<PAGE>

                                   EXHIBIT 4.2


         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
         SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
         ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

NNo.     01-1-1                                                 US $2,500,000.00
         --------------                                            -------------

                       COMPUTERIZED THERMAL IMAGING, INC.

           7% CONVERTIBLE DEBENTURE SERIES 01-1 DUE DECEMBER 31, 2004

         THIS DEBENTURE is one of a duly authorized issue of up to $2,500,000 in
Debentures of COMPUTERIZED THERMAL IMAGING, INC., a corporation organized and
existing under the laws of the State of Nevada (the "Company") designated as its
7% Convertible Debentures Series 01-1. Such Debentures may be issued in series,
each of which may have a different maturity date, but which otherwise have
substantially similar terms.

         FOR VALUE RECEIVED, the Company promises to pay to BEACH BOULEVARD,
L.L.C., the registered holder hereof (the "Holder"), the principal sum of Two
Million Five Hundred Thousand and 00/100 Dollars (US $ 2,500,000.00) on December
31, 2004 (the "Maturity Date") and to pay interest on the principal sum
outstanding from time to time in arrears at the rate of 7% per annum, accruing
from December 31 , 2001, the date of initial issuance of this Debenture (the
"Issue Date"), on the relevant Conversion Date (as defined below). Accrual of
interest shall commence on the first such business day to occur after the Issue
Date and shall continue to accrue on a daily basis until payment in full of the
principal sum has been made or duly provided for. Additional provisions
regarding the payment of interest are provided in Section 4(D) below (the terms
of which shall govern as if this sentence were not included in this Debenture).

         This Debenture is being issued pursuant to the terms of the Securities
Purchase Agreement, dated December 20, 2001 (the "Securities Purchase
Agreement"), to which the Company and the Holder (or the Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Securities Purchase Agreement.

         This Debenture is subject to the following additional provisions:

         1. The Debentures will initially be issued in denominations determined
by the Company, but are exchangeable for an equal aggregate principal amount of

<PAGE>

Debentures of different denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration or transfer or
exchange.

         2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.

         3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws and the terms of the Securities
Purchase Agreement . In the event of any proposed transfer of this Debenture,
the Company may require, prior to issuance of a new Debenture in the name of
such other person, that it receive reasonable transfer documentation. Prior to
due presentment for transfer of this Debenture, the Company and any agent of the
Company may treat the person in whose name this Debenture is duly registered on
the Company's Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

         4.   A.   (i) At any time on or after the Issue Date and prior to the
time this Debenture is paid in full in accordance with its terms (including
without limitation after the Maturity Date and after the occurrence of an Event
of Default, as defined below), the Holder of this Debenture is entitled, at its
option, subject to the following provisions of this Section 4, to convert this
Debenture at any time into shares of Common Stock, $0.001 par value ("Common
Stock"), of the Company at the Conversion Price (as defined below).

                   (ii) The term "Conversion Price" means the Fixed Conversion
Price (as defined below), except (x) as provided in Section 6(C)(iv)(y) hereof
or (y) if the Effective Date has not occurred before the first annual
anniversary of the Closing Date, the "Conversion Price" shall mean the
Alternative Conversion Price (as defined below).

                   (iii) The term "Fixed Conversion Price" means $1.44 (which
amount is subject to adjustment as provided herein).

                   (iv) The term "Closing Bid Price" means the closing bid price
during regular trading hours of the Common Stock (in U.S. Dollars) on the
Principal Trading Market, as reported by the Reporting Service (as defined
below).

                   (v) The term "Reporting Service" means Bloomberg LP or if
that service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Holders of the Debentures and reasonably acceptable to the Company.

              B. Conversion shall be effectuated by faxing a Notice of
Conversion (as defined below) to the Company as provided in this paragraph. The

<PAGE>

Notice of Conversion shall be executed by the Holder of this Debenture and shall
evidence such Holder's intention to convert this Debenture or a specified
portion hereof in the form annexed hereto as Exhibit A. If paid in Common Stock
as contemplated hereby, interest accrued or accruing from the Issue Date to the
relevant Conversion Date shall be paid in Common Stock at the Conversion Price
applicable as of such Conversion Date. No fractional shares of Common Stock or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share. The date
on which notice of conversion is given (the "Conversion Date") shall be deemed
to be the date on which the Holder faxes or otherwise delivers the conversion
notice ("Notice of Conversion") to the Company so that it is received by the
Company on or before such specified date, provided that, if such conversion
would convert the entire remaining principal of this Debenture, the Holder shall
deliver to the Company the original Debentures being converted no later than
five (5) business days thereafter. Facsimile delivery of the Notice of
Conversion shall be accepted by the Company at facsimile number (503) 594-1217;
Attn: Bernard Brady, Chief Financial Officer. Certificates representing Common
Stock upon conversion ("Conversion Certificates") will be delivered to the
Holder at the address specified in the Notice of Conversion (which may be the
Holder's address for notices as contemplated by the Securities Purchase
Agreement or a different address), via express courier, by electronic transfer
or otherwise, within three (3) business days (such third business day, the
"Delivery Date") after the date on which the Notice of Conversion is delivered
to the Company as contemplated in this paragraph B.

              C. Notwithstanding any other provision hereof or of any of the
other Transaction Agreements, in no event (except (i) as specifically provided
herein as an exception to this provision, or (ii) while there is outstanding a
tender offer for any or all of the shares of the Company's Common Stock) shall
the Holder be entitled to convert any portion of this Debenture, or shall the
Company have the obligation to convert such Debenture (and the Company shall not
have the right to pay interest hereon in shares of Common Stock) to the extent
that, after such conversion or issuance of stock in payment of interest, the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and
its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the
Debentures or other convertible securities or of the unexercised portion of the
Warrants or other rights to purchase Common Stock), and (2) the number of shares
of Common Stock issuable upon the conversion of the Debentures with respect to
which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% (the
"Applicable Percentage") of the outstanding shares of Common Stock (after taking
into account the shares to be issued to the Holder upon such conversion). For
purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of
such sentence. The Holder, by its acceptance of this Debenture, further agrees
that if the Holder transfers or assigns any of the Debentures to a party who or
which would not be considered such an affiliate, such assignment shall be made
subject to the transferee's or assignee's specific agreement to be bound by the
provisions of this Section 4(C) as if such transferee or assignee were the
original Holder hereof. Nothing herein shall preclude the Holder from disposing

<PAGE>

of a sufficient number of other shares of Common Stock beneficially owned by the
Holder so as to thereafter permit the continued conversion of this Debenture.

              D.   (i) Subject to the other terms of this Section D, interest on
the principal amount of this Debenture converted pursuant to a Notice of
Conversion shall be due and payable, at the option of the Company, in cash or
Common Stock on the Conversion Date.

                   (ii) Notwithstanding the foregoing, the Company's right to
issue shares in payment of such interest is applicable if, and only if, there is
then in effect a current Registration Statement covering the shares to be issued
to the Holder in payment of such interest.

                   (iii) The number of shares of Common Stock to be issued in
payment of such interest shall be determined by dividing the dollar amount of
the interest to be so paid by the Conversion Price on the relevant Conversion
Date. Such Common Stock shall be delivered to the Holder, or per Holder's
instructions, on the Delivery Date for the related Conversion Certificates
pursuant to Section 4(B) hereof.

                   (iv) If the Company elects to have the interest paid in cash,
the Company shall make such payment within three (3) business days of the
Conversion Date. If such payment is not made in cash by such date, it shall be
deemed that the Company has elected to pay the interest in stock, if the Company
were otherwise eligible to issue shares of Common Stock in payment of such
interest, as provided above.

              E. Anything herein to the contrary notwithstanding, in the event
the Company breaches the provisions of Section 4(g) of the Securities Purchase
Agreement, the Conversion Price shall be amended to be equal to (i) ninety
percent (90%) of (ii) the Conversion Price determined in accordance with the
other provisions of this Debenture without regard to this Section 4(E), and the
Holder may require the Company to immediately redeem all or any part of the
outstanding portion of this Debenture for an amount equal to the Redeemable
Balance (as defined below).

         5. On the Maturity Date, the Company shall redeem any then outstanding
principal amount of this Debenture not previously converted or redeemed at the
Special Redemption Price.

         6.   A.   (i) The Company agrees that, if a Trigger Event (as defined
below) has occurred, the Holder shall have the option, exercisable in such
Holder's sole and absolute discretion, to require the Company to redeem each
Unconverted Debenture (as defined below) for the Redeemable Balance, payable in
cash.

                   (ii) Such option shall be exercised by the Holder giving
written notice of the exercise of this provision by the Holder (a "Holder
Redemption Notice") at any time within fifteen (15) trading days after a Trigger
Event has occurred. The Holder Redemption Notice shall specify the date (the
"Redemption Due Date") on which the Redeemable Balance shall be paid, which date
shall be at least five (5) business days after the date (a "Redemption Notice
Date") on which the Holder Redemption Notice is given, and the wire instructions

<PAGE>

for the account to which the Redeemable Balance is to be paid; provided,
however, that the Company shall have the right to accelerate the date of such
payment.

                   (iii) The Holder of an Unconverted Debenture may elect to
redeem a portion of such Unconverted Debenture without electing to redeem the
balance of the Unconverted Debenture.

                   (iv) If the Holder does not give the Holder Redemption Notice
within the period contemplated by subparagraph (ii) of this Section 6(A), the
Holder's right to elect a redemption under this Section 6 shall expire unless
and until a subsequent Trigger Event occurs, in which event the provisions of
this Section 6(A) (including, but not limited to, this subparagraph (iv)) shall
apply.

              B. The term "Trigger Event" means that one or more of the
following events has occurred:

         (i) the average Closing Bid Prices for the ninety (90) consecutive
         trading days after the Relevant Trigger Start Date (as defined below)
         is less than the average of the Closing Bid Prices during the five (5)
         trading days ending on the trading day immediately preceding the
         Closing Date; or

         (ii) the Effective Date has not occurred by the date which is the first
         anniversary of the Initial Closing Date.

The term "Relevant Trigger Start Date" means the earlier to occur of (x) the
Effective Date or (y) the date (the "Half Year Date") which is one hundred
eighty (180) trading days after the Closing Date.

              C.   (i) The term "Unconverted Debenture" means the principal
amount of this Debenture which has not been converted as of the relevant date.

                   (ii) The term "Redeemable Balance" means the amount, in cash,
equal to (x) the aggregate principal of the Unconverted Debenture and all
accrued interest thereon through and including the Redemption Payment Date (as
defined below) (collectively, the "Accrued Balance"), multiplied by (y) one
hundred eleven percent (111.00%).

                   (iii) The term "Redemption Payment Date" means the date on
which the Company actually pays the Redeemable Balance.

                   (iv) If the Company does not pay the Redeemable Balance in
full by the Redemption Due Date, then the balance of the Redeemable Balance (the
"Current Redeemable Balance") shall be paid as follows:

<PAGE>



         (x) if the Company and the Holder have entered into the Equity Credit
         Line Agreement and the registration statement contemplated by such
         Equity Credit Line Agreement (the "Credit Line Registration Statement")
         is currently effective, the Company shall issue registered unrestricted
         shares of Common Stock pursuant to a series of mandatory put notices
         contemplated by and consistent with the terms of such Equity Line
         Agreement for a period not to exceed six (6) months from the date of
         the Redemption Notice Date (the last day of such six month period, the
         "Six Month Date"), and the Current Redeemable Balance shall be reduced
         by an amount equal to the amount specified in such put notice (and the
         Holder shall be deemed to have fulfilled its payment obligation with
         respect to such put notice by such reduction); provided, further, that
         if the full Current Redeemable Balance is not satisfied by the Six
         Month Date, the balance of the Current Redeemable Balance shall be paid
         in cash on the Six Month Date; and

         (y) if the Credit Line Registration Statement is not currently
         effective, the "Conversion Price" shall be amended to mean the
         Alternative Conversion Price.

Payments of less than the full amount of the Current Redeemable Balance shall be
applied in the following order of priority: (1) first, to the excess of the
Current Redeemable Balance over the Accrued Balance, (2) then, to accrued
interest on the principal of the Unconverted Debenture, and (3) then, to
principal of the Unconverted Debenture.

                   (v) Anything in the other provisions of this Section 6 or
other provisions of this Debenture to the contrary notwithstanding, if the
Effective Date has not occurred by the first annual anniversary of the Closing
Date, the Holder shall have the right to require that the Company redeem the
then outstanding Debentures in cash for the Special Redemption Amount (as
defined below). The provisions of the immediately preceding subparagraph (iv)
shall not apply to a redemption demanded under this subparagraph (v).

                   (vi) The term "Alternative Conversion Price" means the lower
of (x) the Fixed Conversion Price or (y) the Variable Conversion Price. The term
"Variable Conversion Price" means the amount equal to seventy-five percent (75%)
of the average of the three (3) lowest Closing Bid Prices (which need not be
from consecutive trading days) during the ten (10) trading days ending on the
trading day immediately preceding the Conversion Date.

                   (vii) The term "Special Redemption Amount" means an amount
equal to the Special Redemption Price (as defined below).

                   (viii) If all of the Unconverted Debentures are being
redeemed pursuant to this Section 6, then, upon payment in full of the
Redeemable Balance or Special Redemption Amount, as the case may be, for all of
the Unconverted Debentures in accordance with the provisions of this Section 6,
the Holder shall deliver the Debenture to the Company marked "paid in full".

<PAGE>

                   (ix) If the Redeemable Balance or Special Redemption Amount,
as the case may be, is not timely paid by the Company, the Redeemable Balance
computed as of such date will bear interest at the rate of eighteen percent
(18%) or the highest rate allowed by law, whichever is lower, from the date it
was due until and including the date actually paid. The preceding sentence (x)
shall apply to amounts of the Redeemable Balance not yet deemed paid pursuant to
clause (x) of Section 6(C)(iv) above and (y) shall not apply where clause (y) of
Section 6(C)(iv) above is applicable. The failure of the Company to timely pay
the cash portion of any Redeemable Balance or Special Redemption Amount, as the
case may be, when such cash is due and payable shall be an Event of Default.

         7.   A. Anything herein or in any of the other Transaction Agreements
to the contrary notwithstanding, the Company will have the absolute and
unconditional right to redeem all, but not less than all, of the then
Unconverted Debenture in cash for the Special Redemption Price (as defined
below) in accordance with the terms of this Section 7 (such redemption, a
"Special Redemption").

              B.   (i) The term "Special Redemption Price" means the amount,
payable in cash, equal to (x) the greater of the Fixed Special Redemption Amount
or the Variable Special Redemption Amount (as those terms are defined below),
plus (y) any amounts (other than principal and accrued interest due hereunder)
due from the Company to the Holder pursuant to any other provisions of this
Debenture or any of the other Transaction Agreements.

                   (ii) The term "Fixed Special Redemption Amount" means (x) one
hundred twenty-five percent (125.00%) of (y) the aggregate principal of the
Unconverted Debentures and all accrued interest thereon through and including
the Special Redemption Payment Date (as defined below).

                   (iii) The term "Variable Special Redemption Amount" means the
amount equal to:

                   V                      x                 M
               ---------
                   CP

         where:

              "V" means the principal of an Unconverted Debenture plus any
         accrued but unpaid interest thereon;

              "CP" means the Conversion Price in effect on the date (the
         "Special Redemption Notice Date") of the Special Redemption Notice (as
         defined below); and

              "M" means the highest closing price per share of the Common
         Stock during the period beginning on the Special Redemption Notice Date
         and ending on the date Special Redemption Payment Date.

<PAGE>

                   (iv) The term "Special Redemption Payment Date" means the
date the Special Redemption Amount is actually paid by the Company to the
Holder.

              C. The Company shall give written notice of such Special
Redemption to the Holder (the "Special Notice of Redemption"). The date of
payment of the Special Redemption Amount specified in such Special Notice of
Redemption shall be the "Special Redemption Payment Due Date," provided that the
Special Redemption Payment Due Date may not be later than seven (7) business
days after the Special Redemption Notice Date (for purposes of such computation,
the Special Redemption Notice Date shall be deemed the first day).

              D. In the event such Special Redemption Price payment is not
timely made, the Special Redemption Notice shall be null and void and any rights
of the Company to redeem outstanding Debentures under this Section 7 shall
terminate.

              E. Upon issuance of a Special Redemption Notice, the Holder shall
have no right to convert this Debenture into shares of Common Stock for as long
as such Special Redemption Notice has not been declared null and void pursuant
to the preceding paragraph D. The Company, however, will honor all Conversion
Notices submitted by the Holder prior to the Holder's receipt of a Special
Redemption Notice. Anything in this Debenture or any Conversion Notice to the
contrary notwithstanding, upon the Holder's receipt of a Special Redemption
Notice, the Holder shall have the right, in the Holder's sole and absolute
discretion, to notify the Company in writing that the Holder has canceled all or
any part of any outstanding Conversion Notice for which the Conversion Shares
have not been delivered to the Holder. In such event the Debentures for which
the Conversion Notice has been canceled shall be deemed Unconverted Debentures..

         8. Subject to the terms of the Securities Purchase Agreement, no
provision of this Debenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, and interest on,
this Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture and all other Debentures now or hereafter issued of
similar terms are direct obligations of the Company.

         9. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

         10. All payments contemplated hereby to be made "in cash" shall be made
in immediately available good funds of United States of America currency by wire
transfer to an account designated in writing by the Holder to the Company (which
account may be changed by notice similarly given). All payments of cash and each
delivery of shares of Common Stock issuable to the Holder as contemplated hereby
shall be made to the Holder at the address last appearing on the Debenture

<PAGE>

Register of the Company as designated in writing by the Holder from time to
time; except that the Holder can designate, by notice to the Company, a
different delivery address for any one or more specific payments or deliveries.

         11. If, for as long as this Debenture remains outstanding, the Company
enters into a merger (other than where the Company is the surviving entity) or
consolidation with another corporation or other entity or a sale or transfer of
all or substantially all of the assets of the Company to another person
(collectively, a "Sale"), the Company will require, in the agreements reflecting
such transaction, that the surviving entity expressly assume the obligations of
the Company hereunder. Notwithstanding the foregoing, if the Company enters into
a Sale and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then as a
condition of such Sale, the Company and any such successor, purchaser or
transferee will agree that the Debenture may thereafter be converted on the
terms and subject to the conditions set forth above into the kind and amount of
stock, securities or property receivable upon such merger, consolidation, sale
or transfer by a holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable. In the event of any such proposed Sale, (i)
the Holder hereof shall have the right to convert by delivering a Notice of
Conversion to the Company within fifteen (15) days of receipt of notice of such
Sale from the Company, except that Section 4(C) shall not apply to such
conversion.

         12. If, at any time while any portion of this Debenture remains
outstanding, the Company spins off or otherwise divests itself of a part of its
business or operations or disposes of all or of a part of its assets in a
transaction (the "Spin Off") in which the Company does not receive just
compensation for such business, operations or assets, but causes securities of
another entity (the "Spin Off Securities") to be issued to security holders of
the Company, the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had all
of the Holder's Debentures outstanding on the record date (the "Record Date")
for determining the amount and number of Spin Off Securities to be issued to
security holders of the Company (the "Outstanding Debentures") been converted as
of the close of business on the trading day immediately before the Record Date
(the "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
conversion of all or any of the Outstanding Debentures, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by
(y) a fraction, of which (I) the numerator is the principal amount of the
Outstanding Debentures then being converted, and (II) the denominator is the
principal amount of the Outstanding Debentures.

         13. If, at any time while any portion of this Debenture remains
outstanding, the Company effectuates a stock split or reverse stock split of its
Common Stock or issues a dividend on its Common Stock consisting of shares of
Common Stock, the Conversion Price, the Minimum Conversion Price, the Fixed
Conversion Price and any other amounts calculated as contemplated hereby or by
any of the other Transaction Agreements shall be equitably adjusted to reflect
such action. By way of illustration, and not in limitation, of the foregoing (i)
if the Company effectuates a 2:1 split of its Common Stock, thereafter, with
respect to any conversion for which the Company issues shares after the record
date of such split, any market price from a date prior to such split which was

<PAGE>

used in any of the calculation of the Conversion Price shall be deemed to be
one-half of what it had been calculated to be immediately prior to such split;
(ii) if the Company effectuates a 1:10 reverse split of its Common Stock,
thereafter, with respect to any conversion for which the Company issues shares
after the record date of such reverse split, any market price from a date prior
to such split which was used in any of the calculation of the Conversion Price
shall be deemed to be ten times what it had been calculated to be immediately
prior to such split; and (iii) if the Company declares a stock dividend of one
share of Common Stock for every 10 shares outstanding, thereafter, with respect
to any conversion for which the Company issues shares after the record date of
such dividend, any market price from a date prior to such record date which was
used in any of the calculation of the Conversion Price shall be deemed to be
such amount multiplied by a fraction, of which the numerator is the number of
shares (10 in the example) for which a dividend share will be issued and the
denominator is such number of shares plus the dividend share(s) issuable or
issued thereon (11 in the example).

         14. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.

         15. This Debenture shall be governed by and construed in accordance
with the laws of the State of New York. Each of the parties consents to the
exclusive jurisdiction of the federal courts whose districts encompass any part
of the City of New York or the state courts of the State of New York sitting in
the City of New York in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on FORUM NON COVENIENS, to the bringing of any
such proceeding in such jurisdictions.

         16. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial
by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with this Debenture.

         17. The following shall constitute an "Event of Default":

              a.   The Company shall default in the payment of principal or
                   interest on this Debenture, any Redeemable Balance due
                   hereunder or any other amount due, and, in any such instance,
                   the same shall continue for a period of five (5) business
                   days; or

<PAGE>

              b.   Any of the representations or warranties made by the Company
                   herein, in the Securities Purchase Agreement or any of the
                   other Transaction Agreements or in any certificate or
                   financial or other written statements heretofore or hereafter
                   furnished by the Company in connection with the execution and
                   delivery of this Debenture or the Securities Purchase
                   Agreement shall be false or misleading in any material
                   respect at the time made; or

              c.   Subject to the terms of the Securities Purchase Agreement,
                   the Company fails to authorize or to cause its Transfer Agent
                   to issue shares of Common Stock upon exercise by the Holder
                   of the conversion rights of the Holder in accordance with the
                   terms of this Debenture, fails to transfer or to cause its
                   Transfer Agent to transfer any certificate for shares of
                   Common Stock issued to the Holder upon conversion of this
                   Debenture and when required by this Debenture or the
                   Registration Rights Agreement, and such transfer is otherwise
                   lawful, or fails to remove any restrictive legend on any
                   certificate or fails to cause its Transfer Agent to remove
                   such restricted legend, in each case where such removal is
                   lawful, as and when required by this Debenture, the Agreement
                   or the Registration Rights Agreement, and any such failure
                   shall continue uncured for ten (10) business days; or

              d.   The Company shall fail to perform or observe, in any material
                   respect, any other covenant, term, provision, condition,
                   agreement or obligation of any Debenture in this series and
                   such failure shall continue uncured for a period of thirty
                   (30) days after written notice from the Holder of such
                   failure; or

              e.   The Company shall fail to perform or observe, in any material
                   respect, any covenant, term, provision, condition, agreement
                   or obligation of the Company under any of the Transaction
                   Agreements and such failure shall continue uncured for a
                   period of thirty (30) days after written notice from the
                   Holder of such failure; or

              f.   The Company shall (1) admit in writing its inability to pay
                   its debts generally as they mature; (2) make an assignment
                   for the benefit of creditors or commence proceedings for its
                   dissolution; or (3) apply for or consent to the appointment
                   of a trustee, liquidator or receiver for its or for a
                   substantial part of its property or business; or

              g.   A trustee, liquidator or receiver shall be appointed for the
                   Company or for a substantial part of its property or business
                   without its consent and shall not be discharged within sixty
                   (60) days after such appointment; or

              h.   Any governmental agency or any court of competent
                   jurisdiction at the instance of any governmental agency shall

<PAGE>

                   assume custody or control of the whole or any substantial
                   portion of the properties or assets of the Company and shall
                   not be dismissed within sixty (60) days thereafter; or

              i.   Any money judgment, writ or warrant of attachment, or similar
                   process in excess of Four Hundred Thousand ($400,000) Dollars
                   in the aggregate shall be entered or filed against the
                   Company or any of its properties or other assets and shall
                   remain unpaid, unvacated, unbonded or unstayed for a period
                   of sixty (60) days or in any event later than five (5) days
                   prior to the date of any proposed sale thereunder; or

              j.   Bankruptcy, reorganization, insolvency 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 Company and, if instituted
                   against the Company, shall not be dismissed within sixty (60)
                   days after such institution or the Company shall by any
                   action or answer approve of, consent to, or acquiesce in any
                   such proceedings or admit the material allegations of, or
                   default in answering a petition filed in any such proceeding;
                   or

              k.   The Company shall have its Common Stock suspended from
                   trading on, or delisted from, the Principal Trading Market
                   for in excess of ten (10) trading days; or

              l.   Any event defined in another provision of this Debenture as
                   an Event of Default shall have occurred.

If an Event of Default shall have occurred, then, or at any time thereafter, and
in each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent default) at the option of the Holder and in the Holder's sole
discretion, the Holder may consider this Debenture immediately due and payable
(and the Maturity Date shall be accelerated accordingly), without presentment,
demand, protest or notice of any kinds, all of which are hereby expressly
waived, anything herein or in any note or other instruments contained to the
contrary notwithstanding, and the Holder may immediately enforce any and all of
the Holder's rights and remedies provided herein or any other rights or remedies
afforded by law.

         18. Nothing contained in this Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.

         19. In the event for any reason, any payment by or act of the Company
or the Holder shall result in payment of interest which would exceed the limit
authorized by or be in violation of the law of the jurisdiction applicable to
this Debenture, then IPSO FACTO the obligation of the Company to pay interest or
perform such act or requirement shall be reduced to the limit authorized under
such law, so that in no event shall the Company be obligated to pay any such

<PAGE>

interest, perform any such act or be bound by any requirement which would result
in the payment of interest in excess of the limit so authorized. In the event
any payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further agreement or notice between or by the Company or the Holder, be deemed
applied to the payment of principal, if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest-free prepayment of this
Debenture. If any part of such excess remains after the principal has been paid
in full, whether by the provisions of the preceding sentences of this Section 19
or otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provisions of this Section 19 shall control every other
provision of this Debenture.

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

Dated: December 31, 2001

                                      COMPUTERIZED THERMAL IMAGING, INC.

                                      By:      /s/ Bernard J. Brady
                                         ---------------------------------------

                                                   Bernard J. Brady
                                      ------------------------------------------
                                      (Print Name)

                                               Secretary, Treasurer, CFO
                                      ------------------------------------------
                                      (Title)

<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION
                                       OF
           7% CONVERTIBLE DEBENTURE SERIES 01-01 DUE December 31, 2004

   (To be Executed by the Registered Holder in Order to Convert the Debenture)



FROM:                                                                 ("Holder")
      ---------------------------------------------------------------

DATE:                                                    (the "Conversion Date")
     ---------------------------------------------------


RE:      Conversion of $__________ principal amount (the "Converted Debenture")
         of the 7% Convertible Debenture Series 01-_ Due _________, 200_ (the
         "Debenture") of COMPUTERIZED THERMAL IMAGING, INC. (the "Company") into
         shares (the "Conversion Shares") of Common Stock (defined below)

CONVERSION DATE:

         The captioned Holder hereby gives notice to the Company, pursuant to
the Debenture of COMPUTERIZED THERMAL IMAGING, INC. that the Holder elects to
convert the Converted Debenture into fully paid and non-assessable shares of
Common Stock, $0.001 par value (the "Common Stock"), of the Company as of the
Conversion Date specified above. Said conversion shall be based on the following
Conversion Price (THE LOWER OF THE TWO ALTERNATIVES IS CHECKED; THE VARIABLE
CONVERSION PRICE IS AVAILABLE ONLY UNDER CERTAIN SPECIFIED CIRCUMSTANCES):

                  $               , representing the Fixed Conversion Price (as
      ---          ---------------
                  defined in the Debenture)

                  $               , representing the Variable Conversion Price
      ---          ---------------
                  (as defined in the Debenture).

                  If the Variable Conversion Price is selected above, a schedule
                  of the Closing Bid Prices of the Common Stock for the ten (10)
                  trading days prior to the Conversion Date, as reported by the
                  Reporting Service, is attached for your reference in
                  determining the Conversion Price.

<PAGE>

Based on this Conversion Price, the number of Conversion Shares indicated above
should be issued in the following name(s):

                  Name and Record Address                      Conversion Shares

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

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

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

         It is the intention of the Holder to comply with the provisions of
Section 4(C) of the Debenture regarding certain limits on the Holder's right to
convert thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believe this conversion complies with the provisions of said Section
4(C). Nonetheless, to the extent that, pursuant to the conversion effected
hereby, the Holder would have more shares than permitted under said Section,
this notice should be amended and revised, ab initio, to refer to the conversion
which would result in the issuance of shares consistent with such provision. Any
conversion above such amount is hereby deemed void and revoked.

         As contemplated by the Debenture and the Securities Purchase Agreement,
this Notice of Conversion is being sent by facsimile to the telecopier number
and officer indicated above.

         If this Notice of Conversion represents the full conversion of the
outstanding balance of the Converted Debenture, the Holder either (1) has
previously surrendered the Converted Debenture, duly endorsed, to the Company or
(2) will surrender (or cause to be surrendered) the Converted Debenture, duly
endorsed, to the Company at the address indicated above by express courier
within five (5) business days after delivery or facsimile transmission of this
Notice of Conversion.

         The certificates representing the Conversion Shares should be
transmitted by the Company to the Holder via express courier or by electronic
transfer within the time contemplated by the Debenture and Securities Purchase
Agreement after receipt of this Notice of Conversion (by facsimile transmission
or otherwise) to:

<PAGE>

         As contemplated by the Debenture, the Company should also pay all
accrued but unpaid interest on the Converted Debenture to the Holder. The Holder

                      __      If the Company elects to pay such interest in
                  Common Stock, as contemplated by the Debenture, such shares
                  should be issued in the name of the Holder and delivered in
                  the same manner as, and together with, the Conversion Shares.

                      __      If the Company elects or is required to pay the
                  interest paid in cash, such payment should be made by wire
                  transfer as follows:


                                    COMPUTERIZED THERMAL IMAGING, INC.


                                    By:         /s/ Bernard J. Brady
                                          --------------------------------------
                                    Name:       Bernard J. Brady
                                          --------------------------------------
                                    Title:      CFO, Secretary, Treasurer
                                          --------------------------------------

<PAGE>

                              NOTICE OF CONVERSION
                               WORKSHEET SCHEDULE



<TABLE>
<S>                                                         <C>           <C>
1. Current Common Stock holdings of Holder and Affiliates                 _____________
2. Shares to be issued on current conversion                              _____________
3. Other shares eligible to be acquired without restriction               _____________
4. Total [sum of Lines 1 through 3]                                       _____________

5. Outstanding     shares of Common Stock                                 _____________
6. Adjustments to Outstanding
         a. Shares from Line 1 not included in Line 5       ____________
         b. Shares to be issued per Line 2                  ____________
         c. Total Adjustments [Lines 6a and 6b]                           _____________
7. Total Adjusted Outstanding [Lines 5 plus 6c]                           _____________

8. Holder's Percentage [Line 4 divided by Line 7]                         _____________%
[Note: Line 8 not to be above 4.99%]
</TABLE>