FORM OF
                            DEBENTURE 1

                      MAJESTIC COMPANIES, LTD.

             2000 4% Subordinated Convertible Debenture

                     Due May    [     ] , 2005

No.000_______________                               $

This Debenture is issued by Majestic Companies, Ltd. (the
"Company") to [ INSERT ] (the "Debenture holder") pursuant to
exemptions from registration under the U.S. Securities Act of
1933.

                           ARTICLE I

1.01  Principal and Interest.  The Company, for value received
hereby confers the right upon Debenture holder to convert the sum
of ___________________ dollars ($_____________) into the common
stock of the Company (the "Common Stock") on or before May [   ],
2005 ("Maturity Date") as set forth herein, and upon the Maturity
Date to pay interest thereon from the date of issue at the rate
of four percent (4%) per annum.  The Company shall pay such
interest on the outstanding principal amount of the Debenture
from the date of issue until the Maturity Date or conversion; the
Company shall pay interest only upon the outstanding balance of
the Debenture at the rate of four percent (4%) per annum.
Interest will be computed based on a 365-day year.

1.02  Reservation of Common Stock.  The Company shall reserve and
keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion
of this Debenture, such number of shares of Common Stock as shall
from time to time be sufficient to effect such conversion, based
upon 120 % of the Closing Bid Price on the day of Closing or 80%
of the Bid Price, (Bid Price shall mean on any date the closing
bid price (as reported by Bloomberg L.P.) of the Common Stock on
the Principal Market,   if the Common Stock is not traded on a
Principal Market, the highest reported bid price for the Common
Stock, as furnished by the National Association of Securities
Dealers, Inc., for the five trading days immediately preceding
such date of the Common Stock.

1.03  Interest Payments. The interest so payable will be paid at
the time of Conversion to the person in whose name this Debenture
is registered. At the time such interest is payable, the Company,
in its sole discretion, may elect to pay interest in cash (via
wire transfer or certified funds) or in the form of Common Stock.
If paid in the form of Common Stock, the amount of stock to be
issued will be calculated as follows: the value of the stock
shall be the Bid Price on: (i) the date the interest payment is
due; or (ii) if the interest payment is not made when due, the
date the interest payment is made.  A number of shares of Common
Stock with a value equal to the amount of interest due shall be
issued.  No fractional shares will be issued; therefore, in the
event that the value of the Common Stock per share does not equal
the total interest due, the Company will pay the balance in cash.

1.04  Paying Agent and Registrar.  Initially, the Company will act
as Paying Agent and Registrar.  The Company may change any Paying
Agent, Registrar, or Company-registrar without notice.  The
Company may act in any such capacity.

1.05  Subordinated Nature of Debenture.  This Debenture and all
payments hereon, including principal or interest, shall be
subordinate and junior in right of payment to all Company Debt
(as defined hereinafter), but only to the extent set forth as
follows:

(a)  upon the maturity of any Company Debt, or any installment
thereof then due by lapse of time, acceleration or otherwise, all
Company Debt then due shall first be paid in full (or provision
made for payment in full thereof) before any additional payment
on account of principal or interest is made on this Debenture;
and

(b)  in the event of any insolvency or bankruptcy proceedings
affecting the Company, or any receivership, liquidation,
reorganization or other similar proceedings affecting the
Company, and, in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, then the
holders of Company Debt shall be entitled to receive payment in
full of all principal of and interest on all Company Debt before
the holder of this Debenture is entitled to receive any payment
on account of principal, interest or premium on this Debenture.

The provisions of the preceding paragraphs are solely for the
purpose of defining the relative rights of the holders of Company
Debt on the one hand and the holder of this Debenture on the
other hand and nothing herein shall impair, as between the
Company and the holder of this Debenture, the obligation of the
Company, which is unconditional and absolute, to pay the holder
of this Debenture the principal, interest and premiums hereon in
accordance with its terms, nor shall anything herein prevent the
holder of this Debenture from exercising all remedies otherwise
permitted by law or hereunder upon default hereunder, subject to
the relative rights of the holders of Company Debt expressed in
the preceding paragraphs.

For the purpose of this Notice, the term "Company Debt" shall
mean and include current bank debt and all indebtedness acquired
by the Company subsequent to the date hereof, other than
indebtedness to any officer, director or other person who has
beneficial ownership of 10% or more of the Company's issued and
outstanding shares of Common Stock.

                           ARTICLE II

2.01  Amendments and Waiver of Default.  The Debenture may be
amended with the consent of the Debenture holder.  Without the
consent of the Debenture holder, the Debenture may be amended to
cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company obligations to the Debenture holder or
to make any change that does not adversely affect the rights of
the Debenture holder.

                           ARTICLE III

3.01  Events of Default.  An Event of Default is defined as
follows: failure by the Company to pay amounts due hereunder
within two (2) days of the Maturity Date failure by the Company
to advise its transfer agent to issue Common Stock to the
Debenture holder within two (2) business days of the Company's
receipt of the attached Notice of Conversion from Debenture
holder; or failure by the Company for thirty (30) days after
notice to it to comply with any of its other agreements in the
Debenture; and events of bankruptcy or insolvency.  The Debenture
holder may not enforce the Debenture except as provided herein.

3.02  Successor Corporation.  If a successor corporation assumes
all the obligations of this predecessor, Majestic Companies,
Ltd., or the predecessor corporation will be released from those
obligations under the Debenture.

3.03  Waiver and Release.  A director, officer, employee or
stockholders, as such, of the Company shall not have any
liability for any obligations of the Company under the Debenture
or for any claim based on, in respect of, or by reason of such
obligations or their creation.  The Debenture holder, by
accepting a Debenture waives and releases all such liability.
The waiver and release are part of the consideration for the
issue of the Debenture.

                         ARTICLE IV

4.01  Rights and Terms of Conversion.  This Debenture, in whole or
in part, may be converted at any time beginning ninety (90) days
following the date of closing.  After a period of ninety (90)
days from the Closing Date this Debenture, in whole or in part,
may be converted at any time into shares of Common Stock at a
price equal to following Conversion Price: 80% of the average
closing Bid Price ( as reported by Bloomberg) of the Company's
common stock for any four (4) of the previous five (5) days
immediately preceding the date of conversion or 120 % of the
closing Bid Price of the Company's common stock  on the day of
Closing (the "Fixed Price").  If the Common Stock is not traded
on a Principal Market, the highest reported bid price for the
Common Stock, as furnished by the National Association of
Securities Dealers, Inc., for the five trading days immediately
preceding such date of the Common Stock.

In lieu of any fractional share to which the Debenture holder
would otherwise be entitled, the Company will pay the balance in
cash.

4.02  Reissuance of Debenture.  When the Debenture holder elects
to convert a part of the Debenture, then the Company shall
reissue a new Debenture in the same form as this Debenture to
reflect the new principal amount.

4.03  Termination of Conversion Rights.  The Debenture holder's
right to convert the Debenture into the Common Stock in
accordance with paragraph 4.01 shall terminate on May       [   ],
2005 shall be automatically converted on that date in
accordance with the formula set forth in Section 4.01 hereof, and
the appropriate shares of common stock and amount of interest
shall be issued to the Debenture holder.

                           ARTICLE V

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

If to the Company:     The Majestic Companies, Ltd.
                       8880 Rio San Diego Drive - 8th Floor
                       San Diego, CA  92108.
                       Attention: President

If to Debenture holder:  [INSERT]

5.02  Governing Law.  This Debenture shall be deemed to be made,
governed by, interpreted under and construed in all respects in
accordance with the commercial rules of JAMS. This chosen
jurisdiction is irrespective of the country or place of domicile
or residence of either party.  In the event of controversy
arising out of the interpretation, construction, performance or
breach of this agreement, the parties hereby consent to
adjudication under the commercial rules of JAMS.  Said venue of
the arbitration shall be in New York County, New York.  Judgment
on the award rendered by the arbitrator may be entered in U.S.
District Court sitting in the Southern District of the State of
New York or the state courts of the  State of New York sitting in
Manhattan. The Laws of the State of New York shall govern all
disputes regarding this matter.

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

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

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

5.06  Assignment.  Neither this Debenture nor any rights of the
Investor or the Company hereunder may be assigned by either party
to any other person.  Notwithstanding the foregoing, (a) the
provisions of this Debenture shall insure to the benefit of, and
be enforceable by, any permitted transferee of any of the
Debentures purchased or acquired by the Investor hereunder with
respect to the Common Stock held by such person, and (b) upon the
prior written consent of the Company, which consent shall not
unreasonably be withheld, the Investor's interest in this
Debenture may be assigned at any time, in whole or in part, to
any other person or entity (including any affiliate of the
Investor).

IN WITNESS WHEREOF, with the intent to be legally bound hereby,
the parties hereto have executed this Debenture as of
_________________________, 2000.

ATTEST:                          THE MAJESTIC COMPANIES, LTD.

______________________________   By:______________________________
                                 Name:
                                 Title: