Document:

EXHIBIT 4.2

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

                           6% SENIOR SECURED DEBENTURE

November 18, 2005                                                    $_,000,000

         FOR VALUE  RECEIVED,  SUMMUS,  INC., a corporation  organized under the
laws of the  State of  Delaware  (hereinafter  called  the  "BORROWER"),  hereby
promises  to pay to the order of  ___________  or its  registered  assigns  (the
"HOLDER") the sum of _________  Million  Dollars  ($_,000,000)  (the  "PRINCIPAL
AMOUNT"),  payable  upon the earliest to occur of (i) June 30, 2007 and (ii) the
occurrence of an Event of Default (as defined  herein) (the earliest to occur of
these dates is  hereinafter  referred  to as the  "MATURITY  DATE"),  and to pay
interest  on the unpaid  Principal  Amount at the rate of six  percent  (6%) per
annum from the date hereof (the "ISSUE  DATE"),  payable on the  Maturity  Date,
unless this Debenture is converted  prior to the Maturity Date either (x) at the
option of the Holder pursuant to Article II hereof or (y) upon the occurrence of
an Automatic  Conversion Event (as defined in Article II hereof).  Any Principal
Amount of or interest on this  Debenture  which is not paid on the Maturity Date
shall bear  interest  at the rate of twelve  percent  (12%) per annum  ("DEFAULT
INTEREST")  from the due date thereof until the same is paid.  Interest shall be
calculated based on a 360-day year,  accruing daily, and shall commence accruing
on the Issue  Date.  All  payments  shall be made at such  address as the Holder
shall  hereafter give to the Borrower by written notice made in accordance  with
the  provisions  of this  Debenture.  This  Debenture is not  prepayable  by the
Borrower.

         This Debenture is being issued by the Borrower pursuant to a Securities
Purchase  Agreement,  dated as of November 18, 2005,  between the Borrower,  the
Holder and the other purchasers named therein (the "PURCHASE  AGREEMENT").  Each
capitalized term used, but not otherwise defined,  herein shall have the meaning
ascribed  thereto in the  Purchase  Agreement.  For  purposes  hereof,  the term
"DEBENTURES"  shall be deemed to refer to this Debenture,  all other convertible
debentures  issued  pursuant  to the  Purchase  Agreement  and  all  convertible
debentures  issued in  replacement  hereof or thereof or otherwise  with respect
hereto or thereto.

         This Debenture is free from all taxes,  liens,  claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive  rights
or other  similar  rights of  shareholders  of the  Borrower and will not impose
personal  liability  upon the holder  thereof.  The  obligations

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of the Borrower under this Debenture  shall be secured by that certain  Security
Agreement,  dated  November 18, 2005,  between the Borrower,  the Holder and the
other parties named therein (the "SECURITY AGREEMENT").

         The following terms shall apply to this Debenture:

                              I. EVENTS OF DEFAULT

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

                  1. The Borrower  fails to pay the  Principal  Amount hereof or
interest thereon when due, upon acceleration or otherwise;

                  2. The  Borrower  (i) fails to issue shares of Common Stock to
any holder of the  Debentures  upon  exercise  by the  holder of its  conversion
rights in accordance with the terms of the Debentures, (ii) fails to transfer or
to cause its transfer agent to transfer (electronically or in certificated form)
any  certificate for shares of Common Stock issued to any Holder upon conversion
of or  otherwise  pursuant  to  the  Debentures  as  and  when  required  by the
Debentures  or upon  exercise of the  Warrants  issued  pursuant to the Purchase
Agreement (the  "WARRANTS"),  as and when required by the terms  thereof,  or as
required by the Purchase Agreement or the Registration  Rights Agreement,  dated
as of November  18, 2005,  by and among the  Borrower and the other  signatories
thereto  (the  "REGISTRATION  RIGHTS  AGREEMENT"),  (iii)  fails to  remove  any
restrictive  legend (or to withdraw any stop  transfer  instructions  in respect
thereof) on any  certificate or any shares of Common Stock issued to the holders
of the Debentures upon conversion of or otherwise  pursuant to the Debentures as
and when required by the  Debentures  or upon  exercise of the Warrants,  as and
when required by the terms thereof,  or as required by the Purchase Agreement or
the  Registration  Rights  Agreement,  or (iv) fails to fulfill its  obligations
pursuant to Article IV of the  Purchase  Agreement  (or makes any  announcement,
statement or threat that it does not intend to honor the  obligations  described
in  this  paragraph),  and any  such  failure  shall  continue  uncured  (or any
announcement,  statement  or threat  not to honor its  obligations  shall not be
rescinded  in  writing)  for ten (10) days  after the  Borrower  shall have been
notified thereof in writing by any holder of the Debentures;

                  3. (a) The  Borrower  fails  to  obtain  effectiveness  of the
Registration  Statement with the Securities and Exchange  Commission (the "SEC")
prior to March 31, 2006 (as defined in the Registration  Rights  Agreement,  the
"REGISTRATION  STATEMENT")  required to be filed pursuant to Section 3(a) of the
Registration   Rights   Agreement;   (b)  the  Borrower   fails  to  obtain  the
effectiveness  of any additional  Registration  Statement  (required to be filed
pursuant to Section 3(b) of the Registration Rights Agreement) within sixty (60)
days after the Effective Date (as defined in the Registration Rights Agreement);
or (c) any such  Registration  Statement,  after its initial  effectiveness  and
during  the  Registration   Period  (as  defined  in  the  Registration   Rights
Agreement),  lapses in effect or sales of all of the Registrable  Securities (as
defined in the Registration  Rights  Agreement,  the  "REGISTRABLE  SECURITIES")
otherwise cannot be made thereunder (whether by reason of the Borrower's failure
to amend or supplement the prospectus  included  therein in accordance  with the
Registration  Rights  Agreement,  the  Borrower's  failure  to file  and  obtain
effectiveness  with the SEC of an  additional  Registration  Statement  required

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pursuant to Section 3(b) of the Registration  Rights Agreement or otherwise) for
more than  thirty  (30)  consecutive  days or more than  sixty  (60) days in any
twelve (12) month period after such Registration Statement becomes effective;

                  4. The Borrower or any  subsidiary of the Borrower  shall make
an  assignment  for the  benefit  of  creditors,  or apply for or consent to the
appointment of a receiver or trustee for it or for all or  substantially  all of
its  property or  business;  or such a receiver or trustee  shall  otherwise  be
appointed;

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

                  6. The  Borrower  shall fail to  maintain  the  listing of the
Common  Stock on the Nasdaq  National  Market  ("NASDAQ"),  the Nasdaq  SmallCap
Market (the "NASDAQ  SMALLCAP"),  the New York Stock Exchange (the "NYSE"),  the
American Stock  Exchange  ("AMEX") or the  Over-the-Counter  Bulletin Board (the
"OTCBB");

                  7. The sale, conveyance or disposition of all or substantially
all of the  assets  of the  Borrower,  the  effectuation  by the  Borrower  of a
transaction  or series of  related  transactions  in which  more than 50% of the
voting power of the Borrower is disposed of, or the consolidation, merger (other
than a merger solely for the purpose of reincorporating in another jurisdiction)
or other business combination of the Borrower with or into any other individual,
corporation, limited liability company, partnership, association, trust or other
entity or  organization  (each,  a "PERSON") or Persons when the Borrower is not
the survivor;

                  8. The Borrower breaches any covenant contained in Article III
hereof and such  breach  continues  uncured  for a period of ten (10) days after
written notice thereof to the Borrower from any holder of Debentures;

                  9.  The  Borrower  shall be in  default  of a  material  term,
covenant,  warranty  or  undertaking  of any  material  agreement  to which  the
Borrower  is a  party,  including,  but  not  limited  to,  any  obligation  for
indebtedness senior or pari passu to the obligations hereunder;

                  10.  Any  material  representation,   warranty,   covenant  or
agreement of the  Borrower  made  herein,  or in the  Purchase  Agreement or the
Registration  Rights  Agreement  shall  be  materially  false or  misleading  or
breached by the Borrower;

                  11. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets for
more than  $250,000,  and shall  remain  unvacated,  unbonded or unstayed  for a
period of sixty (60) days; or

                  12. An SEC stop trade order or the trading  suspension  of the
Common Stock on the OTCBB (or such principal  exchange on which the Common Stock
trades)  shall be in effect for five (5)  consecutive  Trading  Days or five (5)
Trading Days during a period of ten (10) consecutive Trading Days,  excluding in
all cases a suspension of all trading on the OTCBB (or such  principal  exchange
on which the Common Stock trades);  provided, that this shall only be a Event of
Default to the extent  that the  Borrower  shall not have been able to cure such
trading

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suspension  within  thirty  (30) days of the  notice  thereof or list the Common
Stock on the Nasdaq SmallCap,  Nasdaq, the NYSE, AMEX or OTCBB within sixty (60)
days of such notice;

then,  upon the occurrence and during the  continuation  of any Event of Default
specified  in  subparagraphs  1, 2, 3, 6, 7, 8, 9, 10, 11 or 12 at the option of
the Holder  exercisable by the delivery of written notice (the "DEFAULT NOTICE")
to the Borrower of such Event of Default  (provided  that the remedies  afforded
under  this  Article  I.A shall only be  available  to  Holders  providing  such
notice),   or  upon  the  occurrence  of  any  Event  of  Default  specified  in
subparagraphs 4 or 5, the then outstanding  Debentures shall become  immediately
redeemable and the Borrower shall purchase each holder's outstanding  Debentures
for an amount equal to the greater of (i) the Applicable  Percentage (as defined
below) multiplied by the sum of (a) the then outstanding Principal Amount of the
Debentures,  plus (b) all  accrued  and unpaid  interest  thereon for the period
beginning  on the Issue Date and  ending on the date of  payment of the  Default
Amount (the "DEFAULT PAYMENT DATE"),  plus (c) Default Interest,  if any, on the
amounts  referred to in clauses (a) and/or (b), plus (d) all Conversion  Default
Payments  (as defined in Article  II.E  below),  Delivery  Default  Payments (as
defined  in Article  II.D.2  below) and any other  amounts  owed to such  holder
pursuant to Section  3(c) of the  Registration  Rights  Agreement,  and (ii) the
"PARITY  VALUE" of the  Debentures to be redeemed,  where parity value means the
product  of (x) the  highest  number of shares of  Common  Stock  issuable  upon
conversion of or otherwise  pursuant to such  Debentures in accordance  with the
terms hereof  (without  giving any effect to any  limitations  on conversions of
Debentures contained herein, and treating the Trading Day (as defined in Article
II.A.2) immediately  preceding the Default Payment Date as the "CONVERSION Date"
(as defined in Article II.D.4) for purposes of determining the lowest applicable
Conversion Price,  unless the Event of Default arises as a result of a breach in
respect of a specific  Conversion  Date in which case such Conversion Date shall
be the Conversion Date), multiplied by (y) the highest Closing Price (as defined
below) for the Common  Stock  during the period  beginning  on the date of first
occurrence  of the Event of  Default  and  ending  one day prior to the  Default
Payment  Date (the  greater of such  amounts  set forth in clauses  (i) and (ii)
above being referred to as the "DEFAULT AMOUNT").  The Default Amount,  together
with all other ancillary amounts payable hereunder, shall immediately become due
and payable, all without demand,  presentment or notice, all of which hereby are
expressly  waived,  together  with all  costs,  including,  without  limitation,
reasonable  legal fees and expenses of collection,  and Holder shall be entitled
to exercise  all other rights and  remedies  available at law or in equity.  The
"APPLICABLE  PERCENTAGE" shall mean one hundred twenty (120%) in the case of any
Event of Default  specified in  subparagraphs 1, 2, 3, 6, 7, 8, 9, 10, 11 or 12,
and one hundred percent (100%) in the case of any Event of Default  specified in
subparagraphs 4 or 5.

         B. FAILURE TO PAY DEFAULT  AMOUNT.  In the case of an Event of Default,
if the Borrower fails to pay the Default Amount within five (5) business days of
written  notice that such amount is due and payable,  then  (assuming  there are
sufficient  authorized shares) in addition to all other available remedies,  the
Holder shall have the right at anytime,  and from time to time after the failure
to timely pay the Default Amount, so long as the Event of Default continues,  to
require the Borrower,  upon written notice,  to immediately issue (in accordance
with and subject to the terms of Article II below),  in lieu of that  portion of
the Default  Amount with respect to which such  election is made,  the number of
shares of Common  Stock of the  Borrower  equal to such  portion of the  Default
Amount divided by any Conversion Price (as defined

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below),  as chosen in the sole discretion of Holder,  in effect from the date of
the  Event of  Default  until the date  Holder  elects to  exercise  its  rights
pursuant to this Article I.B.

                                 II. CONVERSION

         A. CONVERSION.

                  1. OPTIONAL  CONVERSION.  The Holder may, at any time and from
time to time,  convert this Debenture into Common Stock, in whole or in part, in
accordance with this Article II (an "OPTIONAL CONVERSION"). This Debenture shall
be convertible into such number of fully paid and nonassessable shares of Common
Stock as such  Common  Stock  exists on the Issue Date,  or any other  shares of
capital  stock or other  securities of the Borrower into which such Common Stock
is  thereafter  changed or  reclassified,  as is  determined by dividing (a) the
Conversion  Amount (as defined below) by (b) the Conversion Price (as defined in
Article  II.B  below);  provided,  however,  that in no event  shall  Holder  be
entitled  to  convert  this  Debenture  in  exercise  of that  dollar  amount of
Debentures  upon  conversion  of which  the sum of (x) the  number  of shares of
Common Stock  beneficially owned by Holder and its affiliates (other than shares
of Common Stock which may be deemed  beneficially owned through the ownership of
the  unconverted  portion of this  Debenture,  or the unexercised or unconverted
portion of any other securities of the Borrower (including,  without limitation,
the Warrants) subject to a limitation on conversion or exercise analogous to the
limitations  contained  herein)  and (y) the  number of  shares of Common  Stock
issuable upon the  conversion of the portion of this  Debenture  with respect to
which  the  determination  of this  proviso  is  being  made,  would  result  in
beneficial  ownership by Holder and Holder's affiliates of more than 9.9% of the
outstanding  shares  of  Common  Stock.  For  purposes  of  the  proviso  to the
immediately preceding sentence,  (i) beneficial ownership shall be determined in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(x) of such  proviso and (ii) such  proviso  may not be amended  without (a) the
written  consent of the  Holder and the  Borrower  and (b) the  approval  of the
holders of a majority of Borrower's  Common Stock  present,  or  represented  by
proxy,  and voting at any meeting  called to vote on such  proviso.  "CONVERSION
AMOUNT" means (i) the portion of the Principal  Amount of this  Debenture  being
converted,  plus (ii) all  accrued  and unpaid  interest  thereon for the period
beginning  on the Issue Date and ending on the  Conversion  Date (as  defined in
Article II.D.4), plus (iii) Default Interest, if any, on the amounts referred to
in the immediately  preceding  clauses (i) and/or (ii), plus (iv) any Conversion
Default  Payments (as defined in Article II.E) and Delivery Default Payments (as
defined in Article II.D.2) payable with respect thereto, together with any other
amounts  owed to Holder  pursuant  to Section  3(c) of the  Registration  Rights
Agreement.

                  2. AUTOMATIC CONVERSION. This Debenture shall be automatically
converted  into shares of Common Stock at the  Conversion  Price (an  "AUTOMATIC
CONVERSION")  in the event (each, an "AUTOMATIC  CONVERSION  EVENT") that either
(i) the  Borrower  shall  have at least ten  million  dollars  ($10,000,000)  in
Revenues (as defined below) in any complete calendar  quarter,  as reported in a
Quarterly  Report on Form 10-Q filed by the  Borrower  with the  Securities  and
Exchange Commission,  or (ii) the Closing Price (as defined below) of the Common
Stock exceeds $6.00 for  forty-five  (45)  consecutive  Trading Days (as defined
below) and the average  daily  trading  volume of the Common  Stock  during such
forty-five  (45) Trading

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Day period exceeds three hundred thousand (300,000) shares (excluding any shares
traded by affiliates of the Borrower), so long as (x) the Registration Statement
is effective  and sales may continue to be made  thereunder  and (y) there shall
not have occurred and be continuing an Event of Default.  "CLOSING PRICE," as of
any  date,  means the  closing  bid  price of the  Common  Stock on the OTCBB as
reported by Bloomberg  Financial  Markets or an  equivalent  reliable  reporting
service  mutually  acceptable  to and  hereafter  designated by the holders of a
majority of the outstanding  Principal Amount of the Debentures and the Borrower
("BLOOMBERG")  or, if the OTCBB is not the  principal  trading  market  for such
security,  the closing bid price of such  security on the  principal  securities
exchange or trading  market where such  security is listed or traded as reported
by  Bloomberg,  or, if no closing bid price of such security is available in any
of the foregoing manners, the average of the bid prices of any market makers for
such  security  that are listed in the "pink  sheets" by the National  Quotation
Bureau, Inc. If the Closing Price cannot be calculated for such security on such
date in the manner  provided  above,  the Closing Price shall be the fair market
value as mutually  determined  by the  Borrower and the holders of a majority of
the outstanding  Principal Amount of the Debentures for which the calculation of
the Closing Price is required.  "REVENUES"  shall mean revenues from application
sales or subscriptions  generated by the Borrower from its business as it exists
on the date of this  Debenture,  as described in the  Borrower's  business  plan
presented to the Holder,  including any revenues  from  internal  growth but not
including  revenue  increases  as  a  result  of  acquisitions  of  entities  or
businesses by the Borrower. "TRADING DAY" shall mean any day on which the Common
Stock is traded  for any  period on the OTCBB,  or on the  principal  securities
exchange  or other  securities  market on which the  Common  Stock is then being
traded.

                  In  the  event  an  Automatic  Conversion  Event  occurs,  the
Borrower  shall so  notify  the  Holder in  writing,  and so long as there is no
dispute as to whether such an event has in fact  occurred  (which  disputes,  if
any, shall be resolved by prompt  submission to independent  arbitration,  which
arbitration  shall be conducted in accordance  with  procedures  mutually agreed
upon by the  parties),  this  Debenture  shall  be  automatically  converted  in
accordance  with the terms of this  Article II on the third  (3rd)  Trading  Day
following receipt of such written notice (the "Automatic Conversion Date"). Upon
an Automatic Conversion,  the Debenture shall be convertible into such number of
fully paid and nonassessable  shares of Common Stock as such Common Stock exists
on the Issue Date, or any other shares of capital  stock or other  securities of
the Borrower into which such Common Stock is thereafter changed or reclassified,
as is determined  by dividing (a) the  Conversion  Amount by (b) the  Conversion
Price;  provided,  however,  that in the event an Automatic  Conversion  of this
Debenture hereunder would result in beneficial  ownership by Holder and Holder's
affiliates of more than 9.9% of the outstanding  shares of Common Stock (but for
the  proviso  set forth in  Article  II.A.1,  which  shall be  applicable  to an
Automatic Conversion hereunder),  then (A) the maximum number of shares issuable
without  violating the proviso set forth on Article II.A shall be issued and (B)
a warrant in the form attached hereto as Exhibit B to acquire a number of shares
equal to the  excess  number of  shares  which  otherwise  cannot be issued as a
result of this proviso shall issued.

                  Subject to the foregoing,  provisions of the Articles  II.D.1,
II.D.2 and  II.D.3  and II.D.5  shall be  applicable  to  Automatic  Conversions
pursuant to this Article II.A.2.

         B. CONVERSION PRICE. The "CONVERSION PRICE" shall be $2.00.

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         C.  ADJUSTMENTS  TO CONVERSION  PRICE.  The  Conversion  Price shall be
subject to adjustment from time to time as follows:

                  1. ADJUSTMENT DUE TO STOCK SPLIT, STOCK DIVIDEND,  ETC. If, at
any time when this Debenture is outstanding, the number of outstanding shares of
Common  Stock is  increased  or  decreased  by a stock  split,  stock  dividend,
combination,  reclassification,  rights  offering  below the  Trading  Price (as
defined below) to all holders of Common Stock or other similar  event,  then the
Conversion  Price shall be  calculated  giving  appropriate  effect to the stock
split, stock dividend, combination,  reclassification or other similar event. In
such event,  the Borrower  shall notify the Transfer  Agent of such change on or
before the effective date thereof.  "TRADING  PRICE," which shall be measured as
of the record date in respect of the rights  offering,  means (i) the average of
the last  reported  sale  prices  for the  shares of  Common  Stock on Nasdaq as
reported by Bloomberg, as applicable,  for the five (5) Trading Days immediately
preceding  such date, or (ii) if Nasdaq is not the principal  trading market for
the shares of Common Stock,  the average of the last reported sale prices on the
principal trading market for the Common Stock during the same period as reported
by  Bloomberg,  or (iii) if market value cannot be calculated as of such date on
any of the foregoing  bases, the Trading Price shall be the fair market value as
reasonably  determined  in good  faith  by (x) the  Board  of  Directors  of the
Borrower  or  (y)  at the  option  of the  holders  of a  majority  of the  then
outstanding  Principal  Amount of the Debentures,  by an independent  investment
bank of nationally recognized standing in the valuation of businesses similar to
the business of the Borrower.

                  2.  ADJUSTMENT DUE TO MERGER,  CONSOLIDATION,  ETC. If, at any
time when this  Debenture  is  outstanding  and prior to the  conversion  of all
Debentures,  there  shall be any  merger,  consolidation,  exchange  of  shares,
recapitalization,  reorganization,  or other similar event, as a result of which
shares of  Common  Stock of the  Borrower  shall be  changed  into the same or a
different number of shares of another class or classes of stock or securities of
the Borrower or another  entity,  or in case of any sale or conveyance of all or
substantially  all of the assets of the Borrower other than in connection with a
plan of  complete  liquidation  of the  Borrower  (each,  a "CHANGE  OF  CONTROL
TRANSACTION"),  then  Holder  shall  thereafter  have the right to receive  upon
conversion of this  Debenture  upon the basis and upon the terms and  conditions
specified  herein  and in  lieu  of  the  shares  of  Common  Stock  immediately
theretofore issuable upon such conversion such stock, securities or assets which
Holder  would  have  been  entitled  to  receive  in such  transaction  had this
Debenture been converted in full immediately prior to such transaction  (without
regard to any limitations on conversion or exercise contained herein), including
any rights (including election rights) that Holder would have had if Holder were
a  stockholder  at any time prior to the  consummation  of the Change of Control
Transaction,  and in any such  case  appropriate  provisions  shall be made with
respect to the rights and  interests of Holder such that the  provisions  hereof
(including,  without  limitation,  provisions  for  adjustment of the Conversion
Price and of the number of shares of Common Stock  issuable  upon  conversion of
this Debenture) shall thereafter be applicable,  as nearly as may be practicable
in  relation  to any  securities  or  assets  thereafter  deliverable  upon  the
conversion  of this  Debenture.  The Borrower  shall not effect any  transaction
described  in this  subparagraph  2 unless  (i) it first  gives,  to the  extent
practical,  thirty  (30) days' prior  written  notice (but in any event at least
fifteen  (15)  business  days prior  written  notice) of the record  date of the
special meeting of stockholders to approve,  or if there is no such record date,
the  consummation  of, such  Change of Control  Transaction  (during  which time
Holder shall be entitled to convert this Debenture),

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which notice shall be given  concurrently with the first public  announcement of
such transaction,  and (ii) the resulting  successor or acquiring entity (if not
the  Borrower)  and, if an entity  different  from the  successor  or  acquiring
entity, the entity whose capital stock or assets the holders of the Common Stock
are  entitled  to  receive as a result of such  Change of  Control  Transaction,
assumes  by  written  instrument  the  obligations  of the  Borrower  under this
Debenture  (including  under this  subparagraph  2). The above  provisions shall
similarly apply to successive consolidations, mergers, sales, transfers or share
exchanges.

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

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

                  5. ADJUSTMENT DUE TO DILUTIVE  ISSUANCE.  If, at any time when
any Debentures are issued and  outstanding,  the Borrower issues or sells, or in
accordance with this Article II.C.5 is deemed to have issued or sold, any shares
of Common Stock for no  consideration  or for a consideration  per share (before
deduction of reasonable  expenses or  commissions or  underwriting  discounts or
allowances in connection  therewith) less than the Conversion Price in effect on
the date of such issuance (or deemed issuance) of such shares of Common Stock (a
"DILUTIVE  ISSUANCE"),   then  immediately  upon  the  Dilutive  Issuance,   the
Conversion  Price will be reduced to the amount of the  consideration  per share
received  by the  Borrower in such  Dilutive  Issuance;  provided  that only one
adjustment will be made for each Dilutive Issuance.

                           The  Borrower  shall be deemed to have issued or sold
shares of Common Stock if the
Borrower in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable,  to subscribe for or to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock ("CONVERTIBLE
SECURITIES")  (such  warrants,  rights and options to purchase  Common  Stock or
Convertible  Securities are hereinafter referred

                                       8
<PAGE>

to as "OPTIONS"). If the price per share for which Common Stock is issuable upon
the exercise of such Options is less than the  Conversion  Price then in effect,
then the Conversion  Price shall be equal to such price per share.  For purposes
of the  preceding  sentence,  the  "price  per share for which  Common  Stock is
issuable  upon the exercise of such  Options" is  determined by dividing (i) the
total amount,  if any,  received or receivable by the Borrower as  consideration
for the  issuance or granting of all such  Options,  plus the minimum  aggregate
amount of  additional  consideration,  if any,  payable to the Borrower upon the
exercise  of all  such  Options,  plus,  in the case of  Convertible  Securities
issuable  upon the exercise of such  Options,  the minimum  aggregate  amount of
additional  consideration payable upon the conversion or exchange thereof at the
time such Convertible  Securities first become  convertible or exchangeable,  by
(ii) the  maximum  total  number of shares of  Common  Stock  issuable  upon the
exercise  of  all  such  Options   (assuming  full   conversion  of  Convertible
Securities,  if applicable).  No further adjustment to the Conversion Price will
be made upon the actual  issuance of such Common Stock upon the exercise of such
Options or upon the  conversion or exchange of Convertible  Securities  issuable
upon exercise of such Options.

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

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

                  6.   CERTAIN   EVENTS.   If  any  event  occurs  of  the  type
contemplated by the adjustment provisions of this Article II.C but not expressly
provided for by such provisions,  the Borrower will give notice of such event as
provided in Article  II.C.7 hereof,  and the Borrower's  Board of Directors will
make an appropriate adjustment in the Conversion Price so that the rights of the
Holder shall be neither enhanced nor diminished by such event.

                                       9
<PAGE>

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

         D.  MECHANICS OF  CONVERSION.  In order to convert this  Debenture into
shares of Common Stock,  Holder shall:  (1) submit a copy of the fully  executed
notice of  conversion  in the form  attached  hereto as  Exhibit A  ("NOTICE  OF
CONVERSION") to the Borrower by facsimile dispatched prior to Midnight, New York
City time (the "CONVERSION NOTICE  DEADLINE"),  on the date specified therein as
the Conversion  Date (as defined in Article II.D.4) (or by other means resulting
in, or reasonably  expected to result in,  written notice to the Borrower on the
date specified  therein as the Conversion Date) to the office of the Borrower or
its designated Transfer Agent for the Debentures, which notice shall specify the
Principal  Amount of this Debenture to be converted,  the applicable  Conversion
Price and a  calculation  of the number of shares of Common Stock  issuable upon
such  conversion;  and (2)  subject  to Article  II.D.1  below,  surrender  this
Debenture  along  with a copy of the Notice of  Conversion  to the office of the
Borrower as soon as practicable  thereafter.  In the case of a dispute as to the
calculation  of the  Conversion  Price,  the Borrower  shall promptly issue that
number of shares of Common Stock as is not disputed in accordance  with the next
sentence.  The Borrower  shall submit the disputed  calculations  to its outside
independent  accountant via facsimile within two (2) business days of receipt of
the Notice of Conversion. The accountant shall audit the calculations and notify
the  Borrower  and Holder of the results no later than 48 hours from the time it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error.

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

                                       10
<PAGE>

                  2.  DELIVERY  OF  COMMON  STOCK  UPON  CONVERSION.   Upon  the
submission  of a Notice  of  Conversion,  the  Borrower  shall,  within  two (2)
business  days after the  Conversion  Date (the  "DELIVERY  PERIOD"),  issue and
deliver (or cause its Transfer Agent to so issue and deliver) in accordance with
the terms hereof and the Purchase  Agreement to or upon the order of Holder that
number of shares of Common Stock for the portion of this Debenture  converted as
shall be determined in accordance  herewith.  In addition to any other  remedies
available to Holder,  including  actual damages  and/or  equitable  relief,  the
Borrower shall pay to Holder $2,000 per day in cash for each day beyond an eight
(8) day grace period  following the Delivery  Period that the Borrower  fails to
deliver  Common Stock (a "DELIVERY  DEFAULT")  issuable upon  conversion of this
Debenture  pursuant to the Notice of Conversion  until such time as the Borrower
has  delivered all such Common Stock (the  "DELIVERY  DEFAULT  PAYMENTS").  Such
Delivery  Default Payments shall be paid to Holder by the fifth (5th) day of the
month following the month in which they have accrued or, at the option of Holder
(by written  notice to the Borrower by the first day of the month  following the
month in which they have  accrued),  shall be  convertible  into Common Stock in
accordance with the terms of this Article II.

                  In lieu of delivering physical  certificates  representing the
Common Stock issuable upon conversion, provided the Borrower's Transfer Agent is
participating in the Depository Trust Borrower ("DTC") Fast Automated Securities
Transfer  ("FAST")  program,  upon written  request of Holder and its compliance
with all applicable  laws, rules and  regulations,  the provisions  contained in
Article II.A and in this Article II.D,  the Borrower  shall use its best efforts
to cause its Transfer Agent to electronically transmit the Common Stock issuable
upon conversion to Holder by crediting the account of Holder's Prime Broker with
DTC through its Deposit  Withdrawal Agent Commission  ("DWAC") system.  The time
periods for  delivery  and  penalties  described  in the  immediately  preceding
paragraph shall apply to the electronic transmittals described herein.

                  In addition to any other rights  available  to the Holder,  if
the  Borrower  fails to  deliver  to the Holder a  certificate  or  certificates
representing  the Conversion  Shares  pursuant to a conversion by the end of the
Delivery  Period,  and if after such 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 Common  Stock which the
Holder  anticipated  receiving  upon  such  conversion  (a  "BUY-IN"),  then the
Borrower  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 shares of Common  Stock  that the  Borrower  was
required to deliver to the Holder in  connection  with the  conversion  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 Debenture and equivalent number of shares of Common Stock for
which  such  conversion  was not  honored or deliver to the Holder the number of
shares of Common  Stock  that would have been  issued  had the  Borrower  timely
complied with its conversion 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 conversion 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 Borrower  shall be
required to pay the Holder $1,000. The Holder shall provide the Borrower written
notice  indicating  the amounts  payable to the Holder in respect of the Buy-In,
together

                                       11
<PAGE>

with applicable  confirmations  and other evidence  reasonably  requested by the
Borrower.  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 Borrower's  failure to timely deliver  certificates  representing
shares of Common Stock upon conversion of this Debenture as required pursuant to
the terms hereof.

                  3. NO FRACTIONAL  SHARES.  If any conversion of this Debenture
would  result in a  fractional  share of Common  Stock or the right to acquire a
fractional share of Common Stock, such fractional share shall be disregarded and
the number of shares of Common Stock issuable upon  conversion of this Debenture
shall be the next higher number of shares.

                  4. CONVERSION  DATE. The  "CONVERSION  DATE" shall be the date
specified in the Notice of Conversion, provided that the Notice of Conversion is
submitted by facsimile (or by other means  resulting in, or reasonably  expected
to result in,  written  notice) to the  Borrower or its  Transfer  Agent  before
Midnight, New York City time, on the date so specified, otherwise the Conversion
Date shall be the first  business  day after the date so  specified on which the
Notice of Conversion is actually received by the Borrower or its Transfer Agent.

                  5. RECORD HOLDERS.  The person or persons  entitled to receive
the shares of Common Stock issuable upon conversion of this Debenture  (pursuant
to Article  II.A.1 and Article  II.A.2) shall be treated for all purposes as the
record  holder or  holders  of such  securities  as of a  Conversion  Date or an
Automatic  Conversion  Date (as  applicable) and all rights with respect to this
Debenture (or portion thereof)  surrendered shall forthwith terminate except the
right to receive  the shares of Common  Stock or other  securities  or  property
issuable  on  such   conversion  (or  exercise)  and  except  that  the  holders
preferential  rights as a Holder of this  Debenture  shall survive to the extent
the Borrower fails to deliver such securities.

         E.  RESERVATION  OF SHARES.  A number of shares of the  authorized  but
unissued  Common Stock  sufficient to provide for the  conversion in full of the
Debentures  outstanding  (based on Conversion Price in effect from time to time)
shall at all times be reserved by the Borrower, free from preemptive rights, for
such  conversion  or  exercise.  As of the Issue Date,  a  sufficient  number of
authorized  and  unissued  shares of Common  Stock have been duly  reserved  for
issuance upon conversion of the Debentures (the "RESERVED AMOUNT"). The Reserved
Amount shall be increased  from time to time in accordance  with the  Borrower's
obligations pursuant to Section 4.7 of the Purchase Agreement.  In addition,  if
the  Borrower  shall  issue any  securities  or make any  change in its  capital
structure which would change the number of shares of Common Stock into which the
Debentures  shall be convertible,  the Borrower shall at the same time also make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock  authorized  and  reserved,  free from  preemptive  rights,  for
conversion of the Debentures.

         If at any time Holder submits a Notice of Conversion,  and the Borrower
does not have  sufficient  authorized  but unissued  shares of Common Stock duly
reserved and available for issuance to effect such conversion in accordance with
the provisions of this Article II (a "CONVERSION  DEFAULT"),  subject to Article
V.I, the Borrower  shall issue to Holder all of the shares of Common Stock which
are available to effect such conversion and exercise, if

                                       12
<PAGE>

applicable.  The portion of the Principal  Amount of this Debenture  included in
the Notice of Conversion  which exceeds the amount which is then convertible (or
exercisable)  into available shares of Common Stock (the "EXCESS AMOUNT") shall,
notwithstanding  anything to the contrary  contained herein,  not be convertible
(or  exercisable)  into Common Stock in  accordance  with the terms hereof until
(and at Holder's option at any time after) the date additional  shares of Common
Stock are authorized and duly reserved by the Borrower to permit such conversion
(or exercise),  at which time the Conversion  Price in respect  thereof shall be
the  lesser  of (i) the  Conversion  Price on the  Conversion  Default  Date (as
defined below) and (ii) the Conversion  Price on the Conversion  Date elected by
Holder in respect thereof.  The Borrower shall use its best efforts to effect an
increase in the authorized  number of shares of Common Stock as soon as possible
following the earlier of (x) such time that Holder notifies the Borrower or that
the  Borrower  otherwise  becomes  aware  that  there  are  or  likely  will  be
insufficient  authorized and unissued shares to allow full conversion hereof and
(y) a Conversion Default. In addition, the Borrower shall pay to Holder payments
("CONVERSION  DEFAULT  PAYMENTS") for a Conversion  Default in the amount of (a)
..18,  multiplied  by (b) the  Conversion  Default  Amount  (as  defined  below),
multiplied  by  (c)(N/365),  where N = the  number of days  from the day  Holder
submits  a  Notice  of  Conversion  giving  rise to a  Conversion  Default  (the
"CONVERSION  DEFAULT  DATE") to the date  (the  "AUTHORIZATION  DATE")  that the
Borrower  authorizes  a  sufficient  number of shares of Common  Stock to effect
conversion  of the  Debentures.  "CONVERSION  DEFAULT  AMOUNT"  means  the  then
outstanding Principal Amount of all Debentures held by Holder plus the aggregate
accrued  interest  thereon as of the first day of the  Conversion  Default.  The
Borrower shall send notice to Holder of the  authorization of additional  shares
of Common  Stock,  the  Authorization  Date and the amount of  Holder's  accrued
Conversion  Default Payments.  The accrued  Conversion  Default Payment for each
calendar month shall be paid in cash or shall be  convertible  into Common Stock
at the applicable Conversion Price, at the Borrower's option, as follows:

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

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

                  Holder's  election shall be made in writing to the Borrower at
any time prior to 5:00 p.m,  New York City time,  on the third  (3rd) day of the
month following the month in which Conversion Default payments have accrued.  If
no election is made,  Holder  shall be deemed to have  elected to receive  cash.
Nothing  herein  shall limit  Holder's  right to pursue  actual  damages (to the
extent in excess of the Conversion  Default Payments) for the Borrower's failure
to maintain a sufficient number of authorized shares of Common Stock, and Holder
shall  have the  right to  pursue  all  remedies  available  at law or in equity
(including a decree of specific performance and/or injunctive relief).

                                       13
<PAGE>

         F. NOTICE OF CONVERSION PRICE ADJUSTMENTS.  Upon the occurrence of each
adjustment or readjustment of the Conversion  Price pursuant to this Article II,
the  Borrower,  at its  expense,  shall  promptly  compute  such  adjustment  or
readjustment  in  accordance  with the terms  hereof and  prepare and furnish to
Holder a certificate  setting forth such adjustment or readjustment  and showing
in detail the facts upon which such  adjustment or  readjustment  is based.  The
Borrower shall, upon the written request at any time of Holder, furnish or cause
to be furnished to Holder a like  certificate  setting forth (i) such adjustment
or  readjustment,  (ii) the Conversion Price at the time in effect and (iii) the
number of shares of Common Stock and the amount,  if any, of other securities or
property which at the time would be received upon conversion of this Debenture.

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

                             III. CERTAIN COVENANTS

         A.  DISTRIBUTIONS  ON CAPITAL STOCK. So long as the Borrower shall have
any  obligation  under this  Debenture,  the  Borrower  shall not,  without  the
Holder's  written consent,  (a) pay, declare or set apart for such payment,  any
dividend or other distribution  (whether in cash,  property or other securities)
on shares of capital stock or (b) directly or indirectly  through any subsidiary
make any other payment or distribution in respect of its capital stock.

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

         C. BORROWINGS.  So long as the Borrower shall have any obligation under
this  Debenture,  the  Borrower  shall not,  without the written  consent of the
holders  of  a  majority  of  the  then  outstanding  Principal  Amount  of  the
Debentures,  create, incur, assume or suffer to exist any liability for borrowed
money senior or pari passu in rank to the  Debentures,  except (a) borrowings in
existence or committed on the date hereof and of which the Borrower has informed
Holder  in  writing  prior  to the  date  hereof  or (b)  indebtedness  to trade
creditors incurred in the ordinary course of business.

                                       14
<PAGE>

         D. SALE OF ASSETS.  So long as the Borrower  shall have any  obligation
under this Debenture, the Borrower shall not, without the written consent of the
holders  of  a  majority  of  the  then  outstanding  Principal  Amount  of  the
Debentures,  sell,  lease or otherwise  dispose of any of its assets outside the
ordinary course of business. Any consent to the disposition of any assets may be
conditioned on a specified use of the proceeds of disposition.

         E.  ADVANCES  AND  LOANS.  So  long  as the  Borrower  shall  have  any
obligation  under this  Debenture,  the Borrower shall not,  without the written
consent of the holders of a majority of the then outstanding Principal Amount of
the Debentures,  lend money,  give credit or make advances to any person,  firm,
joint  venture  or  corporation,   including,   without  limitation,   officers,
directors, employees, subsidiaries and affiliates of the Borrower, except loans,
credits or advances  (a) in  existence or committed on the date hereof and which
the Borrower has informed  Holder in writing  prior to the date hereof,  and (b)
made in the ordinary course of business.

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

                                  IV. MATURITY

         A. PAYMENT AT MATURITY.  The entire  Principal Amount of the Debentures
then outstanding (together with any accrued and unpaid interest thereon, Default
Interest,  Conversion Default Payments,  Delivery Default Payments and all other
amounts  due  and  payable  by the  Borrower  pursuant  to  Section  2(c) of the
Registration  Rights  Agreement)  on the  Maturity  Date,  shall  be paid by the
Borrower to the Holder in cash on the Maturity Date.

         B.  FAILURE TO PAY.  In the event that all  amounts  due and payable by
Borrower are not paid by the Borrower on the  Maturity  Date,  the Holder may at
any time after the Maturity  Date (i) exercise its rights  pursuant to Article I
(to the extent it may exercise such rights in accordance with Article I) or (ii)
exercise its  conversion  rights  pursuant to Article II. Each of the  foregoing
options  may be  exercised  by the  Holder  in  whole  or in  part,  alone or in
combination and without affecting any rights or remedies otherwise  available to
the Holder.  If the Holder elects to exercise its rights  pursuant to clause (i)
above,  until the amounts due are actually paid by the Borrower,  nothing herein
shall  affect  the  Holder's  ability  to  convert  all or any  portion  of this
Debenture  into shares of the  Borrower's  Common Stock in  accordance  with the
terms hereof,  including any portion for which payment is due pursuant to clause
(i).

                                       15
<PAGE>

                                V. MISCELLANEOUS

         A. FAILURE OF INDULGENCE NOT WAIVER. No failure or delay on the part of
Holder in the exercise of any power, right or privilege  hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege  preclude other or further  exercise  thereof or of any other
right, power or privilege.

         B.  NOTICES.  Any notices  required or  permitted to be given under the
terms of this  Debenture  shall be sent by certified or registered  mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight  delivery  service) or by facsimile,  and shall be effective five days
after  being  placed in the mail,  if  mailed,  or upon  receipt  or  refusal of
receipt,  if delivered  personally or by courier or by  facsimile,  in each case
addressed to a party. The addresses for such communications shall be:

                    If to the Company:

                         Summus, Inc.
                         434 Fayetteville Street, Suite 600
                         Raleigh, North Carolina  27601
                         Attention:    Gary E. Ban, Chief Executive Officer
                         Telephone:    919-807-5611
                         Facsimile:    919-807-5601

                    With copy to:

                         Summus, Inc.
                         434 Fayetteville Street, Suite 600
                         Raleigh, North Carolina  27601
                         Attention:    Donald T. Locke, CFO and General Counsel
                         Telephone:    919-807-5623
                         Facsimile:    919-807-5601

         If to Holder,  to the address set forth immediately below Holder's name
on Exhibit A to the Purchase  Agreement or such other address as is communicated
to the Borrower by notice by Holder in accordance with the terms hereof,  with a
copy to counsel for such Holder listed on Exhibit A to the Purchase Agreement.

         C.  AMENDMENT  PROVISION.  The  Debentures  may be  amended  only by an
instrument  in writing  signed by the  Borrower and the holders of a majority of
the then outstanding Principal Amount of the Debentures.

         D. ASSIGNABILITY. This Debenture shall be binding upon the Borrower and
its  successors  and  assigns  and shall  inure to the benefit of Holder and its
successors and assigns. In the event Holder shall sell or otherwise transfer any
portion of this Debenture, each transferee shall be allocated a pro rata portion
of such transferor's  Reserved Amount.  Any portion of the Reserved Amount which
remains  allocated  to any person or entity  which does not hold any

                                       16
<PAGE>

Debentures shall be allocated to the remaining  holders of Debentures,  pro rata
based on the total Principal Amount of Debentures then held by such holders.

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

         F. GOVERNING LAW. This Debenture  shall be governed by and construed in
accordance  with the laws of the State of Delaware  applicable to contracts made
and to be performed in the State of Delaware  (without  regard to  principles of
conflict of laws). The Borrower and Holder irrevocably  consent to the exclusive
jurisdiction  of the United States  federal  courts and state courts  located in
Delaware in any suit or proceeding based on or arising under this Debenture, the
agreements entered into in connection herewith or the transactions  contemplated
hereby or thereby and irrevocably  agree that all claims in respect of such suit
or  proceeding  may be  determined  in such  courts.  The  Borrower  and  Holder
irrevocably  waive the defense of an  inconvenient  forum to the  maintenance of
such suit or  proceeding.  The Borrower and Holder further agree that service of
process upon a party mailed by first class mail shall be deemed in every respect
effective  service  of  process  upon the party in any such suit or  proceeding.
Nothing herein shall affect  Holder's right to serve process in any other manner
permitted by law.  The  Borrower  and Holder  agree that a final  non-appealable
judgment in any such suit or proceeding  shall be conclusive and may be enforced
in other  jurisdictions  by suit on such judgment or in any other lawful manner.
THE  PARTIES  HEREBY  EXPRESSLY  WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY  CLAIM,
DEMAND,  ACTION OR CAUSE OF ACTION  ARISING  UNDER THIS  DEBENTURE OR IN ANY WAY
CONNECTED  WITH OR RELATED OR  INCIDENTAL  TO THE  DEALINGS OF THE PARTIES  WITH
RESPECT TO THIS DEBENTURE,  OR THE  TRANSACTIONS  RELATED  HERETO,  IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER  FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND THE PARTIES HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM,
DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT  TRIAL  WITHOUT A
JURY,  AND THAT EITHER PARTY MAY FILE AN ORIGINAL  COUNTERPART OR A COPY OF THIS
PARAGRAPH  WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE OTHER PARTY
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         G.  DENOMINATIONS.  At the request of Holder,  upon  surrender  of this
Debenture,  the Borrower  shall  promptly  issue new Debentures in the aggregate
outstanding  Principal Amount hereof, in the form hereof, in such  denominations
of at least $25,000 as Holder shall request.

         H. LOST OR STOLEN DEBENTURES.  Upon receipt by the Borrower of evidence
of the loss,  theft,  destruction or mutilation of this  Debenture,  and (in the
case of loss, theft or destruction) of indemnity reasonably  satisfactory to the
Borrower,  and upon surrender and cancellation of this Debenture,  if mutilated,
the Borrower shall execute and deliver a new Debenture of like tenor and date.

         I. PAYMENT OF CASH; DEFAULTS. Whenever the Borrower is required to make
any cash payment to Holder under this Debenture (as a Conversion Default Payment
or otherwise  but not including  payments of principal and interest  hereunder),
such cash  payment  shall be made to  Holder  within  five  Trading  Days  after
delivery by Holder of a notice  specifying

                                       17
<PAGE>

that Holder  elects to receive  such  payment in cash and the method  (e.g.,  by
check,  wire  transfer)  in which such  payment  should be made and  appropriate
delivery instructions,  including any necessary wire transfer  instructions.  If
such payment is not delivered within such five-Trading Day period,  Holder shall
thereafter  be entitled  to  interest  on the unpaid  amount at a per annum rate
equal to the lower of 24% and the highest  interest rate permitted by applicable
law until such amount is paid in full to Holder.

         J. PRO RATA  ALLOCATIONS.  The Reserved Amount (including any increases
thereto)  shall be  allocated  by the Borrower pro rata among the holders of the
Debentures based on the total Principal Amount of Debentures  originally  issued
to each holder of the Debentures.  Each increase to the Reserved Amount shall be
allocated  pro rata  among  the  holders  of the  Debentures  based on the total
Principal  Amount of Debentures  held by each holder at the time of the increase
in the Reserved Amount.  In the event a holder shall sell or otherwise  transfer
any of  such  holder's  shares  of the  Debentures,  each  transferee  shall  be
allocated a pro rata portion of such transferor's  Reserved Amount.  Any portion
of the  Reserved  Amount which  remains  allocated to any person or entity which
does not hold any the Debentures shall be allocated to the remaining  holders of
shares  of the  Debentures,  pro rata  based on the  total  Principal  Amount of
Debentures held by such holders.

         K. STATUS AS DEBENTUREHOLDER. Upon submission of a Notice of Conversion
by Holder,  the  Principal  Amount of this  Debenture  and the interest  thereon
covered thereby (other than any portion of this Debenture,  if any, which cannot
be converted because the conversion thereof would exceed such holder's allocated
portion  of the  Maximum  Share  Amount  or  Reserved  Amount)  shall be  deemed
converted  into shares of Common  Stock as of the  Conversion  Date and Holder's
rights as a holder of this Debenture  shall cease and terminate,  excepting only
the right to receive  certificates  for such  shares of Common  Stock and to any
remedies  provided  herein or  otherwise  available  at law or in equity to such
holder because of a failure by the  Corporation to comply with the terms of this
Debenture.   Notwithstanding   the   foregoing,   if  Holder  has  not  received
certificates  for all shares of Common  Stock  prior to the tenth  business  day
after the expiration of the Delivery Period with respect to a conversion for any
reason, then (unless Holder otherwise elects to retain its status as a holder of
Common  Stock by so  notifying  the  Corporation)  the portion of the  Principal
Amount  and  interest  thereon  subject  to  such  conversion  shall  be  deemed
outstanding  under  this  Debenture  and  the  Corporation  shall,  as  soon  as
practicable, return this Debenture to Holder.

         In all cases,  Holder  shall  retain  all of its  rights  and  remedies
(including,  without  limitation,  (i) the right to receive  Conversion  Default
Payments  pursuant  to Article  II.F to the  extent  required  thereby  for such
Conversion  Default and any subsequent  Conversion Default and (ii) the right to
have the Conversion Price with respect to subsequent  conversions  determined in
accordance  with  Article  II.F) for the  Corporation's  failure to convert this
Debenture.

         L. REMEDIES  CUMULATIVE.  The remedies provided in this Debenture shall
be  cumulative  and in  addition  to all other  remedies  available  under  this
Debenture,  at law or in  equity  (including  a decree of  specific  performance
and/or other  injunctive  relief),  no remedy contained herein shall be deemed a
waiver of compliance  giving rise to such remedy and nothing  herein shall limit
Holder's  right to pursue  actual  damages  for any  failure by the  Borrower to
comply with the terms of this Debenture. The Borrower acknowledges that a breach
by it of its

                                       18
<PAGE>

obligations  hereunder will cause irreparable harm to Holder and that the remedy
at law for any such breach may be inadequate.  The Borrower therefore agrees, in
the event of any such breach or threatened breach,  Holder shall be entitled, in
addition to all other  available  remedies,  to an  injunction  restraining  any
breach,  without the necessity of showing  economic loss and without any bond or
other security being required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

         IN WITNESS WHEREOF,  Borrower has caused this Debenture to be signed in
its name by its duly authorized officer as of the 18th day of November, 2005.

                                             SUMMUS, INC.

                                             By:
                                                --------------------------------
                                                 Gary E. Ban
                                                 Chief Executive Officer

<PAGE>

                                                                       EXHIBIT A

                              NOTICE OF CONVERSION

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

                  The   undersigned   hereby   irrevocably   elects  to  convert
$________Principal Amount of the Debenture (defined below) into shares of common
stock, par value $.001 per share ("COMMON STOCK"),  of Summus,  Inc., a Delaware
corporation  (the  "BORROWER")  according to the conditions of the Debentures of
the Borrower  dated as of November 18, 2005 (the  "DEBENTURES"),  as of the date
written below. If securities are to be issued in the name of a person other than
the  undersigned,  the  undersigned  will pay all  transfer  taxes  payable with
respect  thereto and is delivering  herewith such  certificates.  No fee will be
charged to the Holder for any conversion, except for transfer taxes, if any.

                  The undersigned also irrevocably  elects to convert  $________
of Conversion  Default  Payments,  $________ of Delivery Default Payments and/or
$_______  of  payments  pursuant  to  Section  2(c) of the  Registration  Rights
Agreement at the Applicable Conversion Price set forth below.

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

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

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

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

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

                     Date of Conversion:___________________________
                     Market Price Days:____________________________
                     Applicable Conversion Price:____________________
                     Number of Shares of Common Stock to be Issued
                     Pursuant to:  (i) Conversion of the Debentures:_________
                     _____; or

                                       A-1
<PAGE>

                     (ii)  Conversion  of  Conversion   Default  Payments,
                     Delivery Default Payments and/or payments pursuant to
                     Section 3(c) of the Registration Rights Agreement:
                     ---------------------------------
                     Signature:_________________________________
                     Name:______________________________________
                     Address:___________________________________
                     ___________________________________________

                                      A-2
<PAGE>

                                                                       EXHIBIT BEXHIBIT 4.3

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

                                                                    Right to
                                                                    Purchase
                                                                    _,000,000
                                                                    Units

                               WARRANT (A WARRANT)

         THIS  CERTIFIES  THAT,  for  value  received,   ________________   (the
"Holder") or its registered assigns, is entitled to purchase from Summus,  Inc.,
a Delaware corporation (the "Company"),  at any time or from time to time during
the period specified in Section 2 hereof, ___ Million  (_,000,000) Units for the
purchase price of $2.00 per unit (the "Purchase Price"), each Unit consisting of
(i) one (1) fully paid and  nonassessable  share of the Company's  common stock,
par value $.001 per share (the "Common  Stock"),  and (ii) a warrant to purchase
four-tenths  (4/10) of a share of Common Stock in the form attached  hereto (the
"C-2 Warrant").  The term "Common Shares," as used herein,  refers to the shares
of Common Stock purchasable  pursuant to this Warrant,  but not the C-2 Warrant.
The  number  of Units  purchasable  pursuant  to this  Warrant  are  subject  to
adjustment  as  provided  in Section 4 hereof.  The term  "Warrants"  means this
Warrant and the other warrants issued to the Holder and its affiliates  pursuant
to that certain Securities Purchase  Agreement,  dated November 18, 2005, by and
among the Company  and the Buyers  listed on the  execution  page  thereof  (the
"Purchase Agreement").

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

<PAGE>

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

               (a)  Subject  to  the  provisions  hereof,  this  Warrant  may be
exercised by the Holder,  in whole or in part, by the surrender of this Warrant,
together with a completed  exercise  agreement in the form attached  hereto (the
"Exercise  Agreement"),  to the  Company  during  normal  business  hours on any
business day at the Company's  principal executive offices (or such other office
or agency of the Company as it may designate by notice to the Holder),  and upon
(i) payment to the Company in cash,  by certified  or official  bank check or by
wire transfer for the account of the Company of the Purchase Price for the Units
specified in the Exercise  Agreement.  The Units so purchased shall be deemed to
be issued to the Holder or such holder's  designee,  as the record owner of such
shares, as of the close of business on the date on which this Warrant shall have
been surrendered,  the completed  Exercise  Agreement shall have been delivered,
and  payment  shall have been made for such  shares as set forth  above.  In the
event of any exercise of the rights  represented  by this Warrant in  accordance
with and subject to the terms and conditions hereof, either (i) certificates for
the Common  Shares and the C-2 Warrant  shall be dated the date of such exercise
and delivered to the Holder hereof within a reasonable  time,  not exceeding two
(2) trading  days after such  exercise  or, (ii) only with respect to the Common
Shares,  if the  Company's  transfer  agent  is a  participant  in  the  Deposit
Withdrawal Agent Commission  ("DWAC") system,  the Common Shares shall be issued
and delivered to the Depository Trust Company account on the Holder's behalf via
the DWAC system  within a reasonable  time,  not  exceeding two (2) trading days
after such  exercise  (the date of delivery  pursuant  to (i) or (ii) above,  as
applicable,  being  referred  to herein as the  "Delivery  Date") and the Holder
hereof  shall be deemed for all  purposes to be the holder of the Common  Shares
and  the  C-2  Warrant  so  purchased  as of the  date  of  such  exercise.  The
certificates so delivered shall be in such  denominations as may be requested by
the Holder and shall be registered in the name of the Holder.  In the event that
this Warrant shall have been exercised only in part,  then,  unless this Warrant
has expired,  the Company shall, at its expense, at the time of delivery of such
certificates,  deliver to the holder a new  Warrant  representing  the number of
Units with respect to which this Warrant shall not then have been exercised.

               (b) 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 Common  Shares and the C-2 Warrant  pursuant to an exercise by
the Delivery Date, and if after such 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 Common 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 Common  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 Common  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,

                                       2
<PAGE>

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.  In addition to all other available  remedies at law or in equity,
if the Company fails to deliver  certificates for the Common Shares within three
(3) business days after this Warrant is exercised, then the Company shall pay to
the holder in cash a penalty (the "Delivery  Payment") equal to 2% of the number
of Common  Shares that the holder is entitled to  multiplied by the Market Price
(as  hereinafter  defined)  for  each  day that  the  Company  fails to  deliver
certificates  for the Common Shares.  For example,  if the holder is entitled to
100,000 Common Shares and the Market Price is $2.00,  then the Company shall pay
to the holder $4,000 for each day that the Company fails to deliver certificates
for the Common Shares.  The Delivery  Payment shall be paid to the holder by the
fifth day of the month following the month in which it has accrued.

               (c) Notwithstanding  anything in this Warrant to the contrary, in
no event  shall the Holder of this  Warrant be  entitled to exercise a number of
Warrants (or portions  thereof) in excess of the number of Warrants (or portions
thereof)  upon  exercise  of which the sum of (i) the number of shares of Common
Stock  beneficially owned by the Holder and its affiliates (other than shares of
Common Stock  which,  but for this  proviso,  may be deemed  beneficially  owned
through  the  ownership  of the  unexercised  Warrants  and the  unexercised  or
unconverted  portion  of any  other  securities  of  the  Company  subject  to a
limitation  on  conversion  or exercise  analogous to the  limitation  contained
herein) and (ii) the number of shares of Common Stock  issuable upon exercise of
the  Warrants  (or portions  thereof)  with  respect to which the  determination
described  herein is being made,  would  result in  beneficial  ownership by the
Holder and its affiliates of more than 9.9% of the outstanding  shares of Common
Stock,  provided,  however,  that upon the Holder of this Warrant  providing the
Company with  sixty-one  (61) days notice (the "Waiver  Notice") that the Holder
would like to waive this Section 1(c) with regard to any or all shares of Common
Stock  issuable upon  exercise of this Warrant,  this Section 1(c) will be of no
force or effect with regard to all or a portion of the Warrant referenced in the
Waiver Notice;  provided,  further,  that this provision  shall be of no further
force or effect  during  the  sixty-one  (61)  days  immediately  preceding  the
expiration  of the  term  of  this  Warrant.  For  purposes  of the  immediately
preceding sentence,  beneficial ownership shall be determined in accordance with
Section  13(d)  of  the  Securities  Exchange  Act  of  1934,  as  amended,  and
Regulations 13D-G thereunder, except as otherwise provided in clause (i) hereof.
Notwithstanding  anything in this Warrant to the contrary,  the  restrictions on
exercise of this Warrant set forth in this section shall not be amended  without
(i) the written  consent of the Holder and the Company and (ii) the  approval of
the holders of a majority of the Common Stock present,  or represented by proxy,
and voting at any meeting called to vote on the amendment of such restriction.

        2. PERIOD OF EXERCISE.  This Warrant is  exercisable at any time or from
time to time on or after the date hereof and shall expire at 5:00 p.m., New York
City time,  one  hundred  fifty (150) days  following  the  Effective  Date (the
"Exercise Period"); provided that on the last

                                       3
<PAGE>

day of the Exercise  Period,  if the Holder pays an  extension  fee of $1.99 per
share (the  "Extension  Fee"),  to the Company in cash, by certified or official
bank check or by wire transfer for the account of the Company  (which  Extension
Fee is  non-refundable),  the Exercise  Period shall be extended for a period of
two (2) years with  respect to that number of Units  determined  by dividing (i)
the aggregate amount of the Extension Fee paid by (ii) $1.99; provided, further,
that if the  Exercise  Period has been  extended  pursuant  to the terms of this
Section 2 upon payment of the Extension Fee to the Company,  the Purchase  Price
per Unit shall thereafter equal $0.01. For purposes of this Warrant,  "Effective
Date" means the date that the Commission declares the Registration Statement (as
defined in the Registration Rights Agreement (as defined in Section 7(a) hereto)
effective.  The Company may cause Holder to exercise this Warrant or forfeit its
right to exercise this Warrant in the event that (a) the average Market Price of
the Common  Stock  exceeds  $4.00 for a period of  twenty-two  (22)  consecutive
trading days,  the Common Stock trades at least 300,000  shares for each trading
day during such  twenty-two  (22) day period and (c) the  Registration  Date has
been  declared  effective  by the  Commission  and sales may continue to be made
thereunder.

        3. CERTAIN  AGREEMENTS OF THE COMPANY.  The Company hereby covenants and
agrees as follows:

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

               (b)  RESERVATION  OF SHARES.  During  the  Exercise  Period,  the
Company  shall at all times have  authorized,  and  reserved  for the purpose of
issuance upon exercise of this Warrant,  a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant,  in  accordance  with Section
4.7 of the Purchase Agreement.

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

               (d)  CERTAIN  ACTIONS  PROHIBITED.   The  Company  will  not,  by
amendment  of its  charter or through  any  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder,  but will at all times in
good faith assist in the carrying out of all the  provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this  Warrant in order to protect the  exercise  privilege of the holder of this
Warrant  against  dilution or other  impairment,  consistent  with the tenor and
purpose of this Warrant.  Without limiting the generality of the foregoing,

                                       4
<PAGE>

the Company (i) will not  increase  the par value of any shares of Common  Stock
receivable  upon the exercise of this Warrant  above the Purchase  Price then in
effect,  and (ii) will take all such actions as may be necessary or  appropriate
in  order  that the  Company  may  validly  and  legally  issue  fully  paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.

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

        4.  ANTIDILUTION  PROVISIONS.  During the Exercise Period,  the Purchase
Price and the number of Units  purchasable  pursuant  to this  Warrant  shall be
subject to  adjustment  from time to time as provided in this  Section 4. In the
event that any adjustment of the Purchase Price as required  herein results in a
fraction of a cent, such Purchase Price shall be rounded up to the nearest cent.

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

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

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

                                       5
<PAGE>

               by dividing (i) the total amount,  if any, received or receivable
               by the Company as  consideration  for the issuance or granting of
               all such Options, plus the minimum aggregate amount of additional
               consideration,  if any,  payable to the Company upon the exercise
               of all such Options,  plus, in the case of Convertible Securities
               issuable upon the exercise of such Options, the minimum aggregate
               amount of additional consideration payable upon the conversion or
               exchange  thereof at the time such  Convertible  Securities first
               become  convertible  or  exchangeable,  by (ii) the maximum total
               number of shares of Common  Stock  issuable  upon the exercise of
               all  such  Options   (assuming  full  conversion  of  Convertible
               Securities, if applicable). No further adjustment to the Purchase
               Price will be made upon the actual  issuance of such Common Stock
               upon the  exercise  of such  Options  or upon the  conversion  or
               exchange of Convertible Securities issuable upon exercise of such
               Options.

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

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

                              (iv) TREATMENT OF EXPIRED  OPTIONS AND UNEXERCISED
               CONVERTIBLE  SECURITIES.  If,  in any case,  the total  number of
               shares of Common Stock  issuable  upon  exercise of any Option or
               upon conversion or exchange of any Convertible Securities is

                                       6
<PAGE>

               not, in fact, issued and the rights to exercise such Option or to
               convert  or  exchange  such  Convertible  Securities  shall  have
               expired or terminated,  the Purchase Price then in effect will be
               readjusted to the Purchase  Price which would have been in effect
               at the time of such  expiration or termination had such Option or
               Convertible  Securities,  to the extent  outstanding  immediately
               prior to such expiration or termination (other than in respect of
               the actual  number of shares of Common Stock issued upon exercise
               or conversion thereof), never been issued.

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

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

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

                                       7
<PAGE>

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

               (e)  CONSOLIDATION,  MERGER  OR SALE.  If,  at any time when this
Warrant is  outstanding,  there shall be any merger  (other than a merger solely
for the  purpose of  reincorporating  in another  jurisdiction),  consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which  shares of Common  Stock of the Company  shall be changed into
the same or a different number of shares of another class or classes of stock or
securities  of the  Company  or  another  entity,  or in  case  of any  sale  or
conveyance of all or  substantially  all of the assets of the Company other than
in  connection  with a plan of  complete  liquidation  of the Company  (each,  a
"Change of Control Transaction"), then Holder shall thereafter have the right to
receive  upon  exercise  of this  Warrant  upon the basis and upon the terms and
conditions  specified  herein  and  in  lieu  of  the  shares  of  Common  Stock
immediately  theretofore  issuable upon such exercise such stock,  securities or
assets which Holder would have been entitled to receive in such  transaction had
this  Warrant  been  exercised  in full  immediately  prior to such  transaction
(without regard to any limitations on exercise contained herein),  including any
rights  (including  election rights) that Holder would have had if Holder were a
stockholder  at any time  prior to the  consummation  of the  Change of  Control
Transaction,  and in any such  case  appropriate  provisions  shall be made with
respect  to the rights and  interests  of Holder to the end that the  provisions
hereof (including, without limitation, provisions for adjustment of the Purchase
Price and of the number of Units issuable upon conversion of this Warrant) shall
thereafter be  applicable,  as nearly as may be  practicable  in relation to any
securities or assets thereafter deliverable upon the conversion of this Warrant.
The Company shall not effect any transaction  described in this subparagraph (e)
unless (i) it first  gives,  to the extent  practical,  thirty  (30) days' prior
written  notice  (but in any event at least  fifteen  (15)  business  days prior
written  notice) of the record date of the special  meeting of  stockholders  to
approve, or if there is no such record date, the consummation of, such Change of
Control Transaction (during which time Holder shall be entitled to Exercise this
Warrant),  which  notice  shall be given  concurrently  with  the  first  public
announcement of such transaction,  and (ii) the resulting successor or acquiring
entity (if not the Company)  and, if an entity  different  from the successor or
acquiring  entity,  the entity whose  capital stock or assets the holders of the
Common  Stock are  entitled  to  receive  as a result of such  Change of Control
Transaction, assumes by written instrument the obligations of the Borrower under
this Warrant (including under this subparagraph (e)). The above provisions shall
similarly apply to successive consolidations, mergers, sales, transfers or share
exchanges.

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

                                       8
<PAGE>

been  payable to the holder had such  holder  been the holder of such  shares of
Common Stock on the record date for the  determination of stockholders  entitled
to such distribution.

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

               (h) MINIMUM  ADJUSTMENT OF PURCHASE  PRICE.  No adjustment of the
Purchase  Price shall be made in an amount of less than 1% of the Purchase 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
Purchase Price.

               (i) NO FRACTIONAL  SHARES.  No fractional  shares of Common Stock
are to be issued upon the  exercise  of this  Warrant.  If the  exercise of this
Warrant  would result in a fractional  share of Common  Stock,  such  fractional
share shall be  disregarded  and the number of shares of Common  Stock  issuable
upon exercise of the Warrant shall be the next higher number of shares.

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

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

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

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

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

then,  in each such case,  the Company  shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for  determining  the holders of Common Stock entitled to receive
any such dividend,  distribution,  or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such  reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding-up  and (b) in the  case of any such  reorganization,  reclassification,
consolidation,  merger, sale, dissolution,  liquidation or winding-up, notice of
the date (or,  if not then  known,  a

                                       9
<PAGE>

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

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

                  (l) CERTAIN DEFINITIONS.

                                    (i) "COMMON STOCK DEEMED  OUTSTANDING" shall
                  mean the number of shares of Common Stock actually outstanding
                  (not including  shares of Common Stock held in the treasury of
                  the Company),  plus (x) pursuant to Paragraph 4(b)(i) her9eof,
                  the maximum  total number of shares of Common  Stock  issuable
                  upon the exercise of Options,  as of the date of such issuance
                  or  grant  of such  Options,  if  any,  and  (y)  pursuant  to
                  Paragraph  4(b)(ii) hereof, the maximum total number of shares
                  of Common  Stock  issuable  upon  conversion  or  exchange  of
                  Convertible  Securities,  as of the date of  issuance  of such
                  Convertible Securities, if any.

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

                                    (iii)  "COMMON  STOCK," for purposes of this
                  Section 4,  includes  the Common  Stock,  par value  $.001 per
                  share, and any additional class of stock of the Company having
                  no preference as to dividends or distributions on liquidation,
                  provided

                                       10
<PAGE>

                  that the shares  purchasable  pursuant to this  Warrant  shall
                  include  only  shares of  Common  Stock,  par value  $.001 per
                  share,  in respect of which this  Warrant is  exercisable,  or
                  shares  resulting from any  subdivision or combination of such
                  Common   Stock,   or  in  the  case  of  any   reorganization,
                  reclassification,   consolidation,  merger,  or  sale  of  the
                  character  referred to in Section  4(e)  hereof,  the stock or
                  other securities or property provided for in such section.

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

         6. NO RIGHTS OR LIABILITIES  AS A  SHAREHOLDER.  This Warrant shall not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company.  No provision of this Warrant,  in the absence of affirmative action by
the Holder to purchase Units,  and no mere  enumeration  herein of the rights or
privileges  of the Holder,  shall give rise to any  liability of such holder for
the Purchase Price or as a shareholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

         7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.

                  (a)  TRANSFER.  This  Warrant  and the  rights  granted to the
Holder are  transferable,  in whole or in part,  upon surrender of this Warrant,
together with a properly executed assignment in the form attached hereto, at the
office  or agency  of the  Company  referred  to in  Section 8 below.  Until due
presentment  for  registration  of  transfer  on the books of the  Company,  the
Company  may  treat the  registered  Holder  as the  owner  and  Holder  for all
purposes,  and the Company  shall not be affected by any notice to the contrary.
The Common  Shares are subject to  registration  rights in  accordance  with the
provisions of that certain  Registration  Rights  Agreement,  dated November 18,
2005,  by  and  among  the  Company  and  the  other  signatories  thereto  (the
"Registration Rights Agreement").

                  (b) WARRANT  EXCHANGEABLE  FOR DIFFERENT  DENOMINATIONS.  This
Warrant is  exchangeable,  upon the surrender hereof by the Holder at the office
or agency of the  Company  referred to in Section 8 below,  for new  Warrants of
like tenor  representing  in the  aggregate  the right to purchase the number of
shares  of  Common  Stock  which may be  purchased  hereunder,  each of such new
Warrants to  represent  the right to purchase  such number of shares as shall be
designated by the Holder at the time of such surrender.

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

                                       11
<PAGE>

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

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

         8. NOTICES. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered,  or shall be sent by certified
or registered mail or by recognized overnight mail courier,  postage prepaid and
addressed,  to such holder at the address  shown for such holder on the books of
the  Company,  or at such  other  address as shall  have been  furnished  to the
Company  by  notice  from  such  holder.  All  notices,   requests,   and  other
communications  required or permitted to be given or delivered  hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed,  to the office of the Company at 434 Fayetteville Street,
Suite 600, Raleigh,  North Carolina 27601,  Attention:  Chief Executive Officer,
Facsimile:  919-807-5601,  or at such other address as shall have been furnished
to the  holder of this  Warrant by notice  from the  Company.  Any such  notice,
request, or other communication may be sent by facsimile, but shall in such case
be subsequently confirmed by a writing personally delivered or sent by certified
or registered  mail or by recognized  overnight mail courier as provided  above.
All notices,  requests,  and other  communications  shall be deemed to have been
given  either at the time of the  receipt  thereof  by the  person  entitled  to
receive  such notice at the address of such person for  purposes of this Section
8, or, if mailed by registered or certified mail or with a recognized  overnight
mail courier upon deposit with the United  States Post Office or such  overnight
mail courier,  if postage is prepaid and the mailing is properly  addressed,  as
the case may be.

         9.  GOVERNING  LAW.  THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF DELAWARE  (WITHOUT  REGARD TO  PRINCIPLES OF
CONFLICT  OF  LAWS).   BOTH  PARTIES   IRREVOCABLY   CONSENT  TO  THE  EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS AND THE STATE COURTS LOCATED IN
DELAWARE WITH RESPECT TO ANY SUIT OR  PROCEEDING  BASED ON OR ARISING UNDER THIS
AGREEMENT,   THE  AGREEMENTS   ENTERED  INTO  IN  CONNECTION   HEREWITH  OR  THE
TRANSACTIONS  CONTEMPLATED  HEREBY OR  THEREBY  AND  IRREVOCABLY  AGREE

                                       13
<PAGE>

         THAT ALL CLAIMS IN RESPECT OF SUCH SUIT OR PROCEEDING MAY BE DETERMINED
         IN SUCH  COURTS.  BOTH  PARTIES  IRREVOCABLY  WAIVE THE  DEFENSE  OF AN
         INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH
         PARTIES  FURTHER  AGREE THAT  SERVICE OF PROCESS UPON A PARTY MAILED BY
         FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT  EFFECTIVE SERVICE OF
         PROCESS UPON THE PARTY IN ANY SUCH SUIT OR  PROCEEDING.  NOTHING HEREIN
         SHALL AFFECT EITHER  PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
         PERMITTED  BY LAW.  BOTH  PARTIES  AGREE  THAT A  FINAL  NON-APPEALABLE
         JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND MAY BE
         ENFORCED  IN OTHER  JURISDICTIONS  BY SUIT ON SUCH  JUDGMENT  OR IN ANY
         OTHER LAWFUL MANNER.  THE PARTIES HEREBY  EXPRESSLY  WAIVE ANY RIGHT TO
         TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION ARISING
         UNDER  THIS  WARRANT  OR IN  ANY  WAY  CONNECTED  WITH  OR  RELATED  OR
         INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THIS WARRANT,
         OR THE TRANSACTIONS  RELATED HERETO,  IN EACH CASE WHETHER NOW EXISTING
         OR  HEREAFTER  ARISING,  AND  WHETHER  FOUNDED IN  CONTRACT  OR TORT OR
         OTHERWISE;  AND THE  PARTIES  HEREBY  AGREE AND  CONSENT  THAT ANY SUCH
         CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED  BY COURT
         TRIAL  WITHOUT  A JURY,  AND THAT  EITHER  PARTY  MAY FILE AN  ORIGINAL
         COUNTERPART  OR A COPY OF THIS  PARAGRAPH  WITH ANY  COURT  AS  WRITTEN
         EVIDENCE  OF THE  CONSENT  OF THE OTHER  PARTY  HERETO TO THE WAIVER OF
         THEIR RIGHT TO TRIAL BY JURY.

         10. MISCELLANEOUS.

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

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

                  (c) REMEDIES.  The Company acknowledges that a breach by it of
its  obligations  hereunder  will cause  irreparable  harm to the holder of this
Warrant by  vitiating  the intent and purpose of the  transactions  contemplated
hereby.  Accordingly,  the  Company  acknowledges  that the  remedy at law for a
breach of its obligations  under this Warrant will be inadequate and agrees,  in
the event of a breach or threatened  breach by the Company of the  provisions of
this Warrant,  that the holder of this Warrant shall be entitled, in addition to
all  other  available  remedies  in  law  or  in  equity,  to an  injunction  or
injunctions  to prevent or cure any breaches of the provisions of this Agreement
and to enforce  specifically  the terms and provisions of this Warrant,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

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

                                                 SUMMUS, INC.

                                                 By:
                                                     ---------------------------
                                                      Gary E. Ban
                                                      Chief Executive Officer

                                                 Dated as of November 18, 2005

                                       14
<PAGE>

                           FORM OF EXERCISE AGREEMENT

                                                      Dated:  ________ __, 200_

To:  SUMMUS, INC.

         The  undersigned,  pursuant to the  provisions  set forth in the within
Warrant,  hereby agrees to purchase ________ Units covered by such Warrant,  and
makes  payment  herewith in full therefor at the price per Unit provided by such
Warrant  in cash or by  certified  or  official  bank  check  in the  amount  of
________________________.  Please issue a certificate or  certificates  for such
shares of Common  Stock and a C-2 Warrant or C-2 Warrants in the name of and pay
any cash for any fractional share to:

                                          Name:
                                                -------------------------------

                                          Signature:
                                                     --------------------------

                                          Address:
                                                  -----------------------------
                                                  -----------------------------
                                                  -----------------------------

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

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

<PAGE>

                               FORM OF ASSIGNMENT

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

Name of Assignee                   Address                         No of Shares
----------------                   -------                         ------------

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

Dated:  ________ __, 200_

In the presence of:

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

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

                                     Address:
                                             -----------------------------------

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00094-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00094-of-00352.parquet"}]]