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                                                                     EXHIBIT 4.1

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

Original Issue Date: October ____, 2004
Original Conversion Price (subject to adjustment herein): $_____(1)

                                                                $_______________

                              CONVERTIBLE DEBENTURE
                             DUE OCTOBER ____, 2007

            THIS DEBENTURE is one of a series of duly authorized and issued
Convertible Debentures of Power 3 Medical Products, Inc., a New York
corporation, having a principal place of business at 3400 Research Forest Drive,
Suite B2-3, The Woodlands, Texas 77381 (the "Company"), designated as its
Convertible Debenture, due October ____, 2007 (the "Debentures").

      FOR VALUE RECEIVED, the Company promises to pay to ____________________ or
its registered assigns (the "Holder"), the principal sum of $_______________ on
October ____, 2007 or such earlier date as the Debentures are required or
permitted to be repaid as provided hereunder (the "Maturity Date"). This
Debenture is subject to the following additional provisions:

      Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined
herein have the

------------------------
(1) As to Debentures issued at the First Closing, 75% of the Market Price. As to
Debentures issuable at the Second Closing, the lesser of (a) 75% of the Market
Price and (b) the lesser of (i) 75% of the average of the five consecutive
Closing Prices immediately prior to the Effective Date (as defined in the
Purchase Agreement) and (ii) the Closing Price on the Effective Date.

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meanings given to such terms in the Purchase Agreement, and (b) the following
terms shall have the following meanings:

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

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

            "Change of Control Transaction" means the occurrence after the date
      hereof of any of (i) an acquisition after the date hereof by an individual
      or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated
      under the Exchange Act) of effective control (whether through legal or
      beneficial ownership of capital stock of the Company, by contract or
      otherwise) of in excess of 50% of the voting securities of the Company, or
      (ii) a replacement at one time or within a three year period of more than
      one-half of the members of the Company's board of directors which is not
      approved by a majority of those individuals who are members of the board
      of directors on the date hereof (or by those individuals who are serving
      as members of the board of directors on any date whose nomination to the
      board of directors was approved by a majority of the members of the board
      of directors who are members on the date hereof), or (iii) the execution
      by the Company of an agreement to which the Company is a party or by which
      it is bound, providing for any of the events set forth above in (i) or
      (ii).

            "Closing Price" means on any particular date (a) the daily volume
      weighted average price per share of Common Stock on such date (or the
      nearest preceding date) on the Trading Market (as reported by Bloomberg
      L.P. based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
      Eastern Time) using the VAP function, or (b) if the Common Stock is not
      then listed or quoted on the Trading Market and if prices for the Common
      Stock are then reported in the "pink sheets" published by the National
      Quotation Bureau Incorporated (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid
      price per share of the Common Stock so reported, or (c) if the shares of
      Common Stock are not then publicly traded the fair market value of a share
      of Common Stock as determined by a nationally-recognized independent
      appraiser selected in good faith by the Purchasers of a majority in
      interest of the principal amount of Debentures then outstanding and
      reasonably acceptable to the Company.

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

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

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

                                       2
<PAGE>

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

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

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

            "Equity Conditions" shall mean, during the period in question, (i)
      the Company shall have duly honored all conversions and redemptions
      scheduled to occur or occurring by virtue of one or more Notice of
      Conversions, if any, (ii) all liquidated damages and other amounts owing
      in respect of the Debentures shall have been paid; (iii) there is an
      effective Registration Statement pursuant to which the Holder is permitted
      to utilize the prospectus thereunder to resell all of the shares issuable
      pursuant to the Transaction Documents (and the Company believes, in good
      faith, that such effectiveness will continue uninterrupted for the
      foreseeable future), (iv) the Common Stock is trading on the Trading
      Market and all of the shares issuable pursuant to the Transaction
      Documents are listed for trading on a Trading Market (and the Company
      believes, in good faith, that trading of the Common Stock on a Trading
      Market will continue uninterrupted for the foreseeable future), (v) there
      is a sufficient number of authorized but unissued and otherwise unreserved
      shares of Common Stock for the issuance of all of the shares issuable
      pursuant to the Transaction Documents, (vi) there is then existing no
      Event of Default or event which, with the passage of time or the giving of
      notice, would constitute an Event of Default and (vii) all of the shares
      issued or issuable pursuant to the Transaction Documents in full, ignoring
      for such purposes any conversion or exercise limitation therein, would not
      violate the limitations set forth in Section 4(c) and (ix) no public
      announcement of a pending or proposed Fundamental Transaction, Change of
      Control Transaction or acquisition transaction has occurred that has not
      been consummated.

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

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

            "Fundamental Transaction" shall have the meaning set forth in
      Section 5(e)(iii) hereof.

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

            "Mandatory Prepayment Amount" for any Debentures shall equal the sum
      of (i) the greater of: (A) 130% of the principal amount of Debentures to
      be prepaid, or (B) the principal amount of Debentures to be prepaid,
      divided by the Conversion Price on (x) the date the Mandatory Prepayment
      Amount is demanded or otherwise due or (y) the date the Mandatory
      Prepayment Amount is paid in full, whichever is less, multiplied by the
      Closing Price on (x) the date the Mandatory Prepayment Amount is demanded
      or

                                       3
<PAGE>

      otherwise due or (y) the date the Mandatory Prepayment Amount is paid in
      full, whichever is greater, and (ii) all other amounts, costs, expenses
      and liquidated damages due in respect of such Debentures.

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

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

            "Purchase Agreement" means the Securities Purchase Agreement, dated
      as of October 28, 2004, to which the Company and the original Holder are
      parties, as amended, modified or supplemented from time to time in
      accordance with its terms.

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

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

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

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

            "Trading Day" means a day on which the Common Stock is traded on a
      Trading Market.

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the Nasdaq SmallCap Market, the American Stock Exchange, the New York
      Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.

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

      Section 2. Interest.

            a) No Payment of Interest. Except as set forth herein, the Company
      shall not pay interest to the Holder on this Debenture.

                                       4
<PAGE>

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

      Section 3. Registration of Transfers and Exchanges.

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

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

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

      Section 4. Conversion.

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

                                       5
<PAGE>

      provisions of this paragraph, following conversion of a portion of this
      Debenture, the unpaid and unconverted principal amount of this Debenture
      may be less than the amount stated on the face hereof.

            b) Conversion Price. The conversion price in effect on any
      Conversion Date shall be equal to $____(2) (subject to adjustment herein)
      [AS TO THE FIRST CLOSING DEBENTURES ONLY; PROVIDED, HOWEVER, IF THE LESSER
      OF (i) 75% OF THE AVERAGE OF THE 5 CONSECUTIVE CLOSING PRICES IMMEDIATELY
      PRIOR TO THE EFFECTIVE DATE (AS DEFINED IN THE PURCHASE AGREEMENT) AND
      (ii) THE CLOSING PRICE ON THE EFFECTIVE DATE (THE LESSER OF (i) AND (ii)
      BEING REFERRED TO AS THE "EFFECTIVE DATE PRICE") IS LESS THAN THE
      CONVERSION PRICE, THE CONVERSION PRICE SHALL BE REDUCED TO EQUAL THE
      EFFECTIVE DATE PRICE] (the "Conversion Price").

            c) Conversion Limitations; Holder's Restriction on Conversion. The
      Company shall not effect any conversion of this Debenture, and the Holder
      shall not have the right to convert any portion of this Debenture,
      pursuant to Section 4(a) or otherwise, to the extent that after giving
      effect to such conversion, the Holder (together with the Holder's
      affiliates), as set forth on the applicable Notice of Conversion, would
      beneficially own in excess of 4.99% of the number of shares of the Common
      Stock outstanding immediately after giving effect to such conversion. For
      purposes of the foregoing sentence, the number of shares of Common Stock
      beneficially owned by the Holder and its affiliates shall include the
      number of shares of Common Stock issuable upon conversion of this
      Debenture with respect to which the determination of such sentence is
      being made, but shall exclude the number of shares of Common Stock which
      would be issuable upon (A) conversion of the remaining, nonconverted
      portion of this Debenture beneficially owned by the Holder or any of its
      affiliates and (B) exercise or conversion of the unexercised or
      nonconverted portion of any other securities of the Company (including,
      without limitation, any other Debentures or the Warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its affiliates. Except
      as set forth in the preceding sentence, for purposes of this Section 4(c),
      beneficial ownership shall be calculated in accordance with Section 13(d)
      of the Exchange Act. To the extent that the limitation contained in this
      section applies, the determination of whether this Debenture is
      convertible (in relation to other securities owned by the Holder) and of
      which portion of this Debenture is convertible shall be in the sole
      discretion of such Holder. To ensure compliance with this restriction, the
      Holder will be deemed to represent to the Company each time it delivers a
      Notice of Conversion that such Notice of Conversion has not violated the
      restrictions set forth in this paragraph and the Company shall have no
      obligation to verify or confirm the accuracy of such determination. For
      purposes of this Section 4(c), in determining the number of outstanding
      shares of Common Stock, the Holder may rely on the number of outstanding
      shares of Common Stock as reflected in (x) the Company's most recent Form
      10-QSB or Form 10-KSB, as the case may be, (y) a

-----------------------
(2) As to the Debentures issued at the First Closing, 75% of the Market Price.
As to Debentures issuable at the Second Closing, the lesser of (a) 75% of the
Market Price and (b) the lesser of (i) 75% of the average of the five
consecutive Closing Prices immediately prior to the Effective Date (as defined
in the Purchase Agreement) and (ii) the Closing Price on the Effective Date.

                                       6
<PAGE>

      more recent public announcement by the Company or (z) any other notice by
      the Company or the Company's Transfer Agent setting forth the number of
      shares of Common Stock outstanding. Upon the written or oral request of
      the Holder, the Company shall within two Trading Days confirm orally and
      in writing to the Holder the number of shares of Common Stock then
      outstanding. In any case, the number of outstanding shares of Common Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company, including this Debenture, by the Holder or its
      affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported.

            d) Mechanics of Conversion

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

                  ii. Delivery of Certificate Upon Conversion. Not later than
            three Trading Days after any Conversion Date, the Company will
            deliver to the Holder a certificate or certificates representing the
            Conversion Shares which shall be free of restrictive legends and
            trading restrictions (other than those required by the Purchase
            Agreement or applicable law) representing the number of shares of
            Common Stock being acquired upon the conversion of Debentures. The
            Company shall, if available and if allowed under applicable
            securities laws, use its commercially reasonable efforts to deliver
            any certificate or certificates required to be delivered by the
            Company under this Section electronically through the Depository
            Trust Corporation or another established clearing corporation
            performing similar functions.


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

                  iv. Partial Liquidated Damages. If the Company fails for any
            reason to deliver to the Holder such certificate or certificates
            pursuant to Section 4(d)(ii) by the third Trading Day after the
            Conversion Date, the Company shall pay to such Holder, in cash, as
            liquidated damages and not as a penalty, for each $1000 of principal
            amount being converted, $10 per Trading Day (increasing to $20 per
            Trading Day after 5 Trading Days after such damages begin to accrue)
            for each

                                       7
<PAGE>

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

                  v. Failure to Timely Deliver Certificates Upon Conversion. In
            addition to any other rights available to the Holder, if the Company
            fails for any reason to deliver to the Holder such certificate or
            certificates pursuant to Section 4(d)(ii) by the third Trading Day
            after the Conversion Date, and if after such third Trading Day the
            Holder is required by its brokerage firm to purchase, or its
            brokerage firm purchases (in an open market transaction or
            otherwise) Common Stock to deliver in satisfaction of a sale by such
            Holder of the Conversion Shares which the Holder anticipated
            receiving upon such conversion (a "Buy-In"), then the Company shall
            (A) pay in cash to the Holder (in addition to any remedies available
            to or elected by the Holder) the amount by which (x) the Holder's
            total purchase price (including brokerage commissions, if any) for
            the Common Stock

                                       8
<PAGE>

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

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

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

                                       9
<PAGE>

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

      Section 5. Certain Adjustments.

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

            b) Subsequent Equity Sales. If the Company or any Subsidiary
      thereof, as applicable, at any time while Debentures are outstanding,
      shall offer, sell, grant any option to purchase or offer, sell or grant
      any right to reprice its securities, or otherwise dispose of or issue (or
      announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any
      Person to acquire shares of Common Stock, at an effective price per share
      less than the then Conversion Price ("Dilutive Issuance"), as adjusted
      hereunder (if the holder of the Common Stock or Common Stock Equivalents
      so issued shall at any time, whether by operation of purchase price
      adjustments, reset provisions, floating conversion, exercise or exchange
      prices or otherwise, or due to warrants, options or rights per share which
      is issued in connection with such issuance, be entitled to receive shares
      of Common Stock at an effective price per share which is less than the
      Conversion Price, such issuance shall be deemed to have occurred for less
      than the Conversion Price), then the Conversion

                                       10
<PAGE>

      Price shall be reduced to equal the effective conversion, exchange or
      purchase price for such Common Stock or Common Stock Equivalents
      (including any reset provisions thereof) at issue. Such adjustment shall
      be made whenever such Common Stock or Common Stock Equivalents are issued.
      The Company shall notify the Holder in writing, no later than the business
      day following the issuance of any Common Stock or Common Stock Equivalents
      subject to this section, indicating therein the applicable issuance price,
      or of applicable reset price, exchange price, conversion price and other
      pricing terms.

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

            d) Calculations. All calculations under this Section 5 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For purposes of this Section 5, the number of shares of Common Stock
      outstanding as of a given date shall be the sum of the number of shares of
      Common Stock (excluding treasury shares, if any) outstanding.

            e) Notice to Holders.

                  i. Adjustment to Conversion Price. Whenever the Conversion
            Price is adjusted pursuant to any of this Section 5, the Company
            shall promptly deliver to each Holder a notice setting forth the
            Conversion Price after such adjustment and setting forth a brief
            statement of the facts requiring such adjustment. If the Company
            issues a variable rate security, despite the prohibition thereon in
            the Purchase Agreement, the Company shall be deemed to have issued
            Common Stock or Common Stock Equivalents at the lowest possible
            conversion or exercise price at which such securities may be
            converted or exercised in the case of a Variable Rate Transaction
            (as defined in the Purchase Agreement), or the lowest possible
            adjustment price in the case of an MFN Transaction (as defined in
            the Purchase Agreement).

                                       11
<PAGE>

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

                  iii. Fundamental Transaction. If, at any time while this
            Debenture is outstanding, (A) the Company effects any merger or
            consolidation of the Company with or into another Person, (B) the
            Company effects any sale of all or substantially all of its assets
            in one or a series of related transactions, (C) any tender offer or
            exchange offer (whether by the Company or another Person) is
            completed pursuant to which holders of Common Stock are permitted to
            tender or exchange their shares for other securities, cash or
            property, or (D) the Company effects any reclassification of the
            Common Stock or any compulsory share exchange pursuant to which the
            Common Stock is effectively converted into or exchanged for other
            securities, cash or property (in any such case, a "Fundamental
            Transaction"), then upon any subsequent conversion of this
            Debenture, the Holder shall have the right to receive, for each
            Conversion Share that would have been issuable upon such conversion
            absent such Fundamental Transaction, the same

                                       12
<PAGE>

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

                  iv. Exempt Issuance. Notwithstanding the foregoing, no
            adjustment will be made under this Section 5 in respect of an Exempt
            Issuance.

      Section 6. RESERVED.

      Section 7. Negative Covenants. So long as any portion of this Debenture is
outstanding, the Company will not and will not permit any of its Subsidiaries to
directly or indirectly take any of the following actions unless approved by the
holder(s) of a two-thirds majority of the then-outstanding principal amount of
all Debentures:

            a) enter into, create, incur, assume or suffer to exist any
      indebtedness or liens of any kind, on or with respect to any of its
      property or assets now owned or hereafter acquired or any interest therein
      or any income or profits therefrom that is senior to, in any respect, the
      Company's obligations under the Debentures except for Permitted
      Indebtedness and Permitted Liens described below;

            b) amend its certificate of incorporation, bylaws or other charter
      documents so as to adversely affect any rights of the Holder (it being
      agreed by the Holder that the proposed amendments to the Company's Series
      A Preferred Stock and the designation of the proposed Series B Preferred
      Stock shall not be considered as adversely affecting any rights of the
      Holder);

                                       13
<PAGE>

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

            d) enter into any agreement with respect to any of the foregoing.

As used herein, "Permitted Indebtedness" shall mean:

                  i. indebtedness existing as of the date of the Purchase
            Agreement;

                  ii. indebtedness, including capitalized lease obligations,
            incurred by the Company or any subsidiary for the purpose of
            financing all or any part of the purchase price of property, plant,
            equipment or other assets (tangible or intangible) used in the
            business of the Company or any subsidiary; and

                  iii. funded indebtedness from a non-affiliated lending
            institution or other third party in an amount not to exceed
            $5,000,000.

As used herein, "Permitted Liens" shall mean:

                  i. liens for taxes, assessments for governmental charges or
            claims either not delinquent or contested in good faith by
            appropriate proceedings;

                  ii. statutory liens of landlords, carriers, warehousemen,
            mechanics, suppliers, materialmen and other liens imposed by law
            incurred in the ordinary course of business for sums not yet
            delinquent or being contested in good faith;

                  iii. liens incurred or deposits made in the ordinary course of
            business in connection with workers' compensation, unemployment
            insurance and other types of social security, or to secure the
            performance of statutory obligations, surety and appeal bonds and
            other similar obligations;

                  iv. liens securing any Permitted Indebtedness; and

                  v. liens arising from filing Uniform Commercial Code financing
            statements regarding leases.

      Section 8. Events of Default.

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

                        i.    any default in the payment of the principal amount
                              of any Debenture, or liquidated damages in respect
                              of, any Debenture, in each case free of any claim
                              of subordination, as and when the same shall
                              become due and payable (whether on a Conversion

                                       14
<PAGE>

                              Date or the Maturity Date or by acceleration or
                              otherwise) which default, is not cured, within 3
                              Trading Days;

                        ii.   the Company shall fail to observe or perform any
                              other covenant or agreement contained in this
                              Debenture or any of the other Transaction
                              Documents (other than a breach by the Company of
                              its obligations to deliver shares of Common Stock
                              to the Holder upon conversion which breach is
                              addressed in clause (xii) below) which failure is
                              not cured, if possible to cure, within 10 Trading
                              Days after notice of such default sent by the
                              Holder or by any other holder of Debentures;

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

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

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

                                       15
<PAGE>

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

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

                        vii.  the Common Stock shall not be eligible for
                              quotation on or quoted for trading on a Trading
                              Market and shall not again be eligible for and
                              quoted or listed for trading thereon within 10
                              Trading Days;

                        viii. the Company shall be a party to any Change of
                              Control Transaction or Fundamental Transaction
                              (other than a Fundamental Transaction undertaken
                              for the purpose of changing the domicile of the
                              Company), shall agree to sell or dispose of all or
                              in excess of 33% of its assets in one or more
                              transactions (whether or not such sale would
                              constitute a Change of Control Transaction),
                              provided, that any license by the Company of its
                              intellectual property rights shall not be
                              considered a sale or other disposal hereunder, or
                              shall redeem or repurchase more than a de minimis
                              number of its outstanding shares of Common Stock
                              or other equity securities of the Company (other
                              than redemptions of Conversion Shares and
                              repurchases of shares of Common Stock or other
                              equity securities of departing officers and
                              directors of the Company; provided such
                              repurchases shall not

                                       16
<PAGE>

                              exceed $100,000, in the aggregate, for all
                              officers and directors during the term of this
                              Debenture);

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

                        x.    if, during the Effectiveness Period (as defined in
                              the Registration Rights Agreement), the
                              effectiveness of the Registration Statement lapses
                              for any reason or the Holder shall not be
                              permitted to resell Registrable Securities (as
                              defined in the Registration Rights Agreement)
                              under the Registration Statement, in either case,
                              for more than 30 consecutive Trading Days or 60
                              non-consecutive Trading Days during any 12 month
                              period; provided, however, that in the event that
                              the Company is negotiating a merger,
                              consolidation, acquisition or sale of all or
                              substantially all of its assets or a similar
                              transaction and in the written opinion of counsel
                              to the Company, the Registration Statement, would
                              be required to be amended to include information
                              concerning such transactions or the parties
                              thereto that is not available or may not be
                              publicly disclosed at the time, the Company shall
                              be permitted an additional 10 consecutive Trading
                              Days during any 12 month period relating to such
                              an event;

                        xi.   an Event (as defined in the Registration Rights
                              Agreement) shall not have been cured to the
                              satisfaction of the Holder prior to the expiration
                              of thirty days from the Event Date (as defined in
                              the Registration Rights Agreement) relating
                              thereto (other than an Event resulting from a
                              failure of an Registration Statement to be
                              declared effective by the Commission on or prior
                              to the Effectiveness Date (as defined in the
                              Registration Rights Agreement), which shall be
                              covered by Section 8(a)(ix);

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

                        xiii. the Company shall fail for any reason to pay in
                              full the amount of cash due pursuant to a Buy-In
                              within 10 Trading Days after notice therefor is
                              delivered hereunder or shall fail to pay all

                                       17
<PAGE>

                              amounts owed on account of an Event of Default
                              within 10 Trading Days of the date due.

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

      Section 9. Miscellaneous.

            a) Notices. Any and all notices or other communications or
      deliveries to be provided by the Holders hereunder, including, without
      limitation, any Notice of Conversion, shall be in writing and delivered
      personally, by facsimile, sent by a nationally recognized overnight
      courier service, addressed to the Company, at the address set forth above,
      facsimile number (281) 466-1480, Attn: Steven B. Rash, or such other
      address or facsimile number as the Company may specify for such purposes
      by notice to the Holders delivered in accordance with this Section. Any
      and all notices or other communications or deliveries to be provided by
      the Company hereunder shall be in writing and delivered personally, by
      facsimile, sent by a nationally recognized overnight courier service
      addressed to each Holder at the facsimile telephone number or address of
      such Holder appearing on the books of the Company, or if no such facsimile
      telephone number or address appears, at the principal place of business of
      the Holder. Any notice or other communication or deliveries hereunder
      shall be deemed given and effective on the earliest of (i) the date of
      transmission, if such notice or communication is delivered via facsimile
      (and the sender receives a confirmation of successful transmission) at the
      facsimile telephone number specified in this Section prior to 5:30 p.m.
      (New York City time), (ii) the date after the date of transmission, if
      such notice or communication is delivered via facsimile at the facsimile
      telephone number specified in this Section later than 5:30 p.m. (New York
      City time) on any date and earlier than 11:59 p.m. (New York City time) on
      such date, (iii) the second Business Day following the date of mailing, if

                                       18
<PAGE>

      sent by nationally recognized overnight courier service, or (iv) upon
      actual receipt by the party to whom such notice is required to be given.

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

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

            d) Governing Law. All questions concerning the construction,
      validity, enforcement and interpretation of this Debenture shall be
      governed by and construed and enforced in accordance with the internal
      laws of the State of New York, without regard to the principles of
      conflicts of law thereof. Each party agrees that all legal proceedings
      concerning the interpretations, enforcement and defense of the
      transactions contemplated by any of the Transaction Documents (whether
      brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced in the
      state and federal courts sitting in the City of New York, Borough of
      Manhattan (the "New York Courts"). Each party hereto hereby irrevocably
      submits to the exclusive jurisdiction of the New York Courts for the
      adjudication of any dispute hereunder or in connection herewith or with
      any transaction contemplated hereby or discussed herein (including with
      respect to the enforcement of any of the Transaction Documents), and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, or such New York Courts are improper or
      inconvenient venue for such proceeding. Each party hereby irrevocably
      waives personal service of process and consents to process being served in
      any such suit, action or proceeding by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of
      delivery) to such party at the address in effect for notices to it under
      this Debenture and agrees that such service shall constitute good and
      sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any
      manner permitted by law. Each party hereto hereby irrevocably waives, to
      the fullest extent permitted by applicable law, any and all right to trial
      by jury in any legal proceeding arising out of or relating to this
      Debenture or the transactions contemplated hereby. If either party shall
      commence an action or proceeding to enforce any provisions of this
      Debenture, then the prevailing party in such action or proceeding shall be

                                       19
<PAGE>

      reimbursed by the other party for its attorneys fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of
      such action or proceeding.

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

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

            g) Next Business Day. Whenever any payment or other obligation
      hereunder shall be due on a day other than a Business Day, such payment
      shall be made on the next succeeding Business Day and no interest shall be
      payable in respect of such extension.

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

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

                                       20
<PAGE>

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

                                   POWER 3 MEDICAL PRODUCTS, INC.

                                   By:__________________________________________
                                      Name:
                                      Title:

                                       21
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

      The undersigned hereby elects to convert principal under the Convertible
Debenture of Power 3 Medical Products, Inc., a New York corporation (the
"Company"), due on October 28, 2007, into shares of common stock, par value
$0.001 per share (the "Common Stock"), of the Company according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.

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

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

Conversion calculations:

                                Date to Effect Conversion:

                                Principal Amount of Debentures to be Converted:

                                Number of shares of Common Stock to be issued:

                                Signature:

                                Name:

                                Address:

                                       22
<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

The Convertible Debentures due on October 28, 2007, in the aggregate principal
amount of $____________ issued by Power 3 Medical Products, Inc., a New York
corporation. This Conversion Schedule reflects conversions made under Section 4
of the above referenced Debenture.

                                     Dated:

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

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

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

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

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

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

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

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

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

--------------------------------------------------------------------------------
</TABLE>

                                       23
<PAGE>

                                   SCHEDULE TO
                          FORM OF CONVERTIBLE DEBENTURE

         The Company has issued Convertible Debentures Due October 28, 2007 to
the following listed holders. The terms of the Convertible Debentures issued by
the Company to each of the following holders are identical except for the name
of the holder and the original principal amount of the Convertible Debenture.

<TABLE>
<CAPTION>
                                     HOLDER                                       ORIGINAL PRINCIPAL AMOUNT
                                     ------                                       -------------------------

<S>                                                                                        <C>
        Cityplatz Limited                                                                   $  50,000
        Crescent International Ltd.                                                         $ 200,000
        Crestview Capital Master, LLC                                                       $ 150,000
        DKR SoundShore Oasis Holding Fund Ltd.                                              $  50,000
        Gryphon Master Fund L.P.                                                            $ 100,000
        GSSF Master Fund, LP                                                                $ 100,000
        Mohawk Funding                                                                      $  10,000
        Omicron Master Trust                                                                $ 100,000
        Otape Investments LLC                                                               $ 100,000
        Platinum Partners Value Arbitrage Fund L.P.                                         $  83,333
        Richard Molinsky                                                                    $  30,000
        Sage Capital Investments Limited                                                    $  25,000
        Bach Farms LLC                                                                      $   1,667
</TABLE>