Document:

EXHIBIT A

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
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. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                                            Date of Issuance: _________ __, 2004

                                                                $_______________

                              CONVERTIBLE DEBENTURE

DUE __________ __, 200__1

      THIS DEBENTURE is one of a series of duly authorized and issued
Convertible Debentures of QT 5, Inc., a Delaware corporation, having a principal
place of business at 5655 Lindero Canyon Road, Suite 120, West Lake Village,
California 91362 (the "Company"), designated as its Convertible Debenture, due
__________ __, 200__ (the "Debentures").

      FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the "Holder"), the principal
sum of $_______________ on ___________ __, 200__ or such earlier date as the
Debentures are required or permitted to be repaid as provided hereunder (the
"Maturity Date"). THE COMPANY MAY NOT PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT
OF THIS DEBENTURE WITHOUT THE PRIOR WRITTEN CONSENT OF THE HOLDER.

      This Debenture is subject to the following additional provisions:

-----------------
1     24 months from the Original Issue Date.

                                       1

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      Section 1. 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.

      Section 2. 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. 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.

      Section 3. 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 the principal of, or
            liquidated damages in respect of, any Debentures, free of any claim
            of subordination, 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 is not cured, if possible
            to cure, within 15 days of notice of such default sent by the
            Holder;

                  ii) the Company shall fail to observe or perform any other
            covenant, agreement or warranty contained in, or otherwise commit
            any breach of any of the Transaction Documents (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
            (x) below) which is not cured, if possible to cure, within 10 days
            of notice of such default sent by the Holder;

                  iii) the Company or any of its subsidiaries shall commence, or
            there shall be commenced against the Company or any such subsidiary
            a case under any applicable bankruptcy or insolvency laws as now or
            hereafter in effect or any successor thereto, or the Company
            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 there is commenced against the Company or any subsidiary
            thereof any such bankruptcy, insolvency or other proceeding which
            remains undismissed for a period of 60 days; or the Company or any
            subsidiary thereof is adjudicated insolvent or bankrupt; or any
            order of relief or other order approving any such case or proceeding
            is entered; or 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 the Company or any subsidiary thereof makes a
            general assignment for the benefit of creditors; or 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 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 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 any
            corporate or other action is taken by the Company or any subsidiary
            thereof for the purpose of effecting any of the foregoing;

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                  iv) the Company shall default in any of its obligations under
            any other debenture or 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, which default is not cured, if possible to cure, within 15
            days of notice of such default sent by the Holder;

                  v) the Common Stock shall not be eligible for quotation on or
            quoted for trading on a Principal Market and shall not again be
            eligible for and quoted or listed for trading thereon within seven
            Trading Days;

                  vi) the Company shall be a party to any Change of Control
            Transaction , shall agree to sell or dispose of all or in excess of
            40% 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 Underlying Shares and repurchases
            of shares of Common Stock or other equity securities of departing
            officers and directors of the Company; provided no repurchase shall
            exceed $100,000 for any officer or director);

                  vii) a Registration Statement shall not have been declared
            effective by the Commission on or prior to the 150th calendar day
            after the Original Issue Date;

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                  viii) if, during the Effectiveness Period (as defined in the
            Registration Rights Agreement), the effectiveness of the Underlying
            Shares 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 Underlying Shares
            Registration Statement, in either case, for more than 15 consecutive
            Trading Days or 25 non-consecutive Trading Days during any 12 month
            period;

                  ix) an Event (as defined in the Registration Rights Agreement)
            shall not have been cured to the satisfaction of the Holder prior to
            the expiration of thirty days from the Event Date (as defined in the
            Registration Rights Agreement) relating thereto (other than an Event
            resulting from a failure of a Registration Statement to be declared
            effective by the Commission on or prior to the Effectiveness Date
            (as defined in the Registration Rights Agreement), which shall be
            covered by Section 3(a)(vii));

                  x) the Company shall fail for any reason to deliver
            certificates to a Holder prior to the seventh Trading Day after a
            Conversion Date pursuant to and in accordance with Section 4(b) 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; or

                  (xi) the Company shall fail for any reason to deliver the
            payment in cash pursuant to a Buy-In (as defined herein) within five
            days after notice thereof is delivered hereunder.

            b) If any Event of Default occurs and is continuing, the full
      principal amount of this Debenture, together with any 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
      Prepayment Amount. Interest shall accrue on the Mandatory Prepayment
      Amount hereunder from the fifth (5th) day after such amount is due (being
      the date of an Event of Default) through the date of prepayment in full
      thereof in an amount equal to the Late Fee, to accrue daily from the date
      such payment is due hereunder through and including the date of payment.
      All Debentures for which the full prepayment price hereunder shall have
      been paid in accordance herewith shall promptly be surrendered 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.

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      Section 4. Conversion.

            a) i) 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(a)(ii) 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 Debentures 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 Debentures to the Company unless the entire principal amount of
      this Debenture 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.

                  ii) The Holder shall not have the right to convert any portion
            of this Debenture, pursuant to Section 4(a)(i), Section 5b) or
            otherwise, to the extent that after giving effect to such
            conversion, the Holder (together with the Holder's affiliates), as
            set forth on the applicable Notice of Conversion, would beneficially
            own in excess of 4.99% of the number of shares of the Common Stock
            outstanding immediately after giving effect to such conversion. For
            purposes of the foregoing sentence, the number of shares of Common
            Stock beneficially owned by the Holder and its affiliates shall
            include the number of shares of Common Stock issuable upon
            conversion of this Debenture 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) conversion
            of the remaining, nonconverted portion of this Debenture
            beneficially owned by the Holder or any of its affiliates and (B)
            exercise or conversion of the unexercised or nonconverted portion of
            any other securities of the Company (including, without limitation,
            any other Debentures or the Warrants) subject to a limitation on
            conversion or exercise analogous to the limitation contained herein
            beneficially owned by the Holder or any of its affiliates. Except as
            set forth in the preceding sentence, for purposes of this Section
            4(a)(ii), beneficial ownership shall be calculated in accordance
            with Section 13(d) of the Exchange Act. To the extent that the
            limitation contained in this section applies, the determination of
            whether this Debenture is convertible (in relation to other
            securities owned by the Holder) and of which a portion of this
            Debenture is convertible shall be in the sole discretion of such
            Holder. To ensure compliance with this restriction, the 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. For purposes of this Section 4(a)(ii), in determining
            the number of outstanding shares of Common Stock, the Holder may
            rely on the number of outstanding shares of Common Stock as
            reflected in (x) the Company's most recent Form 10-Q or Form 10-K,
            as the case may be, (y) a more recent public announcement by the
            Company or (z) any other notice by the Company or the Company's
            Transfer Agent setting forth the number of shares of Common Stock
            outstanding. Upon the written or oral request of the Holder, the
            Company shall within two Trading Days confirm orally and in writing
            to the Holder the number of shares of Common Stock then outstanding.
            In any case, the number of outstanding shares of Common Stock shall
            be determined after giving effect to the conversion or exercise of
            securities of the Company, including this Debenture, by the Holder
            or its affiliates since the date as of which such number of
            outstanding shares of Common Stock was reported. The provisions of
            this Section 4(a)(ii) may be waived by the Holder upon, at the
            election of the Holder, not less than 61 days' prior notice to the
            Company, and the provisions of this Section 4(a)i) shall continue to
            apply until such 61st day (or such later date, as determined by the
            Holder, as may be specified in such notice of waiver).

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

            (b) i) Not later than five Trading Days after any Conversion Date,
      the Company will deliver to the Holder a certificate or certificates
      representing the Underlying 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 Debentures. 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. 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 fifth 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 Debentures
      tendered for conversion.

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                  ii) If the Company fails for any reason to deliver to the
            Holder such certificate or certificates pursuant to Section 4(b)(i)
            by the fifth 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 $5,000 of principal amount being converted, $50
            per Trading Day (increasing to $100 per Trading Day after 3 Trading
            Days after such damages begin to accrue) for each Trading Day after
            such third Trading Day until such certificates are delivered. In the
            event a 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 of 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 3 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 Holders from seeking to enforce
            damages pursuant to any other Section hereof or under applicable
            law.

                  (iii) 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(b)(i) by the third
            Trading Day after the Conversion Date, and if after such third
            Trading Day the Holder is required by its 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 Underlying 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 Debentures in 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(b)(i). 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
            Debentures with respect to which the actual sale price of the
            Underlying 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 a
            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(b)(ii) in respect of the certificates resulting in such Buy-In.

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            (c) i) The conversion price in effect on any Conversion Date shall
      be equal to $0.01 (subject to adjustment herein)(the "Set Price").

                  ii) If the Company, at any time while the Debentures are
            outstanding: (A) shall pay 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
            Debenture), (B) subdivide outstanding shares of Common Stock into a
            larger number of shares, (C) combine (including by way of reverse
            stock split) outstanding shares of Common Stock into a smaller
            number of shares, or (D) issue by reclassification of shares of the
            Common Stock any shares of capital stock of the Company, then the
            Set 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 before such event and of which the
            denominator shall be the number of shares of Common Stock
            outstanding 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.

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                  iii) If the Company, at any time while Debentures are
            outstanding, shall issue rights, options or warrants to all holders
            of Common Stock (and not to Holders) entitling them to subscribe for
            or purchase shares of Common Stock or other securities exercisable,
            convertible into or exchangeable for Common Stock (the "Common Stock
            Equivalents") at a price per share less than the Closing Price at
            the record date mentioned below, then the Set Price shall be
            adjusted by multiplying the Set Price in effect immediately prior to
            such record date by a fraction, of which the denominator shall be
            the number of shares of the Common Stock (excluding treasury shares,
            if any) outstanding on the date of issuance of such rights or
            warrants plus the number of additional shares of Common Stock
            offered for subscription or purchase, and of which the numerator
            shall be the number of shares of the Common Stock (excluding
            treasury shares, if any) outstanding on the date of issuance of such
            rights or warrants plus the number of shares which the aggregate
            offering price of the total number of shares so offered would
            purchase at the Closing Price on the record date. Such adjustment
            shall be made whenever such rights, options or warrants are issued,
            and shall become effective immediately after the record date for the
            determination of stockholders entitled to receive such rights,
            options or warrants.

                  iv) If the Company or any subsidiary thereof, as applicable,
            at any time while Debentures are 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 Equivalent entitling
            any Person to acquire shares of Common Stock, at an effective price
            per share less than the then Set Price ("Dilutive Issuance"), as
            adjusted hereunder (if the holder of the Common Stock or Common
            Stock Equivalent so issued shall at any time, whether by operation
            of purchase price adjustments, reset provisions, floating
            conversion, exercise or exchange prices or otherwise, or due to
            warrants, options or rights 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 Set Price, such
            issuance shall be deemed to have occurred for less than the Set
            Price), then the Set Price shall be reduced to equal the effective
            conversion, exchange or purchase price for such Common Stock or
            Common Stock Equivalents (including any reset provisions thereof) at
            issue. Such adjustment shall be made whenever such Common Stock or
            Common Stock Equivalents are issued. The Company shall notify the
            Holder in writing, no later than the 3rd business day following the
            issuance of any Common Stock or Common Stock Equivalent subject to
            this section, indicating therein the applicable issuance price, or
            of applicable reset price, exchange price, conversion price and
            other pricing terms.

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                  v) If the Company, at any time while Debentures are
            outstanding, shall distribute to all holders of Common Stock (and
            not to Holders) evidences of its indebtedness or assets or rights or
            warrants to subscribe for or purchase any security, then in each
            such case the Set Price shall be determined by multiplying such
            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 Closing Price
            determined as of the record date mentioned above, and of which the
            numerator shall be such Closing Price 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 Holders 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.

                  vi) All calculations under this Section 4 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 4, the number of shares of Common Stock
            deemed to be outstanding as of a given date shall be the sum of the
            number of shares of Common Stock (excluding treasury shares, if any)
            outstanding on a fully diluted basis.

                  vii) Whenever the Set Price is adjusted pursuant to any of
            Section 4(c)(ii) - (v), the Company shall promptly mail to each
            Holder a notice setting forth the Set Price after such adjustment
            and setting forth a brief statement of the facts requiring such
            adjustment.

                  viii) 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 the Debentures,
            and shall cause to be mailed to the Holders at their last addresses
            as they 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. Holders are entitled to convert Debentures during the 20-day
            period commencing the date of such notice to the effective date of
            the event triggering such notice.

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                  ix) 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
            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 Underlying Share that would have been issuable
            upon such conversion absent 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 Set 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 Set 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 (c)
            and insuring that this Debenture (or any such replacement security)
            will be similarly adjusted upon any subsequent transaction analogous
            to a Fundamental Transaction.

                                       11
<PAGE>

                  (x) Notwithstanding the foregoing, no adjustment will be made
            under this paragraph (c) in respect of (A) the granting or issuance
            of shares of capital stock or of options to employees, officers,
            directors and consultants of the Company pursuant to any stock
            option plan agreement or arrangement duly adopted or approved by a
            majority of the non-employee members of the Board of Directors of
            the Company or a majority of the members of a committee of
            non-employee directors established for such purpose, (B) upon the
            exercise of this Debenture or any other Debenture of this series or
            of any other series or security issued by the Company in connection
            with the offer and sale of this Company's securities pursuant to the
            Purchase Agreement, or (C) upon the exercise of or conversion of any
            Common Stock Equivalents, rights, options or warrants issued and
            outstanding on the Original Issue Date, provided such securities
            have not been amended since the date of the Purchase Agreement
            except as a result of the Purchase Agreement, or (D) issuance of
            securities in connection with acquisitions, strategic investments,
            or strategic partnering arrangements, the primary purpose of which
            is not to raise capital.

            (d) 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 the Debentures, each as
      herein provided, free from preemptive rights or any other actual
      contingent purchase rights of persons other than the Holders, not less
      than such number of shares of the Common Stock as shall (subject to any
      additional requirements of the Company as to reservation of such shares
      set forth in the Purchase Agreement) be issuable (taking into account the
      adjustments and restrictions of Section 4(b)) upon the conversion of the
      outstanding principal amount of the Debentures. 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 has been declared effective under the
      Securities Act, registered for public sale in accordance with such
      Registration Statement.

            (e) 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 Closing Price 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.

                                       12
<PAGE>

            (f) The issuance of certificates for shares of the Common Stock on
      conversion of the Debentures shall be made without charge to the Holders
      thereof 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
      such Debentures 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.

            (g) Any and all notices or other communications or deliveries to be
      provided by the Holders hereunder, including, without limitation, any
      Notice of 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
      Holders 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.

      Section 5. Reserved.

      Section 6. 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:

            "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.

                                       13
<PAGE>

            "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 40% of the voting securities of the Company, or
      (ii) 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 (iii) 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) or
      (ii).

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common stock, $0.001 par value per share,
      of the Company and stock of any other class into which such shares may
      hereafter have been reclassified or changed.

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

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

            "Late Fees" shall have the meaning set forth in the second paragraph
      to this Debenture.

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

            "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.

                                       14
<PAGE>

            "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 February __, 2004, 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 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 the registration statement to be
      filed by the Company pursuant to the Registration Rights Agreement.

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

            "Set Price" shall have the meaning set forth in Section 4(c)(i).

            "Trading Day" means (a) a day on which the shares of Common Stock
      are traded on a Principal Market on which the shares of Common Stock are
      then listed or quoted, or (b) if the shares of Common Stock are not quoted
      on a Principal Market, a day on which the shares of Common Stock are
      quoted in the over-the-counter market as reported by the National
      Quotation Bureau Incorporated (or any similar organization or agency
      succeeding its functions of reporting prices); provided, that in the event
      that the shares of Common Stock are not listed or quoted as set forth in
      (a), (b) and (c) hereof, then Trading Day shall mean a Business Day.

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

            "Underlying Shares" means the shares of Common Stock issuable upon
      conversion of Debentures in accordance with the terms hereof.

      Section 7. 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, 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. As long as this Debenture is outstanding, the
Company shall not and shall cause it subsidiaries not to, without the consent of
the Holders, (a) amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of the Holders; (b) repay,
repurchase or offer to repay, repurchase or otherwise acquire shares of its
Common Stock or other equity securities other than as to the Underlying Shares
to the extent permitted or required under the Transaction Documents or as
otherwise permitted by the Transaction Documents; or (c) enter into any
agreement with respect to any of the foregoing.

                                       15
<PAGE>

      Section 8. 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.

      Section 9. Except as provided below in this Section 9, 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, enter into, create,
incur, assume or suffer to exist any indebtedness 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 that is senior in any
respect to the Company's obligations under the Debentures without the prior
consent of the Holder, which consent shall not be unreasonably withheld.

      Notwithstanding the foregoing and anything else to the contrary in this
Debenture or any other Transaction Document, the Company shall have the right in
its sole and absolute discretion to enter into one or more factoring agreements
and/or other type of receivables financing with any party or parties on terms
acceptable to the Company so long as it shall first offer such factoring
agreement and terms (the "Factoring Proposal") on a pro rata basis to the
Purchasers, who shall have a right of first refusal with respect thereto. The
Company shall send each Factoring Proposal, if any, to the Purchasers via
facsimile and the Purchasers shall have 2 Business Days in which to deliver a
binding written commitment accepting such Factoring Proposal. Failure to respond
within such time shall be deemed a waiver of such right of refusal and the
Company shall have the right to enter into the Factoring Proposal with a party
or parties other than the Purchasers. To the extent the Purchasers exercise
their right of first refusal, they may apportion the factoring amongst
themselves in any manner, so long as in the aggregate the amount and terms of
factoring provided is equal to or more favorable to the Company than the
Factoring Proposal.

      Section 10. 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 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 reasonable attorneys' fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

                                       16
<PAGE>

      Section 11. 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.

      Section 12. 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 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 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.

      Section 13. 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.

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

                                       17
<PAGE>

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

                                    QT 5, INC.

                                    By:_________________________________________
                                       Name:
                                       Title:

                                       18
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the 6% Convertible
Debenture of QT 5, Inc. (the "Company"), due on __________ __, 2008, into shares
of common stock, $0.001 par value 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 Company's 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 Debentures to be Converted:

                               Number of shares of Common Stock to be issued:

                               Signature:

                               Name:

                               Address:

<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

6% Convertible Debentures due on ____________________ ___, 2008, in the
aggregate principal amount of $____________ issued by QT 5, Inc. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

                               Dated:

<TABLE>
<CAPTION>
=============================== ------------------------- ======================= ------------------------------
                               Aggregate Principal
                                Amount Remaining
      Date of Conversion                                      Subsequent to
(or for first entry, Original                                   Conversion
         Issue Date)              Amount of Conversion         (or original              Company Attest
                                Principal Amount)
------------------------------- ------------------------- ----------------------- ------------------------------
<S>                             <C>                       <C>                     <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

=============================== ========================= ======================= ------------------------------

</TABLE>

                                       21EXHIBIT C

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

                                   QT 5, INC.

                 THIS COMMON STOCK PURCHASE 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 February ____, 2004 (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 QT 5, Inc., a corporation incorporated in Delaware (the "Company"), up to
____________ shares (the "Warrant Shares") of Common Stock, par value $0.001 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be $0.01, subject
to adjustment hereunder. The Exercise Price and the number of Warrant Shares for
which the Warrant is exercisable shall be subject to adjustment as provided
herein. CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE
MEANINGS SET FORTH IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT (THE "PURCHASE
AGREEMENT"), DATED FEBRUARY ___, 2004, BETWEEN THE COMPANY AND THE PURCHASERS
SIGNATORY THERETO.

                                       1
<PAGE>

      1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 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.

      2. Authorization of 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).

      3. Exercise of Warrant.

            (a) Exercise of the purchase rights represented by this Warrant may
      be made 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); provided, however, within 5
      Trading Days of the date said Notice of Exercise is delivered to the
      Company, 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. Certificates for shares purchased hereunder shall be
      delivered to the Holder within the earlier of (i) 5 Trading Days after the
      date on which the Notice of Exercise shall have been delivered by
      facsimile copy or (ii) 3 Trading Days from the delivery to the Company of
      the Notice of Exercise Form by facsimile copy, surrender of this Warrant
      and payment of the aggregate Exercise Price as set forth above ("Warrant
      Share Delivery Date"); provided, however, in the event the Warrant is not
      surrendered or the aggregate Exercise Price is not received by the Company
      within 5 Trading Days after the date on which the Notice of Exercise shall
      be delivered by facsimile copy, the Warrant Share Delivery Date shall be
      extended to the extent such 5 Trading Day period is exceeded. This Warrant
      shall be deemed to have been exercised on the date the Notice of Exercise
      is delivered to the Company by facsimile copy. 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 5 prior to
      the issuance of such shares, have been paid. If the Company fails to
      deliver to the Holder a certificate or certificates representing the
      Warrant Shares pursuant to this Section 3(a) by the Warrant Share Delivery
      Date, then the Holder will have the right to rescind such exercise. In
      addition to any other rights available to the Holder, if the Company fails
      to deliver to the Holder a certificate or certificates representing the
      Warrant Shares pursuant to an exercise by the second Trading Day after the
      Warrant Share Delivery Date, and if after such third Trading Day the
      Holder is required by its broker to purchase (in an open market
      transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by the Holder of the Warrant Shares which the
      Holder anticipated receiving upon such exercise (a "Buy-In"), then the
      Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased exceeds (y) the amount
      obtained by multiplying (A) the number of Warrant Shares that the Company
      was required to deliver to the Holder in connection with the exercise at
      issue times (B) the price at which the sell order giving rise to such
      purchase obligation was executed, and (2) at the option of the Holder,
      either reinstate the portion of the Warrant and equivalent number of
      Warrant Shares for which such exercise was not honored or deliver to the
      Holder the number of shares of Common Stock that would have been issued
      had the Company timely complied with its exercise and delivery obligations
      hereunder. For example, if the Holder purchases Common Stock having a
      total purchase price of $11,000 to cover a Buy-In with respect to an
      attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of
      the immediately preceding sentence the Company shall be required to pay
      the Holder $1,000. The Holder shall provide the Company written notice
      indicating the amounts payable to the Holder in respect of the Buy-In,
      together with applicable confirmations and other evidence reasonably
      requested by the Company. Nothing herein shall limit a Holder's right to
      pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company's failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the
      Warrant as required pursuant to the terms hereof.

                                       2
<PAGE>

            (b) If this Warrant shall have been exercised in part, the Company
      shall, 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.

            (c) The Company shall not effect any exercise of this Warrant, and
      the Holder shall not have the right to exercise any portion of this
      Warrant, pursuant to Section 3(a) or otherwise, to the extent that after
      giving effect to such issuance after exercise, the Holder (together with
      the Holder's affiliates), as set forth on the applicable Notice of
      Exercise, would beneficially own in excess of 4.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to
      such issuance. For purposes of the foregoing sentence, the number of
      shares of Common Stock beneficially owned by the Holder and its affiliates
      shall include the number of shares of Common Stock issuable upon exercise
      of this Warrant with respect to which the determination of such sentence
      is being made, but shall exclude the number of shares of Common Stock
      which would be issuable upon (A) exercise of the remaining, nonexercised
      portion of this Warrant beneficially owned by the Holder or any of its
      affiliates and (B) exercise or conversion of the unexercised or
      nonconverted portion of any other securities of the Company (including,
      without limitation, any other Debentures or Warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its affiliates. Except
      as set forth in the preceding sentence, for purposes of this Section 3(c),
      beneficial ownership shall be calculated in accordance with Section 13(d)
      of the Exchange Act. To the extent that the limitation contained in this
      Section 3(c) applies, the determination of whether this Warrant is
      exercisable (in relation to other securities owned by the Holder) and of
      which a portion of this Warrant is exercisable shall be in the sole
      discretion of such Holder, and the submission of a Notice of Exercise
      shall be deemed to be such Holder's determination of whether this Warrant
      is exercisable (in relation to other securities owned by such Holder) and
      of which portion of this Warrant is exercisable, in each case subject to
      such aggregate percentage limitation, and the Company shall have no
      obligation to verify or confirm the accuracy of such determination. For
      purposes of this Section 3(c), in determining the number of outstanding
      shares of Common Stock, the Holder may rely on the number of outstanding
      shares of Common Stock as reflected in (x) the Company's most recent Form
      10-Q or Form 10-K, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other notice by the Company or the
      Company's Transfer Agent setting forth the number of shares of Common
      Stock outstanding. Upon the written or oral request of the Holder, the
      Company shall within two Trading Days confirm orally and in writing to the
      Holder the number of shares of Common Stock then outstanding. In any case,
      the number of outstanding shares of Common Stock shall be determined after
      giving effect to the conversion or exercise of securities of the Company,
      including this Warrant, by the Holder or its affiliates since the date as
      of which such number of outstanding shares of Common Stock was reported.
      The provisions of this Section 3(c) may be waived by the Holder upon, at
      the election of the Holder, not less than 61 days' prior notice to the
      Company, and the provisions of this Section 3(c) shall continue to apply
      until such 61st day (or such later date, as determined by the Holder, as
      may be specified in such notice of waiver).

                                       3
<PAGE>

            (d) If at any time after one year from the date of issuance of this
      Warrant there is no effective Registration Statement registering the
      resale of the Warrant Shares by the Holder, 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 Closing Price 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.

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

                                       4
<PAGE>

      5. 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.

      6. 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.

      7. Transfer, Division and Combination.

            (a) Subject to compliance with any applicable securities laws and
      the conditions set forth in Sections 1 and 7(e) 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, 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) 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 7(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) The Company shall prepare, issue and deliver at its own expense
      (other than transfer taxes) the new Warrant or Warrants under this Section
      7.

            (d) The Company agrees to maintain, at its aforesaid office, books
      for the registration and the registration of transfer of the Warrants.

                                       5
<PAGE>

            (e) 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.

      8. 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.

      9. 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.

      10. 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.

      11. Adjustments of Exercise Price and Number of Warrant Shares.

            (a) Stock Splits, etc. The number and kind of securities purchasable
      upon the exercise of this Warrant and the Exercise Price shall be subject
      to adjustment from time to time upon the happening of any of the
      following. In case the Company shall (i) pay a dividend in shares of
      Common Stock or make a distribution in shares of Common Stock to holders
      of its outstanding Common Stock, (ii) subdivide its outstanding shares of
      Common Stock into a greater number of shares, (iii) combine its
      outstanding shares of Common Stock into a smaller number of shares of
      Common Stock, or (iv) issue any shares of its capital stock in a
      reclassification of the Common Stock, then the number of Warrant Shares
      purchasable upon exercise of this Warrant immediately prior thereto shall
      be adjusted so that the Holder shall be entitled to receive the kind and
      number of Warrant Shares or other securities of the Company which it would
      have owned or have been entitled to receive had such Warrant been
      exercised in advance thereof. Upon each such adjustment of the kind and
      number of Warrant Shares or other securities of the Company which are
      purchasable hereunder, the Holder shall thereafter be entitled to purchase
      the number of Warrant Shares or other securities resulting from such
      adjustment at an Exercise Price per Warrant Share or other security
      obtained by multiplying the Exercise Price in effect immediately prior to
      such adjustment by the number of Warrant Shares purchasable pursuant
      hereto immediately prior to such adjustment and dividing by the number of
      Warrant Shares or other securities of the Company that are purchasable
      pursuant hereto immediately thereafter resulting from such adjustment. An
      adjustment made pursuant to this paragraph shall become effective
      immediately after the effective date of such event retroactive to the
      record date, if any, for such event.

                                       6
<PAGE>

            (b) Anti-Dilution Provisions. During the Exercise Period, the
      Exercise Price shall be subject to adjustment from time to time as
      provided in this Section 11(b). In the event that any adjustment of the
      Exercise Price as required herein results in a fraction of a cent, such
      Exercise Price shall be rounded up or down to the nearest cent.

                  (i) Adjustment of Exercise Price. If and whenever the Company
            issues or sells, or in accordance with Section 11(b)(ii) hereof is
            deemed to have issued or sold, any shares of Common Stock for a
            consideration per share of less than the then Exercise Price or for
            no consideration (such lower price, the "Base Share Price" and such
            issuances collectively, a "Dilutive Issuance"), then, the Exercise
            Price shall be reduced to equal the Base Share Price, provided, that
            for purposes hereof, all securities exercisable, convertible into or
            exchangeable for Common Stock ("Convertible Securities") shall be
            deemed outstanding immediately after the issuance of such Common
            Stock. Such adjustment shall be made whenever such shares of Common
            Stock or Convertible Securities are issued.

                  (ii) Effect on Exercise Price of Certain Events. For purposes
            of determining the adjusted Exercise Price under Section 11(b)
            hereof, the following will be applicable:

                                       7
<PAGE>

                        (A) Issuance of Rights or Options. If the Company in any
                  manner issues or grants any warrants, rights or options,
                  whether or not immediately exercisable, to subscribe for or to
                  purchase Common Stock or Convertible Securities (such
                  warrants, rights and options to purchase Common Stock or
                  Convertible Securities are hereinafter referred to as
                  "Options") and the effective price per share for which Common
                  Stock is issuable upon the exercise of such Options is less
                  than the Exercise Price ("Below Base Price Options"), then the
                  maximum total number of shares of Common Stock issuable upon
                  the exercise of all such Below Base Price Options (assuming
                  full exercise, conversion or exchange of Convertible
                  Securities, if applicable) will, as of the date of the
                  issuance or grant of such Below Base Price Options, be deemed
                  to be outstanding and to have been issued and sold by the
                  Company for such price per share and the maximum consideration
                  payable to the Company upon such exercise (assuming full
                  exercise, conversion or exchange of Convertible Securities, if
                  applicable) will be deemed to have been received by the
                  Company. For purposes of the preceding sentence, the
                  "effective price per share for which Common Stock is issuable
                  upon the exercise of such Below Base Price Options" is
                  determined by dividing (i) the total amount, if any, received
                  or receivable by the Company as consideration for the issuance
                  or granting of all such Below Base Price Options, plus the
                  minimum aggregate amount of additional consideration, if any,
                  payable to the Company upon the exercise of all such Below
                  Base Price Options, plus, in the case of Convertible
                  Securities issuable upon the exercise of such Below Base Price
                  Options, the minimum aggregate amount of additional
                  consideration payable upon the exercise, conversion or
                  exchange thereof at the time such Convertible Securities first
                  become exercisable, convertible or exchangeable, by (ii) the
                  maximum total number of shares of Common Stock issuable upon
                  the exercise of all such Below Base Price Options (assuming
                  full conversion of Convertible Securities, if applicable). No
                  further adjustment to the Exercise Price will be made upon the
                  actual issuance of such Common Stock upon the exercise of such
                  Below Base Price Options or upon the exercise, conversion or
                  exchange of Convertible Securities issuable upon exercise of
                  such Below Base Price Options.

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

                                       8
<PAGE>

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

                        (D) Calculation of Consideration Received. If any Common
                  Stock, Options or Convertible Securities are issued, granted
                  or sold for cash, the consideration received therefor for
                  purposes of this Warrant will be the amount received by the
                  Company therefor, before deduction of reasonable commissions,
                  underwriting discounts or allowances or other reasonable
                  expenses paid or incurred by the Company in connection with
                  such issuance, grant or sale. In case any Common Stock,
                  Options or Convertible Securities are issued or sold for a
                  consideration part or all of which shall be other than cash,
                  the amount of the consideration other than cash received by
                  the Company will be the fair market value of such
                  consideration, except where such consideration consists of
                  securities, in which case the amount of consideration received
                  by the Company will be the fair market value (closing bid
                  price, if traded on any market) thereof as of the date of
                  receipt. In case any Common Stock, Options or Convertible
                  Securities are issued in connection with any merger or
                  consolidation in which the Company is the surviving
                  corporation, the amount of consideration therefor will be
                  deemed to be the fair market value of such portion of the net
                  assets and business of the non-surviving corporation as is
                  attributable to such Common Stock, Options or Convertible
                  Securities, as the case may be. The fair market value of any
                  consideration other than cash or securities will be determined
                  in good faith by an investment banker or other appropriate
                  expert of national reputation selected by the Company and
                  reasonably acceptable to the holder hereof, with the costs of
                  such appraisal to be borne by the Company.

                                       9
<PAGE>

                        (E) Exceptions to Adjustment of Exercise Price.
                  Notwithstanding the foregoing, no adjustment will be made
                  under this Section 11(b) in respect of (1) the granting of
                  options to employees, officers and directors of the Company
                  pursuant to any stock option plan duly adopted by a majority
                  of the non-employee members of the Board of Directors of the
                  Company or a majority of the members of a committee of
                  non-employee directors established for such purpose, (2) upon
                  the exercise of the Debentures or any Debentures of this
                  series or of any other series or security issued by the
                  Company in connection with the offer and sale of this
                  Company's securities pursuant to the Purchase Agreement, or
                  (3) upon the exercise of or conversion of any Convertible
                  Securities or Options issued and outstanding on the Initial
                  Exercise Date, provided that the securities have not been
                  amended since the date of the Purchase Agreement except as a
                  result of the Purchase Agreement, or (4) acquisitions or
                  strategic investments, the primary purpose of which is not to
                  raise capital.

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

      12. Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, 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 Other Property 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) cash
equal to the value of this Warrant as determined in accordance with the
Black-Scholes option pricing formula. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12. For purposes of
this Section 12, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

                                       10
<PAGE>

      13. Voluntary Adjustment by the 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.

      14. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

      15. Notice of Corporate Action. If at any time:

                  (a) the Company shall take a record of the holders of its
            Common Stock for the purpose of entitling them to receive a dividend
            or other distribution, or any right to subscribe for or purchase any
            evidences of its indebtedness, any shares of stock of any class or
            any other securities or property, or to receive any other right, or

                  (b) there shall be any capital reorganization of the Company,
            any reclassification or recapitalization of the capital stock of the
            Company or any consolidation or merger of the Company with, or any
            sale, transfer or other disposition of all or substantially all the
            property, assets or business of the Company to, another corporation
            or,

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

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with Section 17(d).

                                       11
<PAGE>

      16. Authorized Shares. 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 Principal Market
upon which the Common Stock may be listed.

      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.

      17. Miscellaneous.

                  (a) 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.

                                       12
<PAGE>

                  (b) 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.

                  (c) 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 or otherwise prejudice
            Holder's rights, powers or remedies, notwithstanding 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.

                  (d) 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.

                  (e) 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.

                  (f) 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.

                  (g) 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.

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

                  (i) 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.

                                       13
<PAGE>

                  (j) 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.

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

                                       14
<PAGE>

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

Dated:  February ____, 2004

                                  QT 5, INC.

                                  By:___________________________________________
                                     Name:
                                     Title:

                                       15
<PAGE>

                               NOTICE OF EXERCISE

To:      QT 5, Inc.

      (1)______The undersigned hereby elects to purchase ________ Warrant Shares
of QT 5, Inc. 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
            3(d), to exercise this Warrant with respect to the maximum number of
            Warrant Shares purchasable pursuant to the cashless exercise
            procedure set forth in subsection 3(d).

      (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.

                                  [PURCHASER]

                                  By: ______________________________
                                      Name:
                                      Title:

                                  Dated:________________________

<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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}]]