder"), or shall have
paid pursuant to the terms hereunder, the principal sum of $_______________ by
December __, 2009, or such earlier date as this Debenture is required or
permitted to be repaid as provided hereunder (the "Maturity Date"), and to pay
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture in accordance with the provisions hereof.
This Debenture is subject to the following additional provisions:

        Section 1.      Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) the following terms shall have the following meanings:

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                "Alternate Consideration" shall have the meaning set forth in
        Section 5(d).

                "Base Conversion Price" shall have the meaning set forth in
        Section 5(b).

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

                "Buy-In" shall have the meaning set forth in Section 4(d)(v).

                "Change of Control Transaction" means the occurrence after the
        date hereof of any of (i) an acquisition after the date hereof by an
        individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
        promulgated under the Exchange Act) of effective control (whether
        through legal or beneficial ownership of capital stock of the Company,
        by contract or otherwise) of in excess of 33% of the voting securities
        of the Company, or (ii) the Company merges into or consolidates with any
        other Person, or any Person merges into or consolidates with the Company
        and, after giving effect to such transaction, the stockholders of the
        Company immediately prior to such transaction own less than 66% of the
        aggregate voting power of the Company or the successor entity of such
        transaction, or (iii) the Company sells or transfers its assets, as an
        entirety or substantially as an entirety, to another Person and the
        stockholders of the Company immediately prior to such transaction own
        less than 66% of the aggregate voting power of the acquiring entity
        immediately after the transaction, (iv) a replacement at one time or
        within a three year period of more than one-half of the members of the
        Company's board of directors which is not approved by a majority of
        those individuals who are members of the board of directors on the date
        hereof (or by those individuals who are serving as members of the board
        of directors on any date whose nomination to the board of directors was
        approved by a majority of the members of the board of directors who are
        members on the date hereof), or (v) the execution by the Company of an
        agreement to which the Company is a party or by which it is bound,
        providing for any of the events set forth above in (i) through (iv).

                "Common Stock" means the common stock, par value $.001 per
        share, of the Company and stock of any other class of securities into
        which such securities may hereafter have been reclassified or changed
        into.

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

                "Conversion Price" shall have the meaning set forth in
        Section 4(b).

                "Conversion Shares" means the shares of Common Stock issuable
        upon conversion of this Debenture or as payment of interest in
        accordance with the terms.

                "Debenture Register" shall have the meaning set forth in
        Section 2(c).

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                "Dilutive Issuance" shall have the meaning set forth in
        Section 5(b).

                "Dilutive Issuance Notice" shall have the meaning set forth in
        Section 5(b).

                "Effectiveness Period" shall have the meaning given to such term
        in the Registration Rights Agreement.

                "Equity Conditions" shall mean, during the period in question,
        (i) the Company shall have duly honored all conversions and redemptions
        scheduled to occur or occurring by virtue of one or more Notice of
        Conversions of the Holder, if any, (ii) all liquidated damages and other
        amounts owing to the Holder in respect of this Debenture shall have been
        paid, (iii) there is an effective Registration Statement pursuant to
        which the Holder is permitted to utilize the prospectus thereunder to
        resell all of the shares issuable pursuant to the Transaction Documents
        (and the Company believes, in good faith, that such effectiveness will
        continue uninterrupted for the foreseeable future), (iv) the Common
        Stock is trading on the Trading Market and all of the shares issuable
        pursuant to the Transaction Documents are listed for trading or quoted
        on a Trading Market (and the Company believes, in good faith, that
        trading of the Common Stock on a Trading Market will continue
        uninterrupted for the foreseeable future), (v) there is a sufficient
        number of authorized but unissued and otherwise unreserved shares of
        Common Stock for the issuance of all of the shares issuable pursuant to
        the Transaction Documents, (vi) there is then existing no Event of
        Default or event which, with the passage of time or the giving of
        notice, would constitute an Event of Default, (vii) the issuance of the
        shares in question (or, in the case of a redemption, the shares issuable
        upon conversion in full of the redemption amount) to the Holder would
        not violate the limitations set forth in Section 4(c), (viii) no public
        announcement of a pending or proposed Fundamental Transaction, Change of
        Control Transaction or acquisition transaction has occurred that has not
        been consummated and (ix) for a period of 20 consecutive Trading Days
        prior to the applicable date in question, the daily trading volume for
        the Common Stock on the Trading Market exceeds 200,000 shares per
        Trading Day (subject to adjustment for forward and reverse stock splits
        and the like).

                "Event of Default" shall have the meaning set forth in
        Section 8.

                "Exchange Act" means the Securities Exchange Act of 1934, as
        amended, and the rules and regulations promulgated thereunder.

                "Fundamental Transaction" shall have the meaning set forth in
        Section 5(d).

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

                "Interest Notice Period" shall have the meaning set forth in
        Section 2(a).

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                "Interest Payment Date" shall have the meaning set forth in
        Section 2(a).

                "Interest Share Amount" shall have the meaning set forth in
        Section 2(a).

                "Late Fees" shall have the meaning set forth in Section 2(d).

                "Mandatory Default Amount" shall equal the sum of (i) the
        greater of: (A) 130% of the principal amount of this Debenture to be
        prepaid, plus all accrued and unpaid interest thereon, or (B) the
        principal amount of this Debenture to be prepaid, plus all other accrued
        and unpaid interest hereon, divided by the Conversion Price on (x) the
        date the Mandatory Default Amount is demanded or otherwise due or (y)
        the date the Mandatory Default Amount is paid in full, whichever is
        less, multiplied by the VWAP on (x) the date the Mandatory Default
        Amount is demanded or otherwise due or (y) the date the Mandatory
        Default Amount is paid in full, whichever is greater, and (ii) all other
        amounts, costs, expenses and liquidated damages due in respect of this
        Debenture.

                "New York Courts" shall have the meaning set forth in
        Section 9(d).

                "Notice of Conversion" shall have the meaning set forth in
        Section 4(a).

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

                "Permitted Indebtedness" shall mean (a) the Indebtedness
        existing on the Original Issue Date and set forth on Schedule 3.1(gg)
        attached to the Purchase Agreement, (b) lease obligations and purchase
        money Indebtedness of up to $3,000,000, in the aggregate, incurred in
        connection with the acquisition of capital assets and lease obligations
        with respect to newly acquired or leased assets, (c) up to $1.8 million
        of Indebtedness under an asset-based line of credit (with a nationally
        recognized commercial lending institution whose primary business is not
        investing in securities) entered into in connection with the replacement
        of the Company's existing line of credit and (d) Indebtedness incurred
        by the Company that does not mature or require payments of principal
        prior to the four year anniversary of the Original Issue Date and is
        made expressly subordinate in right of payment to the Indebtedness
        evidenced by this Debenture, as reflected in a written agreement
        acceptable to the Holder and approved by the Holder in writing.

                "Permitted Lien" shall mean the individual and collective
        reference to the following: (a) Liens for taxes, assessments and other
        governmental charges or levies not yet due or Liens for taxes,
        assessments and other governmental charges or levies being contested in
        good faith and by appropriate proceedings for which adequate reserves
        (in the good faith judgment of the management of the Company) have been
        established in accordance with GAAP, (b) Liens imposed by law which were
        incurred in the ordinary course of business, such as carriers',
        warehousemen's, materialmen's and mechanics' Liens, statutory landlords'
        Liens, and other similar Liens arising in the ordinary course of

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<PAGE>

        business, and (x) which do not individually or in the aggregate
        materially detract from the value of such property or assets or
        materially impair the use thereof in the operation of the business of
        the Company and its consolidated Subsidiaries or (y) which are being
        contested in good faith by appropriate proceedings, which proceedings
        have the effect of preventing the forfeiture or sale of the property or
        asset subject to such Lien, (c) Liens incurred in connection with
        Permitted Indebtedness under clause (b) thereunder provided that such
        Liens are not secured by assets of the Company or its Subsidiaries other
        than the assets so acquired or leased, (d) pledges or deposits in
        connection with worker's compensation, unemployment insurance and other
        social security legislation, (e) Liens on equipment (including proceeds
        thereof and accessions thereto) leased by the Company pursuant to
        operating leases entered into in the ordinary course of business
        incurred solely for the purpose of financing the lease of such
        equipment, (f) Liens in favor of customs authorities arising as a matter
        of law to secure payment of customs duties in connection with the
        importation of goods, (g) Liens arising solely by virtue of any
        statutory or common law provision relating to banker's liens, rights of
        setoff or similar rights and remedies as to deposit accounts or other
        funds maintained with a creditor depository institution and (h) the
        Liens existing on the Original Issue Date and set forth on Schedule
        3.1(_) attached to the Purchase Agreement.

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

                "Purchase Agreement" means the Securities Purchase Agreement,
        dated as of December __, 2005, to which the Company and the original
        Holder are parties, as amended, modified or supplemented from time to
        time in accordance with its terms.

                "Quarterly Conversion Period" shall have the meaning set forth
        in Section 6(a) hereof.

                "Quarterly Conversion Price" shall have the meaning set forth in
        Section 6(a) hereof.

                "Quarterly Redemption" shall mean the redemption of this
        Debenture pursuant to Section 6(a) hereof.

                "Quarterly Redemption Amount" shall mean, as to a Quarterly
        Redemption, $____(1).

                "Quarterly Redemption Date" means each January 1, April 1,
        July 1 and October 1, commencing on January 1, 2008 and ending upon the
        full redemption of this Debenture.

                "Quarterly Redemption Notice" shall have the meaning set forth
        in Section 6(a) hereof.

                "Quarterly Redemption Period" shall have the meaning set forth
        in Section 6(a) hereof.

----------
(1)     1/9 th of the principal amount of the Debenture.

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<PAGE>

                "Quarterly Redemption Share Amount" shall have the meaning set
        forth in Section 6(a) hereof.

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

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

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

                "Subsidiary" shall have the meaning given to such term in the
        Purchase Agreement.

                "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 Nasdaq SmallCap Market, the American Stock Exchange, the
        New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
        Board.

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

                "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 the OTC Bulletin Board and if
        prices for the Common Stock are then reported in the "Pink Sheets"
        published by 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
        a nationally recognized independent appraiser selected in good faith by
        the Holder and reasonably acceptable to the Company.

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<PAGE>

        Section 2.      Interest.

                a)      Payment of Interest in Cash or Kind. The Company shall
        pay interest to the Holder on the aggregate unconverted and then
        outstanding principal amount of this Debenture at the rate of 8% per
        annum, payable quarterly on January 1, April 1, July 1 and October 1,
        beginning on January 1, 2006, on each Quarterly Redemption Date (as to
        that principal amount then being redeemed), on each Conversion Date (as
        to that principal amount then being converted) and on the Maturity Date
        (except that, if any such date is not a Business Day, then such payment
        shall be due on the next succeeding Business Day) (each such date, an
        "Interest Payment Date"), in cash or duly authorized, fully paid and
        non-assessable shares of Common Stock at the Interest Conversion Rate,
        or a combination thereof (the amount to be paid in shares, the "Interest
        Share Amount"); provided, however, payment in shares of Common Stock may
        only occur if during the 20 Trading Days immediately prior to the
        applicable Interest Payment Date (the "Interest Notice Period") and
        through and including the date such shares of Common Stock are issued to
        the Holder all of the Equity Conditions (excluding condition (ix) in the
        definition of Equity Conditions), unless waived by the Holder in
        writing, have been met and the Company shall have given the Holder
        notice in accordance with the notice requirements set forth below.

                b)      Company's Election to Pay Interest in Kind. Subject to
        the terms and conditions herein, the decision whether to pay interest
        hereunder in shares of Common Stock or cash shall be at the discretion
        of the Company. Prior to the commencement of an Interest Notice Period,
        the Company shall provide the Holder with written notice of its election
        to pay interest hereunder on the applicable Interest Payment Date either
        in cash, shares of Common Stock or a combination thereof (the Company
        may indicate in such notice that the election contained in such notice
        shall continue for later periods until revised) and the Interest Share
        Amount as to the applicable Interest Payment Date. During any Interest
        Notice Period, the Company's election (whether specific to an Interest
        Payment Date or continuous) shall be irrevocable as to such Interest
        Payment Date. Subject to the aforementioned conditions, failure to
        timely provide such written notice shall be deemed an election by the
        Company to pay the interest on such Interest Payment Date in cash. At
        any time the Company delivers a notice to the Holder of its election to
        pay the interest in shares of Common Stock, the Company shall file a
        prospectus supplement pursuant to Rule 424 disclosing such election.

                c)      Interest Calculations. Interest shall be calculated on
        the basis of a 360-day year and shall accrue daily commencing on the
        Original Issue Date until payment in full of the principal sum, together
        with all accrued and unpaid interest and other amounts which may become
        due hereunder, has been made. Payment of interest in shares of Common
        Stock shall otherwise occur pursuant to Section 4(d)(ii) and only for
        purposes of the payment of interest in shares, the Interest Payment Date
        shall be deemed the Conversion Date. Interest shall cease to accrue with
        respect to any principal amount converted, provided that the Company in
        fact delivers the Conversion Shares within the time period required by
        Section 4(d)(ii).

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        Interest hereunder will be paid to the Person in whose name this
        Debenture is registered on the records of the Company regarding
        registration and transfers of this Debenture (the "Debenture Register").
        Except as otherwise provided herein, if at any time the Company pays
        interest partially in cash and partially in shares of Common Stock to
        the holders of the Debentures, then such payment shall be distributed
        ratably among the holders based upon the principal amount of Debentures
        held by each holder.

                d)      Late Fee. All overdue accrued and unpaid interest to be
        paid hereunder shall entail a late fee at the rate of 18% per annum (or
        such lower maximum amount of interest permitted to be charged under
        applicable law) ("Late Fees") which will accrue daily from the date such
        interest is due hereunder through and including the date of payment.
        Notwithstanding anything to the contrary contained herein, if on any
        Interest Payment Date the Company has elected to pay interest in Common
        Stock and is not able to pay accrued interest in the form of Common
        Stock because it does not then satisfy the conditions for payment in the
        form of Common Stock set forth above, then, at the option of the Holder,
        the Company, in lieu of delivering either shares of Common Stock
        pursuant to this Section 2 or paying the regularly scheduled cash
        interest payment, shall deliver, within three Trading Days of each
        applicable Interest Payment Date, an amount in cash equal to the product
        of the number of shares of Common Stock otherwise deliverable to the
        Holder in connection with the payment of interest due on such Interest
        Payment Date and the highest VWAP during the period commencing on the
        Interest Payment Date and ending on the Trading Day prior to the date
        such payment is made.

                e)      Prepayment. Except as otherwise set forth in this
        Debenture, the Company may not prepay any portion of the principal
        amount of this Debenture without the prior written consent of the
        Holder.

        Section 3.      Registration of Transfers and Exchanges.

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

                b)      Investment Representations. This Debenture has been
        issued subject to certain investment representations of the original
        Holder set forth in the Purchase Agreement and may be transferred or
        exchanged only in compliance with the Purchase Agreement and applicable
        federal and state securities laws and regulations.

                c)      Reliance on Debenture Register. Prior to due presentment
        to the Company for transfer of this Debenture, the Company and any agent
        of the Company may treat the Person in whose name this Debenture is duly
        registered on the Debenture Register as the owner hereof for the purpose
        of receiving payment as herein provided and for all other purposes,
        whether or not this Debenture is overdue, and neither the Company nor
        any such agent shall be affected by notice to the contrary.

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        Section 4.      Conversion.

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

                b)      Conversion Price. The conversion price in effect on any
        Conversion Date shall be equal to $0.4544 (subject to adjustment
        herein)(the "Conversion Price").

                c)      Conversion Limitations.

                        i.      [RESERVED].

                        ii.     Holder's Restriction on Conversion. The Company
                shall not effect any conversion of this Debenture, and a Holder
                shall not have the right to convert any portion of this
                Debenture to the extent that after giving effect to such
                conversion, such Holder (together with such Holder's Affiliates,
                and any other person or entity acting as a group together with
                such Holder or any of such Holder's Affiliates), as set forth on
                the applicable Notice of Conversion, would beneficially own in
                excess of the Beneficial Ownership Limitation (as defined
                below). For purposes of the foregoing sentence, the number of
                shares of Common Stock beneficially owned by such Holder and its
                Affiliates shall include the number of shares of Common Stock
                issuable upon conversion of this Debenture with respect to which
                the determination of such sentence is being

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<PAGE>

                made, but shall exclude the number of shares of Common Stock
                which would be issuable upon (A) conversion of the remaining,
                nonconverted principal amount of this Debenture beneficially
                owned by such 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 Debentures or the Warrants) subject to a limitation on
                conversion or exercise analogous to the limitation contained
                herein beneficially owned by such Holder or any of its
                Affiliates. Except as set forth in the preceding sentence, for
                purposes of this Section 4(c), beneficial ownership shall be
                calculated in accordance with Section 13(d) of the Exchange Act
                and the rules and regulations promulgated thereunder. To the
                extent that the limitation contained in this Section 4(c)
                applies, the determination of whether this Debenture is
                convertible (in relation to other securities owned by such
                Holder together with any Affiliates) and of which amounts of
                this Debenture are convertible shall be in the sole discretion
                of such Holder, and the submission of a Notice of Conversion
                shall be deemed to be such Holder's determination of whether
                this Debenture may be converted (in relation to other securities
                owned by such Holder) and which amounts of this Debenture are
                convertible, in each case subject to such aggregate percentage
                limitations. To ensure compliance with this restriction, each
                Holder will be deemed to represent to the Company each time it
                delivers a Notice of Conversion that such Notice of Conversion
                has not violated the restrictions set forth in this paragraph
                and the Company shall have no obligation to verify or confirm
                the accuracy of such determination. In addition, a determination
                as to any group status as contemplated above shall be determined
                in accordance with Section 13(d) of the Exchange Act and the
                rules and regulations promulgated thereunder. For purposes of
                this Section 4(c), in determining the number of outstanding
                shares of Common Stock, a Holder may rely on the number of
                outstanding shares of Common Stock as reflected in the most
                recent of the following: (A) the Company's most recent Form
                10-QSB or Form 10-KSB, as the case may be, (B) a more recent
                public announcement by the Company or (C) 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 a Holder, the Company shall within two
                Trading Days confirm orally and in writing to such Holder the
                number of shares of Common Stock then outstanding. In any case,
                the number of outstanding shares of Common Stock shall be
                determined after giving effect to the conversion or exercise of
                securities of the Company, including this Debenture, by such
                Holder or its Affiliates since the date as of which such number
                of outstanding shares of Common Stock was reported. The
                "Beneficial Ownership Limitation" shall be 4.99% of the number
                of shares of the Common Stock outstanding immediately after
                giving effect to the issuance of shares of Common Stock issuable
                upon conversion of

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                this Debenture held by the Holder. The Beneficial Ownership
                Limitation provisions of this Section 4(c) may be waived by such
                Holder, at the election of such Holder, upon not less than 61
                days' prior notice to the Company to change the Beneficial
                Ownership Limitation to 9.99% of the number of shares of the
                Common Stock outstanding immediately after giving effect to the
                issuance of shares of Common Stock upon conversion of this
                Debenture held by the Holder, and the provisions of this Section
                4(c) shall continue to apply. Upon such a change by a Holder of
                the Beneficial Ownership Limitation from such 4.99% limitation
                to such 9.99% limitation, the Beneficial Ownership Limitation
                may not be waived by such Holder. The provisions of this
                paragraph shall be implemented in a manner otherwise than in
                strict conformity with the terms of this Section 4(c) to correct
                this paragraph (or any portion hereof) which may be defective or
                inconsistent with the intended Beneficial Ownership Limitation
                herein contained or to make changes or supplements necessary or
                desirable to properly give effect to such limitation. The
                limitations contained in this paragraph shall apply to a
                successor holder of this Debenture.

                d)      Mechanics of Conversion

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

                        ii.     Delivery of Certificate Upon Conversion. Not
                later than three Trading Days after any Conversion Date, the
                Company will deliver or cause to be delivered to the Holder (A)
                a certificate or certificates representing the Conversion Shares
                which shall be free of restrictive legends and trading
                restrictions (other than those required by the Purchase
                Agreement) representing the number of shares of Common Stock
                being acquired upon the conversion of this Debenture (including,
                if so timely elected by the Company, shares of Common Stock
                representing the payment of accrued interest otherwise
                determined pursuant to Section 2(a) but assuming that the
                Interest Payment Period is the 20 Trading Days period
                immediately prior to the date on which the Conversion Notice is
                delivered to the Company) and (B) a bank check in the amount of
                accrued and unpaid interest (if the Company is required to pay
                accrued interest in cash). The Company shall, if available and
                if allowed under applicable securities laws, use its best
                efforts to deliver any certificate or certificates required to
                be delivered by the Company under this Section electronically
                through the Depository Trust Corporation or another established
                clearing corporation performing similar functions.

                        iii.    Failure to Deliver Certificates. If in the case
                of any Notice of Conversion such certificate or certificates are
                not delivered to or as directed by the applicable Holder by the
                third Trading Day after a Conversion Date, the Holder shall be
                entitled by written notice to the Company at any time on or
                before its receipt of such certificate or certificates
                thereafter, to rescind such conversion, in which event the
                Company shall immediately return the certificates representing
                the principal amount of this Debenture tendered for conversion.

                                       11
<PAGE>

                        iv.     Obligation Absolute; Partial Liquidated Damages.
                If the Company fails for any reason to deliver to the Holder
                such certificate or certificates pursuant to Section 4(d)(ii) by
                the third Trading Day after the Conversion Date, the Company
                shall pay to such Holder, in cash, as liquidated damages and not
                as a penalty, for each $1000 of principal amount being
                converted, $10 per Trading Day (increasing to $20 per Trading
                Day after 5 Trading Days after such damages begin to accrue) for
                each Trading Day after such fifth Trading Day until such
                certificates are delivered. The Company's obligations to issue
                and deliver the Conversion Shares upon conversion of this
                Debenture in accordance with the terms hereof are absolute and
                unconditional, irrespective of any action or inaction by the
                Holder to enforce the same, any waiver or consent with respect
                to any provision hereof, the recovery of any judgment against
                any Person or any action to enforce the same, or any setoff,
                counterclaim, recoupment, limitation or termination, or any
                breach or alleged breach by the Holder or any other Person of
                any obligation to the Company or any violation or alleged
                violation of law by the Holder or any other person, and
                irrespective of any other circumstance which might otherwise
                limit such obligation of the Company to the Holder in connection
                with the issuance of such Conversion Shares; provided, however,
                such delivery shall not operate as a waiver by the Company of
                any such action the Company may have against the Holder. In the
                event the Holder of this Debenture shall elect to convert any or
                all of the outstanding principal amount hereof, the Company may
                not refuse conversion based on any claim that the Holder or any
                one associated or affiliated with the Holder has been engaged in
                any violation of law, agreement or for any other reason, unless,
                an injunction from a court, on notice, restraining and or
                enjoining conversion of all or part of this Debenture shall have
                been sought and obtained and the Company posts a surety bond for
                the benefit of the Holder in the amount of 150% of the principal
                amount of this Debenture outstanding, which is subject to the
                injunction, which bond shall remain in effect until the
                completion of arbitration/litigation of the dispute and the
                proceeds of which shall be payable to such Holder to the extent
                it obtains judgment. In the absence of an injunction precluding
                the same, the Company shall issue Conversion Shares or, if
                applicable, cash, upon a properly noticed conversion. Nothing
                herein shall limit a Holder's right to pursue actual damages or
                declare an Event of Default pursuant to Section 8 herein for the
                Company's failure to deliver Conversion Shares within the period
                specified herein and such Holder shall have the right to pursue
                all remedies available to it at law or in equity including,
                without limitation, a decree of specific performance and/or
                injunctive relief. The exercise of any such rights shall not
                prohibit the Holder from seeking to enforce damages pursuant to
                any other Section hereof or under applicable law.

                        v.      Compensation for Buy-In on Failure to Timely
                Deliver Certificates Upon Conversion. In addition to any other
                rights available to the Holder, if the Company fails for any
                reason to deliver to the Holder such certificate or certificates
                pursuant to Section 4(d)(ii) by the fifth Trading Day after the
                Conversion Date, and if after such fifth Trading Day the Holder
                is required by its

                                       12
<PAGE>

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

                        vi.     Reservation of Shares Issuable Upon Conversion.
                The Company covenants that it will at all times reserve and keep
                available out of its authorized and unissued shares of Common
                Stock solely for the purpose of issuance upon conversion of this
                Debenture and payment of interest on this Debenture, each as
                herein provided, free from preemptive rights or any other actual
                contingent purchase rights of persons other than the Holder (and
                the other holders of the Debentures), not less than such number
                of shares of the Common Stock as shall (subject to the terms and
                conditions set forth in the Purchase Agreement) be issuable
                (taking into account the adjustments and restrictions of Section
                5) upon the conversion of the outstanding principal amount of
                this Debenture and payment of interest hereunder. The Company
                covenants that all shares of Common Stock that shall be so
                issuable shall, upon issue, be duly and validly authorized,
                issued and fully paid, nonassessable and, if the Registration
                Statement is then effective under the Securities Act, registered
                for public sale in accordance with such Registration Statement.

                                       13
<PAGE>

                        vii.    Fractional Shares. Upon a conversion hereunder
                the Company shall not be required to issue stock certificates
                representing fractions of shares of the Common Stock, but may if
                otherwise permitted, make a cash payment in respect of any final
                fraction of a share based on the VWAP at such time. If the
                Company elects not, or is unable, to make such a cash payment,
                the Holder shall be entitled to receive, in lieu of the final
                fraction of a share, one whole share of Common Stock.

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

        Section 5.      Certain Adjustments.

                a)      Stock Dividends and Stock Splits. If the Company, at any
        time while this Debenture is outstanding: (A) pays a stock dividend or
        otherwise makes a distribution or distributions on shares of its Common
        Stock or any other equity or equity equivalent securities payable in
        shares of Common Stock (which, for avoidance of doubt, shall not include
        any shares of Common Stock issued by the Company pursuant to this
        Debenture, including as interest thereon), (B) subdivides outstanding
        shares of Common Stock into a larger number of shares, (C) combines
        (including by way of reverse stock split) outstanding shares of Common
        Stock into a smaller number of shares, or (D) issues by reclassification
        of shares of the Common Stock any shares of capital stock of the
        Company, then the Conversion Price shall be multiplied by a fraction of
        which the numerator shall be the number of shares of Common Stock
        (excluding treasury shares, if any) outstanding immediately before such
        event and of which the denominator shall be the number of shares of
        Common Stock outstanding immediately after such event. Any adjustment
        made pursuant to this Section shall become effective immediately after
        the record date for the determination of stockholders entitled to
        receive such dividend or distribution and shall become effective
        immediately after the effective date in the case of a subdivision,
        combination or re-classification.

                b)      Subsequent Equity Sales. If the Company or any
        Subsidiary thereof, as applicable, at any time while this Debenture is
        outstanding, shall offer, sell, grant any option to purchase or offer,
        sell or grant any right to reprice its securities, or otherwise dispose
        of or issue (or announce any offer, sale, grant or any option to
        purchase or other disposition) any Common Stock or Common Stock
        Equivalents entitling any Person to

                                       14
<PAGE>

        acquire shares of Common Stock, at an effective price per share less
        than the then Conversion Price (such lower price, the "Base Conversion
        Price" and such issuances collectively, a "Dilutive Issuance"), as
        adjusted hereunder (if the holder of the Common Stock or Common Stock
        Equivalents so issued shall at any time, whether by operation of
        purchase price adjustments, reset provisions, floating conversion,
        exercise or exchange prices or otherwise, or due to warrants, options or
        rights per share which is issued in connection with such issuance, be
        entitled to receive shares of Common Stock at an effective price per
        share which is less than the Conversion Price, such issuance shall be
        deemed to have occurred for less than the Conversion Price on such date
        of the Dilutive Issuance), then the Conversion Price shall be reduced to
        equal the Base Conversion Price. Such adjustment shall be made whenever
        such Common Stock or Common Stock Equivalents are issued.
        Notwithstanding the foregoing, no adjustment will be made under this
        Section 5(b) in respect of an Exempt Issuance. The Company shall notify
        the Holder in writing, no later than the Business 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 5(b), upon the occurrence of
        any Dilutive Issuance, after the date of such Dilutive Issuance the
        Holder is entitled to receive a number of Conversion Shares based upon
        the Base Conversion Price regardless of whether the Holder accurately
        refers to the Base Conversion Price in the Notice of Conversion.

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

                d)      Fundamental Transaction. If, at any time while this
        Debenture is outstanding, (A) the Company effects any merger or
        consolidation of the Company with or into another Person, (B) the
        Company effects any sale of all or substantially all of its assets in
        one or a series of related transactions, (C) any tender offer or
        exchange offer (whether by the Company or another Person) is completed
        pursuant to which holders of

                                       15
<PAGE>

        Common Stock are permitted to tender or exchange their shares for other
        securities, cash or property, or (D) the Company effects any
        reclassification of the Common Stock or any compulsory share exchange
        pursuant to which the Common Stock is effectively converted into or
        exchanged for other securities, cash or property (in any such case, a
        "Fundamental Transaction"), then upon any subsequent conversion of this
        Debenture, the Holder shall have the right to receive, for each
        Conversion Share that would have been issuable upon such conversion
        immediately prior to the occurrence of such Fundamental Transaction, the
        same kind and amount of securities, cash or property as it would have
        been entitled to receive upon the occurrence of such Fundamental
        Transaction if it had been, immediately prior to such Fundamental
        Transaction, the holder of one share of Common Stock (the "Alternate
        Consideration"). For purposes of any such conversion, the determination
        of the Conversion 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 Conversion Price among
        the Alternate Consideration in a reasonable manner reflecting the
        relative value of any different components of the Alternate
        Consideration. If holders of Common Stock are given any choice as to the
        securities, cash or property to be received in a Fundamental
        Transaction, then the Holder shall be given the same choice as to the
        Alternate Consideration it receives upon any conversion of this
        Debenture following such Fundamental Transaction. To the extent
        necessary to effectuate the foregoing provisions, any successor to the
        Company or surviving entity in such Fundamental Transaction shall issue
        to the Holder a new debenture consistent with the foregoing provisions
        and evidencing the Holder's right to convert such debenture into
        Alternate Consideration. The terms of any agreement pursuant to which a
        Fundamental Transaction is effected shall include terms requiring any
        such successor or surviving entity to comply with the provisions of this
        paragraph (d) and insuring that this Debenture (or any such replacement
        security) will be similarly adjusted upon any subsequent transaction
        analogous to a Fundamental Transaction.

                e)      Calculations. All calculations under this Section 5
        shall be made to the nearest cent or the nearest 1/100th of a share, as
        the case may be. For purposes of this Section 5, 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.

                f)      Notice to the Holder.

                        i.      Adjustment to Conversion Price. Whenever the
                Conversion Price is adjusted pursuant to any of this Section 5,
                the Company shall promptly mail to each Holder a notice setting
                forth the Conversion Price after such adjustment and setting
                forth a brief statement of the facts requiring such adjustment.
                If the Company issues a variable rate security, despite the
                prohibition thereon in the Purchase Agreement, the Company shall
                be deemed to have issued Common Stock or Common Stock
                Equivalents at the lowest possible conversion or exercise

                                       16
<PAGE>

                price at which such securities may be converted or exercised in
                the case of a Variable Rate Transaction (as defined in the
                Purchase Agreement).

                        ii.     Notice to Allow Conversion by Holder. If (A) the
                Company shall declare a dividend (or any other distribution) on
                the Common Stock; (B) the Company shall declare a special
                nonrecurring cash dividend on or a redemption of the Common
                Stock; (C) the Company shall authorize the granting to all
                holders of the Common Stock rights or warrants to subscribe for
                or purchase any shares of capital stock of any class or of any
                rights; (D) the approval of any stockholders of the Company
                shall be required in connection with any reclassification of the
                Common Stock, any consolidation or merger to which the Company
                is a party, any sale or transfer of all or substantially all of
                the assets of the Company, of any compulsory share exchange
                whereby the Common Stock is converted into other securities,
                cash or property; (E) the Company shall authorize the voluntary
                or involuntary dissolution, liquidation or winding up of the
                affairs of the Company; then, in each case, the Company shall
                cause to be filed at each office or agency maintained for the
                purpose of conversion of this Debenture, and shall cause to be
                mailed to the Holder at its last addresses as it shall appear
                upon the stock books of the Company, at least 20 calendar days
                prior to the applicable record or effective date hereinafter
                specified, a notice stating (x) the date on which a record is to
                be taken for the purpose of such dividend, distribution,
                redemption, rights or warrants, or if a record is not to be
                taken, the date as of which the holders of the Common Stock of
                record to be entitled to such dividend, distributions,
                redemption, rights or warrants are to be determined or (y) the
                date on which such reclassification, consolidation, merger,
                sale, transfer or share exchange is expected to become effective
                or close, and the date as of which it is expected that holders
                of the Common Stock of record shall be entitled to exchange
                their shares of the Common Stock for securities, cash or other
                property deliverable upon such reclassification, consolidation,
                merger, sale, transfer or share exchange; provided, that the
                failure to mail such notice or any defect therein or in the
                mailing thereof shall not affect the validity of the corporate
                action required to be specified in such notice. The Holder is
                entitled to convert this Debenture during the 20-day period
                commencing the date of such notice to the effective date of the
                event triggering such notice.

        Section 6.      Quarterly Redemption.

                a)      Quarterly Redemption. On each Quarterly Redemption Date,
        the Company shall redeem the Quarterly Redemption Amount plus accrued
        but unpaid interest, the sum of all liquidated damages and any other
        amounts then owing to such Holder in respect of this Debenture (the
        "Quarterly Redemption"). The Quarterly Redemption Amount due on each
        Quarterly Redemption Date shall be paid in cash; provided, however, as
        to any Quarterly Redemption and upon 20 Trading Days' prior written
        irrevocable notice (the "Quarterly Redemption Notice" and the 20 Trading
        Day period immediately following the Quarterly Redemption Notice, the

                                       17
<PAGE>

        "Quarterly Redemption Period"), in lieu of a cash redemption payment the
        Company may elect to pay all or part of a Quarterly Redemption Amount in
        Conversion Shares (such dollar amount to be paid on a Quarterly
        Redemption Date in Conversion Shares, the "Quarterly Redemption Share
        Amount") based on a conversion price equal to the lesser of (i) the then
        Conversion Price and (ii) 90% of the average of the VWAPs for the 20
        consecutive Trading Days ending on the Trading Day that is immediately
        prior to the applicable Quarterly Redemption Date (subject to adjustment
        for any stock dividend, stock split, stock combination or other similar
        event affecting the Common Stock during such 20 Trading Day period) (the
        price calculated during the 20 Trading Day period immediately prior to
        the Quarterly Redemption Date, the "Quarterly Conversion Price" and such
        period, the "Quarterly Conversion Period"); provided, further, that the
        Company may not pay the Quarterly Redemption Amount in Conversion Shares
        unless, (y) from the date the Holder receives the duly delivered
        Quarterly Redemption Notice through and until the date such Quarterly
        Redemption is paid in full, the Equity Conditions, unless waived in
        writing by the Holder, have been satisfied and (z) as to such Quarterly
        Redemption, prior to such Quarterly Redemption Period (but not more than
        5 Trading Days prior to the commencement of the Quarterly Redemption
        Period), the Company shall have delivered to the Holder's account with
        The Depository Trust Company a number of shares of Common Stock to be
        applied against such Quarterly Redemption Share Amount equal to the
        quotient of (x) the applicable Quarterly Redemption Share Amount divided
        by (y) the then Conversion Price (the "Pre-Redemption Conversion
        Shares"). The Holder may convert, pursuant to Section 4(a), any
        principal amount of this Debenture subject to a Quarterly Redemption at
        any time prior to the date that the Quarterly Redemption Amount and all
        amounts owing thereon are due and paid in full. Unless otherwise
        indicated by the Holder in the applicable Notice of Conversion, any
        principal amount of this Debenture converted during the applicable
        Quarterly Redemption Period until the date the Quarterly Redemption
        Amount is paid in full shall be first applied to the principal amount
        subject to the Quarterly Redemption Amount payable in cash and then to
        the Quarterly Redemption Share Amount. Any principal amount of this
        Debenture converted during the applicable Quarterly Redemption Period in
        excess of the Quarterly Redemption Amount shall be applied against the
        last principal amount of this Debenture scheduled to be redeemed
        hereunder, in reverse time order from the Maturity Date; provided,
        however, if any such conversion is applied to such Quarterly Redemption
        Amount, the Pre-Redemption Conversion Shares, if any were issued in
        connection with such Quarterly Redemption or were not already applied to
        such conversions, shall be first applied against such conversion. The
        Company covenants and agrees that it will honor all Notice of
        Conversions tendered up until such amounts are paid in full. The
        Company's determination to pay a Quarterly Redemption in cash, shares of
        Common Stock or a combination thereof shall be applied ratably to all of
        the holders of the Debentures based on their (or their predecessor's)
        initial purchases of Debentures pursuant to the Purchase Agreement. At
        any time the Company delivers a notice to the Holder of its election to
        pay the Quarterly Redemption Amount in shares of Common Stock, the
        Company shall file a prospectus supplement pursuant to Rule 424
        disclosing such election.

                                       18
<PAGE>

                b)      Redemption Procedure. The payment of cash pursuant to a
        Quarterly Redemption shall be made on the Quarterly Redemption Date. If
        any portion of the cash payment for a Quarterly Redemption shall not be
        paid by the Company by the respective due date, interest shall accrue
        thereon at the rate of 18% per annum (or the maximum rate permitted by
        applicable law, whichever is less) until the payment of the Optional
        Redemption Amount, plus all amounts owing thereon is paid in full.
        Alternatively, if any portion of the Quarterly Redemption Amount remains
        unpaid after such date, the Holders subject to such redemption may
        elect, by written notice to the Company given at any time thereafter, to
        invalidate ab initio such redemption, notwithstanding anything herein
        contained to the contrary. Notwithstanding anything to the contrary in
        this Section 6, the Company's determination to redeem in cash or its
        elections under Section 6(b) shall be applied among the Holders of
        Debentures ratably. The Holder may elect to convert the outstanding
        principal amount of the Debenture pursuant to Section 4 prior to actual
        payment in cash for any redemption under this Section 6 by fax delivery
        of a Notice of Conversion to the Company.

        Section 7.      Negative  Covenants.  So long as any portion of this
Debenture is outstanding, the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly:

                a)      other than Permitted Indebtedness, enter into, create,
        incur, assume, guarantee or suffer to exist any indebtedness for
        borrowed money of any kind, including but not limited to, a guarantee,
        on or with respect to any of its property or assets now owned or
        hereafter acquired or any interest therein or any income or profits
        therefrom;

                b)      other than Permitted Liens, enter into, create, incur,
        assume or suffer to exist any liens of any kind, on or with respect to
        any of its property or assets now owned or hereafter acquired or any
        interest therein or any income or profits therefrom;

                c)      amend its certificate of incorporation, bylaws or other
        charter documents so as to materially and adversely affect any rights of
        the Holder;

                d)      repay, repurchase or offer to repay, repurchase or
        otherwise acquire more than a de minimis number of shares of its Common
        Stock or Common Stock Equivalents other than as to the Conversion Shares
        to the extent permitted or required under the Transaction Documents or
        as otherwise permitted by the Transaction Documents;

                e)      enter into any agreement with respect to any of the
        foregoing; or

                f)      pay cash dividends or distributions on any equity
        securities of the Company other than as to the Securities to the extent
        permitted or required under the Transaction Documents.

                                       19
<PAGE>

        Section 8.      Events of Default.

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

                        i.      any default in the payment of (A) the principal
                amount of any Debenture, or (B) interest (including Late Fees)
                on, or liquidated damages in respect of, any Debenture, as and
                when the same shall become due and payable (whether on a
                Conversion Date or the Maturity Date or by acceleration or
                otherwise) which default, solely in the case of an interest
                payment or other default under clause (B) above, is not cured,
                within 3 Trading Days;

                        ii.     the Company shall fail to observe or perform any
                other covenant or agreement contained in this Debenture or any
                other Debenture (other than a breach by the Company of its
                obligations to deliver shares of Common Stock to the Holder upon
                conversion which breach is addressed in clause (xi) below) which
                failure is not cured, if possible to cure, within the earlier to
                occur of (A) 5 Trading Days after notice of such default sent by
                the Holder or by any other Holder and (B)10 Trading Days after
                the Company shall become or should have become aware of such
                failure;

                        iii.    a default or event of default (subject to any
                grace or cure period provided for in the applicable agreement,
                document or instrument) shall occur under (A) any of the
                Transaction Documents, or (B) any other material agreement,
                lease, document or instrument to which the Company or any
                Subsidiary is bound;

                        iv.     any representation or warranty made herein, in
                any other Transaction Documents, in any written statement
                pursuant hereto or thereto, or in any other report, financial
                statement or certificate made or delivered to the Holder or any
                other holder of Debentures shall be untrue or incorrect in any
                material respect as of the date when made or deemed made;

                        v.      (i) the Company or any of its Subsidiaries shall
                commence a case, as debtor, a case under any applicable
                bankruptcy or insolvency laws as now or hereafter in effect or
                any successor thereto, or the Company or any Subsidiary
                commences any other proceeding under any reorganization,
                arrangement, adjustment of debt, relief of debtors, dissolution,
                insolvency or liquidation or similar law of any jurisdiction
                whether now or hereafter in effect relating to the Company or
                any Subsidiary thereof or (ii) there is commenced a case against
                the Company or any Subsidiary thereof, under any applicable
                bankruptcy or insolvency laws, as now or hereafter in effect or
                any successor thereto which remains undismissed for a period of
                60 days; or (iii) the Company or any Subsidiary thereof is
                adjudicated by a court of competent jurisdiction insolvent or
                bankrupt; or any order of relief or other order approving any
                such case or

                                       20
<PAGE>

                proceeding is entered; or (iv) the Company or any Subsidiary
                thereof suffers any appointment of any custodian or the like for
                it or any substantial part of its property which continues
                undischarged or unstayed for a period of 60 days; or (v) the
                Company or any Subsidiary thereof makes a general assignment for
                the benefit of creditors; or (vi) the Company shall fail to pay,
                or shall state that it is unable to pay, or shall be unable to
                pay, its debts generally as they become due; or (vii) the
                Company or any Subsidiary thereof shall call a meeting of its
                creditors with a view to arranging a composition, adjustment or
                restructuring of its debts; or (viii) the Company or any
                Subsidiary thereof shall by any act or failure to act expressly
                indicate its consent to, approval of or acquiescence in any of
                the foregoing; or (ix) any corporate or other action is taken by
                the Company or any Subsidiary thereof for the purpose of
                effecting any of the foregoing;

                        vi.     the Company or any Subsidiary shall default in
                any of its obligations under any mortgage, credit agreement or
                other facility, indenture agreement, factoring agreement or
                other instrument under which there may be issued, or by which
                there may be secured or evidenced any indebtedness for borrowed
                money or money due under any long term leasing or factoring
                arrangement of the Company in an amount exceeding $150,000,
                whether such indebtedness now exists or shall hereafter be
                created and such default shall result in such indebtedness
                becoming or being declared due and payable prior to the date on
                which it would otherwise become due and payable;

                        vii.    the Common Stock shall not be eligible for
                quotation on or quoted for trading on a Trading Market and shall
                not again be eligible for and quoted or listed for trading
                thereon within five Trading Days;

                        viii.   the Company shall be a party to any Change of
                Control Transaction or Fundamental Transaction, shall agree to
                sell or dispose of all or in excess of 33% of its assets in one
                or more transactions (whether or not such sale would constitute
                a Change of Control Transaction) or shall redeem or repurchase
                more than a de minimis number of its outstanding shares of
                Common Stock or other equity securities of the Company (other
                than redemptions of Conversion Shares and repurchases of shares
                of Common Stock or other equity securities of departing officers
                and directors of the Company; provided such repurchases shall
                not exceed $100,000, in the aggregate, for all officers and
                directors during the term of this Debenture);

                        ix.     a Registration Statement shall not have been
                declared effective by the Commission on or prior to the 180th
                calendar day after the Closing Date;

                        x.      if, during the Effectiveness Period (as defined
                in the Registration Rights Agreement), the effectiveness of the
                Registration Statement lapses for any reason or the Holder shall
                not be permitted to resell Registrable Securities (as defined in
                the Registration Rights Agreement) under the Registration
                Statement,

                                       21
<PAGE>

                in either case, for more than 20 consecutive Trading Days or 30
                non-consecutive Trading Days during any 12 month period;
                provided, however, that in the event that the Company is
                negotiating a merger, consolidation, acquisition or sale of all
                or substantially all of its assets or a similar transaction and
                in the written opinion of counsel to the Company, the
                Registration Statement, would be required to be amended to
                include information concerning such transactions or the parties
                thereto that is not available or may not be publicly disclosed
                at the time, the Company shall be permitted an additional 10
                consecutive Trading Days during any 12 month period relating to
                such an event;

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

                        xii.    any monetary judgment, writ or similar final
                process shall be entered or filed against the Company, any
                Subsidiary or any of their respective property or other assets
                for than $150,000, and shall remain unvacated, unbonded or
                unstayed for a period of 45 calendar days.

                b)      Remedies Upon Event of Default. If any Event of Default
        occurs, the full principal amount of this Debenture, together with
        interest and other amounts owing in respect thereof, to the date of
        acceleration shall become, at the Holder's election, immediately due and
        payable in cash. The aggregate amount payable upon an Event of Default
        shall be equal to the Mandatory Default Amount. Commencing 5 days after
        the occurrence of any Event of Default that results in the eventual
        acceleration of this Debenture, the interest rate on this Debenture
        shall accrue at the rate of 18% per annum, or such lower maximum amount
        of interest permitted to be charged under applicable law. Upon the
        payment in full of the Mandatory Default Amount on this entire Debenture
        the Holder shall promptly surrender this Debenture to or as directed by
        the Company. The Holder need not provide and the Company hereby waives
        any presentment, demand, protest or other notice of any kind, and the
        Holder may immediately and without expiration of any grace period
        enforce any and all of its rights and remedies hereunder and all other
        remedies available to it under applicable law. Such declaration may be
        rescinded and annulled by Holder at any time prior to payment hereunder
        and the Holder shall have all rights as a Debenture holder until such
        time, if any, as the full payment under this Section shall have been
        received by it. No such rescission or annulment shall affect any
        subsequent Event of Default or impair any right consequent thereon.

        Section 9.      Miscellaneous.

                a)      Notices. Any and all notices or other communications or
        deliveries to be provided by the Holder hereunder, including, without
        limitation, any Notice of

                                       22
<PAGE>

        Conversion, shall be in writing and delivered personally, by facsimile,
        sent by a nationally recognized overnight courier service, addressed to
        the Company, at the address set forth above, facsimile number
        ______________, Attn: ______________________________________or such
        other address or facsimile number as the Company may specify for such
        purposes by notice to the Holder delivered in accordance with this
        Section. Any and all notices or other communications or deliveries to be
        provided by the Company hereunder shall be in writing and delivered
        personally, by facsimile, sent by a nationally recognized overnight
        courier service addressed to each Holder at the facsimile telephone
        number or address of such Holder appearing on the books of the Company,
        or if no such facsimile telephone number or address appears, at the
        principal place of business of the Holder. Any notice or other
        communication or deliveries hereunder shall be deemed given and
        effective on the earliest of (i) the date of transmission, if such
        notice or communication is delivered via facsimile at the facsimile
        telephone number specified in this Section prior to 5:30 p.m. (New York
        City time), (ii) the date after the date of transmission, if such notice
        or communication is delivered via facsimile at the facsimile telephone
        number specified in this Section later than 5:30 p.m. (New York City
        time) on any date and earlier than 11:59 p.m. (New York City time) on
        such date, (iii) the second Business Day following the date of mailing,
        if sent by nationally recognized overnight courier service, or (iv) upon
        actual receipt by the party to whom such notice is required to be given.

                b)      Absolute Obligation. Except as expressly provided
        herein, no provision of this Debenture shall alter or impair the
        obligation of the Company, which is absolute and unconditional, to pay
        the principal of, interest and liquidated damages (if any) on, this
        Debenture at the time, place, and rate, and in the coin or currency,
        herein prescribed. This Debenture is a direct debt obligation of the
        Company. This Debenture ranks pari passu with all other Debentures now
        or hereafter issued under the terms set forth herein.

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

                d)      Governing Law. All questions concerning the
        construction, validity, enforcement and interpretation of this Debenture
        shall be governed by and construed and enforced in accordance with the
        internal laws of the State of New York, without regard to the principles
        of conflicts of law thereof. Each party agrees that all legal
        proceedings concerning the interpretations, enforcement and defense of
        the transactions contemplated by any of the Transaction Documents
        (whether brought against a party hereto or its respective affiliates,
        directors, officers, shareholders, employees or agents) shall be
        commenced in the state and federal courts sitting in the City of New
        York, Borough of Manhattan (the "New York Courts"). Each party hereto
        hereby irrevocably submits to

                                       23
<PAGE>

        the exclusive jurisdiction of the New York Courts for the adjudication
        of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein (including with
        respect to the enforcement of any of the Transaction Documents), and
        hereby irrevocably waives, and agrees not to assert in any suit, action
        or proceeding, any claim that it is not personally subject to the
        jurisdiction of any such court, or such New York Courts are improper or
        inconvenient venue for such proceeding. Each party hereby irrevocably
        waives personal service of process and consents to process being served
        in any such suit, action or proceeding by mailing a copy thereof via
        registered or certified mail or overnight delivery (with evidence of
        delivery) to such party at the address in effect for notices to it under
        this Debenture and agrees that such service shall constitute good and
        sufficient service of process and notice thereof. Nothing contained
        herein shall be deemed to limit in any way any right to serve process in
        any manner permitted by law. Each party hereto hereby irrevocably
        waives, to the fullest extent permitted by applicable law, any and all
        right to trial by jury in any legal proceeding arising out of or
        relating to this Debenture or the transactions contemplated hereby. If
        either party shall commence an action or proceeding to enforce any
        provisions of this Debenture, then the prevailing party in such action
        or proceeding shall be reimbursed by the other party for its attorneys
        fees and other costs and expenses incurred with the investigation,
        preparation and prosecution of such action or proceeding.

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

                f)      Severability. If any provision of this Debenture is
        invalid, illegal or unenforceable, the balance of this Debenture shall
        remain in effect, and if any provision is inapplicable to any person or
        circumstance, it shall nevertheless remain applicable to all other
        persons and circumstances. If it shall be found that any interest or
        other amount deemed interest due hereunder violates applicable laws
        governing usury, the applicable rate of interest due hereunder shall
        automatically be lowered to equal the maximum permitted rate of
        interest. The Company covenants (to the extent that it may lawfully do
        so) that it shall not at any time insist upon, plead, or in any manner
        whatsoever claim or take the benefit or advantage of, any stay,
        extension or usury law or other law which would prohibit or forgive the
        Company from paying all or any portion of the principal of or interest
        on this Debenture as contemplated herein, wherever enacted, now or at
        any time hereafter in force, or which may affect the covenants or the
        performance of this indenture, and the Company (to the extent it may
        lawfully do so) hereby expressly waives all benefits or advantage of any
        such law, and covenants that it will not, by resort to any such law,
        hinder, delay or impeded the execution of any power herein granted to
        the Holder, but will suffer and permit the execution of every such as
        though no such law has been enacted.

                                       24
<PAGE>

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

                h)      Headings. The headings contained herein are for
        convenience only, do not constitute a part of this Debenture and shall
        not be deemed to limit or affect any of the provisions hereof.

                i)      Assumption. Any successor to the Company or surviving
        entity in a Fundamental Transaction shall (i) assume in writing all of
        the obligations of the Company under this Debenture and the other
        Transaction Documents pursuant to written agreements in form and
        substance satisfactory to the Holder (such approval not to be
        unreasonably withheld or delayed) prior to, or contemporaneous with,
        such Fundamental Transaction and (ii) to issue to the Holder a new
        debenture of such successor entity evidenced by a written instrument
        substantially similar in form and substance to this Debenture,
        including, without limitation, having a principal amount and interest
        rate equal to the principal amounts and the interest rates of the
        Debentures held by the Holder and having similar ranking to this
        Debenture, and satisfactory to the Holder (any such approval not to be
        unreasonably withheld or delayed). The provisions of this Section 9(i)
        shall apply similarly and equally to successive Fundamental Transactions
        and shall be applied without regard to any limitations of this
        Debenture.

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

                                       25
<PAGE>

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

                                              ELECTRONIC SENSOR TECHNOLOGY, INC.

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

                                       26
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

        The undersigned hereby elects to convert principal under the 8%
Convertible Debenture of Electronic Sensor Technology, Inc., a Nevada
corporation (the "Company"), due on December __, 2009, into shares of common
stock, par value $.001 per share (the "Common Stock"), of the Company according
to the conditions hereof, as of the date written below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.

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

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

Conversion calculations:

                                Date to Effect Conversion:

                                Principal Amount of Debenture to be Converted:

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

                                Number of shares of Common Stock to be issued:

                                Signature:

                                Name:

                                Address:

                                       27
<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

The 8% Convertible Debentures due on December __, 2009, in the aggregate
principal amount of $____________ issued by Electronic Sensor Technology, Inc.
This Conversion Schedule reflects conversions made under Section 4 of the above
referenced Debenture.

                                     Dated:

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

                                       28Exhibit 4.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                       ELECTRONIC SENSOR TECHNOLOGY, INC.

                THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies
that, for value received, _____________ (the "Holder"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date hereof (the "Initial Exercise Date")
and on or prior to the close of business on the fifth anniversary of the Initial
Exercise Date (the "Termination Date") but not thereafter, to subscribe for and
purchase from Electronic Sensor Technology, Inc., a Nevada corporation (the
"Company"), up to ______ shares (the "Warrant Shares") of Common Stock, par
value $.001 per share, of the Company (the "Common Stock"). The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

        Section 1.      Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "Purchase Agreement"), dated December __, 2005, among
the Company and the purchasers signatory thereto.

        Section 2.      Exercise.

                a)      Exercise of Warrant. Exercise of the purchase rights
        represented by this Warrant may be made, in whole or in part, at any
        time or times on or after the Initial Exercise Date and on or before the
        Termination Date by delivery to the Company of a duly executed facsimile
        copy of the Notice of Exercise Form annexed hereto (or such other office
        or agency of the Company as it may designate by notice in writing to the
        registered Holder at the address of such Holder appearing on the books
        of the Company);

<PAGE>

        provided, however, within 5 Trading Days of the date said Notice of
        Exercise is delivered to the Company, if this Warrant is exercised in
        full, the Holder shall have surrendered this Warrant to the Company and
        the Company shall have received payment of the aggregate Exercise Price
        of the shares thereby purchased by wire transfer or cashier's check
        drawn on a United States bank. Notwithstanding anything herein to the
        contrary, the Holder shall not be required to physically surrender this
        Warrant to the Company until the Holder has purchased all of the Warrant
        Shares available hereunder and the Warrant has been exercised in full.
        Partial exercises of this Warrant resulting in purchases of a portion of
        the total number of Warrant Shares available hereunder shall have the
        effect of lowering the outstanding number of Warrant Shares purchasable
        hereunder in an amount equal to the applicable number of Warrant Shares
        purchased. The Holder and the Company shall maintain records showing the
        number of Warrant Shares purchased and the date of such purchases. The
        Company shall deliver any objection to any Notice of Exercise Form
        within 1 Business Day of receipt of such notice. In the event of any
        dispute or discrepancy, the records of the Holder shall be controlling
        and determinative in the absence of manifest error. The Holder and any
        assignee, by acceptance of this Warrant, acknowledge and agree that, by
        reason of the provisions of this paragraph, following the purchase of a
        portion of the Warrant Shares hereunder, the number of Warrant Shares
        available for purchase hereunder at any given time may be less than the
        amount stated on the face hereof.

                b)      Exercise Price. The exercise price of the Common Stock
        under this Warrant shall be $0.4761, subject to adjustment hereunder
        (the "Exercise Price").

                c)      Cashless Exercise. If at any time after one year from
        the date of 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:

                (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.

                Notwithstanding anything herein to the contrary, unless the
        Company provides the Holder written notice, setting forth the
        forthcoming Termination Date, at least 10 Trading Days prior to the
        Termination Date, then, on the Termination Date, this Warrant shall be
        automatically exercised via cashless exercise pursuant to this
        Section 2(c).

                                        2
<PAGE>

                d)      Holder's Restrictions. The Company shall not effect any
        exercise of this Warrant, and a Holder shall not have the right to
        exercise any portion of this Warrant, pursuant to Section 2(c) or
        otherwise, to the extent that after giving effect to such issuance after
        exercise, such Holder (together with such Holder's Affiliates, and any
        other person or entity acting as a group together with such Holder or
        any of such Holder's affiliates), as set forth on the applicable Notice
        of Exercise, would beneficially own in excess of the Beneficial
        Ownership Limitation (as defined below). For purposes of the foregoing
        sentence, the number of shares of Common Stock beneficially owned by
        such 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 such 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 Debentures or Warrants) subject to a limitation on conversion or
        exercise analogous to the limitation contained herein beneficially owned
        by such 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 and the rules and regulations promulgated thereunder, it
        being acknowledged by a Holder that the Company is not representing to
        such Holder that such calculation is in compliance with Section 13(d) of
        the Exchange Act and such 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(d) applies, the determination of
        whether this Warrant is exercisable (in relation to other securities
        owned by such Holder) and of which a portion of this Warrant is
        exercisable shall be in the sole discretion of a Holder, and the
        submission of a Notice of Exercise shall be deemed to be each 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. In addition, a
        determination as to any group status as contemplated above shall be
        determined in accordance with Section 13(d) of the Exchange Act and the
        rules and regulations promulgated thereunder. For purposes of this
        Section 2(d), in determining the number of outstanding shares of Common
        Stock, a Holder may rely on the number of outstanding shares of Common
        Stock as reflected in (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 a Holder, the Company shall within
        two Trading Days confirm orally and in writing to such Holder the number
        of shares of Common Stock then outstanding. In any case, the number of
        outstanding shares of Common Stock shall be determined after giving
        effect to the conversion or exercise of securities of the Company,
        including this Warrant, by such Holder or its affiliates since the date
        as of which such number of outstanding shares of Common Stock was
        reported. The "Beneficial Ownership Limitation" shall be 4.99% of the
        number of shares of the Common Stock outstanding immediately after
        giving effect to the issuance of shares of Common Stock issuable upon
        exercise of this Warrant. The Beneficial Ownership Limitation provisions
        of this Section 2(d) may be waived by such Holder, at the election of
        such Holder, upon not less than 61 days'

                                        3
<PAGE>

        prior notice to the Company to change the Beneficial Ownership
        Limitation to 9.99% of the number of shares of the Common Stock
        outstanding immediately after giving effect to the issuance of shares of
        Common Stock upon exercise of this Warrant, and the provisions of this
        Section 2(d) shall continue to apply. Upon such a change by a Holder of
        the Beneficial Ownership Limitation from such 4.99% limitation to such
        9.99% limitation, the Beneficial Ownership Limitation may not be waived
        by such Holder. The provisions of this paragraph shall be implemented in
        a manner otherwise than in strict conformity with the terms of this
        Section 2(d) to correct this paragraph (or any portion hereof) which may
        be defective or inconsistent with the intended Beneficial Ownership
        Limitation herein contained or to make changes or supplements necessary
        or desirable to properly give effect to such limitation. The limitations
        contained in this paragraph shall apply to a successor holder of this
        Warrant.

                e)      Mechanics of Exercise.

                                i.      Authorization of Warrant Shares. The
                        Company covenants that all Warrant Shares which may be
                        issued upon the exercise of the purchase rights
                        represented by this Warrant will, upon exercise of the
                        purchase rights represented by this Warrant, be duly
                        authorized, validly issued, fully paid and nonassessable
                        and free from all taxes, liens and charges in respect of
                        the issue thereof (other than taxes in respect of any
                        transfer occurring contemporaneously with such issue).

                                ii.     Delivery of Certificates Upon 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
                        otherwise by physical delivery to the address specified
                        by the Holder in the Notice of Exercise within 3 Trading
                        Days from the delivery to the Company of the Notice of
                        Exercise Form, surrender of this Warrant (if required)
                        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 and all taxes required to be paid by the
                        Holder, if any, pursuant to Section 2(e)(vii) prior to
                        the issuance of such shares, have been paid.

                                iii.    Delivery of New Warrants Upon Exercise.
                        If this Warrant shall have been exercised in part, the
                        Company shall, at the request of a Holder and upon
                        surrender of this Warrant certificate, at the time of
                        delivery of the certificate or certificates representing
                        Warrant Shares, deliver to Holder a new Warrant
                        evidencing the rights of Holder to purchase the
                        unpurchased Warrant Shares called for by this Warrant,
                        which new Warrant shall in all other respects be
                        identical with this Warrant.

                                        4
<PAGE>

                                iv.     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(e)(iv) by the Warrant
                        Share Delivery Date, then the Holder will have the right
                        to rescind such exercise.

                                v.      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.

                                vi.     No Fractional Shares or Scrip. No
                        fractional shares or scrip representing fractional
                        shares shall be issued upon the exercise of this
                        Warrant.

                                        5
<PAGE>

                        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 Exercise Price.

                                vii.    Charges, Taxes and Expenses. Issuance of
                        certificates for Warrant Shares shall be made without
                        charge to the Holder for any issue or transfer tax or
                        other incidental expense in respect of the issuance of
                        such certificate, all of which taxes and expenses shall
                        be paid by the Company, and such certificates shall be
                        issued in the name of the Holder or in such name or
                        names as may be directed by the Holder; provided,
                        however, that in the event certificates for Warrant
                        Shares are to be issued in a name other than the name of
                        the Holder, this Warrant when surrendered for exercise
                        shall be accompanied by the Assignment Form attached
                        hereto duly executed by the Holder; and the Company may
                        require, as a condition thereto, the payment of a sum
                        sufficient to reimburse it for any transfer tax
                        incidental thereto.

                                viii.   Closing of Books. The Company will not
                        close its stockholder books or records in any manner
                        which prevents the timely exercise of this Warrant,
                        pursuant to the terms hereof.

        Section 3.      Certain Adjustments.

                a)      Stock Dividends and Splits. If the Company, at any time
        while this Warrant is outstanding: (A) pays a stock dividend or
        otherwise make a distribution or distributions on shares of its Common
        Stock or any other equity or equity equivalent securities payable in
        shares of Common Stock (which, for avoidance of doubt, shall not include
        any shares of Common Stock issued by the Company pursuant to this
        Warrant), (B) subdivides outstanding shares of Common Stock into a
        larger number of shares, (C) combines (including by way of reverse stock
        split) outstanding shares of Common Stock into a smaller number of
        shares, or (D) issues by reclassification of shares of the Common Stock
        any shares of capital stock of the Company, then in each case the
        Exercise Price shall be multiplied by a fraction of which the numerator
        shall be the number of shares of Common Stock (excluding treasury
        shares, if any) outstanding 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(a) shall become
        effective immediately after the record date for the determination of
        stockholders entitled to receive such dividend or distribution and shall
        become effective immediately after the effective date in the case of a
        subdivision, combination or re-classification.

                b)      Subsequent Equity Sales. If the Company or any
        Subsidiary thereof, as applicable, at any time while this Warrant is
        outstanding, shall offer, sell, grant any option to purchase or offer,
        sell or grant any right to reprice its securities, or otherwise dispose
        of or issue (or announce any offer, sale, grant or any option to
        purchase or other

                                        6
<PAGE>

        disposition) any Common Stock or Common Stock Equivalents entitling any
        Person to acquire shares of Common Stock, at an effective price per
        share less than the then Exercise Price (such lower price, the "Base
        Share Price" and such issuances collectively, a "Dilutive Issuance"), as
        adjusted hereunder (if the holder of the Common Stock or Common Stock
        Equivalents so issued shall at any time, whether by operation of
        purchase price adjustments, reset provisions, floating conversion,
        exercise or exchange prices or otherwise, or due to warrants, options or
        rights per share which is issued in connection with such issuance, be
        entitled to receive shares of Common Stock at an effective price per
        share which is less than the Exercise Price, such issuance shall be
        deemed to have occurred for less than the Exercise Price on such date of
        the Dilutive Issuance), then the Exercise Price shall be reduced and
        only reduced to equal the Base Share Price and the number of Warrant
        Shares issuable hereunder shall be increased such that the aggregate
        Exercise Price payable hereunder, after taking into account the decrease
        in the Exercise Price, shall be equal to the aggregate Exercise Price
        prior to such adjustment. Such adjustment shall be made whenever such
        Common Stock or Common Stock Equivalents are issued. Notwithstanding the
        foregoing, no adjustments shall be made under this Section 3(b) in
        respect of an Exempt Issuance. 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(b), 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 Base Share Price
        regardless of whether the Holder accurately refers to the Base Share
        Price in the Notice of Exercise.

                c)      Pro Rata Distributions. If the Company, at any time
        prior to the Termination Date, shall distribute to all holders of Common
        Stock (and not to Holders of the Warrants) evidences of its indebtedness
        or assets (including cash and cash dividends) or rights or warrants to
        subscribe for or purchase any security other than the Common Stock
        (which shall be subject to Section 3(b)), then in each such case the
        Exercise Price shall be adjusted by multiplying the Exercise Price in
        effect immediately prior to the record date fixed for determination of
        stockholders entitled to receive such distribution by a fraction of
        which the denominator shall be the VWAP determined as of the record date
        mentioned above, and of which the numerator shall be such VWAP on such
        record date less the then per share fair market value at such record
        date of the portion of such assets or evidence of indebtedness so
        distributed applicable to one outstanding share of the Common Stock as
        determined by the Board of Directors in good faith. In either case the
        adjustments shall be described in a statement provided to the Holder of
        the portion of assets or evidences of indebtedness so distributed or
        such subscription rights applicable to one share of Common Stock. Such
        adjustment shall be made whenever any such distribution is made and
        shall become effective immediately after the record date mentioned
        above.

                d)      Fundamental Transaction. If, at any time while this
        Warrant is outstanding, (A) the Company effects any merger or
        consolidation of the Company with

                                        7
<PAGE>

        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 Warrant as determined in accordance with the
        Black-Scholes option pricing formula. 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(d) and insuring that this Warrant (or any such replacement
        security) will be similarly adjusted upon any subsequent transaction
        analogous to a Fundamental Transaction.

                e)      Calculations. All calculations under this Section 3
        shall be made to the nearest cent or the nearest 1/100th of a share, as
        the case may be. For purposes of this Section 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.

                f)      Voluntary Adjustment By Company. The Company may at any
        time during the term of this Warrant reduce the then current Exercise
        Price to any amount and for any period of time deemed appropriate by the
        Board of Directors of the Company.

                                        8
<PAGE>

                g)      Notice to Holders.

                                i.      Adjustment to Exercise Price. Whenever
                        the Exercise Price is adjusted pursuant to this Section
                        3, the Company shall promptly mail to each Holder a
                        notice setting forth the Exercise Price after such
                        adjustment and setting forth a brief statement of the
                        facts requiring such adjustment. If the Company issues a
                        variable rate security, despite the prohibition thereon
                        in the 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 Purchase Agreement).

                                ii.     Notice to Allow Exercise by Holder. If
                        (A) the Company shall declare a dividend (or any other
                        distribution) on the Common Stock; (B) the Company shall
                        declare a special nonrecurring cash dividend on or a
                        redemption of the Common Stock; (C) the Company shall
                        authorize the granting to all holders of the Common
                        Stock rights or warrants to subscribe for or purchase
                        any shares of capital stock of any class or of any
                        rights; (D) the approval of any stockholders of the
                        Company shall be required in connection with any
                        reclassification of the Common Stock, any consolidation
                        or merger to which the Company is a party, any sale or
                        transfer of all or substantially all of the assets of
                        the Company, of any compulsory share exchange whereby
                        the Common Stock is converted into other securities,
                        cash or property; (E) the Company shall authorize the
                        voluntary or involuntary dissolution, liquidation or
                        winding up of the affairs of the Company; then, in each
                        case, the Company shall cause to be mailed to the Holder
                        at its last address as it shall appear upon the Warrant
                        Register of the Company, at least 20 calendar days prior
                        to the applicable record or effective date hereinafter
                        specified, a notice stating (x) the date on which a
                        record is to be taken for the purpose of such dividend,
                        distribution, redemption, rights or warrants, or if a
                        record is not to be taken, the date as of which the
                        holders of the Common Stock of record to be entitled to
                        such dividend, distributions, redemption, rights or
                        warrants are to be determined or (y) the date on which
                        such reclassification, consolidation, merger, sale,
                        transfer or share exchange is expected to become
                        effective or close, and the date as of which it is
                        expected that holders of the Common Stock of record
                        shall be entitled to exchange their shares of the Common
                        Stock for securities, cash or other property deliverable
                        upon such reclassification, consolidation, merger, sale,
                        transfer or share exchange; provided that the failure to
                        mail such notice or any defect therein or in the mailing
                        thereof shall not affect the validity of the corporate
                        action required to be specified in such notice. The
                        Holder is entitled to exercise this Warrant during the
                        20-day period commencing on the date of such notice to
                        the effective date of the event triggering such notice.

                                        9
<PAGE>

                h)      Additional Exercise Price Adjustment. In addition to any
        other rights the Holder may have hereunder or under applicable law, if a
        Registration Statement that includes all Warrant Shares issuable
        hereunder is not declared effective by the Commission on or prior to the
        six month anniversary of the Initial Exercise Date, the Exercise Price
        shall be reduced by $0.03 (subject to adjustment for forward and reverse
        stock splits, stock dividends, recapitalizations and the like), and
        shall be reduced by an additional $0.03 (subject to adjustment for
        forward and reverse stock splits, stock dividends, recapitalizations and
        the like) for each thirty day period thereafter until the earlier of the
        date a Registration Statement that includes the Warrant Shares is
        declared effective by the Commission or the date the Exercise Price is
        reduced to $0.001. The adjustments pursuant to this Section 3(h) shall
        apply on a daily pro-rata basis for any portion of a 30 day period until
        a Registration Statement that includes the Warrant Shares is declared
        effective by the Commission.

        Section 4.      Transfer of Warrant.

                a)      Transferability. Subject to compliance with any
        applicable securities laws and the conditions set forth in Sections 5(a)
        and 4(d) hereof and to the provisions of Section 4.1 of the Purchase
        Agreement, this Warrant and all rights hereunder are transferable, in
        whole or in part (as long as each part if exercised in full by the
        holder thereof would entitle such holder to receive not less than 5,000
        Warrant Shares), upon surrender of this Warrant at the principal office
        of the Company, together with a written assignment of this Warrant
        substantially in the form attached hereto duly executed by the Holder or
        its agent or attorney and funds sufficient to pay any transfer taxes
        payable upon the making of such transfer. Upon such surrender and, if
        required, such payment, the Company shall execute and deliver a new
        Warrant or Warrants in the name of the assignee or assignees and in the
        denomination or denominations specified in such instrument of
        assignment, and shall issue to the assignor a new Warrant evidencing the
        portion of this Warrant not so assigned, and this Warrant shall promptly
        be cancelled. A Warrant, if properly assigned, may be exercised by a new
        holder for the purchase of Warrant Shares without having a new Warrant
        issued.

                b)      New Warrants. This Warrant may be divided or combined
        with other Warrants upon presentation hereof at the aforesaid office of
        the Company, together with a written notice specifying the names and
        denominations in which new Warrants are to be issued, signed by the
        Holder or its agent or attorney. Subject to compliance with Section
        4(a), as to any transfer which may be involved in such division or
        combination, the Company shall execute and deliver a new Warrant or
        Warrants in exchange for the Warrant or Warrants to be divided or
        combined in accordance with such notice.

                c)      Warrant Register. The Company shall register this
        Warrant, upon records to be maintained by the Company for that purpose
        (the "Warrant Register"), in the name of the record Holder hereof from
        time to time. The Company may deem and treat the registered Holder of
        this Warrant as the absolute owner hereof for the purpose of any
        exercise hereof or any distribution to the Holder, and for all other
        purposes, absent actual notice to the contrary.

                                       10
<PAGE>

                d)      Transfer Restrictions. If, at the time of the surrender
        of this Warrant in connection with any transfer of this Warrant, the
        transfer of this Warrant shall not be registered pursuant to an
        effective registration statement under the Securities Act and under
        applicable state securities or blue sky laws, the Company may require,
        as a condition of allowing such transfer (i) that the Holder or
        transferee of this Warrant, as the case may be, furnish to the Company a
        written opinion of counsel (which opinion shall be in form, substance
        and scope customary for opinions of counsel in comparable transactions)
        to the effect that such transfer may be made without registration under
        the Securities Act and under applicable state securities or blue sky
        laws, (ii) that the holder or transferee execute and deliver to the
        Company an investment letter in form and substance acceptable to the
        Company and (iii) that the transferee be an "accredited investor" as
        defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated
        under the Securities Act or a qualified institutional buyer as defined
        in Rule 144A(a) under the Securities Act.

        Section 5.      Miscellaneous.

                a)      Title to Warrant. Prior to the Termination Date and
        subject to compliance with applicable laws and Section 4 of this
        Warrant, this Warrant and all rights hereunder are transferable, in
        whole or in part, at the office or agency of the Company by the Holder
        in person or by duly authorized attorney, upon surrender of this Warrant
        together with the Assignment Form annexed hereto properly endorsed. The
        transferee shall sign an investment letter in form and substance
        reasonably satisfactory to the Company.

                b)      No Rights as Shareholder Until Exercise. This Warrant
        does not entitle the Holder to any voting rights or other rights as a
        shareholder of the Company prior to the exercise hereof. Upon the
        surrender of this Warrant and the payment of the aggregate Exercise
        Price (or by means of a cashless exercise), the Warrant Shares so
        purchased shall be and be deemed to be issued to such Holder as the
        record owner of such shares as of the close of business on the later of
        the date of such surrender or payment.

                c)      Loss, Theft, Destruction or Mutilation of Warrant. The
        Company covenants that upon receipt by the Company of evidence
        reasonably satisfactory to it of the loss, theft, destruction or
        mutilation of this Warrant or any stock certificate relating to the
        Warrant Shares, and in case of loss, theft or destruction, of indemnity
        or security reasonably satisfactory to it (which, in the case of the
        Warrant, shall not include the posting of any bond), and upon surrender
        and cancellation of such Warrant or stock certificate, if mutilated, the
        Company will make and deliver a new Warrant or stock certificate of like
        tenor and dated as of such cancellation, in lieu of such Warrant or
        stock certificate.

                d)      Saturdays, Sundays, Holidays, etc. If the last or
        appointed day for the taking of any action or the expiration of any
        right required or granted herein shall be a Saturday, Sunday or a legal
        holiday, then such action may be taken or such right may be exercised on
        the next succeeding day not a Saturday, Sunday or legal holiday.

                e)      Authorized Shares.

                                       11
<PAGE>

                        The Company covenants that during the period the Warrant
                is outstanding, it will reserve from its authorized and unissued
                Common Stock a sufficient number of shares to provide for the
                issuance of the Warrant Shares upon the exercise of any purchase
                rights under 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 or
                quoted.

                        Except and to the extent as waived or consented to by
                the Holder, the Company shall not by any action, including,
                without limitation, amending its certificate of incorporation or
                through any reorganization, transfer of assets, consolidation,
                merger, dissolution, issue or sale of securities or any other
                voluntary action, avoid or seek to avoid the observance or
                performance of any of the terms 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 actions as may be necessary or
                appropriate to protect the rights of Holder as set forth in this
                Warrant against impairment. Without limiting the generality of
                the foregoing, the Company will (a) not increase the par value
                of any Warrant Shares above the amount payable therefor upon
                such exercise immediately prior to such increase in par value,
                (b) take all such action as may be necessary or appropriate in
                order that the Company may validly and legally issue fully paid
                and nonassessable Warrant Shares 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.

                        Before taking any action which would result in an
                adjustment in the number of Warrant Shares for which this
                Warrant is exercisable or in the Exercise Price, the Company
                shall obtain all such authorizations or exemptions thereof, or
                consents thereto, as may be necessary from any public regulatory
                body or bodies having jurisdiction thereof.

                f)      Jurisdiction. All questions concerning the construction,
        validity, enforcement and interpretation of this Warrant shall be
        determined in accordance with the provisions of the Purchase Agreement.

                g)      Restrictions. The Holder acknowledges that the Warrant
        Shares acquired upon the exercise of this Warrant, if not registered,
        will have restrictions upon resale imposed by state and federal
        securities laws.

                h)      Nonwaiver and Expenses. No course of dealing or any
        delay or failure to exercise any right hereunder on the part of Holder
        shall operate as a waiver of such right

                                       12
<PAGE>

        or otherwise prejudice Holder's rights, powers or remedies,
        notwithstanding the fact that all rights hereunder terminate on the
        Termination Date. If the Company willfully and knowingly 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.

                i)      Notices. Any notice, request or other document required
        or permitted to be given or delivered to the Holder by the Company shall
        be delivered in accordance with the notice provisions of the Purchase
        Agreement.

                j)      Limitation of Liability. No provision hereof, in the
        absence of any affirmative action by Holder to exercise this Warrant or
        purchase Warrant Shares, and no enumeration herein of the rights or
        privileges of Holder, shall give rise to any liability of Holder for the
        purchase price of any Common Stock or as a stockholder of the Company,
        whether such liability is asserted by the Company or by creditors of the
        Company.

                k)      Remedies. 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.

                l)      Successors and Assigns. Subject to applicable securities
        laws, this Warrant and the rights and obligations evidenced hereby shall
        inure to the benefit of and be binding upon the successors of the
        Company and the successors and permitted assigns of Holder. The
        provisions of this Warrant are intended to be for the benefit of all
        Holders from time to time of this Warrant and shall be enforceable by
        any such Holder or holder of Warrant Shares.

                m)      Amendment. This Warrant may be modified or amended or
        the provisions hereof waived with the written consent of the Company and
        the Holder.

                n)      Severability. Wherever possible, each provision of this
        Warrant shall be interpreted in such manner as to be effective and valid
        under applicable law, but if any provision of this Warrant shall be
        prohibited by or invalid under applicable law, such provision shall be
        ineffective to the extent of such prohibition or invalidity, without
        invalidating the remainder of such provisions or the remaining
        provisions of this Warrant.

                o)      Headings. The headings used in this Warrant are for the
        convenience of reference only and shall not, for any purpose, be deemed
        a part of this Warrant.

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

                                       13
<PAGE>

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

Dated:  December ____, 2005

                                              ELECTRONIC SENSOR TECHNOLOGY, INC.

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

                                       14
<PAGE>

                               NOTICE OF EXERCISE

TO:     ELECTRONIC SENSOR TECHNOLOGY, INC.

                (1)     The undersigned hereby elects to purchase ________
Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

                (2)     Payment shall take the form of (check applicable box):

                        [ ] in lawful money of the United States; or

                        [ ] the cancellation of such number of Warrant Shares
                        as is necessary, in accordance with the formula set
                        forth in subsection 2(c), to exercise this Warrant with
                        respect to the maximum number of Warrant Shares
                        purchasable pursuant to the cashless exercise procedure
                        set forth in subsection 2(c).

                (3)     Please issue a certificate or certificates representing
said Warrant Shares in the name of the undersigned or in such other name as is
specified below:

                        _________________________________________

The Warrant Shares shall be delivered to the following:

                        _________________________________________

                        _________________________________________

                        _________________________________________

                (4)     Accredited Investor. The undersigned is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: _____________________________________________________

Signature of Authorized Signatory of Investing Entity: ________________________

Name of Authorized Signatory: _________________________________________________

Title of Authorized Signatory: ________________________________________________

Date: _________________________________________________________________________

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

                FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

                                         Dated:  ______________, _______

                        Holder's Signature:  ___________________________

                        Holder's Address:    ___________________________

                                             ___________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

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