7% CONVERTIBLE DEBENTURES

     THE  DEBENTURE  REPRESENTED  HEREBY  HAS  NOT  BEEN  REGISTERED  WITH  THE
SECURITIES  AND  EXCHANGE  COMMISSION  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.

     PAYMENTS ON ACCOUNT OF THE INDEBTEDNESS EVIDENCED BY THIS DEBENTURE AND THE
EXERCISE  OF  REMEDIES  HEREUNDER  ARE  SUBORDINATED  TO  SENIOR INDEBTEDNESS AS
PROVIDED  HEREIN.

No.  1     $  5,000,000

                                 ENDOCARE, INC.

                    7% CONVERTIBLE DEBENTURES DUE MAY 4, 2003

     Endocare  Inc.,  a Delaware corporation (the "Company"), for value received
                                                   -------
hereby  promises  to  pay  to  Brown  Simpson Partners I, Ltd. or its registered
assigns  ("Holder")  the  principal sum of Five Million Dollars at the Company's
           ------
office  or  agency for said purpose in New York, New York on May 4, 2003 in such
coin  or  currency  (or,  as  provided  herein, at the Holder's option in Common
Stock)  of the United States of America as at the time of payment shall be legal
tender  for  the  payment of public and private debts at the last address of the
Holder  (as  defined herein) last appearing on the Register (as defined herein).

     This  Debenture  is  one  of  a  duly  authorized  issue  of 7% Convertible
Debentures,  due May 4, 2003 of the Company (the "Debenture") referred to in the
                                                  ---------
Securities  Purchase  Agreement  (the "Purchase Agreement"), dated as of June 7,
                                       ------------------
1999,  by and among the Company and the Purchasers listed on Schedule I thereto,
and issued in connection with the Second Closing thereunder.  The Debentures are
subject  to  the  terms  and  conditions of the Purchase Agreement.  The Company
agrees  to  issue from time to time replacement Debentures in the form hereof to
facilitate  any  transfers  and  assignments.  In addition, after delivery of an
indemnity  in  form  and  substance  reasonably satisfactory to the Company, the
Company  also  agrees  to issue replacement Debentures for securities which have
been  lost,  stolen,  mutilated  or  destroyed.

     The  Company shall keep at its principal office a register (the "Register")
                                                                      --------
in  which  shall be entered the names and addresses of the registered holders of
the  Debentures and particulars of the respective Debentures held by them and of
all  transfers of such Debentures. References to the "Holder" or "Holders" shall
                                                      ------      -------
mean  the Person listed in the Register as the payee of any Debenture unless the
payee  shall  have  presented such Debenture to the Company for transfer and the
transferee  shall  have  been entered in the Register as a subsequent holder, in
which  case  the  term  shall  mean such subsequent holder. The ownership of the
Debentures  shall  be  proven  by  the  Register, absent manifest error. For the
purpose of paying interest and principal on the Debentures, the Company shall be
entitled  to  rely  on  the  names  and  addresses  in  the  Register.

     No provision of this Debenture shall alter or impair the obligations of the
Company,  which  are  absolute  and  unconditional,  to pay the principal of and
interest  on  this  Debenture  at  the  place, times, rate, and in the currency,
herein  prescribed.

     The  principal  of  this Debenture shall bear interest at the rate of seven
(7%)  per annum (the "Interest Rate").  The interest shall accrue daily from the
                      -------------
most  recent  Interest  Payment  Date  to  which  interest has been paid on this
Debenture,  or  if  no  interest  has  been paid on this Debenture from the date
hereof until payment in full of the principal amount has been made.  Interest is
payable  in cash or an equivalent value of the Company's Common Stock calculated
based  upon  the  Average  Price  (as  defined herein), at the Company's option,
subject  to  certain  conditions contained herein, annually on January 1 of each
year  (an "Interest Payment Date"), commencing on January 1, 2001, to the Holder
           ---------------------
hereof  until  the  principal amount is paid or made available for payment.  The
interest  so  payable, and punctually paid or duly provided for, on any Interest
Payment  Date  will  be  paid or delivered to the Holder of the Debenture at the
close  of  business on the Record Date for the interest payable on such Interest
Payment  Date.  The  "Record  Date"  for  any  interest  payment is the close of
                      ------------
business  on  December  15, whether or not a Business Day, immediately preceding
the  Interest  Payment  Date  on  which  such  Interest  is  payable.

     Any amounts that have become due and payable hereunder and remain unpaid by
the  Company  shall  accrue  interest  thereafter  until payment in full of such
amount  at  the  rate of twenty percent (20%) (the "Default Rate") per annum and
                                                    ------------
shall  be  payable  upon  demand  by  the  Holder.

     Interest,  whether  at  the  Interest  Rate  or  the  Default Rate, will be
computed on the basis of a fraction, the denominator of which is 365 (or 366 for
any  leap  year) and the numerator of which is the actual number of days elapsed
from  the date such interest begins to accrue, in the case of the Interest Rate,
or  becomes  due  and  payable,  in  the  case  of  the  Default  Rate.

     Each  of  the  Interest  Rate and the Default Rate (if otherwise applicable
under  the  terms  hereof) shall be effective both before and after any judgment
may be rendered in a court of competent jurisdiction, provided, however, that if
                                                      --------  -------
either the Interest Rate or Default Rate is deemed to be in excess of the amount
permitted  to  be charged by the Company under applicable laws, the Holder shall
be  entitled  to  collect  an Interest Rate or Default Rate, as the case may be,
only  at  the  highest  rate permitted by law, and any interest collected by the
Holder in excess of such lawful amount shall be deemed a payment in reduction of
the  principal  amount  then  outstanding  under  this Debenture and shall be so
applied.

     The  principal  of,  and  any  interest paid in cash on, this Debenture are
payable  in  coin  or currency of the United States of America as at the time of
payment  is  legal  tender  for  payment of public or private debts, at the last
address  of  the Holder last appearing on the Register, except that interest due
on the principal amount, if any (but not interest overdue for more than five (5)
days), may, at the Company's option be paid in shares of Common Stock calculated
based  upon  the Average Price (as defined herein) on the date such interest was
due.  It  shall  be assumed that the Company shall elect to make all payments of
interest  in Common Stock, unless the Company shall have given written notice to
each  Holder  not  less  than  one  (1)  calendar  month prior to the applicable
Interest  Payment  Date  of  its  intention  to  pay  such  interest  in  cash.
Notwithstanding  anything  to the contrary contained herein, the Company may not
issue  shares  of  Common Stock in payment of the interest on principal if:  (i)
the  number  of  shares  of  Common  Stock  at the time authorized, unissued and
unreserved  for  all other purposes is insufficient to pay interest hereunder in
shares  of  Common Stock or there is an insufficient number of authorized shares
of  Common Stock reserved (pursuant to Section 3.6(b) of the Purchase Agreement)
for  issue  for  full conversion of all of the Debentures issued pursuant to the
Purchase  Agreement;  (ii)  such  shares  are  not  either registered for resale
pursuant  to  the  Registration Statement (as defined in the Registration Rights
Agreement  (as  defined  herein))  or  freely  transferable pursuant to Rule 144
promulgated under the Act, as determined by counsel to the Company pursuant to a
written  opinion  letter  addressed  and in form and substance acceptable to the
Holder  and the transfer agent for such shares, subject to receipt, if necessary
for  such  opinion, from the Holder of a representation from such Holder that it
is  not  an  Affiliate (as defined herein) of the Company; (iii) such shares are
not  listed  or  quoted on the Nasdaq (as defined herein) or a Subsequent Market
(as  defined  herein);  (iv)  the  issuance  of  such shares would result in the
recipient  thereof  beneficially  owning  more  than  9.99%  of  the  issued and
outstanding  shares of Common Stock as determined in accordance with Section 4.8
hereof; (v) an Event of Default has occurred and is continuing or an event that,
with  the  passage of time or giving of notice or both would constitute an Event
of  Default,  has occurred and is continuing; or (vi) the Company has issued the
Issuable  Maximum  (as  defined  herein)  upon  conversion of or pursuant to the
Debentures  issued  pursuant  to  the  Purchase  Agreement  and  the Shareholder
Approval  has  not  been  obtained.

     The  Holder  may  from  time  to  time convert the principal amount of this
Debenture,  or  any  portion thereof, with any accrued but unpaid interest, into
Common  Stock,  as  more  particularly  set  forth  in  Section  4.2.

                                    ARTICLE I

                                   DEFINITIONS

     1.1     CERTAIN  TERMS DEFINED The following terms for all purposes of this
             ----------------------
Debenture  shall  have  the  respective meanings specified below. All accounting
terms  used  herein  and  not expressly defined shall have the meanings given to
them  in  accordance  with  generally accepted accounting principles (as defined
herein).  Capitalized terms not otherwise defined herein shall have the meanings
assigned  to  them in the Purchase Agreement.  The terms defined in this Section
1.1  include  the  plural  as  well  as  the  singular.

     "Acceleration  Notice"  has  the  meaning  set  forth  in  Section  3.1.
      --------------------

     "Affiliate"  of  any  Person  means any other Person directly or indirectly
      ---------
controlling  or  controlled  by  or under direct or indirect common control with
such  Person.  For  the  purposes  of  this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the power
to  direct or cause the direction of the management and policies of such Person,
whether  through  the  ownership of voting securities, by contract or otherwise;
and  the  terms  "controlling" and "controlled" have meanings correlative to the
foregoing.

     "Appraiser" shall mean a nationally recognized or major regional investment
      ---------
banking  firm  or firm of independent certified public accountants of recognized
standing.

     "Authorization  Date"  has  the  meaning  set  forth  in  Section  4.9.
      -------------------

     "Average Price" on any date means (x) the sum of the Per Share Market Value
      -------------
for  the  ten  (10)  Trading  Days immediately preceding such date minus (y) the
highest  and  lowest  Per  Share  Market  Value during the ten (10) Trading Days
immediately  preceding  such  date,  divided  by  (z)  eight  (8).

     "Board  of Directors" means either the Board of Directors of the Company or
      -------------------
any  committee  of  such  Board  duly  authorized  to  act  hereunder.

     "Business  Day"  means  any  day  except a Saturday, Sunday or other day on
      -------------
which commercial banks in the City of New York are authorized or required by law
to  close.

     "Capital  Stock"  means,  with  respect  to any Person, any and all shares,
      --------------
interests,  participations  or  other  equivalents  (however designated) of such
Person's  capital  stock  whether  now  outstanding or issued after the Original
Issue  Date,  including,  without limitation, all Common Stock and all Preferred
Stock.

     "Change of Control" means the occurrence of any of (i) an acquisition after
      -----------------
the  date  hereof  by  an individual or legal entity or "group" (as described in
Section  13(d)(3)  of  the  Exchange  Act)  of  in  excess  of 50% of the voting
securities  of  the  Company,  (ii)  a  replacement 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 their duly elected successors who are directors immediately prior to
such  transaction,  in one or a series of related transactions, (iii) the merger
of  the  Company with or into another entity, unless following such transaction,
the  Holders  of  the Company's securities continue to hold at least 51% of such
securities  following such transaction, (iv) the consolidation or sale of all or
substantially  all  of  the  assets of the Company in one or a series of related
transactions,  (v)  Mr.  Paul  W.  Mikus ceasing to serve as the Chief Executive
Officer,  President  or Chairman of the Board of the Company due to his death or
disability  or  termination for cause, unless he is replaced by the Board within
one  hundred  and  twenty  days (120) of his termination of service and (vi) Mr.
Paul  W.  Mikus  ceasing  to  serve as the Chief Executive Officer, President or
Chairman of the Board of the Company due to his voluntary resignation, unless he
is  replaced  by  the  Board  within  ninety days (90) by a successor reasonably
acceptable  to  the Holders of a majority of a then-outstanding principal amount
of  the  Debentures.

     "Closing  Date"  has  the  meaning  set  forth  in  the Purchaser Agreement
      -------------

     "Common  Stock"  means the common stock, par value $0.001 per share, of the
      -------------
Company,  or the common stock of any successor to the Company following a Change
in  Control  in  which  the  Company's Common Stock is converted into the Common
Stock  of  the  successor  corporation.

     "Company"  has  the  meaning  set  forth  in  the  first  paragraph hereof.
      -------

      "Convertible  Securities"  has  the  meaning  set  forth  in  Section
       -----------------------
4.5(e)(i)(A).
       -----

     "Conversion  Date"  has  the  meaning  set  forth  in  Section  4.4(a).
      ----------------

     "Conversion  Default"  has  the  meaning  set  forth  in  Section  4.9.
      -------------------

     "Conversion  Default  Payments"  has  the meaning set forth in Section 4.9.
      -----------------------------

     "Conversion  Notice"  has  the  meaning  set  forth  in  Section  6.1.
      ------------------

     "Conversion  Notice  Date"  has  the  meaning  set  forth  in  Section 6.3.
      ------------------------

     "Conversion  Price"  has  the  meaning  set  forth  in  Section  4.2(a).
      -----------------

     "Conversion  Trigger  Price"  has  the  meaning  set  forth in Section 6.1.
      --------------------------

     "Debt"  of  any  Person  means,  at  any date, without duplication, (i) all
      ----
obligations  of  such  Person  for  borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all  obligations  of  such  Person  in  respect of letters of credit or bankers'
acceptance  or  other  similar  instruments  (or  reimbursement obligations with
respect  thereto),  (iv)  all  obligations  of  such  Person to pay the deferred
purchase  price  of  property or services, (v) all obligations of such Person as
lessee  under  capitalized  leases, (vi) all Debt of others secured by a Lien on
any  asset  of  such Person, whether or not such Debt is assumed by such Person,
provided  that  for  purposes  of determining the amount of any Debt of the type
described  in  this  clause, if recourse with respect to such Debt is limited to
such asset, the amount of such Debt shall be limited to the fair market value of
such  asset,  (vii) all Debt of others guaranteed by such Person, and (viii) all
redeemable  stock  valued  at  the  greater  of  its  voluntary  or  involuntary
liquidation  preference  plus  accrued  and  unpaid  dividends.

     "Debenture"  or  "Debentures"  has  the  meaning  set  forth  in the second
      ---------        ----------
paragraph  hereof.
      -

     "Debenture  Shares"  means  the  shares  of  Common  Stock  underlying  the
      -----------------
Debentures  or  shares  issued  upon  conversion  of  the  Debentures.
      --

     "Default  Rate"  has  the  meaning set forth in the sixth paragraph hereof.
      -------------

     "Determination  Date"  has  the  meaning  set  forth  in  Section  4.6.
      -------------------

     "DTC"  means  the  Depositary  Trust  Corporation.
      ---

     "Event  of  Default"  has  the  meaning  set  forth  in  Section  3.1.
      ------------------

     "Excess  Amount"  has  the  meaning  set  forth  in  Section  4.9.
      --------------

     "Excess  Principal"  has  the  meaning  set  forth  in  Section  4.6.
      -----------------

     "Exchange  Act" shall mean the Securities Exchange Act of 1934, as amended.
      -------------

     "FAST"  has  the  meaning  set  forth  in  Section  4.4(c).
      ----

     "GAAP"  or  "generally  accepted  accounting  principles"  means  generally
      ----        -------------------------------------------
accepted  accounting  principles  in  the  United  States,  including,  without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles  Board  of the American Institute of Certified Public Accountants and
statements  and pronouncements of the Financial Accounting Standards Board or in
such  other statements by such other entity as approved by a significant segment
of  the  accounting  profession.

     "Holder",  "Holder of Debentures", "Debentureholder" or other similar terms
      ------     --------------------    ---------------
means  the  registered  holder  of  any  Debenture.
                                         ---------

     "Incurrence"  means  the  incurrence,  creation, assumption or in any other
      ----------
manner  becoming  liable with respect to, or the extension of the maturity of or
becoming  responsible  for  the  payment  of,  any  Debt.  "Incur"  shall have a
                                                            -----
comparable  meaning.

     "Interest  Payment  Date"  has the meaning set forth in the fifth paragraph
      -----------------------
hereof.

     "Interest  Rate"  has  the meaning set forth in the fifth paragraph hereof.
      --------------

     "Issuable  Maximum"  has  the  meaning  set  forth  in  Section  4.6.
      -----------------

     "Mandatory  Prepayment  Amount"  for any Debenture means the greater of (i)
      -----------------------------           ---------
the  sum  of (x) 120% of the principal amount of the Debenture to be prepaid and
                                                     ---------
(y)  all  other amounts, costs, interest, expenses and liquidated damages due in
respect  of  such  principal amount and (ii) the sum of (x) at the option of the
Holder,  either (I) the principal amount of the Debenture to be repaid, plus all
                                                ---------
accrued and unpaid interest thereon, divided by the Conversion Price on the date
the  Mandatory Prepayment Amount is demanded or otherwise due, multiplied by the
Per  Share  Market Value on the date the Mandatory Prepayment Amount is demanded
or  otherwise  due  or (II) the principal amount of the Debenture to be prepaid,
                                                        ---------
plus all accrued and unpaid interest thereon, divided by the lower of either the
Conversion  Price  or  the Average Price on the Trading Day immediately prior to
the  date the Mandatory Prepayment Amount is paid in full, multiplied by the Per
Share  Market  Value  on  the  Trading  Day  immediately  prior  to the date the
Mandatory  Prepayment  Amount is paid in full, and (y) all other amounts, costs,
interest,  expenses  and  liquidated  damages  due  in respect of such principal
amount.

     "Maturity  Date"  means  the  date  on  which  the principal of a Debenture
      --------------                                                   ---------
becomes  due and payable as herein provided, whether on the Stated Maturity Date
or  pursuant  to  acceleration  upon  an  Event  of  Default.

     "Nasdaq"  means  the  Nasdaq  SmallCap  Market.
      ------

     "Notice  of  Conversion"  has  the  meaning  set  forth  in  Section  4.2.
      ----------------------

     "Optional  Conversion"  has  the  meaning  set  forth  in  Section  6.1.
      --------------------

     "Optional  Conversion  Date"  has  the  meaning  set  forth in Section 6.3.
      --------------------------

     "Options"  has  the  meaning  set  forth  in  Section  4.5(e)(i)(A).
      -------

     "Original  Issue  Date"  of  any  Debenture  (or portion thereof) means the
      ---------------------
earlier of (i) the date of such Debenture and (ii) the date of any Debenture (or
portion  thereof) for which such security was issued (directly or indirectly) on
registration  of  transfer,  exchange  or  substitution.

     "Payment  Blockage  Notice"  has  the  meaning set forth in Section 7.2(b).
      -------------------------

     "Per  Share  Market  Value"  means  (i)  on  any particular Trading Day the
      -------------------------
closing  bid  price  per  share of the Common Stock on such date (as reported by
Bloomberg  Information  Services,  Inc.,  or any successor reporting service) on
Nasdaq  or,  if  the  Common  Stock is not then quoted on Nasdaq, any Subsequent
Market  on which the Common Stock is then listed or if there is no such price on
such  date,  then  the closing bid price on such exchange or quotation system on
the  date  nearest  preceding such date (excluding bids posted by the Company, a
Holder  or  an  Affiliate of any such person) or (ii) if the Common Stock is not
listed  then  on  Nasdaq  or  any Subsequent Market, the closing bid price for a
share  of  Common  Stock  in  the  over-the-counter  market,  as reported by the
National  Quotation  Bureau  Incorporated  (or  similar  organization  or agency
succeeding  to  its  functions  of reporting prices) at the close of business on
such  date  (excluding  bids posted by a Holder or an Affiliate of a Holder), or
(iii) if the Common Stock is not then publicly traded the fair market value of a
share  of  Common  Stock as determined by an Appraiser selected in good faith by
the holder of this Debenture; provided, however, that the Company, after receipt
                              --------  -------
of  the  determination by such Appraiser, shall have the right to select in good
faith  an  additional  Appraiser,  in which case, the fair market value shall be
equal to the average of the determinations by each such Appraiser; and provided,
                                                                       --------
further  that  all  determinations  of  the  Per  Share  Market  Value  shall be
-------
appropriately  adjusted  for  any stock dividends, stock splits or other similar
-------
transactions  during  such  period.
--

     "Person" means an individual, a corporation, a partnership, an association,
      ------
a trust or any other entity or organization, including a government or political
subdivision  or  an  agency  or  instrumentality  thereof.

     "Preferred  Stock"  means,  with respect to any Person, any and all shares,
      ----------------
interests,  participations  or  other  equivalents  (however designated) of such
Person's  preferred  or preference stock whether now outstanding or issued after
the  date  of  this Debenture, and includes, without limitation, all classes and
series  of  preferred  or  preference  stock.

      "Property"  of  any  Person  means  all types of real, personal, tangible,
       --------
intangible or mixed property owned by such Person whether or not included in the
most  recent  consolidated balance sheet of such Person under generally accepted
accounting  principles.

     "Purchase  Agreement"  means that Securities Purchase Agreement dated as of
      -------------------
June  7,  1999  by  and  among  the  Company  and  the  Purchasers.

     "Purchase  Price"  means, with respect to any Debenture, the purchase price
      ---------------
paid  to  the  Company  upon  issuance  of  such  Debenture.

     "Purchasers"  has  the  meaning ascribed thereto in the Purchase Agreement.
      ----------

     "Record  Date"  has  the  meaning  set forth in the fifth paragraph hereof.
      ------------

     "Record  Date"  has  the  meaning  set forth in the fifth paragraph hereof.
      ------------

     "Registration  Rights  Agreement"  means that Registration Rights Agreement
      -------------------------------
dated  as  of  June  7,  1999  by  and  among  the  Company  and the Purchasers.

     "Registration  Rights  Agreement"  means that Registration Rights Agreement
      -------------------------------
dated  as  of  June  7,  1999  by  and  among  the  Company  and the Purchasers.

     "Reverse  Stock  Split"  has  the  meaning  set  forth  in  Section 4.5(a).
      ---------------------

     "Senior  Indebtedness"  shall  have  the  meaning set forth in Section 7.1.
      --------------------

     "Senior  Indebtedness"  shall  have  the  meaning set forth in Section 7.1.
      --------------------

     "Stated  Maturity  Date"  means  May  4,  2003.
      ----------------------

     "Stock  Option  Plan"  means any contract, plan or agreement which has been
      -------------------
approved  by  the  Board  of  Directors  of  the  Company, pursuant to which the
Company's  securities  may  be  issued  to  any  employee,  officer, director or
consultant.

     "Subsidiary"  means,  with  respect to any Person, any corporation or other
      ----------
entity  of  which  a  majority of the Capital Stock or other ownership interests
having  ordinary  voting  power to elect a majority of the Board of Directors or
other  persons  performing  similar  functions  are  at  the  time  directly  or
indirectly  owned or controlled by such Person.  A Person shall not be deemed to
directly  or  indirectly  own  a majority of the Capital Stock of another Person
solely  because  of ownership of an unexercised warrant to acquire Capital Stock
of  such  other Person if the warrant does not provide for voting control of the
warrant  shares  prior  to  its  exercise.

     "Subsequent  Market"  means  the  New  York  Stock Exchange, American Stock
      ------------------
Exchange, Nasdaq National Market, London Stock Exchange or Tokyo Stock Exchange.

     "Trading Day" means (a) a day on which the Common Stock is traded on Nasdaq
      -----------
or,  if  the  Common  Stock is not then designated on Nasdaq, on such Subsequent
Market  on  which the Common Stock is then listed or quoted or (b) if the Common
Stock  is not listed on Nasdaq or a Subsequent Market, a day on which the Common
Stock  is traded in the over-the-counter Market, as reported by the OTC Bulletin
Board,  or  (c)  if  the Stock is not quoted on the OTC Bulletin Board, a day on
which  the  Common Stock is quoted in the over-the-counter market as reported by
the  National  Quotation  Bureau  Incorporated  (or  any similar organization or
agency  succeeding  its functions or reporting prices) provided, however that in
any  event  that  the  Common Stock is not listed or quoted as set forth in (a),
(b),  or  (c)  hereof,  then  a  Trading  Day  shall  mean  any  Business  Day.

     "Valuation  Event"  has  the  meaning set forth in Section 4.5(e)(i)(C)(I).
      ----------------

                                   ARTICLE II

                             PAYMENT; THE SECURITIES

     2.1     PAYMENT  OF  PRINCIPAL  AND  INTEREST.  The  Company  covenants and
             --------------------------------------
agrees  that  it will duly and punctually pay or cause to be paid the principal,
plus all accrued interest thereon, with respect to each of the Debentures at the
place  or  places,  at  the  respective  times and in the manner provided in the
Debentures.

     2.2     MUTILATED,  DEFACED,  DESTROYED, LOST AND STOLEN DEBENTURESIn case
             -----------------------------------------------------------
any  temporary  or  definitive  Debenture  shall become mutilated, defaced or be
apparently  destroyed,  lost  or stolen, the Company shall execute and deliver a
new  Debenture,  bearing a number not contemporaneously outstanding, in exchange
and  substitution  for  the  mutilated  or  defaced Debenture. In every case the
applicant  for a substitute Debenture shall furnish to the Company such security
or indemnity as it may reasonably require to indemnify and defend and to save it
harmless  and,  in  every  case  of  destruction,  loss or theft evidence to the
Company's  satisfaction  of  the  apparent  destruction,  loss  or theft of such
Debenture  and  of  the  ownership  thereof.

     Upon  the issuance of any substitute Debenture, the Company may require the
payment  of  a sum sufficient to cover any tax or other governmental charge that
may  be  imposed in relation thereto and any other expenses connected therewith.
In  case  any  Debenture  which  has  matured or is about to mature, or has been
called  for  conversion  in full, or is being surrendered for conversion in full
shall  become  mutilated  or defaced or be apparently destroyed, lost or stolen,
the  Company  may,  instead of issuing a substitute Debenture, with the holder's
consent,  pay  or  authorize  the  payment  or  conversion  of the same (without
surrender  thereof  except  in the case of a mutilated or defaced Debenture), if
the  applicant  for  such  payment shall furnish to the Company such security or
indemnity  as  it  may  reasonably  require  to save it harmless from all risks,
however  remote,  and, in every case of apparent destruction, loss or theft, the
applicant shall also furnish to the Company evidence to the Company's reasonable
satisfaction of the apparent destruction, loss or theft of such Debenture and of
the  ownership  thereof.

     Every  substitute  Debenture  issued  pursuant  to  the  provisions of this
Section  by  virtue of the fact that any Debenture is apparently destroyed, lost
or  stolen shall constitute an additional contractual obligation of the Company,
whether  or  not  the apparently destroyed, lost or stolen Debenture shall be at
any time enforceable by anyone and shall be entitled to all the benefits of (but
shall  be  subject to all the limitations of rights set forth in) this Debenture
equally and proportionately with any and all other Debentures duly authenticated
and delivered hereunder. All Debentures shall be held and owned upon the express
condition  that,  to  the  extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
defaced,  or  apparently destroyed, lost or stolen Debentures and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing
or  hereafter enacted to the contrary with respect to the replacement or payment
of  negotiable  instruments  or  other  securities  without  their  surrender.

     2.3     CANCELLATION  OF  DEBENTURES;  DESTRUCTION THEREOF.  All Debentures
             --------------------------------------------------
surrendered  for payment, conversion, registration of transfer or exchange shall
be  delivered to the Company for cancellation, and no Debentures shall be issued
in  lieu  thereof except as expressly permitted by any of the provisions of this
Debenture.  The Company shall destroy canceled Debentures held by it and deliver
a  certificate  of destruction to the Holder, unless otherwise required.  If the
Company  shall  acquire  any of the Debentures, such acquisition alone shall not
operate  as a redemption or satisfaction of the indebtedness represented by such
Debentures  unless  and  until  such  indebtedness  is  satisfied.

                                   ARTICLE III

                                    DEFAULTS

     3.1     EVENT  OF  DEFAULT  DEFINED;  ACCELERATION  OF  MATURITY; WAIVER OF
             -------------------------------------------------------------------
DEFAULT.  In  case  one  or  more  of the following events ("Events of Default")
     --                                                      -----------------
(whatever the reason for such Event of Default and whether it shall be voluntary
or  involuntary  or be 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)  shall  have occurred and be continuing:

     a.     default  in  the  payment  in cash (or in Common Stock, as permitted
herein)  of  all or any part of the principal of and the entire accrued interest
on  any  of  the  Debentures  as  and when the same shall become due and payable
either  at  maturity,  upon  any  conversion,  by  declaration  or otherwise; or

     b.     failure  on  the  part of the Company to duly observe or perform any
other  of  the covenants or agreements on the part of the Company (or the making
by  the Company of any announcement, statement or threat that it does not intend
to  honor  the  obligations  described  in  this  paragraph)  contained  in this
Debenture  (including  the failure to issue Common Stock upon conversion of this
Debenture  in accordance with the terms hereof) or the Purchase Agreement or the
Registration Rights Agreement for a period of ten (10) Business Days (other than
with  respect  to an announcement, statement or threat) in the case of a failure
due  to circumstances within the Company's control, or thirty (30) Business Days
in  the case of a failure due to circumstances not within the Company's control,
after the earlier of (x) the date on which any officer of the Company shall have
obtained  actual  knowledge of such failure (or  such announcement, statement or
threat)  or  (y) the date on which  written notice thereof has been given to the
Company  by  the  Holder;  or

     c.     there  shall  have  occurred with respect to any particular issue of
Debt  of  the  Company  and/or  one  or  more Subsidiaries having an outstanding
principal  amount  of  $1,000,000 or more, whether such Debt now exists or shall
hereafter  be created, an event of default which has entitled the holder thereof
to declare such Debt to be due and payable in full prior to its stated maturity,
and  the  holder of such Debt has declared such Debt due and payable in full; or

     d.     a  judgment  or  order (not covered by insurance) for the payment of
money  shall be rendered against the Company or any Subsidiary of the Company in
excess  of  $1,000,000 in the aggregate for all such judgments or orders against
all  such  Persons (treating any deductibles, self insurance or retention as not
so  covered)  that  shall  not  be discharged, and all such judgments and orders
remain outstanding and there shall be any period of thirty (30) consecutive days
following entry of the judgment or order in excess of $1,000,000 or the judgment
or  order which causes the aggregate amount described above to exceed $1,000,000
during  which  a  stay  of enforcement of such judgment or order, by reason of a
pending  appeal  or  otherwise,  shall  not  be  in  effect;  or

     e.     a  court having jurisdiction in the premises shall enter a decree or
order  for  relief  in  respect  of the Company or any of its subsidiaries in an
involuntary  case  under  any applicable bankruptcy, insolvency or other similar
law  now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian,  trustee, sequestrator (or similar official) of the Company or any of
its  Subsidiaries  or for any substantial part of the property of the Company or
any of its Subsidiaries or ordering the winding up or liquidation of the affairs
of the Company or any of its Subsidiaries, and such decree or order shall remain
unstayed  and  in  effect  for  a  period  of  sixty  (60)  consecutive days; or

     f.     the  Company  or  any of its Subsidiaries shall commence a voluntary
case  under  any  applicable  bankruptcy, insolvency or other similar law now or
hereafter  in  effect,  or  consent  to  the  entry of an order for relief in an
involuntary  case  under  any  such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or  similar  official)  of  the  Company  or any of its Subsidiaries or for any
substantial  part  of the property of the Company or any of its Subsidiaries, or
the Company or any of its Subsidiaries shall make any general assignment for the
benefit  of  creditors;  or

     g.     any representation, warranty, certification or statement made by the
Company  in the Purchase Agreement or in any certificate, financial statement or
other  document delivered pursuant to the Purchase Agreement shall prove to have
been  incorrect  in  any  material  respect  when  made;  or

     h.     the Common Stock shall be delisted from Nasdaq or shall be suspended
from trading on Nasdaq without resuming trading and/or being relisted thereon or
on  a  Subsequent  Market  or having such suspension lifted, as the case may be,
within  five  (5)  Business Days (twenty (20) Business Days if the Company is in
good  faith  contesting  such  delisting  or  suspension);  or

     i.     a  Registration  Statement  (as  defined  in the Registration Rights
Agreement)  for  the  Debenture  Shares  shall  not  have  been  declared by the
Securities  and  Exchange  Commission  on  or  prior  to  the 30th day after the
Effectiveness  Date  (as  defined in the Registration Rights Agreement) or after
its  initial  effectiveness  and  prior  to  the  expiration  of  the  Company's
obligation  to  keep  the Registration Statement effective as required under the
Registration  Rights  Agreement, such Registration Statement lapses in effect or
sales  of  all  of  the  Registrable  Securities (as defined in the Registration
Rights  Agreement) otherwise cannot be made thereunder (whether by reason of the
Company's  failure  to  amend  or  supplement the prospectus included therein in
accordance  with  the  Registration Rights Agreement or otherwise) for more than
fifteen  (15)  consecutive  days  or  thirty  (30) days in any twelve (12) month
period;  or

     j.     a  Change  of  Control  shall  occur unless the Average Price of the
Company's  Common  Stock  immediately  (i) prior to the Change of Control if the
event leading to the Change of Control or the intent to consummate the Change of
Control  was  previously  announced  publicly,  or  (ii)  after the tenth (10th)
Trading  Day  following the Change of Control if the event leading to the Change
of  Control  or  intent  to  consummate  a  Change of Control was not previously
announced  publicly,  was  at  least  $8.00  per  share (which shall be adjusted
proportionately  to  the  extent  the  Conversion  Price is adjusted hereunder),
provided  however that the Holders have been able to sell their shares of Common
Stock  in  the  market  under  an  effective  Registration  Statement  for  the
immediately  preceding  thirty (30) days and will be able to sell such shares in
the  market  for  fifteen  (15)  days  after  the  Change  of  Control;  or

     k.     an  Event of Default has occurred and is continuing under any of the
other  Debentures  issued  pursuant  to  the  Purchase  Agreement;  or

     l.     Failure on the part of the Company to comply with its obligations to
close  the  Second Closing (as defined in the Purchase Agreement) when requested
by  the  Holders.

     then, in each and every such case (other than an Event of Default specified
in  Section  3.1(e)  or  3.1(f) hereof), unless the principal shall have already
become  due  and payable, by notice in writing to the Company (the "Acceleration
                                                                    ------------
Notice"),  the  Holders of at least a majority of the then outstanding principal
 -----
amount  of  the  Debentures  may  declare the entire principal of and the entire
accrued  interest  on the Debentures owned by such Holders to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and  payable.  If  an  Event  of  Default  specified in Section 3.1(e) or 3.1(f)
occurs,  the  principal  of  and any accrued interest on the Debentures (and the
aggregate  amounts  described  below)  shall  become  and be immediately due and
payable  without  any  declaration  or  other  act  on the part of any Debenture
Holder.  In the event that the Company shall not have promptly, but in any event
within  ten  (10) Business Days upon receipt of an Acceleration Notice, paid the
Holder  the  amount specified below, the Conversion Price shall automatically be
adjusted  to equal the average Per Share Market Value of the Common Stock during
the  preceding  thirty  (30)  consecutive Trading Days immediately preceding the
date  of  the Acceleration Notice; provided, that such Per Share Market Value is
                                   --------
lower  than  the  Conversion  Price.

     The  aggregate amount payable upon an Event of Default described in Section
3.1(a),  (e),  (f)  and  (i)  shall  be  equal  to  the sum of (i) the Mandatory
Prepayment  Amount  plus  (ii)  at  the  option  of  the  Holder,  the Mandatory
Prepayment  Amount  for  the  principal amount of the Debentures (the "Converted
                                                                       ---------
Debentures")  that would then be held by such Holder had the principal amount of
   -------
Debentures  converted into Debenture Shares that are then held by the Holder not
been  so  converted;  provided,  that  the  Holder  shall  not  be entitled to a
                      --------
Mandatory  Prepayment  Amount  with  respect to Converted Debentures if both the
following have occurred: (i) prior to the occurrence of an Event of Default, the
Debenture  Shares  into  which  the Converted Debentures were converted had been
held  by  the  Holder  for  more  than  thirty  (30)  days and (ii) prior to the
occurrence  of  the  Event  of  Default  and  after receipt by the Holder of the
Debenture  Shares  that  are held by the Holder at the time of the occurrence of
the  Event of Default, the Registration Statement with respect to such Debenture
Shares  had been continuously effective, and the Common Stock has been quoted on
Nasdaq,  for  more  than  thirty  (30)  days.

     The  aggregate principal amount payable on each Event of Default other than
as  described  in  Section 3.1(a), (e), (f) and (i) shall be equal to the sum of
(i)  the  Mandatory Prepayment Amount plus (ii) at the option of the Holder, the
Mandatory Prepayment Amount for the Converted Debentures that would then be held
by  such  Holder had the principal amount of Debentures converted into Debenture
Shares  (as  defined  herein)  that  are  then  held  by  the Holder not been so
converted;  provided,  that  the  Holder  shall  not  be entitled to a Mandatory
            --------
Prepayment  Amount  with  respect  to  Converted  Debentures  if  prior  to  the
occurrence of an Event of Default, the Debenture Shares into which the Converted
Debentures  were  converted  had been held by the Holder for more than three (3)
Trading  Days.

     For purposes of this Section 3.1, the principal amount of the Debentures is
outstanding  until  such  date  as  the  Holder shall have been issued Debenture
Shares  upon  a  conversion  (or  attempted conversion) thereof.  Interest shall
accrue  on  the  Mandatory  Prepayment  Amount hereunder from the day after such
amount  is  due  (being  the  date  of  an Event of Default) through the date of
payment  in  full  thereof  at  the  rate  of  20.0%  per annum.  Payment of the
Mandatory Prepayment Amount pursuant to this Section 3.1 shall be in addition to
any  other  amounts  that  may  be due to the Holder pursuant to this Debenture.
Within  five  (5)  Business Days of receipt by the Holder of payments of amounts
due to the Holder, (i) the Holder shall return the Debentures to the Company and
(ii)  in  the  event  the  Mandatory  Prepayment Amount relates to the Converted
Debentures,  the  Holder  shall  return  the  Debenture  Shares  into which such
Converted Debentures were converted.  In the event of the occurrence of an Event
of  Default,  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.  Any  demand  for  payment  may  be rescinded and annulled by a
Holder  at  any  time  prior to payment hereunder.  If a majority of the Holders
rescind and annul any such demand, then the remaining Holders shall be deemed to
rescind and annul any such demand.  No such rescission or annulment shall affect
any  subsequent  Event  of  Default  or  impair  any  right  consequent thereon.

     Upon  delivery of any Acceleration Notice to the Company, the Company shall
provide  a  copy  of  such  notice to the other Holders, if any, within five (5)
Business  Days of the Company's receipt thereof.  Failure to deliver such notice
shall  not  affect  the  validity  of  the  notice  delivered  by the Holders in
accordance  with  the  provisions  referred  to  above.

     3.2     POWERS  AND  REMEDIES  CUMULATIVE;  DELAY OR OMISSION NOT WAIVER OF
             -------------------------------------------------------------------
DEFAULT No  right  or remedy herein conferred upon or reserved to the Holders is
   ----
intended  to  be  exclusive  of  any  other right or remedy, and every right and
remedy  shall,  to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or  in  equity  or otherwise. The assertion or employment of any right or remedy
hereunder,  or  otherwise,  shall  not  prevent  the  concurrent  assertion  or
employment  of  any  other  appropriate  right  or  remedy.

     No delay or omission of the Holders to exercise any right or power accruing
upon any Event of Default occurring and continuing as aforesaid shall impair any
such  right  or  power or shall be construed to be a waiver of any such Event of
Default  or  an  acquiescence  therein;  and every power and remedy given by the
Debentures  or  by law may be exercised from time to time, and as often as shall
be  deemed  expedient,  by  the  Holders.

                                   ARTICLE IV

                              EXCHANGE; CONVERSION

     4.1     RIGHT  OF  DEBENTUREHOLDERS  TO  EXCHANGE DEBENTURES Subject to and
             ----------------------------------------------------
upon  compliance  with  the  provisions  of  this  Section,  this  Debenture  is
exchangeable for an equal 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.

     4.2     RIGHT  OF DEBENTUREHOLDERS TO CONVERT DEBENTURES INTO COMMON STOCK.
             ------------------------------------------------------------------

     a.     Conversion  Price.  Subject  to  and  upon  compliance  with  the
            -----------------
provisions  of  this Section 4.2, the principal amount of this Debenture, or any
portion thereof which is $1,000 or a multiple thereof may, at any time and at or
before  the  close  of  business  on  the  Maturity  Date be converted into duly
authorized,  validly issued, fully-paid and nonassessable shares of Common Stock
at $6.75 per share subject to adjustment under the provisions of this Article IV
(the  "Conversion  Price").
       -----------------

     b.     Notice of Conversion.  If an adjustment in the Conversion Price and,
            --------------------
if  applicable,  a  change  in  the  securities  or other property issuable upon
conversion  has  taken place hereunder, then the conversion described in Section
4.2(a)  shall  be  at  the applicable Conversion Price and in such securities or
other  property  as  so  adjusted.  The  Purchaser desiring to make a conversion
shall  deliver  to  the  Company  during  usual  business hours of the Company's
office,  or,  at  the  Purchaser's option, to  the transfer agent of the Company
during usual business hours of the transfer agent,  a written notice of election
to  convert,  as provided in the form attached hereto as Exhibit A (a "Notice of
                                                         ---------     ---------
Conversion"),  accompanied,  if  required,  by  the  Debenture  or  Debentures,
 ---------
representing  at  least  the  principal  amount  to  be  converted.
 -------

     4.3     ADJUSTMENT  FOR  DIVIDENDS;  INTEREST  PAYMENT  AFTER CONVERSION No
             ----------------------------------------------------------------
payment  or  adjustment will be made for dividends on any Common Stock except as
provided herein.  On conversion of a Debenture, that portion of interest accrued
and  unpaid  attributable  to  the  period  from  the Original Issue Date to the
Conversion  Date  with respect to the converted Debenture shall not be canceled,
extinguished  or  forfeited,  but  rather  shall  be  paid in full to the Holder
thereof  by  the  payment  of  an amount of shares of Common Stock valued at the
Average  Price  equal  thereto; provided, however, that the Company may pay such
                                --------  -------
amount  in cash if it provides the Holder with not less than ten (10) days prior
written notice of such intention. If the Holder converts more than one Debenture
at  the  same  time,  the  number  of  shares  of Common Stock issuable upon the
conversion  shall  be  based  on  the  total  principal amount of the Debentures
converted.

     4.4     ISSUANCE  OF  SHARES  UPON  CONVERSION.
             --------------------------------------

     a.     As  promptly  as practicable, but in any event no later than two (2)
Trading  Days  after  delivery  of  a Notice of Conversion and, if required, the
surrender,  as  herein  provided, of any Debenture or Debentures for conversion,
the  Company  shall  deliver  or  cause  to  be  delivered  to the Holder of the
Debenture  or  Debentures delivering such Notice of Conversion, or such Holder's
designee,  a  certificate  or  certificates  representing  the  number  of  duly
authorized, validly issued, fully-paid and nonassessable shares of Common Stock,
into  which such Debenture or Debentures may be converted in accordance with the
provisions  of  this  Article  IV.  Such conversion shall be deemed to have been
made  at  the  time and on the date the Notice of Conversion is delivered to the
Company,  as  long  as, if required, the Debenture or Debentures being converted
are  promptly  delivered  to  the  Company  and the rights of the Holder of such
Debenture  or  Debentures  as a Holder (subject to the Company's satisfaction of
its  obligations  hereunder with respect to such conversion) shall cease at such
time with respect to the Converted Debentures, the Person or Persons entitled to
receive  the  shares  of  Common  Stock,  upon  conversion  of such Debenture or
Debentures, shall be treated for all purposes as having become the record holder
or  holders  of  such  shares  of Common Stock at such time, and such conversion
shall be at the Conversion Price in effect at such time (the "Conversion Date").
                                                              ---------------
Subject  to  paragraph  4.4(b), if any Debenture is converted in part only, upon
such  conversion the Company shall execute and deliver to the Holder thereof, as
requested  by  such  Holder,  a  new  Debenture  or  Debentures  of  authorized
denominations  in aggregate principal amount equal to the unconverted portion of
such  Debenture.  Without in any way limiting the Holder's right to pursue other
remedies,  including  actual damages and/or equitable relief, the parties hereto
agree  that  if the Company fails to deliver the shares of Common Stock required
to  be  issued  upon  the  conversion of such Debenture or Debentures under this
Section  4.4  within  the two (2) Trading Day period referred above, the Company
shall  pay  to the Holder upon demand an amount of cash (at the Holder's option)
equal  to:  (i)  the  commissions, discounts and similar expenses charged to the
Holder  in  purchasing  a  number  of shares of Common Stock no greater than the
number  of  shares  of Common Stock required to be issued upon the conversion of
the Debenture or Debentures, or (ii) the product of  (w) the number of shares of
Common  Stock  required  to  be  issued  upon the conversion of the Debenture or
Debentures,  (x)  the  Per  Share  Market Value of such shares on the Conversion
Date,  (y) the number of days after such two (2) day period that such shares are
not  delivered  to  the  Holder,  and  (z)  0.005.

     b.     Notwithstanding  anything  to  the  contrary  set forth herein, upon
conversion of a Debenture in accordance with the terms thereof, the Holder shall
not  be required to physically surrender the Debenture to the Company unless the
entire unpaid principal amount of the Debenture is so converted.  The Holder and
the  Company  shall  maintain  records  showing  the  principal  amount  already
converted  and  the  dates  of  such conversions or shall use such other method,
reasonably  satisfactory  to  the  Holder  and the Company, so as not to require
physical surrender of  the Debenture upon each such conversion.  In the event of
any dispute or discrepancy, such records of the Company shall be controlling and
determinative  in the absence of manifest error.  Notwithstanding the foregoing,
if  any  portion  of the Debenture is converted, the Holder may not transfer the
Debenture  unless  the  Holder  first physically surrenders the Debenture to the
Company,  whereupon  the Company shall promptly issue and deliver upon the order
of  the  Holder  a  new  Debenture of like tenor, registered as the Holder (upon
payment  by  the  Holder  of  any  applicable  transfer  taxes)  may  request,
representing  in  the  aggregate  the  remaining  unpaid principal amount of the
Debenture.  The  Holder  and  any  assignee,  by  acceptance  of  the Debenture,
acknowledge  and  agree  that,  by  reason  of the provisions of this paragraph,
following  conversion  of  a portion of  a Debenture, the unpaid and unconverted
principal  amount  of  such  Debenture represented by such Debenture may be less
than  the  amount  stated  on  the  face  thereof.

     c.     In  lieu  of  delivering  physical  certificates  representing  the
Debenture  Shares,  provided the shares of Common Stock issuable upon conversion
of  a  Debenture  may  be sold pursuant to Rule 144(k) under the Act or under an
effective  Registration  Statement  and  the  Company's  transfer  agent  is
participating in the Depositary Trust Company Fast Automated Securities Transfer
("FAST")  program,  upon  request  of  the  Holder  and  in  compliance with the
  ----
provisions of  Sections 4.1, 4.2 and 4.4, the Company shall use its best efforts
  ----
to  cause  its  transfer  agent  to electronically transmit the shares of Common
Stock  issuable  upon conversion of the Debenture to the Holder by crediting the
account  of  the  Holder's  Prime Broker with DTC through its Deposit Withdrawal
Agent  Commission  system.  The  time  period  for  delivery  described  in  the
immediately  preceding  paragraph  shall  apply  to  the electronic transmittals
described  herein.

     d.     In  addition  to  any  other  rights available to the Holder, if the
Company fails to deliver to the Holder such certificate or certificates pursuant
to  Section 4.4(a), including for purposes hereof, any shares of Common Stock to
be  issued  on  the  Conversion  Date  on account of accrued but unpaid interest
hereunder,  by  the  second  (2nd) Trading Day after the Conversion Date, and if
after  such  second  (2nd)  Trading  Day the Holder purchases (in an open market
transaction  or  otherwise) Common Stock to deliver in satisfaction of a sale by
such  Holder  of  the  Debenture Shares which the Holder was entitled to receive
upon such conversion (a "Buy-In"), then the Company shall (A) pay in cash to the
                         ------
Holder  (in  addition to any remedies available to or elected by the Holder) the
amount  by  which  (x)  the  Holder's  total purchase price (including brokerage
commissions,  if  any) for the Common Stock so purchased exceeds (y) the product
of  (1)  the  aggregate  number  of  shares of Common Stock that such Holder was
entitled  to  receive  from the conversion at issue multiplied by (2) the market
price  of  the Common Stock at the time of the sale giving rise to such purchase
obligation and (B) at the option of the Holder, either return the Debentures for
which  such  conversion  was not honored or deliver to such Holder the number of
shares  of  Common  Stock  that  would  have  been issued had the Company timely
complied with its conversion and delivery obligations under Section 4.4(a).  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 market price of the Debenture Shares on the date of
conversion  totaled  $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.

     4.5     ADJUSTMENT OF CONVERSION PRICE In addition to any adjustment to the
             ------------------------------
Conversion  Price  provided elsewhere in this Debenture, the Conversion Price in
effect  at  any  time  shall be subject to adjustment from time to time upon the
happening  of  certain  events,  as  follows:

     a.     Common  Stock  Dividends;  Common Stock Splits; Reverse Common Stock
            --------------------------------------------------------------------
Splits If  the  Company,  at  any  time while this Debenture is outstanding, (a)
  ----
shall pay a stock dividend on its Common Stock, (b) subdivide outstanding shares
  --
of  Common  Stock into a larger number of shares, (c) combine outstanding shares
of  Common  Stock  into  a  smaller  number  of  shares,  or  (d)  issue  by
reclassification  of  shares  of Common Stock any shares of Capital Stock of the
Company, the Conversion Price shall be multiplied by a fraction the numerator of
which  shall be the number of shares of Common Stock (excluding treasury shares,
if  any) outstanding before such event and the denominator of which shall be the
number  of  shares of Common Stock outstanding after such event.  Any adjustment
made  pursuant to this paragraph 4.5(a) 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.
Notwithstanding  the  foregoing, if the Company shall combine outstanding shares
of Common Stock into a smaller number of shares (a "Reverse Stock Split") at any
                                                    -------------------
time prior to the Maturity Date, then the Conversion Price in effect immediately
prior  to  such  reverse  stock  split shall not be adjusted and shall remain in
effect  after  giving  effect  to  such  reverse  stock  split.

     b.     Rights; Warrants If the Company, at any time while this Debenture is
            ----------------
outstanding,  shall  issue  rights  or  warrants to all of the holders of Common
Stock  entitling  them  to subscribe for or purchase shares of Common Stock at a
price  per  share  less than the Conversion Price, the Conversion Price shall be
multiplied by a fraction, the denominator of which shall be the number of shares
of  Common  Stock (excluding treasury shares, if any) outstanding on the date of
issuance  of  such  rights  or  warrants plus the number of additional shares of
Common  Stock  offered  for subscription or purchase, and the numerator of which
shall  be  the  number  of shares of Common Stock (excluding treasury shares, if
any)  outstanding  on  the  date of issuance of such rights or warrants plus the
number  of  shares  which  the  aggregate  offering price of the total number of
shares  so offered would purchase at the Conversion Price. Such adjustment shall
be  made whenever such rights or warrants are issued, and shall become effective
immediately after the record date for the determination of shareholders entitled
to  receive  such  rights  or  warrants.

     c.     Other  Distributions  on  Stock.  If  the Company, at any time while
            -------------------------------
this  Debenture is outstanding, shall distribute to all of the holders of Common
Stock  evidence of its indebtedness or assets or rights or warrants to subscribe
for or purchase any security (excluding those referred to in Sections 4.5(a) and
(b)  above),  then in each such case the Conversion Price at which the Debenture
shall  thereafter  be  exercisable  shall  be  determined  by  multiplying  the
Conversion  Price  in  effect  immediately  prior  to  the record date fixed for
determination  of  shareholders  entitled  to  receive  such  distribution  by a
fraction, the denominator of which shall be the Per Share Market Value of Common
Stock  determined  as  of  the record date mentioned above, and the numerator of
which  shall  be  such Per Share Market Value of the Common Stock 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  Common  Stock  as determined by the Board of Directors in good faith;
provided,  however, that in the event of a distribution exceeding thirty percent
   -----   -------
(30%)  of  the  net  assets  of  the  Company,  such  fair market value shall be
determined  by  an Appraiser selected in good faith by the Holder; and provided,
                                                                       --------
further,  that the Company, after receipt of the determination by such Appraiser
 ------
shall  have  the  right  to  select  an  additional  Appraiser  meeting the same
qualifications,  in  good  faith,  in  which case the fair market value shall be
equal  to  the  average  of  the  determinations  by  each such Appraiser.  Such
adjustment shall be made whenever any such distribution is made and shall become
effective  immediately  after  the  record  date  mentioned  above.

     d.     Other  Events.  In  case  of  (A) any reclassification of the Common
            -------------
Stock into other securities of the Company or (B)  any compulsory share exchange
pursuant  to  which the Common Stock is converted into other securities, cash or
property  (each  of (A) or (B), an "Extraordinary Event"), the Holder shall have
                                    -------------------
the  right  thereafter  to  convert  the Debenture for shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common  Stock  following  such  Extraordinary  Event,  and  the  Holder shall be
entitled  upon such event to receive such amount of securities, cash or property
as  the shares of the Common Stock of the Company into which the Debenture could
have  been  converted  immediately  prior  to  such Extraordinary Event (without
taking into account any limitations or restrictions on the convertibility of the
Debentures)  would  have  been entitled.  In the case of an Extraordinary Event,
the  terms  of  any  such  Extraordinary Event shall include such terms so as to
continue  to  give  to  the  Holder the right to receive the securities, cash or
property  set  forth  in  this Section 4.5(d) upon any conversion following such
Extraordinary  Event.  This  provision  shall  similarly  apply  to  successive
Extraordinary  Events.

     e.     Adjustment  to  Conversion  Price  for  Dilutive  Issuances.  If the
            -----------------------------------------------------------
Company,  at  any  time  while  this  Debenture is outstanding, takes any of the
actions  described in this Section 4.5(e), then, in order to prevent dilution of
the rights granted under this Debenture, at any time prior to the Maturity Date,
the Conversion Price will be subject to adjustment from time to time as provided
in  this  Section  4.5(e).

     (i)     Adjustment  of Conversion Price upon Issuance of Common Stock If at
             -------------------------------------------------------------
any  time while this Debenture is outstanding the Company issues or sells, or is
deemed  to  have  issued or sold, any shares of Common Stock for a consideration
per  share  less  than  the Conversion Price in effect immediately prior to such
issuance  or  sale,  then immediately after such issuance or sale the Conversion
Price  then  in  effect shall be reduced to an amount equal to the consideration
per  share  of  Common  Stock  in  such  issuance  or  sale.  For the purpose of
determining  the  adjusted  Conversion  Price  under  this  Section  4.5(e), the
following  shall  be  applicable:

     (A)     Issuance  of  Options.  If  at  any  time  while  this Debenture is
             ---------------------
outstanding  the Company in any manner grants any rights or options to subscribe
for  or  to  purchase  Common Stock or any stock or other securities convertible
into  or  exchangeable  for Common Stock (such rights or options, "Options," and
                                                                   -------
such  convertible or exchangeable stock or securities, "Convertible Securities")
                                                        ----------------------
and  the price per share for which Common Stock is issuable upon the exercise of
such  Options  or  upon conversion or exchange of such Convertible Securities is
less  than  the  Conversion  Price  in effect immediately prior to such grant or
issuance, then the Conversion Price then in effect shall be reduced to the price
per  share  for which Common Stock is issuable upon the exercise of such Options
or  upon  the  conversion  or  exchange  of  such  Convertible  Securities.  No
adjustment  of  the  Conversion  Price shall be made upon the actual issuance of
such  Common  Stock  upon  conversion  or  exchange  of  such  Options.

     (B)     Change in Option Price or Rate of Conversion.  If there is a change
             --------------------------------------------
at  any  time  in  (i)  the exercise price provided for in any Options, (ii) the
additional consideration, if any, payable upon the issue, conversion or exchange
of  any  Convertible  Securities  or  (iii)  the  rate  at which any Convertible
Securities  are  convertible into or exchangeable for Common Stock, other than a
change  which  results from events set for in Sections 4.5(a), (b) and (c) which
also  cause  a  relative  change in the Conversion Price, then immediately after
such change in option price or rate of conversion the Conversion Price in effect
at  the  time  of  such change shall be readjusted to the Conversion Price which
would  have  been  in effect had such Options or Convertible Securities had such
changed  exercise price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold; provided that no
adjustment  shall  be made if such adjustment would result in an increase of the
Conversion  Price  then  in  effect.

     (C)     Effect  on  Conversion  Price  of  Certain Events.  For purposes of
             -------------------------------------------------
determining  the  adjusted  Conversion  Price  under this Section 4.5(e)(i), the
following  shall  be  applicable:

(I)     Calculation  of Consideration Received.  If any Common Stock, Options or
---     --------------------------------------
Convertible  Securities are issued or sold or deemed to have been issued or sold
for  cash,  the  consideration  received  therefor  will be deemed to be the net
amount  received  by the Company therefor.  In case any Common Stock, Options or
Convertible  Securities  are issued or sold for a consideration other than cash,
the  amount of the consideration other than cash received by the Company will be
the  fair  value of such consideration, except where such consideration consists
of  publicly  traded  securities,  in  which  case  the  amount of consideration
received  by  the  Company will be the average of the Per Share Market Values of
such  security  for  the five (5) consecutive Trading Days immediately preceding
the date of receipt. In case any Common Stock, Options or Convertible Securities
are  issued  to  the  owners  of the non-surviving entity in connection with any
merger  in which the Company is the surviving entity the amount of consideration
therefor  will  be deemed to be the fair value of such portion of the net assets
and  business  of  the  non-surviving  entity  as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be.  The fair value of
any  consideration  other  than cash or securities will be determined jointly by
the  Company  and  the  Holders  of  Debentures  representing  a majority of the
aggregate  principal amount of Debentures then outstanding.  If such parties are
unable  to reach agreement within ten (10) days after the occurrence of an event
requiring  valuation  (the  "Valuation  Event"),  the  fair  value  of  such
                             ----------------
consideration  will  be  determined  within  forty eight (48) hours of the tenth
(10th)  day following the Valuation Event by an Appraiser selected in good faith
by  the  Company  and  agreed  upon  by the Holders of Debentures representing a
majority  of the aggregate principal amount of Debentures then outstanding.  The
determination  of  such  Appraiser  shall  be  binding  upon  all parties absent
manifest  error.

(I)
(II)     Treasury  Shares.  The  number of shares of Common Stock outstanding at
----     ----------------
any  given  time  does not include shares owned or held by or for the account of
the  Company,  and  the  disposition  of  any  shares  so  owned or held will be
considered  an  issue  or  sale  of  Common  Stock.

(I)     Record  Date.  If  the  Company  establishes  a record of the holders of
---     ------------
Common  Stock  for  the  purpose  of entitling them (1) to receive a dividend or
---
other distribution payable in Common Stock, Options or in Convertible Securities
---
or  (2)  to  subscribe  for  or  purchase  Common  Stock, Options or Convertible
Securities,  then such record date will be deemed to be the date of the issue or
sale  of  the shares of Common Stock deemed to have been issued or sold upon the
declaration  of  such  dividend  or the making of such other distribution or the
date  of the granting of such right of subscription or purchase, as the case may
be.

     (D)     Certain  Events If any event occurs of the type contemplated by the
             ---------------
provisions  of Section 4.5(e) (subject to the exceptions stated therein) but not
expressly  provided  for  by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then the Company's Board of Directors will make an appropriate
adjustment in the Conversion Price so as to protect the rights of the Holder, or
assigns,  of  this  Debenture;  provided,  however, that no such adjustment will
increase  the  Conversion Price as otherwise determined pursuant to this Section
4.5(e).

     Notwithstanding  anything  to the contrary contained in this Section 4.5(e)
no  adjustment  shall  be  made  to  the Conversion Price in connection with the
issuance,  sale or grant of any of the following securities, whether or not at a
price  that  is  less  than  the  Conversion  Price:

     (i)     shares of Common Stock issuable upon the exercise of any options or
warrants  outstanding  on  the  date hereof and listed in Schedule 2.1(c) of the
Purchase  Agreement;

     (ii)     shares  of  Common Stock or options to acquire Common Stock issued
or  deemed  to have been issued by the Company in connection with a Stock Option
Plan;

     (iii)     shares of Common Stock underlying the Debentures or shares issued
upon  the  conversion  of  the  Debentures;

     (iv)     up  to  520,000  shares  of Common Stock or securities convertible
into or exchangeable for  Common Stock, in any twelve (12) month period, granted
in  normal  course  of  business  activities  to underwriters, placement agents,
service  providers  or  business advisors, provided however, that such issuance,
sale  or  grant is not at a price below four dollars ($4.00) per share of Common
Stock;  and

      (v)     shares  of  Common  Stock  or  securities  convertible  into  or
exchangeable  for Common Stock issued to Senior Lenders (as hereinafter defined)
in  consideration  for  the  issuance  of  Senior  Indebtedness  (as hereinafter
defined), so long as the Common Stock or securities represent no more than eight
percent (8%) in value of the Senior Indebtedness incurred in connection with the
issuance  of  such  securities;  provided that the amount of Senior Indebtedness
shall  only  include the actual amount that the Company may draw or incur on the
closing  date  for  such Senior Indebtedness.  For example, if the Company takes
out  a  twenty million dollar ($20,000,000) line of credit for which it can only
draw  ten  million  dollars  ($10,000,000)  at  the  closing  of  the  Senior
Indebtedness,  then  the  Common  Stock  and  securities  convertible  into  or
exchangeable  for Common Stock can only have a value based on a Per Share Market
Value  of  eight  hundred  thousand  dollars  ($800,000).

     f.     Rounding All  calculations  under  this Section 4.5 shall be made to
            --------
the  nearest  cent  or  the  nearest  l/l00th  of  a  share, as the case may be.

     g.     Notice  of  Adjustment The  Company  shall  give  the Holder written
            ----------------------
notice of the occurrence of any of the events specified in Sections 4.5(a), (b),
(c),  (d)  or  (e)  as  soon as practicable, but in no even later than three (3)
Business  Days after such event,  provided further, that if such notice contains
material  non-public  information,  the Company shall (i) publicly disclose such
information prior to or concurrently with the giving of such notice or (ii) only
disclose  such  information  to  the  extent  that  the  Holder  shall not be in
possession  of  material  non-public  information.  Such notice shall contain at
least:  (A) a description of the event, (B) the adjusted Conversion Price with a
reference  to the applicable paragraph in Section 4.5 hereof and (C) the date on
which  the  adjusted  Conversion  Price  is  effective.

     4.6     NASDAQ  LIMITATION.  If  on any date (the "Determination Date") (a)
             ------------------                         ------------------
the  Common Stock is listed for trading on Nasdaq, (b) the Conversion Price then
in effect is such that the aggregate number of shares of Common Stock that would
then  be  issuable  upon  conversion  in  full of the then outstanding principal
amount  of  the  Debentures  as  if  all  such Debentures were converted on such
Determination  Date  (without  regard  to any limitations on conversions) and as
payment  of  interest  thereon,  as  would  equal or exceed 20% of the number of
shares  of  the Common Stock outstanding immediately prior to the "Closing Date"
                                                                   ------------
(the "Issuable Maximum"), and (c) the Company shall not have previously obtained
      ----------------
the  vote  of  the  shareholders of the Company (the "Shareholder Approval"), if
                                                      --------------------
any,  as  may  be required by the applicable rules and regulations of Nasdaq (or
any  successor  entity)  to  approve  the  issuance of shares of Common Stock in
excess  of  the Issuable Maximum in a private placement whereby shares of Common
Stock are deemed to have been issued at a price that is less than the greater of
book  value  or  fair market value of the Common Stock, then with respect to the
aggregate  principal amount of the Debentures then held by the Holders for which
a conversion in accordance with the Conversion Price would result in an issuance
of  shares  of  Common  Stock in excess of such Holder's pro rata allocation (as
described  below)  of  the Issuable Maximum (the "Excess Principal") the Company
                                                  ----------------
may  elect  to  prepay  cash  to the Holders in an amount equal to the Mandatory
Prepayment  Amount.  Any such election by the Company must be made in writing to
the  Holders within two (2) Trading Days after the first such Determination Date
and  the  payment  of  such  Mandatory  Prepayment  Amount  applicable  to  such
prepayment must be made in full to the Holders with ten (10) Business Days after
the  date  such  notice  is delivered.  If the Company does not deliver timely a
notice  of  its election to prepay under this Section or shall, if it shall have
delivered  such a notice, fail to pay the prepayment amount hereunder within ten
(10) Business Days thereafter, then each Holder shall have the option by written
notice  to  the Company, to, if applicable, declare any such notice given by the
Company,  if  given,  to be null and void and require the Company to either: (i)
use  its  best  efforts  to  obtain  the Shareholder Approval applicable to such
issuance  as  soon  as is possible, but in any event not later than the 60th day
after  such  request unless the Company has previously used its best efforts to,
but  has  failed  to,  obtain such approval (provided, that if the Company shall
fail  to  obtain  the Shareholder Approval during such 60-day period, the Holder
may  demand  the  cash  payment set forth in Section 4.6(ii) herein) or (ii) pay
cash  to  such Holder, within five (5) Business Days of such Holder's notice, in
an  amount equal to the Mandatory Prepayment Amount for such Holder's portion of
the  Excess  Principal.  The  payment of the Mandatory Prepayment Amount to each
Holder pursuant to this Section shall be determined on a pro rata basis upon the
principal amount of the Debentures held by such Holder on the Determination Date
which  is  in excess of the pro rata allocation of the Issuable Maximum.  If the
Company  fails  to  pay the Mandatory Prepayment Amount in full pursuant to this
Section  within  five (5) Business Days after the date payable, the Company will
pay  interest  thereon  at  a  rate  of  20% per annum to the converting Holder,
accruing  interest daily from the date of conversion until such amount, plus all
such  interest thereon, if any, is paid in full.  Until the Company has received
the  Shareholder  Approval  no  Holder  of  the Debentures shall be issued, upon
conversion  of Debentures, shares of Common Stock in an amount greater than such
Holder's  allocated  portion  of  the Issuable Maximum pursuant to Section 4.15.

     4.7     RESTRICTION  ON  CONVERSION  BY  EITHER  THE  HOLDER  OR  THE
             -------------------------------------------------------------
COMPANY Notwithstanding  anything  herein to the contrary, in no event shall any
Holder or the Company have the right or be required to convert any or all of the
aggregate  principal amount and interest accrued thereon of this Debenture if as
a  result  of  such  conversion  the  aggregate number of shares of Common Stock
beneficially  owned  by such Holder and its Affiliates would exceed 9.99% of the
outstanding  shares of the Common Stock following such conversion.  For purposes
of this Section 4.7, beneficial ownership shall be calculated in accordance with
Section  13(d)  of  the  Securities  Exchange  Act  of  1934,  as  amended.  The
provisions  of  this  Section  4.7  may  be waived by a Holder as to itself (and
solely  as  to  itself)  upon  not less than 65 days prior written notice to the
Company,  and  the  provisions of this Section 4.7 shall continue to apply until
such  65th  day  (or  later,  if  stated  in  the  notice  of  waiver).

     4.8     OFFICER'S  CERTIFICATE.  Whenever  the number of shares purchasable
             ----------------------
upon  conversion shall be adjusted as required by the provisions of Section 4.5,
the Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary  at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted number of shares determined as herein
provided, setting forth in reasonable detail the facts requiring such adjustment
and  the  manner  of  computing such adjustment. Each such officer's certificate
shall  be  signed  by  the chairman, president or chief financial officer of the
Company.  Each  such  officer's  certificate  shall  be  made  available  at all
reasonable  times for inspection by any holder of the Debentures and the Company
shall,  forthwith after each such adjustment, deliver a copy of such certificate
to  the  each  of  the  Holders.

     4.9     RESERVATION  OF  SHARES The  Company  covenants that it will at all
             -----------------------
times  reserve  and keep available out of its authorized shares of Common Stock,
free  from preemptive rights, solely for the purpose of issue upon conversion of
the  Debentures as herein provided, such number of shares of the Common Stock as
shall  then  be  issuable upon the conversion of all outstanding Debentures into
Common  Stock  in  accordance with Section 3.6(b) of the Purchase Agreement (the
"Reserved  Amount").  The  Company covenants that all shares of the Common Stock
  ---------------
issued  upon  conversion of the Debenture which shall be so issuable shall, when
issued,  be  duly  and  validly  issued  and  fully  paid  and  non-assessable.

          If,  at  any  time  a  Holder  of  this  Debenture submits a Notice of
Conversion,  and  the  Company  does not have sufficient authorized but unissued
shares  of  Common  Stock available to effect such conversion in accordance with
the  provisions  of  this Article IV (a "Conversion Default"), the Company shall
                                         ------------------
issue  to  the Holder all of the shares of Common Stock which are then available
to  effect  such  conversion.  The  portion  of  this Debenture which the Holder
included  in  its  Conversion  Notice and which exceeds the amount which is then
convertible  into  available shares of Common Stock (the "Excess Amount") shall,
                                                          -------------
notwithstanding  anything  to  the contrary contained herein, not be convertible
into Common Stock in accordance with the terms hereof until (and at the Holder's
option  at  any  time  after)  the  date  additional  shares of Common Stock are
authorized by the Company to permit such conversion at which time the Conversion
Price  in  respect thereof shall be the lesser of (i) the Per Share Market Value
on  the Conversion Default Date (as defined below) and (ii) the Per Share Market
Value  on  the  Conversion  Date  thereafter  elected  by  the Holder in respect
thereof.  In addition, the Company shall pay to the Holder payments ("Conversion
                                                                      ----------
Default  Payments") for a Conversion Default in the amount of (x) the sum of (1)
-----------------
the  then  outstanding  principal  amount of this Debenture plus (2) accrued and
unpaid  interest  on  the  unpaid principal amount of this Debenture through the
Authorization  Date (as defined below) plus (3) Default Interest, if any, on the
amounts referred to in clauses (1) and/or (2), multiplied by (y) .24, multiplied
by  (z)  (N/365),  where  N  equals  the  number of days from the day the holder
submits  a  Notice  of  Conversion  giving  rise  to  a  Conversion Default (the
"Conversion  Default  Date")  to  the  date  (the "Authorization Date") that the
        ------------------                         ------------------
Company  authorizes  a  sufficient  number  of  shares of Common Stock to effect
conversion  of  the  full  outstanding principal balance of this Debenture.  The
Company shall use its best efforts to authorize a sufficient number of shares of
Common  Stock as soon as practicable following the earlier of (i) such time that
the Holder notifies the Company or that the Company otherwise becomes aware that
there are or likely will be insufficient authorized and unissued shares to allow
full  conversion  thereof and (ii) a Conversion Default.  The Company shall send
notice  to the Holder of the authorization of additional shares of Common Stock,
the  Authorization  Date  and  the amount of Holder's accrued Conversion Default
Payments.  The accrued Conversion Default Payments for each calendar month shall
be paid in cash or shall be convertible into Common Stock (at such time as there
are  sufficient  authorized  shares  of Common Stock following the Authorization
Date)  at  the  applicable Conversion Price, at the Holder's option, as follows:

          (a)     In  the event Holder elects to take such payment in cash, cash
payment  shall  be  made  to Holder by the fifth (5th) Business Day of the month
following  the  month  in  which  it  has  accrued;  and

     (b)     In  the  event  Holder elects to take such payment in Common Stock,
the  Holder  may  convert such payment amount into Common Stock at the lesser of
the  Conversion Price (as in effect at the time of conversion) and the Per Share
Market Value (on the fifth day of the month referred to below) at any time after
the  fifth  day  of  the  month  following  the month in which it has accrued in
accordance  with  the  terms  of  this  Article  IV  (so long as there is then a
sufficient  number  of  authorized  shares  of  Common  Stock).

     The  Holder's  election shall be made in writing to the Company at any time
prior  to 8:00 p.m., New York City Time, on the third day of the month following
the  month in which Conversion Default payments have accrued.  If no election is
made,  the  Holder  shall  be  deemed  to have elected to receive cash.  Nothing
herein shall limit the Holder's right to pursue actual damages (to the extent in
excess of the conversion Default Payments) for the Company's failure to maintain
a  sufficient number of authorized shares of Common Stock, and each Holder shall
have  the  right to pursue all remedies available at law or in equity (including
degree  of  specific  performance  and/or  injunctive  relief).

     4.10     COMPLIANCE  WITH  GOVERNMENTAL REQUIREMENTS. The Company covenants
              -------------------------------------------
that  if  any  shares  of  Common  Stock required to be reserved for purposes of
conversion  of Debentures hereunder require registration with or approval of any
governmental  authority  under  any  Federal  or  state  law,  or  any  national
securities  exchange,  before  such  shares  may  be issued upon conversion, the
Company  will use its best efforts to cause such shares to be duly registered or
approved,  as  the  case  may  be.

     4.11     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 Per Share Market Value 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.

     4.12     PAYMENT  OF  TAX  UPON  ISSUE  OR  TRANSFER.  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.

     4.13     NOTICES.  Any  notice or other communication required or permitted
              -------
to  be  given  hereunder  shall  be  in writing and shall be deemed to have been
received  (a)  upon  hand  delivery  (receipt acknowledged) or delivery by telex
(with  correct  answer  back received), telecopy or facsimile (with transmission
confirmation  report)  at the address or number designated below (if received by
8:00  p.m.  EST  where such notice is to be received), or the first Business Day
following such delivery (if received after 8:00 p.m. EST where such notice is to
be  received) or (b) on the second Business Day following the date of mailing by
express  courier  service,  fully  prepaid,  addressed  to such address, or upon
actual  receipt of such mailing, whichever shall first occur.  The addresses for
such  communications  are (i) if to the Company to Endocare, Inc., 7 Studebaker,
Irvine, California 92618, Attention: Paul W. Mikus, fax no. (949) 597-0607, with
copies  to  Brobeck,  Phleger  &  Harrison  LLP,  38  Technology  Drive, Irvine,
California  92618,  Attention: Richard A. Fink, fax no. (949) 790-6301, and (ii)
if  to  any  Holder  to  the  address  set  forth on Schedule II to the Purchase
Agreement  with copies to Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison
Avenue, New York, New York 10022, Attention: James Kaye, fax no. (212) 872-1002,
or  such  other  address  as may be designated in writing hereafter, in the same
manner,  by  such  Person.

     4.14     ALLOCATIONS OF ISSUABLE MAXIMUM AND RESERVED AMOUNT.  The Issuable
              ---------------------------------------------------
Maximum  and Reserved Amount shall be allocated pro rata among the Holders based
on  the  principal amount of Debentures issued to each Holder.  Each increase to
the  Issuable  Maximum and Reserved Amount shall be allocated pro rata among the
Holders  based  on the principal amount of Debentures held by each Holder at the
time of the increase in the Issuable Maximum or Reserved Amount.  In the event a
Holder  shall  sell  or otherwise transfer any of such Holder's Debentures, each
transferee  shall  be allocated a pro rata portion of such transferor's Issuable
Maximum  and  Reserved  Amount.  Any portion of the Issuable Maximum or Reserved
Amount  which  remains allocated to any person or entity which does not hold any
Debentures  shall  be allocated to the remaining Holders, pro rata, based on the
principal  amount  of  such  Debentures  then  held  by  such  Holders.

                                   ARTICLE V

                    CONSOLIDATION, MERGER OR SALE OF COMPANY

     5.1     CONSOLIDATION,  MERGER  OR  SALE  ONLY ON CERTAIN TERMS The Company
             -------------------------------------------------------
shall not consolidate with or merge into any other Person or convey, transfer or
lease  its properties and assets substantially as an entirety to any Person, and
the  Company  shall  not permit any Person to consolidate with or merge into the
Company  or convey, transfer or lease its properties and assets substantially as
an  entirety  to  the  Company,  unless:

     a.     in  case  the  Company  shall consolidate with or merge into another
Person  or  convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which  leases,  the  properties  and  assets  of the Company substantially as an
entirety  shall  be  a  corporation,  partnership or trust whose Common Stock is
traded  or  the  Nasdaq or a Subsequent Market, and shall expressly assume, by a
Debenture  supplemental  hereto,  executed and delivered to the Holders, in form
satisfactory  to  the  Holders  of  a majority of the then outstanding principal
amount  of  the Debentures, the due and punctual payment of the principal of and
interest  on  all  the  Debentures  and  the  performance or observance of every
covenant  of  this  Debenture  on  the  part  of  the Company to be performed or
observed  and  shall  have  provided  for  conversion  rights in accordance with
Section  5.3;  and

     b.     immediately after giving effect to such transaction and treating any
indebtedness  which  becomes  an  obligation of the Company or a Subsidiary as a
result  of  such  transaction  as  having  been  incurred by the Company or such
Subsidiary  at  the  time  of  such  transaction, no Event of Default shall have
happened  and  be  continuing.

     5.2     SUCCESSOR  SUBSTITUTED Upon  any consolidation of the Company with,
             ----------------------
or  merger  of the Company into, any other Person or any conveyance, transfer or
lease  of  the properties and assets of the Company substantially as an entirety
in  accordance  with  Section  5.1,  the  successor  person  formed  by  such
consolidation  or  into which the Company is merged or to which such conveyance,
transfer  or  lease  is  made  shall succeed to, and be substituted for, and may
exercise  every  right  and  power of, the Company under this Debenture with the
same  effect  as  if such successor Person had been named as the Company herein,
and  thereafter,  except in the case of a lease, the predecessor Person shall be
relieved  of  all  obligations  and  covenants  under  this  Debenture.

     5.3     CONVERSION  RIGHTS.  In  case  of  any consolidation of the Company
             ------------------
with,  or  merger  of  the Company into, any other Person, any merger of another
Person  into  the  Company  (other  than  a  merger which does not result in any
reclassification,  conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company) or any sale or transfer of all or substantially all
of  the  assets  of  the  Company,  the  Person  formed by such consolidation or
resulting  from  such  merger or which acquires such assets, as the case may be,
shall  in the supplemental Debenture provided pursuant to Section 5.1(a) provide
that  the  Holder  of  each  Debenture  then  outstanding  shall  have the right
thereafter,  during  the period such Debenture shall be convertible as specified
in  Article  IV,  to  convert  such  Debenture  only into the kind and amount of
securities,  cash  or  other  assets receivable upon such consolidation, merger,
sale  or  transfer  by  a  holder of the number of shares of Common Stock of the
Company into which such Debenture might have been converted immediately prior to
such  consolidation,  merger,  sale  or  transfer,  with  which  the  Company
consolidated  or  into which the Company merged or which merged into the Company
or  to  which  such  sale or transfer was made, as the case may be ("Constituent
                                                                     -----------
Person"),  or  an Affiliate of a Constituent Person.  The supplemental indenture
   ---
also  shall  provide that if in connection with such consolidation, merger, sale
or  transfer, each holder of Common Stock is entitled to elect to receive either
securities,  cash  or  other  assets receivable upon such consolidation, merger,
sale  or  transfer, the Company or the surviving or transferee corporation shall
provide  each  holder  of  securities  with  the  right  to elect to receive the
securities,  cash  or other assets into which the Debentures held by such Holder
shall  be  convertible  after  completion of such consolidation, merger, sale or
transfer  on  the  same  terms  and subject to the same conditions applicable to
holders  of  Common Stock (including, without limitation, notice of the right to
elect,  limitations  on  the period in which such election shall be made and the
effect  of failing to exercise the election).  Such supplemental Debenture shall
provide  for  adjustments  which, for events subsequent to the effective date of
such supplemental Debenture, shall be as nearly equivalent as may be practicable
to  the  adjustments provided for in this Article.  The above provisions of this
Section  shall  similarly  apply to successive consolidations, mergers, sales or
transfers.

                                   ARTICLE VI


                             INTENTIONALLY OMITTED.

                                   ARTICLE VII

                           SUBORDINATION OF DEBENTURES

     7.1     DEBENTURES  SUBORDINATE  TO  SENIOR  INDEBTEDNESS.  The  Company
             -------------------------------------------------
covenants and agrees, and each Holder of a Debenture, by his acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the payment of the principal of (and premium, if any)
and  interest  on  each  and  all  of  the  Debentures are hereby expressly made
subordinate  and subject in right of payment to the prior payment in full of all
Senior  Indebtedness.  "Senior  Indebtedness"  shall  mean  any  indebtedness,
                        --------------------
liabilities  and other obligations of the Company (whether as primary obligor or
as  guarantor)  to any Person (each a "Senior Lender"), now existing or incurred
                                       -------------
hereafter,  with  respect to any working capital, revolving credit or other line
of  credit facility, any term loan facility, or any other extension of credit by
a  bank,  insurance  company or financial institution engaged in the business of
lending  money  (whether  or  not  secured), including reimbursement obligations
under  letters of credit (or local guaranties, as applicable) and obligations in
respect  of  bankers'  acceptances,  interest  rate  protection  agreements  and
currency  exchange  and purchase agreements, and any other indebtedness or other
obligations  of  the  Company  for  borrowed  money  evidenced  by notes, bonds,
debentures  or  similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses and secured
thereby.  Senior  Indebtedness  shall include renewals, refundings, refinancings
or  other  extensions of the foregoing.  The terms "indebtedness," "liabilities"
and  "obligations" are used herein in their most comprehensive sense and include
any  and  all  advances,  debts,  obligations  and  liabilities, now existing or
hereafter  arising, whether voluntary or involuntary and whether due or not due,
absolute  or contingent, liquidated or unliquidated, determined or undetermined.
Notwithstanding  the  foregoing,  Senior  Indebtedness  shall  not  include
indebtedness  of the Company to the Holder or its Affiliates (including, without
limitation,  debentures  issued by the Company to Brown Simpson Strategic Growth
Fund,  Ltd.  and  Brown  Simpson  Strategic  Growth  Fund,  L.P.).

     7.2     NO  PAYMENT  ON  DEBENTURES  IN  CERTAIN  CIRCUMSTANCES.
             -------------------------------------------------------

     a.     No  payment  or  distribution of cash or property (other than Common
Stock of the Company or other securities of the Company that are subordinated to
Senior  Indebtedness  to  at  least  the  same  extent as the Debentures) of the
Company  will  be made on account of principal of or interest on the Debentures,
or  to defease or acquire any of the Debentures, or on account of the conversion
provisions  of  the  Debentures  and  no  action  shall  be  taken  (judicial or
otherwise)  to collect any such payment or distribution (i) upon the maturity of
any  Senior Indebtedness by lapse of time, acceleration or otherwise, unless and
until  all  Senior  Indebtedness  shall  first  be paid in full in cash, or such
payment  duly  made  in  a  manner  satisfactory  to  the holders of such Senior
Indebtedness  or  (ii)  in the event that the Company defaults in the payment of
any  principal  of, premium, if any, or interest on or any other amounts payable
on  or  due  in  connection with any Senior Indebtedness when it becomes due and
payable, whether at maturity or at a date fixed for prepayment or by declaration
or  otherwise,  unless  and until such default has been waived in writing by the
holders of the Senior Indebtedness.  Payments on the Debentures may and shall be
resumed  in  the  case  of  a  payment  default only upon the date on which such
default  is waived in writing by the holders of the Senior Indebtedness or their
agent.

     b.     If  any  default  other  than  a  default  contemplated  by  Section
                              -----  ----
7.2(a)(ii)  above  shall  have  occurred and be continuing that would permit the
holders  of  the  Senior  Indebtedness  to  accelerate  the  maturity  of Senior
Indebtedness,  upon  written notice (a "Payment Blockage Notice") of the default
                                        -----------------------
given  to the Company and the Holders by the holders of, or an agent, trustee or
other  representative for, such Senior Indebtedness, then, unless and until such
default  has  been  waived  in  writing,  no  payment or distribution of cash or
property  (other  than  Common  Stock  of the Company or other securities of the
Company that are subordinated to Senior Indebtedness to at least the same extent
as the Debentures) shall be made by the Company with respect to the principal of
or  interest  on the Debentures or on account of conversion of the Debentures or
to  acquire  or repurchase any of the Debentures for cash or property other than
Common  Stock  of  the  Company,  and  no  action  shall  be  taken (judicial or
otherwise)  to  collect  any  such  payment  or  distribution.  If  such  Senior
Indebtedness  is  not  declared  due  and  payable within 180 days after written
notice  of  the event of default is given, promptly after the end of the 180-day
period  the  Company  will pay all sums due in respect of the Debentures and not
paid during the 180-day period.  During any 360-day consecutive period, only one
such  period during which payment with respect to the Debentures may not be made
as the result of a Payment Blockage Notice may commence and the duration of such
period  may  not  exceed  180  days.  No  nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Holders
shall  be, or be made, the basis for a subsequent Payment Blockage Notice unless
such  default  shall  have  been  waived  for a period of not less than 90 days.

     c.     If  any payment or distribution of assets of the Company is received
by  any  Holder  in  respect  of  the  Debentures at a time when that payment or
distribution  should  not have been made because of paragraph (a) or (b) of this
Section  7.2,  and  provided  that  prior  to the Company's disbursement of such
distribution  or  payment, the Holders shall have received a written notice from
the Company or from an agent or representative for one or more holders of Senior
Indebtedness, such payment or distribution will be received and held and will be
paid  over  to  the  holders of Senior Indebtedness (pro rata as to each of such
holders  on  the  basis of the respective amounts of Senior Indebtedness held by
them)  until  all  such  Senior Indebtedness has been paid in full, after giving
effect  to  any  concurrent payment or distribution or provision therefor to the
holders  of  such  Senior  Indebtedness.

     7.3     DEBENTURES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS
             -------------------------------------------------------------------
ON DISSOLUTION, LIQUIDATION OR REORGANIZATION Upon any distribution of assets of
---------------------------------------------
the  Company  upon any dissolution, winding up, liquidation or reorganization of
the  Company  (whether  in  bankruptcy,  insolvency,  receivership  or  similar
proceedings  relating  to  the Company or its property or upon an assignment for
the  benefit  of  creditors  or  any  marshalling  of  the  Company's  assets or
liabilities  or  otherwise):

     a.     the  holders  of  all  Senior Indebtedness will first be entitled to
receive  payment  in  full  of  the  principal  of  and  interest  due on Senior
Indebtedness (including interest accruing after the commencement of a bankruptcy
or  insolvency)  at  the  rate  specified  in the applicable Senior Indebtedness
documents and including, without limitation, in respect of premiums, indemnities
or  otherwise,  before  the  Holders  are  entitled  to  receive  any payment or
distribution  on  account  of  the  principal  of or interest on the Debentures;

     b.     any  payment or distribution of assets of the Company of any kind or
character,  whether  in  cash,  property  or securities (except that Holders may
receive  securities  that  are  subordinated  at least to the same extent as the
Debentures  to  Senior  Indebtedness  and  any securities issued in exchange for
Senior  Indebtedness),  to  which  Holders  would  be  entitled  except  for the
provisions  of this Section 7.3 will be paid by the liquidating trustee or agent
or  other  persons  legally  empowered  to  make  such a payment or distribution
directly  to the holders of Senior Indebtedness (pro rata to such holders on the
basis  of the respective amounts of Senior Indebtedness held by such holders) or
their  representatives to the extent necessary to make or provide for payment in
full in cash of all Senior Indebtedness remaining unpaid, after giving effect to
any  concurrent  payment  or  distribution  to  the  holders  of  such  Senior
Indebtedness  or  provision  for  that  payment  or  distribution;  and

     c.     if,  notwithstanding  the  foregoing, any payment or distribution of
assets  of  the  Company  of any kind or character, whether in cash, property or
securities  (except that Holders may receive securities that are subordinated at
least  to  the  same  extent  as  the  Debentures to Senior Indebtedness and any
securities  issued  in  exchange  for  Senior  indebtedness)  is received by the
Holders  on account of the principal of or interest on the Debentures before all
Senior  Indebtedness  is  paid  in  full,  such  payment or distribution will be
received and held in trust for and will be forthwith paid over to the holders of
the  Senior  Indebtedness  remaining  unpaid  or  unprovided  for  or  their
representatives  for  application (in the cash of cash) to, or as collateral (in
the  case  of  non-cash  property  or securities) for the payment of such Senior
Indebtedness  until  all  such  Senior Indebtedness has been paid in full, after
giving effect to any concurrent payment or distribution or provision therefor to
the  holders  of  such  Senior  Indebtedness.

     The  Company  will  give  prompt  written  notice  to  the  Holders  of any
dissolution,  winding  up, liquidation or reorganization of it or any assignment
for  the  benefit  of  its  creditors.

     7.4     SUBROGATION  TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS Subject to
             --------------------------------------------------------
the  payment in full of all Senior Indebtedness, the Holders shall be subrogated
to  the  rights  of  the  holders  of Senior Indebtedness to receive payments or
distributions  of  cash, property or securities of the Company applicable to the
Senior  Indebtedness  until all amounts owing on the Debentures shall be paid in
full;  and,  for  the  purposes  of  such  subrogation:

     a.     no  payments  or  distributions  to  the  holders  of  the  Senior
Indebtedness  of  any cash, property or securities to which the Holders would be
entitled  except  for the provisions of this Article VII and no payment pursuant
to  the  provisions of this Article VII to the holders of Senior Indebtedness by
the  Holders shall, as between the Company, its creditors (other than holders of
Senior  Indebtedness)  and the Holders, be deemed to be a payment by the Company
to  or  on  account  of  the  Senior  Indebtedness;  and

     b.     no  payment  or  distributions of cash, property or securities to or
for  the  benefit  of  the Holders pursuant to the subrogation provision of this
Article  VII,  which  would  otherwise  have  been paid to the holders of Senior
Indebtedness,  shall  be  deemed  to  be  a payment by the Company to or for the
account  of  the  Debentures.

     7.5     PROVISIONS  SOLELY  TO  DEFINE  RELATIVE RIGHTS.  The provisions of
             -----------------------------------------------
this  Article  are  and  are  intended  solely  for  the purpose of defining the
relative  rights  of  the  Holders  on  the  one  hand and the holders of Senior
Indebtedness  on the other hand.  Nothing contained in this Article or elsewhere
in  this  Debenture  or in the Debentures is intended to or shall (a) impair, as
among  the  Company, its creditors other than holders of Senior Indebtedness and
the  Holders of the Debentures, the obligation of the Company, which is absolute
and  unconditional to pay to the Holders of the Debentures the principal of (any
premium,  if  any)  and  interest  on  the Debentures as and when the same shall
become  due  and  payable  in  accordance  with  their  terms; or (b) affect the
relative  rights  against  the  Company  of  the  Holders  of the Debentures and
creditors  of  the Company other than the holders of Senior Indebtedness; or (c)
prevent  the  Holder  of  any  Debenture  from exercising all remedies otherwise
permitted  by  applicable law upon default under this Debentures, subject to the
rights,  if any, under this Article VII of the holders of Senior Indebtedness to
receive  cash,  property  and securities otherwise payable or deliverable to the
Holder  upon  the  exercise  of  any  such  remedy.

     7.6     RIGHT  TO  FILE  PROOF  OF CLAIM.  In the event of any dissolution,
             --------------------------------
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency,  receivership,  reorganization  or  similar  proceedings or upon any
assignment  for  the  benefit  of  creditors  or  otherwise)  tending  towards
liquidation  of  the  business  and  assets  of the Company, with respect to the
filing  of a claim for the unpaid balance of any Holder's Debentures in the form
required  in  those  proceedings,  if the Holder does not file a proper claim or
proof  of debt in the form required in such proceeding at least thirty (30) days
before the expiration of the time to file such claim or claims, then the holders
of Senior Indebtedness and their agents, trustees, or other representatives  are
hereby  authorized to have the right to file, and are hereby authorized to file,
an  appropriate  claim  for  and  on  behalf  of  each  such  Holder.

     7.7     NO  WAIVER OF SUBORDINATION PROVISIONS.  No right of any present or
             --------------------------------------
future  holder  of  any  Senior  Indebtedness to enforce subordination as herein
provided  shall  at  any time in any way be prejudiced or impaired by any act or
failure  to  act  on the part of the Company or by any act or failure to act, in
good  faith, by any such holder, or by any noncompliance by the Company with the
terms,  provisions  and covenants of this Debenture, regardless of any knowledge
thereof  any  such  holder  may  have  or  be  otherwise  charged  with.

     Without  in any way limiting the generality of the foregoing paragraph, the
holders  of  Senior Indebtedness may, at any time and from time to time, without
the  consent  of  or  notice to the Holders of the Debentures, without incurring
responsibility  to  the  Holders  of  the  Debentures  and  without impairing or
releasing  the  subordination  provided  in  this  Article  or  the  obligations
hereunder  of  the  Holders  of  the  Debentures  to  the  holders  of  Senior
Indebtedness,  do any one or more of the following: (i) change the manner, place
or  terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or  any  instrument  evidencing  the  same  or  any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release  any  Person  liable  in  any  manner  for  the  collection  of  Senior
Indebtedness;  and  (iv)  exercise or refrain from exercising any rights against
the  Company  and  any  other  Person.

     7.8     NOTICE TO HOLDERS.  The Company shall give prompt written notice to
             -----------------
the  Holders of any fact known to the Company which would prohibit the making of
any  payment to or by the Holders in respect of the Debentures.  Notwithstanding
the  provisions  of  this  Article or any other provision of this Debenture, the
Holders  shall not be charged with knowledge of the existence of any facts which
would  prohibit  the  making  of  any  payment  to the Holders in respect of the
Debentures,  unless  and  until  the  Holders shall have received written notice
thereof  from  the Company or a holder of Senior Indebtedness; and, prior to the
receipt  of  any  such  written  notice,  the  Holders  shall be entitled in all
respects  to  assume  that  no  such facts exist; provided, however, that if the
                                                  --------  -------
Holders shall not have received the notice provided for in this Section at least
two Business Days prior to the date upon which by the terms hereof any money may
become  payable  for  any purpose (including, without limitation, the payment of
the  principal  of,  and  premium,  if any, or interest on any Debenture), then,
anything  herein  contained  to  the contrary notwithstanding, the Holders shall
have full power and authority to receive such money and to apply the same to the
purpose  for  which  such  money  was  received and shall not be affected by any
notice  to  the  contrary  which  may be received by it within two Business Days
prior  to  such  date.

     The  Holders shall be entitled to rely on the delivery to them of a written
notice  by  a  Person representing himself to be a holder of Senior Indebtedness
(or  a representative thereof) to establish that such notice has been given by a
holder  of  Senior  Indebtedness (or representative thereof).  In the event that
the  Holders  determines  in  good  faith that further evidence is required with
respect  to  the  right  of  any Person as a holder of Senior Indebtedness (or a
representative  thereof)  to participate in any payment or distribution pursuant
to  this Article, the Holders may request such Person to furnish evidence to the
reasonable  satisfaction  of the Holders as to the amount of Senior Indebtedness
held  by such Person, the extent to which such Person is entitled to participate
in  such  payment or distribution and any other facts pertinent to the rights of
such  Person  under  this  Article,  and  if such evidence is not furnished, the
Holders  may  defer any payment to such Person pending judicial determination as
to  the  right  of  such  Person  to  receive  such  payment.

     7.9     RELIANCE  ON  JUDICIAL  ORDER  OR CERTIFICATE OF LIQUIDATING AGENT.
             ------------------------------------------------------------------
Upon  the  payment  or distribution of assets of the Company referred to in this
Article,  the Holders of the Debentures shall be entitled to rely upon any order
or  decree  entered  by  any  court  of  competent  jurisdiction  in  which such
proceeding  is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of the creditors, agent
or other Person making such payment or distribution, delivered to the Holders of
Debentures,  for the purpose of ascertaining the Persons entitled to participate
in  such  payment  or  distribution,  the holders of the Senior Indebtedness and
other  indebtedness  of  the Company, the amount thereof or payable thereon, the
amount  or  amounts  paid  or  distributed thereon and all other facts pertinent
thereto  or  to  this  Article  VII.

     7.10     NO ADVERSE MODIFICATION TO DEBENTURE.  Neither the Holders nor the
              ------------------------------------
Company  shall enter into any modification of the Debentures which is in any way
adverse  to  the  holders  of  the  Senior  Indebtedness.

     7.11     NOTICE  TO  HOLDERS  OF  SENIOR  INDEBTEDNESS.  The  Company  will
              ---------------------------------------------
furnish to the holders of Senior Indebtedness at the time Senior Indebtedness is
initially  incurred,  when  there  is a change in the Holders thereof, or at any
time  upon  request  therefor,  a true and correct copy of the then most current
register  setting  forth the names and addresses of the Holders as of such date.

     7.12     SUBORDINATION  AGREEMENT.  The  Holder  by  its  acceptance hereof
              ------------------------
agrees  to execute and deliver to any Senior Lender such subordination agreement
as  may  be  reasonably  requested  by  such Senior Lender, which may deviate in
certain  minor  respects  from the subordination provisions contained herein but
which  is  commercially  reasonable  and customary, and to execute, acknowledge,
deliver,  file,  notarize and register all such further agreements, instruments,
certificates,  documents  and  assurances,  and perform such acts as such Senior
Lender  shall  deem  necessary  or appropriate to effectuate the purposes of the
subordination  provisions  contained  herein.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     8.1     MODIFICATION  OF DEBENTURES. This Debenture may be modified without
             ---------------------------
prior  notice  to  any  Holder  upon  the written consent of the Company and the
Holders  of  more  than  75%  of  the  principal  amount  of the Debentures then
outstanding.  The  Holders  of  more  than  75%  of  the principal amount of the
Debentures  then  outstanding  may  waive  compliance  by  the  Company with any
provision of this Debenture without prior notice to any Holder. However, without
the  consent of each Holder affected, an amendment, supplement or waiver may not
(1)  reduce the amount of Debentures whose Holders must consent to an amendment,
supplement  or  waiver,  (2)  reduce the principal amount of or extend the fixed
maturity of any Debenture or (3) make any Debenture payable in money or property
other  than  as  stated  in  the  Debentures.

     8.2     MISCELLANEOUS.  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 hereby
irrevocably  submits  to  the nonexclusive jurisdiction of the state and federal
courts  sitting  in  the  City  of  New  York,  Borough  of  Manhattan,  for the
adjudication  of  any  dispute  hereunder  or in connection herewith or with any
transaction  contemplated  hereby  or  discussed  herein, 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, that
such  suit,  action  or proceeding is improper.  Except as specifically provided
herein,  the parties hereto, including all guarantors or endorsers, hereby waive
presentment,  demand,  notice,  protest  and  all  other  demands and notices in
connection  with  the  delivery, acceptance, performance and enforcement of this
Debenture,  and  assent  to extensions of the time of payment, or forbearance or
other  indulgence  without notice. The Holder of this Debenture by acceptance of
this  Debenture agrees to be bound by the provisions of this Debenture which are
expressly  binding  on  such  Holder.

     8.3     RANK  AND  SUBORDINATION.  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, interest and
liquidated damages (if any) on, this Debenture at the time, place, and rate, and
in  the  coin  or  currency  (or,  as  provided herein, in Common Stock), herein
prescribed.  This  Debenture  is  a  direct  obligation of the Company and ranks
subordinate  to  all  Senior Indebtedness.  Except as otherwise provided herein,
the  Company  may not voluntarily prepay the outstanding principal amount of the
Debenture.

     8.4     DEBENTURES  OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining
             ---------------------------------------------------
whether  the  Holders  of the requisite aggregate principal amount of Debentures
have  concurred  in  any  direction,  consent  or  waiver  under this Debenture,
Debentures which are owned by the Company or any other obligor on the Debentures
or  by  any  Person directly or indirectly controlling or controlled by or under
direct  or  indirect common control with the Company or any other obligor on the
Debentures shall be disregarded and deemed not to be outstanding for the purpose
of  any such determination; provided that any Debentures owned by the Purchasers
shall  be  deemed  outstanding  for  purposes  of  making  such a determination.
Debentures  so  owned  which  have been pledged in good faith may be regarded as
outstanding  if  the  pledgee establishes to the satisfaction of the Company the
pledgee's  right  so to act with respect to such Debentures and that the pledgee
is  not  the  Company  or  any  other  obligor upon the securities or any Person
directly  or indirectly controlling or controlled by or under direct or indirect
common  control  with  the  Company  or  any  other  obligor  on the Debentures.

     8.5     NOTICE TO DEBENTUREHOLDERS PRIOR TO TAKING CERTAIN TYPES OF ACTION.
             ------------------------------------------------------------------
In  case:

     a.     the Company shall authorize the issuance, at any time from and after
the  Original  Issue  Date, to all holders of any class or series of its Capital
Stock,  of rights or warrants to subscribe for or purchase shares of its capital
stock  or  of  any  other  right;

     b.     the Company shall authorize, at any time from and after the Original
Issue  Date,  the  distribution  to  all  holders  of any class or series of its
Capital  Stock,  of  evidences  of  its  indebtedness  or  assets;

     c.     the  Company shall declare a dividend (or other distribution) on its
Common  Stock or the Company shall declare a special nonrecurring dividend on or
a  redemption  of  its  Common  Stock;

     d.     of  any subdivision, combination or reclassification of any class or
series  of  Capital Stock of the Company at any time from and after the Original
Issue Date or of any consolidation or merger to which the Company is a party and
for  which  approval  by  the shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company or any
compulsory  share  exchange  whereby  the  Common  Stock is converted into other
securities,  cash  or  property;  or

     e.     of  the voluntary or involuntary dissolution, liquidation or winding
up  of  the Company; then the Company shall cause to be mailed to the Holders of
this  Debenture,  at  their  last  addresses  as  they  shall  appear  upon  the
registration  books  of the Company, at such time as the Company so notifies its
stockholders, a notice stating (i) the date as of which the holders of record of
such  class  or  series  of Capital Stock are to be entitled to receive any such
rights, warrants or distribution are to be determined, or (ii) the date on which
any  such  subdivision,  combination,  reclassification,  consolidation, merger,
sale, transfer, dissolution, liquidation, winding up or other action is expected
to  become  effective,  and  the date as of which it is expected that holders of
record  of  such  class  or  series of Capital Stock record shall be entitled to
exchange  their stock for securities or other property, if any, deliverable upon
such  subdivision,  combination,  reclassification, consolidation, merger, sale,
transfer,  dissolution,  liquidation,  winding  up  or  other  action.

     The  failure  to give the notice required by this Section 8.5 or any defect
therein  shall  not  affect the legality or validity of any distribution, right,
warrant,  subdivision,  combination,  reclassification,  consolidation,  merger,
sale,  transfer,  dissolution,  liquidation,  winding up or other action, or the
vote  upon  any  of  the  foregoing.

     8.6     EFFECT OF HEADINGS. The Section headings herein are for convenience
             ------------------
only  and  shall  not  affect  the  construction  hereof.

     8.7     NO  RIGHTS  AS  STOCKHOLDER.  This  Debenture shall not entitle the
             ---------------------------
Holder  to  any  rights  as  a  stockholder  of  the  Company, including without
limitation,  the  right  to  vote,  to receive dividends and other distributions
unless  and  to  the  extent converted into shares of Common Stock in accordance
with  the  terms  hereof.

     8.8     FAILURE  OR INDULGENCE NOT WAIVER.  No failure or delay on the part
             ---------------------------------
of  the  Holder in the exercise of any power, right or privilege hereunder shall
operate  as  a  waiver  thereof, nor shall any single or partial exercise of any
such  power, right or privilege preclude other or further exercise thereof or of
any  other  right,  power  or  privileges.  All  rights  and  remedies  existing
hereunder  are  cumulative  to,  and  not  exclusive  of, any rights or remedies
otherwise  available.

                  [Remainder of page intentionally left blank]


<PAGE>

     IN  WITNESS WHEREOF, the Company and the Holder have caused this instrument
to  be  duly  executed  as  of  May  4,  2000.


                                             ENDOCARE, INC.



                                             By:     /s/  Paul  W.  Mikus
                                                     --------------------
                                             Name:     Paul  W.  Mikus
                                             Title:    Chief  Executive  Officr





                                             BROWN  SIMPSON  PARTNERS  I,  LTD.


                                             By:     /s/
                                                     ----------------------
                                             Name:
                                             Title:



<PAGE>

                                                                       EXHIBIT A

                                 ENDOCARE, INC.
                                CONVERSION NOTICE

Reference  is  made to the Debenture issued by Endocare, Inc. (the "Debenture").
                                                                    ----------
In  accordance  with  and  pursuant  to  the  Debenture,  the undersigned hereby
irrevocably  elects  to convert the principal amount of the Debenture, indicated
below  into  shares  of  Common  Stock,  par  value $.001 per share (the "Common
                                                                          ------
Stock"),  of  the  Company, by tendering the Debenture specified below as of the
date  specified  below.


Date  of
Conversion:________________________________________________________________


Aggregate  Principal  Amount  to  be
converted:____________________________________________


Debenture  no(s).  of  Debenture  to  be
converted:___________________________________________

Please  confirm  the  following  information:

Conversion
Price:__________________________________________________________________


Number  of  shares  of  Common  Stock  to  be
issued:________________________________________


Please  issue  the Common Stock into which the Debenture is being converted and,
if  applicable,  any  check  drawn on an account of the Company in the following
name  and  to  the  following  address:


Issue
to:_________________________________________________________________________

Facsimile  Number:
______________________________________________________________

Authorization:
By:_________________________________________________________________

Title:____________________________________


Dated:___________________________________


Account  Number  (if  electronic  book  entry
transfer):______________________________________

Transaction  Code  Number  (if  electronic  book  entry
transfer):_______________________________