Document:

11903-00011/845991.2
                                                                  Exhibit  10.23

                                                            DATED: MARCH 8, 2001

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

No.  [1]                                                                $125,000

                              PEN INTERCONNECT INC.
                            8% CONVERTIBLE DEBENTURE
                              DUE MARCH [  ], 2002

     THIS  DEBENTURE  is  an  issued debenture of Pen Interconnect, Inc., a Utah
corporation,  having  a  principal place of business at 2961 W. MacArthur Blvd.,
Suite  121,  Santa  Ana,  CA 92704 (the "Company"), designated as its 8% Secured
Convertible Debentures, due March [   ], 2002, in the aggregate principal amount
of  One  Hundred  twenty  five  Thousand  Dollars ($125,000) (the "Debentures").

11903-00011/845991.2

<PAGE>
     FOR  VALUE RECEIVED, the Company promises to pay to ALPHA CAPITAL AG or its
registered  assigns (the "Holder"), the principal sum of $125,000, on March [ ],
                          ------
2002  or  such  earlier  date  as the Debentures are required or permitted to be
repaid  as  provided  hereunder (the "Maturity Date") and to pay interest to the
                                      -------------
Holder  on  the  aggregate  unconverted and then outstanding principal amount of
this  Debenture  at  the  rate  of 8% per annum, payable on a quarterly basis on
March  31,  June  30,  September  30  and  December  31  of each year while such
Debentures are outstanding commencing  on March  31, 2001 and on each Conversion
Date  (as  defined  herein) (each an "Interest Payment Date") for such principal
                                      ---------------------
amount,  commencing  on  the  earlier  to  occur  of  a Conversion Date for such
principal  amount  and  March  __,  2002,  in cash or shares of Common Stock (as
defined  in  Section 6).  Subject to the terms and conditions herein, the Holder
may  elect  to receive interest hereunder in shares of Common Stock or cash.  If
interest  is  paid by the Company in shares of its Common Stock, then the number
of  shares  of Common Stock issuable on account of such interest shall equal the
cash  amount  of  such  interest  on  such  Interest Payment Date divided by the
Conversion  Price (as defined below) on such date.  Interest shall be calculated
on the basis on a 360-day year and shall accrue daily commencing on the Original
Issue Date (as defined in Section 6) until payment in full of the principal sum,
together  with  all  accrued  and  unpaid  interest and other amounts, which may
become  due  hereunder,  has  been made.  Interest hereunder will be paid to the
Person  (as  defined in Section 6) in whose name this Debenture is registered on
the  records  of  the Company regarding registration and transfers of Debentures
(the  "Debenture Register").  All overdue accrued and unpaid interest to be paid
       ------------------
in  cash  hereunder  shall entail a late fee at the rate of 15% per annum ("Late
                                                                            ----
Fee")  (or  such  lower maximum amount of interest permitted to be charged under
  -
applicable  law)  which  will  accrue  daily, from the date such interest is due
hereunder  through and including the date of payment, payable in cash or, at the
option of the Holder, in shares of Common Stock. If such Late Fee is paid by the
Company in shares of its Common Stock, then the number of shares of Common Stock
issuable  on  account  of such Late Fee shall equal the cash amount of such Late
Fee  on such Late Fee payment date divided by the Conversion Price on such date.

     This  Debenture  is  subject  to  the  following  additional  provisions:

     Section1.       This  Debenture  is  exchangeable  for  an  equal aggregate
     ---------
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested  by  the Holder surrendering the same.  No service charge will be made
for  such  registration  of  transfer  or  exchange.

     Section2.       This  Debenture  has  been  issued  subject  to  certain
     ---------
investment  representations  of  the  original  Holder set forth in the Purchase
     ----
Agreement  (as defined in Section 6) and may be transferred or exchanged only in
compliance with the Purchase Agreement.  Prior to due presentment to the Company
for  transfer  of  this  Debenture, the Company and any agent of the Company may
treat  the Person (as defined in Section 6) in whose name this Debenture is duly
registered  on  the  Debenture  Register  as the owner hereof for the purpose of
receiving  payment as herein provided and for all other purposes, whether or not
this  Debenture  is overdue, and neither the Company nor any such agent shall be
affected  by  notice  to  the  contrary.

     Section3.       Events  of  Default.
     ---------       -------------------

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

       (i)   any default in the payment of the principal of, interest (including
any  Late  Fees) on or liquidated damages in respect of, any Debentures, free of
any  claim  of  subordination, as and when the same shall become due and payable
(whether  on  a  Conversion  Date  or  the  Maturity  Date or by acceleration or
otherwise);

<PAGE>
       (ii)   the  Company  shall fail to observe or perform any other covenant,
agreement or warranty contained in, or otherwise commit any breach of any of the
Transaction  Documents  (as  defined  in  Section 6), and such failure or breach
shall  not have been remedied within five days after the date on which notice of
such  failure  or  breach  shall  have  been  given;

       (iii)   the Company or any of its subsidiaries shall  commence, or there
shall be commenced against the Company or any such  subsidiary a case under any
applicable  bankruptcy  or  insolvency laws as now or hereafter in effect or any
successor  thereto,  or  the  Company  commences  any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency  or  liquidation  or  similar  law of any jurisdiction whether now or
hereafter  in  effect relating to the Company or any subsidiary thereof or there
is  commenced against the Company or any subsidiary thereof any such bankruptcy,
insolvency  or  other  proceeding  which  remains undismissed for a period of 61
days;  or  the  Company  or  any  subsidiary thereof is adjudicated insolvent or
bankrupt;  or  any  order  of  relief  or other order approving any such case or
proceeding  is  entered;  or  the  Company or any subsidiary thereof suffers any
appointment  of  any custodian or the like for it or any substantial part of its
property  which  continues  undischarged or unstayed for a period of 61 days; or
the Company or any subsidiary thereof makes a general assignment for the benefit
of creditors; or the Company shall fail to pay, or shall state that it is unable
to  pay,  or  shall be unable to pay, its debts generally as they become due; or
the Company or any subsidiary thereof shall call a meeting of its creditors with
a  view to arranging a composition, adjustment or restructuring of its debts; or
the  Company  or  any  subsidiary  thereof  shall  by  any act or failure to act
expressly  indicate  its  consent  to, approval of or acquiescence in any of the
foregoing;  or  any  corporate  or  other  action is taken by the Company or any
subsidiary  thereof  for  the  purpose  of  effecting  any  of  the  foregoing;

       (iv)    the  Company shall default in any of its obligations  under  any
other Debenture or any mortgage, credit agreement  or other  facility, indenture
agreement,  factoring  agreement  or  other  instrument under which there may be
issued,  or  by  which  there  may  be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
of  the  Company  in an amount exceeding $100,000, whether such indebtedness now
exists  or  shall  hereafter  be  created  and such default shall result in such
indebtedness  becoming  or  being  declared due and payable prior to the date on
which  it  would  otherwise  become  due  and  payable;

       (v)    the Common Stock shall not be eligible for quotation on and quoted
for trading or listed for trading  on  the  OTC  Bulletin  Board ("OTC'), Nasdaq
                                                                   ---
SmallCap  Market, New York Stock Exchange, American Stock Exchange or the Nasdaq
National  Market  (each,  a "Subsequent Market") and shall not again be eligible
                             -----------------
for  and  quoted  or  listed  for  trading  thereon  within  five  Trading Days;

<PAGE>
       (vi)    the Company shall be a party to any Change of Control Transaction
(as  defined  in  Section 6), shall agree to sell or dispose all or in excess of
33%  of  its  assets in one or more transactions (whether or not such sale would
constitute  a Change of Control Transaction), or shall redeem or repurchase more
than a de minimis number of shares of Common Stock or other equity securities of
the  Company (other than redemptions of Underlying Shares (as defined in Section
6));

       (vii)  an Underlying Shares Registration Statement (as defined in Section
6) shall  not  have  been declared  effective by the  Commission (as defined in
Section 6) on or prior to the  120th  day  after  the  Original  Issue  Date;

       (viii)     if,  during  the  Effectiveness  Period (as defined in the
Registration Rights Agreement  (as defined in Section 6)), the effectiveness of
the Underlying Shares Registration Statement lapses for any reason or the Holder
shall not be permitted  to  resell  Registrable  Securities  (as  defined in the
Registration  Rights  Agreement)  under  the  Underlying Shares  Registration
Statement, in either case, for more than  five  consecutive  Trading Days or an
aggregate of eight Trading  Days (which need not be consecutive  Trading  Days);

       (ix)   an  Event (as  defined in the Registration Rights Agreement) shall
not have been cured to the satisfaction of the Holder prior to the expiration of
thirty  days  from  the  Event  Date  (as  defined  in  the  Registration Rights
Agreement)  relating thereto (other than an Event resulting from a failure of an
Underlying  Shares  Registration  Statement  to  be  declared  effective  by the
Commission  on  or  prior  to the 120th day after the Original Issue Date, which
shall  be  covered  by  Section  3(a)(vii));

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

       (xi) the Company shall fail for any reason to deliver the payment in cash
pursuant  to  a  Buy-In  (as  defined  herein)  within five days after notice is
claimed  delivered  hereunder;  or

<PAGE>
     (b)     During  the time that any portion of this Debenture is outstanding,
if  any  Event of Default occurs and is continuing, the full principal amount of
this  Debenture  (and, at the Holder's option, all other Debentures then held by
such Holder), together with interest and other amounts owing in respect thereof,
to  the  date of acceleration shall become at the Holder's election, immediately
due  and  payable  in  cash,  provided  however, that if the Company informs the
                              -----------------
Holder  that  it  will  be unable to pay the amounts due in cash, the Holder may
request  payment of such amounts in stock.  The number of shares of Common Stock
issuable in payment thereof shall be determined by dividing the aggregate amount
due to the Holder by the Conversion Price.  The aggregate amount payable upon an
Event  of  Default  shall  be  equal  to the sum of (i) the Mandatory Prepayment
Amount  (as  defined  in  Section  6) plus (ii) the product of (A) the number of
Underlying  Shares issued in respect of conversions hereunder within thirty days
of  the date of a declaration of an Event of Default and then held by the Holder
and  (B)  the  Per  Share  Market  Value  (as  defined in Section 6) on the date
prepayment  is  due  or the date the full prepayment price is paid, whichever is
greater.  Interest  shall  accrue  on  the  prepayment amount hereunder from the
seventh  day  after  such  amount is due (being the date of an Event of Default)
through  the date of prepayment in full thereof at the rate of 15% per annum (or
such  lesser  maximum amount that is permitted to be paid by applicable law), to
accrue  daily  from the date such payment is due hereunder through and including
the  date  of  payment.  All Debentures and Underlying Shares for which the full
prepayment  price  hereunder  shall  have been paid in accordance herewith shall
promptly  be  surrendered to or as directed by the Company.  The Holder need not
provide  and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace  period  enforce  any and all of its rights and remedies hereunder and all
other  remedies  available  to it under applicable law.  Such declaration may be
rescinded  and  annulled  by  Holder at any time prior to payment hereunder.  No
such  rescission  or  annulment  shall affect any subsequent Event of Default or
impair  any  right  consequent  thereon.

     Section4.       Conversion.
     ---------       ----------

     (a)     (i)      Conversion  at  Option of Holder. (A) This Debenture shall
                      --------------------------------
be convertible into shares of Common Stock at the option of the Holder, in whole
or  in  part  at  any  time and from time to time, after the Original Issue Date
(subject to the limitations on conversion set forth in Section 4(a)(ii) hereof).
The number of shares of Common Stock issuable upon a conversion hereunder equals
the  sum  of (i) the quotient obtained by dividing (x) the outstanding principal
amount of this Debenture to be converted by (y) the Conversion Price (see (c)(i)
for  this  section),  and  (ii)  the  amount equal to (I) the product of (x) the
outstanding  principal  amount  of  this  Debenture  to be converted and (y) the
product  of  (1) the quotient obtained by dividing .08 by 360 and (2) the number
of  days  for  which  such principal amount was outstanding, divided by (II) the
Conversion Price on the Conversion Date, provided, that if the Holder shall have
                                         --------
elected  to  receive  the  interest due on a Conversion Date in cash, subsection
(ii)  shall  not  be  used  in the calculation of the number of shares of Common
Stock  issuable  upon  a  conversion  hereunder.

     (B)     Notwithstanding  anything  to  the contrary contained herein, if on
any  Conversion  Date:

          (1)  the  number  of  shares  of  Common Stock at the time authorized,
unissued  and  unreserved  for  all  purposes,  or  held  as  treasury stock, is
insufficient  to pay principal and interest hereunder in shares of Common Stock;

<PAGE>
          (2) after the Principal and Interest Effectiveness Date (the ninetieth
day  after  closing)  such  shares  of  Common Stock  (x) are not registered for
resale pursuant to an effective Underlying Shares Registration Statement and (y)
may  not be sold without volume restrictions pursuant to Rule 144(k) promulgated
under  the Securities Act (as defined in Section 6), as determined by counsel to
the  Company  pursuant  to  a written opinion letter, addressed to the Company's
transfer agent in the form and substance acceptable to the applicable Holder and
such  transfer  agent (if the shares of Common Stock are permitted by the Holder
to  be  delivered  under  this  clause  (2)  prior to the Effectiveness Date (as
defined  in  the  Registration  Rights  Agreement)  and thereafter an Underlying
Shares Registration Statement shall be declared effective by the Commission, the
Company  shall,  within three Trading Days after the date of such declaration of
effectiveness,  exchange such shares for shares of Common Stock that are free of
restrictive  legends  of  any  kind);

          (3)  the  Common  Stock is not listed or quoted for trading on the OTC
Bulletin  Board  ("OTC')  or  on  a  Subsequent  Market;
                   ---

          (4)  the  Company  has  failed  to  timely  satisfy  its  conversion
obligations
hereunder;  or

          (5)  the  issuance  of  such  shares of Common Stock would result in a
violation  of Sections 4(a)(ii), then, at the option of the Holder, the Company,
in  lieu of delivering shares of Common Stock pursuant to Section 4(a)(i), shall
deliver, within three Trading Days of each applicable Conversion Date, an amount
in  cash  equal  to  the  product  of  the  outstanding  principal amount of the
Debentures  to  be  converted  plus  any  interest  due  therein  divided by the
conversion  price  and multiplied by the highest closing price of the stock from
date  of  the  conversion  notice  till the date that such cash payment is made.

     (C)     The Holder shall effect conversions by simultaneously delivering to
the  Company and the Escrow Agent a completed notice in the form attached hereto
as  Exhibit A (a "Conversion Notice"), including a completed Conversion Schedule
    ---------     -----------------
in the form of Schedule 1 to the Conversion Notice (on each Conversion Date, the
               ----------
"Conversion  Schedule").  The  Conversion Schedule shall set forth the remaining
 --------------------
principal  amount  of this Debenture and all accrued and unpaid interest thereon
subsequent to the conversion at issue.  The date on which a Conversion Notice is
delivered  is the "Conversion Date."  Unless the Holder is converting the entire
                   ---------------
principal amount outstanding under this Debenture, the Holder is not be required
to  physically  surrender  this  Debenture  to  the  Company  in order to effect
conversions.  Subject to Section 4(b), each Conversion Notice, once given, shall
be  irrevocable.  Conversions  hereunder  shall  have the effect of lowering the
outstanding  principal  amount  of  this  Debenture  plus all accrued and unpaid
interest thereon in an amount equal to the applicable conversion, which shall be
evidenced  by  entries set forth in the Conversion Schedule.  The Holder and the
Company  shall  maintain  records showing the principal amount converted and the
date  of  such  conversions.  In  the  event  of any dispute or discrepancy, the
records  of  the Holder shall be controlling and determinative in the absence of
manifest  error.

<PAGE>
       (ii)     Certain  Conversion  Restrictions.  A  Holder  may  not  convert
              ---------------------------------
Debentures or receive shares of Common Stock as payment of interest hereunder to
the  extent  such conversion or receipt of such interest payment would result in
the  Holder,  together  with  any  affiliate  thereof,  beneficially  owning (as
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
promulgated  thereunder)  in excess of 9.999% of the then issued and outstanding
shares  of  Common  Stock,  including  shares  issuable  upon conversion of, and
payment  of interest on, the Debentures held by such Holder after application of
this  Section.  Since  the Holder will not be obligated to report to the Company
the  number  of  shares  of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue would result in the issuance of shares
of  Common  Stock  in  excess of 9.999% of the then outstanding shares of Common
Stock  without regard to any other shares which may be beneficially owned by the
Holder  or  an  affiliate  thereof,  the  Holder  shall  have  the authority and
obligation  to  determine whether the restriction contained in this Section will
limit  any  particular  conversion  hereunder  and to the extent that the Holder
determines  that  the  limitation  contained  in  this  Section  applies,  the
determination  of  which  portion  of  the  principal  amount  of Debentures are
convertible  shall  be  the responsibility and obligation of the Holder.  If the
Holder  has  delivered  a Conversion Notice for a principal amount of Debentures
that,  without  regard to any other shares that the Holder or its affiliates may
beneficially  own,  would  result  in  the  issuance  in excess of the permitted
amount  hereunder,  the  Company  shall notify the Holder of this fact and shall
honor  the conversion for the maximum principal amount permitted to be converted
on such Conversion Date in accordance with the periods described in Section 4(b)
and,  at  the  option of the Holder, either retain any principal amount tendered
for  conversion  in  excess  of  the  permitted  amount  hereunder  for  future
conversions  or  return  such  excess  principal  amount  to  the  Holder.  The
provisions  of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 65 days prior notice to the Company.
Other  Holders  shall  be  unaffected  by  any  such  waiver.

     (b)     (i)     Not  later  than  three  Trading  Days after any Conversion
Date,  (i)  the Escrow Agent is hereby authorized and directed to deliver to the
Holder  a certificate or certificates which shall be free of restrictive legends
and  trading  restrictions  representing  the  number  of shares of Common Stock
issuable  upon  such conversion in accordance with the terms hereof (if there is
no Escrow Agent for such purpose or for any reason there are insufficient shares
of  Common Stock deposited with the Escrow Agent for delivery to the Holder upon
conversion  hereunder,  the  Corporation will deliver to the Holder within three
Trading Days the shares of Common Stock being acquired upon the conversion), and
(ii)  if the Holder has elected to receive accrued interest in cash, the Company
will  deliver  to  the  Holder a bank check, payable to Holder, in the amount of
accrued  and  unpaid  interest.  If  requested  by a Holder, the Company and the
Escrow  Agent  will  use  their  best  efforts  to  deliver  conversion  shares
electronically  through  the Depository Trust Corporation or another established
clearing  corporation  performing  similar functions.  If shares of Common Stock
issuable  following  a  Conversion Notice are not delivered to or as directed by
the Holder by the third Trading Day after a Conversion Date, the Holder shall be
entitled by written notice to the Escrow Agent and the Company at any time on or
before  its  receipt  of such shares, to rescind such conversion, in which event
the  Company  shall  immediately  return  to the Holder a Debenture in principal
amount  equal  to  the  principal  amount, interest and all other amounts due in
respect  of  the Conversion Notice (provided the Holder is converting the entire
principal  amount  outstanding  under  this  Debenture).

       (ii)    If the Company fails to deliver to the Holder such certificate or
certificates  pursuant  to  Section  4(b)(i)  by the third Trading Day after the
Conversion  Date,  the  Company shall pay to such Holder, in cash, as liquidated
damages  and  not  as  a  penalty,  $5,000 for each Trading Day after such third
Trading Day until such certificates are delivered.  Nothing herein shall limit a
Holder's  right to pursue actual damages or declare an Event of Default pursuant
to  Section  3  herein  for  the  Company's  failure  to  deliver  certificates
representing  shares of Common Stock upon conversion within the period specified
herein  and such Holder shall have the right to pursue all remedies available to
it  at  law  or  in  equity  including, without limitation, a decree of specific
performance and/or injunctive relief.  The exercise of any such rights shall not
prohibit  the  Holders  from  seeking  to  enforce damages pursuant to any other
Section  hereof or under applicable law.  Further, if the Company shall not have
delivered  any cash due in respect of conversions of Debentures or as payment of
interest  thereon by the third Trading Day after the Conversion Date, the Holder
may,  by  notice  to  the Company, require the Company to issue shares of Common
Stock  pursuant  to  Section  4(c),  except that for such purpose the Conversion
Price  applicable  thereto  shall  be  the lesser of the Conversion Price on the
Conversion Date and the Conversion Price on the date of such Holder demand.  Any
such  shares  will  be  subject  to  the  provision  of  this  Section.

<PAGE>
       (iii)    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(b)(i)  by the third Trading Day after the Conversion Date, and if
after such third 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  Underlying  Shares  which  the  Holder  anticipated receiving upon such
conversion  (a  "Buy-In"),  then the Company shall (A) pay in cash to the Holder
                 ------
(in  addition  to any remedies available to or elected by the Holder) the amount
by which (x) the Holder's total purchase price (including brokerage commissions,
if  any)  for  the  Common Stock so purchased exceeds (y) the product of (1) the
aggregate  number  of  shares  of  Common  Stock  that  such  Holder anticipated
receiving from the conversion at issue multiplied by (2) the 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 reissue Debentures in principal amount
equal  to  the  principal  amount  of the attempted conversion or deliver to the
Holder  the number of shares of Common Stock that would have been issued had the
Company  timely  complied  with its delivery requirements under Section 4(b)(i).
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 Underlying Shares on
the  date  of  conversion  was  a  total  of  $10,000  under  clause  (A) of the
immediately  preceding sentence, the Company shall be required to pay the Holder
$1,000.  The  Holder  shall  provide  the  Company written notice indicating the
amounts  payable  to  the  Holder  in  respect  of  the Buy-In.  Notwithstanding
anything  contained  herein to the contrary, if a Holder requires the Company to
make  payment  in  respect  of  a  Buy-In  for  the  failure  to  timely deliver
certificates  hereunder  and  the  Company timely pays in full such payment, the
Company  shall  not  be  required  to  pay  such Holder liquidated damages under
Section  4(b)(ii)  in  respect  of  the  certificates  resulting in such Buy-In.

     (c)     (i)     The  conversion price (the "Conversion Price") in effect on
                                                 ----------------
any  Conversion  Date shall be the lesser of (1) $.04 and (2) 70% of the average
of  the  lowest  three  inter-day  trading  prices  (which  need  not  occur  on
consecutive  Trading  Days) during the thirty Trading Days immediately preceding
the  applicable  Conversion  Date  (which  may include Trading Days prior to the
Original  Issue  Date),  provided,  that such thirty Trading Day period shall be
                         --------
extended  for the number of Trading Days during such period in which (A) trading
in  the  Common  Stock  is  suspended by, or not traded on, the pink sheets or a
Subsequent  Market  on  which  the Common Stock is then listed, or (B) after the
date  declared  effective  by the Commission, the Underlying Shares Registration
Statement  is either not effective or  the Prospectus included in the Underlying
Shares  Registration  Statement  may not be used by the Holder for the resale of
Underlying  Shares.

<PAGE>
       (ii)   If  the Company, at any time while the Debentures are outstanding,
(a) shall pay a stock dividend or otherwise make a distribution or distributions
on  shares  of  its  Common  Stock  or  any  other  equity  or equity equivalent
securities  payable  in shares of Common Stock, (b) subdivide outstanding shares
of Common Stock into a larger number of shares, (c) combine (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares,  or  (d)  issue  by  reclassification  of shares of the Common Stock any
shares  of capital stock of the Company, then the Initial Conversion Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of  Common  Stock  (excluding  treasury  shares, if any) outstanding before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding  after  such  event.  Any  adjustment  made pursuant to this Section
shall  become  effective immediately after the record date for the determination
of  stockholders  entitled  to  receive  such dividend or distribution and shall
become  effective  immediately  after  the  effective  date  in  the  case  of a
subdivision,  combination  or  re-classification.

       (iii)     If the Company,  at  any time while Debentures are outstanding,
shall  issue rights, options or warrants to all holders of Common Stock (and not
to  Holders)  entitling them to subscribe for or purchase shares of Common Stock
at  a  price  per  share less than the Per Share Market Value at the record date
mentioned below, then the Conversion Price shall be multiplied by a fraction, of
which  the  denominator  shall  be  the  number  of  shares  of the 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 of which the numerator shall be the number of
shares  of  the  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 such Per Share Market Value.  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 stockholders entitled to receive such
rights,  options  or  warrants.  However, upon the expiration of any such right,
option  or  warrant to purchase shares of the Common Stock the issuance of which
resulted  in  an adjustment in the Conversion Price pursuant to this Section, if
any  such  right,  option  or  warrant  shall  expire  and  shall  not have been
exercised,  the  Conversion  Price  shall  immediately  upon  such expiration be
recomputed  and  effective  immediately upon such expiration be increased to the
price  which  it  would  have  been (but reflecting any other adjustments in the
Conversion  Price  made  pursuant  to  the  provisions of this Section after the
issuance  of such rights or warrants) had the adjustment of the Conversion Price
made  upon  the  issuance  of  such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common  Stock  actually  purchased  upon the exercise of such rights, options or
warrants  actually  exercised.

<PAGE>
       (iv)     If the  Company or  any  subsidiary  thereof, as applicable with
respect  to  Common  Stock  Equivalents  (as  defined  below), at any time while
Debentures  are  outstanding,  shall  issue  shares  of  Common Stock or rights,
warrants,  options  or  other  securities  or  debt that are convertible into or
exchangeable  for  shares of Common Stock ("Common Stock Equivalents") entitling
                                            ------------------------
any Person to acquire shares of Common Stock, at a price per share less than the
Conversion  Price  (if the holder of the Common Stock or Common Stock Equivalent
so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or  due  to  warrants, options or rights per share which is issued in connection
with such issuance, be entitled to receive shares of Common Stock at a price per
share  which is less than the Conversion Price, such issuance shall be deemed to
have  occurred  for less than the Conversion Price), then, at the sole option of
the  Holder,  the  Conversion  Price shall be adjusted to mirror the conversion,
exchange  or  purchase  price  for such Common Stock or Common Stock Equivalents
(including  any  reset  provisions  thereof) at issue.  Such adjustment shall be
made  whenever  such  Common  Stock or Common Stock Equivalents are issued.  The
Company  shall  notify the Holder and the Escrow Agent in writing, no later than
the  business  day  following  the  issuance of any Common Stock or Common Stock
Equivalent  subject  to this section, indicating therein the applicable issuance
price,  or of applicable reset price, exchange price, conversion price and other
pricing  terms.  No  adjustment  under this Section shall be made as a result of
(i)  issuances  of  Common  Stock  or  Common  Stock  Equivalents  to the extent
disclosed  in  Schedule  2.1(c)  to  the  Purchase Agreement, (ii) issuances and
exercises  of options to purchase shares of Common Stock issued for compensatory
purposes  pursuant to any of the Company's stock option or stock purchase plans,
or  (iii)  exercises  under the Warrants (as defined in the Purchase Agreement).

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

       (vi)     In  case of any  reclassification  of  the  Common  Stock or any
compulsory  share  exchange pursuant to which the Common Stock is converted into
other  securities, cash or property, the Holders shall have the right thereafter
to, at their option, (A) convert the then outstanding principal amount, together
with  all accrued but unpaid interest and any other amounts then owing hereunder
in respect of this Debenture only into the shares of stock and other securities,
cash  and property receivable upon or deemed to be held by holders of the Common
Stock  following such reclassification or share exchange, and the Holders of the
Debentures  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 then outstanding principal amount, together with all accrued but
unpaid  interest  and  any other amounts then owing hereunder in respect of this
Debenture  could  have been converted immediately prior to such reclassification
or  share exchange would have been entitled or (B) require the Company to prepay
the  aggregate  of  its  outstanding  principal  amount  of Debentures, plus all
interest  and  other  amounts  due and payable thereon, at a price determined in
accordance  with  Section  3(b).  The  entire  prepayment price shall be paid in
cash.  This  provision  shall similarly apply to successive reclassifications or
share  exchanges.

       (vii)  Company share reserve  not  less than 200% of the shares of Common
Stock issuable upon conversion in full of the Debentures and exercise in full of
the Warrants; and within five Business Days following the receipt by the Company
of  a Purchaser's notice that such minimum number of Underlying Shares is not so
reserved,  the  Company  shall promptly reserve a sufficient number of shares of
Common  Stock  to  comply  with  such  requirement.

       (vii)     All calculations under  this  Section  4  shall  be made to the
nearest  cent  or  the  nearest  1/100th  of  a  share,  as the case may be.  No
adjustments in either the Conversion Price or the Initial Conversion Price shall
be  required  if such adjustment is less than $0.01, provided, however, that any
                                                     --------
adjustments which by reason of this Section are not required to be made shall be
carried  forward  and  taken  into  account  in  any  subsequent  adjustment.

<PAGE>
       (viii)     Whenever either the Initial Conversion Price or the Conversion
Price  is  adjusted pursuant to any of Section 4(c)(ii) - (v), the Company shall
promptly mail to each Holder a notice setting forth the Initial Conversion Price
or  Conversion  Price  (as applicable) after such adjustment and setting forth a
brief  statement  of  the  facts  requiring  such  adjustment.

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

<PAGE>
       (x)     In case of any (1) merger or consolidation of the Company with or
into  another  Person,  or  (2) sale by the Company of more than one-half of the
assets of the Company in one or a series of related transactions, a Holder shall
have  the  right  to (A) exercise any rights under Section 3(b), (B) convert its
aggregate  principal  amount  of  Debentures then outstanding into the shares of
stock  and  other  securities, cash and property receivable upon or deemed to be
held  by  holders  of Common Stock following such merger, consolidation or sale,
and such Holder shall be entitled upon such event or series of related events to
receive  such  amount  of  securities, cash and property as the shares of Common
Stock  into  which such aggregate principal amount of Debentures could have been
converted  immediately  prior  to such merger, consolidation or sales would have
been  entitled,  or  (C)  in  the case of a merger or consolidation, require the
surviving  entity to issue to the Holder convertible debentures with a principal
amount  equal  to the aggregate principal amount of Debentures then held by such
Holder,  plus  all  accrued and unpaid interest and other amounts owing thereon,
which  newly issued convertible debentures shall have terms identical (including
with  respect  to  conversion)  to  the  terms  of  this Debenture, and shall be
entitled to all of the rights and privileges of a Holder of Debentures set forth
herein  and the agreements pursuant to which the Debentures were issued.  In the
case  of clause (C), the conversion price applicable for the newly issued shares
of convertible preferred stock or convertible debentures shall be based upon the
amount  of  securities,  cash and property that each share of Common Stock would
receive in such transaction and the Conversion Price in effect immediately prior
to  the  effectiveness  or  closing date for such transaction.  The terms of any
such merger, sale or consolidation shall include such terms so as to continue to
give  the  Holders  the  right  to receive the securities, cash and property set
forth  in  this  Section upon any conversion or redemption following such event.
This  provision  shall  similarly  apply  to  successive  such  events.

     (d)     The  Company  covenants  that it will at all times reserve and keep
available  out  of its authorized and unissued shares of Common Stock solely for
the  purpose  of  issuance  upon  conversion  of  the  Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or  any  other  actual  contingent  purchase  rights  of  persons other than the
Holders,  not  less  than  such  number  of  shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments  and  restrictions  of  Section  4(b))  upon  the  conversion of the
outstanding  principal  amount  of  the  Debentures  and  payment  of  interest
hereunder.  The  Company covenants that all shares of Common Stock that shall be
so  issuable shall, upon issue, be duly and validly authorized, issued and fully
paid,  nonassessable  and,  if  the Underlying Shares Registration Statement has
been  declared effective under the Securities Act, registered for public sale in
accordance  with  such  Underlying  Shares  Registration  Statement.

     (e)     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.

     (f)     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.

<PAGE>
     (g)     Any  and  all  notices  or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Conversion
Notice,  shall  be  in writing and delivered personally, by facsimile, sent by a
nationally  recognized  overnight  courier  service  or  sent  by  certified  or
registered mail, postage prepaid, addressed to the Company, at 2961 W. MacArthur
Blvd.,  Suite 121, Santa Ana, CA 92704, Facsimile No.: 714/ 436-9728, attention:
Steve  Fryer,  or  such  other  address  or  facsimile number as the Company may
specify  for such purposes by notice to the Holders delivered in accordance with
this  Section,  with  a  copy  to  (other  than  for  Conversion  Notices)  [
],  Facsimile  No.:  [   ]  [        ], Attn: [       ].  Any and all notices or
other communications or deliveries to be provided by the Company hereunder shall
be  in  writing  and  delivered  personally,  by facsimile, sent by a nationally
recognized  overnight  courier  service or sent by certified or registered mail,
postage  prepaid,  addressed to each Holder at the facsimile telephone number or
address  of  such  Holder  appearing  on the books of the Company, or if no such
facsimile  telephone  number  or  address  appears,  at  the  principal place of
business  of  the  Holder.  Any  notice  or  other  communication  or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number  specified  in this Section prior to 5:00 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication  is  delivered  via  facsimile  at  the facsimile telephone number
specified  in this Section later than 5:00 p.m. (New York City time) on any date
and  earlier  than 11:59 p.m. (New York City time) on such date, (iii) four days
after  deposit  in  the  United States mail, (iv) the Business Day following the
date  of mailing, if sent by nationally recognized overnight courier service, or
(v)  upon  actual  receipt  by  the  party to whom such notice is required to be
given.

     Section  5.   Definitions.  For  the  purposes  hereof, the following terms
     -----------   -----------
shall  have  the  following  meanings:

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

<PAGE>
     "Change  of  Control  Transaction"  means  the  occurrence of any of (i) an
      --------------------------------
acquisition  after  the  date hereof by an individual or legal entity or "group"
(as  described  in  Rule  13d-5(b)(1)  promulgated  under  the  Exchange Act) of
effective  control  (whether  through  legal  or beneficial ownership of capital
stock  of  the  Company,  by  contract  or otherwise) of in excess of 33% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more  than  one-half of the members of the Company's board of directors which is
not  approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was  approved  by  a  majority  of the members of the board of directors who are
members  on  the  date  hereof),  (iii)  the  merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
50%  or  more  of  the  assets  of  the  Company  in  one or a series of related
transactions,  or (iv) the execution by the Company of an agreement to which the
Company  is a party or by which it is bound, providing for any of the events set
forth  above  in  (i),  (ii)  or  (iii).

     "Commission"  means  the  Securities  and  Exchange  Commission.
      ----------

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

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

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

<PAGE>
     "Person"  means a corporation, an association, a partnership, organization,
      ------
a  business,  an  individual, a government or political subdivision thereof or a
governmental  agency.

     "Purchase  Agreement"  means  the  Secured  Convertible  Debenture Purchase
      -------------------
Agreement,  dated  February  [   ],  200,  to which the Company and the original
Holder  are  parties,  as amended, modified or supplemented from time to time in
accordance  with  its  terms.

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

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

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

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

     "Underlying  Shares"  means  the  shares  of  Common  Stock  issuable  upon
      ------------------
conversion  of Debentures or as payment of interest in accordance with the terms
hereof.

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

<PAGE>
     Section  6.       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,  herein  prescribed.  This  Debenture  is  a  direct obligation of the
Company.  This  Debenture  ranks  pari  passu  with  all other Debentures now or
                                  ----  -----
hereafter  issued  under  the  terms  set  forth  herein.  As  long as there are
Debentures  outstanding,  the  Company shall not and shall cause it subsidiaries
not  to,  without  the  consent  of  the  Holders,  (i) amend its certificate of
incorporation,  bylaws  or other charter documents so as to adversely affect any
rights  of  the Holders; (ii) repay, repurchase or offer to repay, repurchase or
otherwise  acquire  shares  of its Common Stock or other equity securities other
than  as  to the Underlying Shares to the extent permitted or required under the
Transaction  Documents; or (iii) enter into any agreement with respect to any of
the  foregoing.   The  Company  may  only  voluntarily  prepay  the  outstanding
principal  amount  on  the  Debentures  in  accordance  with  Section  5 hereof.

     Section  7.       This Debenture shall not entitle the Holder to any of the
     -----------
rights  of a stockholder of the Company, including without limitation, the right
to  vote, to receive dividends and other distributions, or to receive any notice
of,  or  to  attend,  meetings  of  stockholders or any other proceedings of the
Company,  unless  and  to  the  extent  converted into shares of Common Stock in
accordance  with  the  terms  hereof.

     Section  8.       If  this  Debenture  shall  be mutilated, lost, stolen or
     -----------
destroyed,  the  Company shall execute and deliver, in exchange and substitution
for  and  upon  cancellation  of  a  mutilated  Debenture,  or  in lieu of or in
substitution  for a lost, stolen or destroyed debenture, a new Debenture for the
principal  amount  of this Debenture so mutilated, lost, stolen or destroyed but
only  upon  receipt  of  evidence  of  such  loss,  theft or destruction of such
Debenture,  and  of  the  ownership  hereof,  and  indemnity,  if requested, all
reasonably  satisfactory  to  the  Company.

     Section  9.  No  indebtedness of the Company is senior to this Debenture in
     -----------
right  of payment, whether with respect to interest, damages or upon liquidation
or dissolution or otherwise. The Company will not and will not permit any of its
subsidiaries  to,  directly  or indirectly, enter into, create, incur, assume or
suffer  to  exist any indebtedness of any kind, on or with respect to any of its
property  or  assets  now owned or hereafter acquired or any interest therein or
any  income  or profits therefrom that is senior in any respect to the Company's
obligations  under  the  Debentures.

     Section  10.  This  Debenture  shall  be  governed  by  and  construed  in
     ------------
accordance  with  the  laws  of  the State of New York, without giving effect to
     ---
conflicts  of  laws  thereof.  The  Company  and  the  Holder hereby irrevocably
submits to the exclusive 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, or that such suit, action or proceeding is
improper.  Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or  proceeding by receiving a copy thereof sent to the Company at the address in
effect  for  notices  to  it  under this instrument and agrees that such service
shall  constitute  good  and  sufficient  service of process and notice thereof.
Nothing  contained herein shall be deemed to limit in any way any right to serve
process  in  any  manner  permitted  by  law.  Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law.  Each  party  irrevocably  waives,  to  the  fullest  extent  permitted  by
applicable  law,  any  and  all  right  to trial by jury in any legal proceeding
arising  out  of  or relating to this Agreement or the transactions contemplated
hereby.  If  either  party shall commence an action or proceeding to enforce any
provisions  of  a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its' attorneys fees and
other  costs  and  expenses  incurred  with  the  investigation, preparation and
prosecution  of  such  action  or  proceeding.

<PAGE>
     Section  11.  Any  waiver  by  the Company or the Holder of a breach of any
     ------------
provision  of this Debenture shall not operate as or be construed to be a waiver
of  any  other breach of such provision or of  any breach of any other provision
of  this  Debenture.  The  failure  of  the Company or the Holder to insist upon
strict  adherence  to  any term of this Debenture on one or more occasions shall
not  be  considered  a  waiver  or deprive that party of the right thereafter to
insist  upon  strict adherence to that term or any other term of this Debenture.
Any  waiver  must  be  in  writing.

     Section  12.  If  any  provision  of  this Debenture is invalid, illegal or
     ------------
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision  is  inapplicable to any person or circumstance, it shall nevertheless
remain  applicable to all other persons and circumstances.  If it shall be found
that  any  interest  or other amount deemed interest due hereunder shall violate
applicable  laws  governing usury, the applicable rate of interest due hereunder
shall  automatically be lowered to equal the maximum permitted rate of interest.
The  Company  covenants (to the extent that it may lawfully do so) that it shall
not  at  any  time insist upon, plead, or in any manner whatsoever claim or take
the  benefit  or  advantage  of,  any  stay, extension or usury law or other law
which  would  prohibit  or forgive the Company from paying all or any portion of
the  principal of or interest on the Debentures as contemplated herein, wherever
enacted,  now  or  at  any  time  hereafter  in  force,  or which may affect the
covenants  or  the performance of this indenture, and the Company (to the extent
it  may lawfully do so) hereby expressly waives all benefits or advantage of any
such  law,  and  covenants  that it will not, by resort to any such law, hinder,
delay  or  impeded  the execution of any power herein granted to the Holder, but
will  suffer  and  permit  the execution of every such as though no such law has
been  enacted.

     Section  13.  Whenever  any  payment or other obligation hereunder shall be
     ------------
due  on  a day other than a Business Day, such payment shall be made on the next
succeeding  Business  Day.

     Section  14.  The  payment  obligations  under  this  Debenture  and  the
     ------------
obligations  of  the Company to the Holder arising upon the conversion of all or
     ---
any  of  the  Debentures  in  accordance  with the provisions hereof are secured
pursuant  to  the  Security  Agreement  (as  defined in the Purchase Agreement).

     Section  15.  Injunction  -  Posting  of  Bond.  The Company may not refuse
     ------------  --------------------------------
conversion  of  a  Note  based  on  any  claim  that  such Subscriber or any one
associated  or affiliated with such Subscriber has been engaged in any violation
of  law, or for any other reason, unless, an injunction from a court, on notice,
restraining  and  or enjoining conversion of all or part of said Note shall have
been  sought and obtained and the Company posts a surety bond for the benefit of
such  Subscriber  in  the  amount  of  130%  of the amount of the Note, which is
subject  to  the  injunction,  which  bond  shall  remain  in  effect  until the
completion  of  arbitration/litigation  of the dispute and the proceeds of which
shall  be  payable to such Subscriber to the extent Subscriber obtains judgment.

<PAGE>

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

     PEN  INTERCONNECT,  INC.

     By:  /s/  Steven  Fryer
               -------------
     Name:     [Steven  Fryer           ]
     Title:    [  CEO                     ]

<PAGE>

11903-00011/845991.2
     EXHIBIT  A

                             NOTICE  OF  CONVERSION

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

The  undersigned  hereby elects to convert the attached Debenture into shares of
common  stock,  $0.01  par  value  per  share  (the  "Common  Stock"),  of  Pen
Interconnect,  Inc(the "Company") according to the conditions hereof, as of the
date  written  below.  If  shares are to be issued in the name of a person other
than  the  undersigned, the undersigned will pay all transfer taxes payable with
respect  thereto  and  is  delivering herewith such certificates and opinions as
reasonably  requested  by  the  Company in accordance therewith.  No fee will be
charged  to  the  holder  for any conversion, except for such transfer taxes, if
any.

Conversion  calculations:      ----------------------------------------------
                               Date to Effect Conversion
                               ----------------------------------------------
                               Principal Amount of Debentures to be Converted

                               Payment of Interest in Kind  _ Yes
                                                            _ No
                                 If yes,  $  _______ of Interest Accrued
                                 on  Account  of Conversion at Issue
                               ----------------------------------------------
                               Number of shares of Common Stock to be Issued
                               ----------------------------------------------
                               Applicable  Conversion  Price
                               ----------------------------------------------
                               Signature
                               -----------------------------
                               Name
                               -----------------------------
                               Address

<PAGE>
                                  SCHEDULE  1

                              CONVERSION  SCHEDULE

                             PEN INTERCONNECT, INC.
      8% Secured Convertible Debentures due March [   ], 2002, in the aggregate
principal amount of $125,000 issued by Pen Interconnect, Inc.  This Conversion
Schedule reflects conversions made under Section 4(a)(i) of the above referenced
Debentures.

                                        Dated:

<TABLE>
<CAPTION>

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

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

</TABLE>11903-00011/845991.2
                                                                   Exhibit 10.24

                                                            DATED: MARCH 8, 2001

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

No.  [1]                                                                 $75,000

                              PEN INTERCONNECT INC
                            8% CONVERTIBLE DEBENTURE
                              DUE MARCH [  ], 2002

     THIS  DEBENTURE  is  an  issued debenture of Pen Interconnect, Inc., a Utah
corporation,  having  a  principal place of business at 2961 W. MacArthur Blvd.,
Suite  121,  Santa  Ana,  CA 92704 (the "Company"), designated as its 8% Secured
                                         -------
Convertible Debentures, due March [   ], 2002, in the aggregate principal amount
of  Seventy  Five  Thousand  Dollars  ($75,000)  (the  "Debentures").
                                                        ----------

<PAGE>

11903-00011/845991.2

<PAGE>
     FOR  VALUE RECEIVED, the Company promises to pay to AMRO Int'l. S.A. or its
registered  assigns  (the  "Holder"), the principal sum of $[              ], on
                            ------
March [ ], 2002 or such earlier date as the Debentures are required or permitted
to  be repaid as provided hereunder (the "Maturity Date") and to pay interest to
                                          -------------
the Holder on the aggregate unconverted and then outstanding principal amount of
this  Debenture  at  the  rate  of 8% per annum, payable on a quarterly basis on
March  31,  June  30,  September  30  and  December  31  of each year while such
Debentures are outstanding commencing  on March  31, 2001 and on each Conversion
Date  (as  defined  herein) (each an "Interest Payment Date") for such principal
                                      ---------------------
amount,  commencing  on  the  earlier  to  occur  of  a Conversion Date for such
principal  amount  and  March  __,  2002,  in cash or shares of Common Stock (as
defined  in  Section 6).  Subject to the terms and conditions herein, the Holder
may  elect  to receive interest hereunder in shares of Common Stock or cash.  If
interest  is  paid by the Company in shares of its Common Stock, then the number
of  shares  of Common Stock issuable on account of such interest shall equal the
cash  amount  of  such  interest  on  such  Interest Payment Date divided by the
Conversion  Price (as defined below) on such date.  Interest shall be calculated
on the basis on a 360-day year and shall accrue daily commencing on the Original
Issue Date (as defined in Section 6) until payment in full of the principal sum,
together with all accrued and unpaid interest and other amounts which may become
due hereunder, has been made.  Interest hereunder will be paid to the Person (as
defined  in Section 6) in whose name this Debenture is registered on the records
of  the  Company  regarding  registration  and  transfers  of  Debentures  (the
"Debenture  Register").  All  overdue  accrued and unpaid interest to be paid in
         -----------
cash hereunder shall entail a late fee at the rate of 15% per annum ("Late Fee")
                                                                      --------
(or  such  lower  maximum  amount  of  interest  permitted  to  be charged under
applicable  law)  which  will  accrue  daily, from the date such interest is due
hereunder  through and including the date of payment, payable in cash or, at the
option of the Holder, in shares of Common Stock. If such Late Fee is paid by the
Company in shares of its Common Stock, then the number of shares of Common Stock
issuable  on  account  of such Late Fee shall equal the cash amount of such Late
Fee  on such Late Fee payment date divided by the Conversion Price on such date.

     This  Debenture  is  subject  to  the  following  additional  provisions:

     Section 1.       This Debenture  is  exchangeable  for  an  equal aggregate
     ---------
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested  by  the Holder surrendering the same.  No service charge will be made
for  such  registration  of  transfer  or  exchange.

     Section 2.       This Debenture  has  been  issued  subject  to  certain
     ---------
investment  representations  of  the  original  Holder set forth in the Purchase
     ----
Agreement  (as defined in Section 6) and may be transferred or exchanged only in
compliance with the Purchase Agreement.  Prior to due presentment to the Company
for  transfer  of  this  Debenture, the Company and any agent of the Company may
treat  the Person (as defined in Section 6) in whose name this Debenture is duly
registered  on  the  Debenture  Register  as the owner hereof for the purpose of
receiving  payment as herein provided and for all other purposes, whether or not
this  Debenture  is overdue, and neither the Company nor any such agent shall be
affected  by  notice  to  the  contrary.

     Section 3.       Events of  Default.
     ---------       -------------------

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

       (i)   any default in the payment of the principal of, interest (including
any  Late  Fees) on or liquidated damages in respect of, any Debentures, free of
any  claim  of  subordination, as and when the same shall become due and payable
(whether  on  a  Conversion  Date  or  the  Maturity  Date or by acceleration or
otherwise);

<PAGE>
     (ii)     the  Company  shall fail to observe or perform any other covenant,
agreement or warranty contained in, or otherwise commit any breach of any of the
Transaction  Documents  (as  defined  in  Section 6), and such failure or breach
shall  not have been remedied within five days after the date on which notice of
such  failure  or  breach  shall  have  been  given;

       (iii)     the Company or any of its subsidiaries shall commence, or there
shall be commenced against the Company or  any such  subsidiary a case under any
applicable  bankruptcy  or  insolvency laws as now or hereafter in effect or any
successor  thereto,  or  the  Company  commences  any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency  or  liquidation  or  similar  law of any jurisdiction whether now or
hereafter  in  effect relating to the Company or any subsidiary thereof or there
is  commenced against the Company or any subsidiary thereof any such bankruptcy,
insolvency  or  other  proceeding  which  remains undismissed for a period of 61
days;  or  the  Company  or  any  subsidiary thereof is adjudicated insolvent or
bankrupt;  or  any  order  of  relief  or other order approving any such case or
proceeding  is  entered;  or  the  Company or any subsidiary thereof suffers any
appointment  of  any custodian or the like for it or any substantial part of its
property  which  continues  undischarged or unstayed for a period of 61 days; or
the Company or any subsidiary thereof makes a general assignment for the benefit
of creditors; or the Company shall fail to pay, or shall state that it is unable
to  pay,  or  shall be unable to pay, its debts generally as they become due; or
the Company or any subsidiary thereof shall call a meeting of its creditors with
a  view to arranging a composition, adjustment or restructuring of its debts; or
the  Company  or  any  subsidiary  thereof  shall  by  any act or failure to act
expressly  indicate  its  consent  to, approval of or acquiescence in any of the
foregoing;  or  any  corporate  or  other  action is taken by the Company or any
subsidiary  thereof  for  the  purpose  of  effecting  any  of  the  foregoing;

       (iv)  the Company shall default in any of its obligations under any other
Debenture  or  any  mortgage,  credit  agreement  or  other  facility, indenture
agreement,  factoring  agreement  or  other  instrument under which there may be
issued,  or  by  which  there  may  be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
of  the  Company  in an amount exceeding $100,000, whether such indebtedness now
exists  or  shall  hereafter  be  created  and such default shall result in such
indebtedness  becoming  or  being  declared due and payable prior to the date on
which  it  would  otherwise  become  due  and  payable;

       (v)    the Common Stock shall not be eligible for quotation on and quoted
for trading or listed for trading on  the  OTC  Bulletin  Board ("OTC'), Nasdaq
                                                                  ---
SmallCap  Market, New York Stock Exchange, American Stock Exchange or the Nasdaq
National  Market  (each,  a "Subsequent Market") and shall not again be eligible
                             -----------------
for  and  quoted  or  listed  for  trading  thereon  within  five  Trading Days;

<PAGE>
       (vi)    the Company shall be a party to any Change of Control Transaction
(as  defined  in  Section 6), shall agree to sell or dispose all or in excess of
33%  of  its  assets in one or more transactions (whether or not such sale would
constitute  a Change of Control Transaction), or shall redeem or repurchase more
than a de minimis number of shares of Common Stock or other equity securities of
the  Company (other than redemptions of Underlying Shares (as defined in Section
6));

       (vii)     an  Underlying  Shares  Registration  Statement (as defined in
Section 6) shall  not have been declared effective by the Commission (as defined
in Section 6) on or prior to  the 120th day  after  the  Original  Issue  Date;

       (viii)    if, during  the  Effectiveness  Period (as defined in the
Registration Rights Agreement (as defined in Section 6)), the effectiveness of
the Underlying Shares Registration Statement lapses for any reason or the Holder
shall not be permitted  to resell  Registrable  Securities  (as  defined in the
Registration  Rights  Agreement)  under  the  Underlying  Shares  Registration
Statement, in either case, for more than  five  consecutive  Trading Days or an
aggregate of eight Trading  Days (which need not be consecutive  Trading  Days);

       (ix)    an Event (as  defined in the Registration Rights Agreement) shall
not have been cured to the satisfaction of the Holder prior to the expiration of
thirty  days  from  the  Event  Date  (as  defined  in  the  Registration Rights
Agreement)  relating thereto (other than an Event resulting from a failure of an
Underlying  Shares  Registration  Statement  to  be  declared  effective  by the
Commission  on  or  prior  to the 120th day after the Original Issue Date, which
shall  be  covered  by  Section  3(a)(vii));

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

       (xi)     the Company  shall fail for any reason to deliver the payment in
cash pursuant to a  Buy-In (as defined herein)  within five days after notice is
claimed  delivered  hereunder;  or

<PAGE>
     (b)     During  the time that any portion of this Debenture is outstanding,
if  any  Event of Default occurs and is continuing, the full principal amount of
this  Debenture  (and, at the Holder's option, all other Debentures then held by
such Holder), together with interest and other amounts owing in respect thereof,
to  the  date of acceleration shall become at the Holder's election, immediately
due  and  payable  in  cash,  provided  however, that if the Company informs the
                              -----------------
Holder  that  it  will  be unable to pay the amounts due in cash, the Holder may
request  payment of such amounts in stock.  The number of shares of Common Stock
issuable in payment thereof shall be determined by dividing the aggregate amount
due to the Holder by the Conversion Price.  The aggregate amount payable upon an
Event  of  Default  shall  be  equal  to the sum of (i) the Mandatory Prepayment
Amount  (as  defined  in  Section  6) plus (ii) the product of (A) the number of
Underlying  Shares issued in respect of conversions hereunder within thirty days
of  the date of a declaration of an Event of Default and then held by the Holder
and  (B)  the  Per  Share  Market  Value  (as  defined in Section 6) on the date
prepayment  is  due  or the date the full prepayment price is paid, whichever is
greater.  Interest  shall  accrue  on  the  prepayment amount hereunder from the
seventh  day  after  such  amount is due (being the date of an Event of Default)
through  the date of prepayment in full thereof at the rate of 15% per annum (or
such  lesser  maximum amount that is permitted to be paid by applicable law), to
accrue  daily  from the date such payment is due hereunder through and including
the  date  of  payment.  All Debentures and Underlying Shares for which the full
prepayment  price  hereunder  shall  have been paid in accordance herewith shall
promptly  be  surrendered to or as directed by the Company.  The Holder need not
provide  and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace  period  enforce  any and all of its rights and remedies hereunder and all
other  remedies  available  to it under applicable law.  Such declaration may be
rescinded  and  annulled  by  Holder at any time prior to payment hereunder.  No
such  rescission  or  annulment  shall affect any subsequent Event of Default or
impair  any  right  consequent  thereon.

     Section4.       Conversion.
     ---------       ----------

     (a)     (i)      Conversion  at  Option of Holder. (A) This Debenture shall
                      --------------------------------
be convertible into shares of Common Stock at the option of the Holder, in whole
or  in  part  at  any  time and from time to time, after the Original Issue Date
(subject to the limitations on conversion set forth in Section 4(a)(ii) hereof).
The number of shares of Common Stock issuable upon a conversion hereunder equals
the  sum  of (i) the quotient obtained by dividing (x) the outstanding principal
amount of this Debenture to be converted by (y) the Conversion Price (see (c)(i)
for  this  section),  and  (ii)  the  amount equal to (I) the product of (x) the
outstanding  principal  amount  of  this  Debenture  to be converted and (y) the
product  of  (1) the quotient obtained by dividing .08 by 360 and (2) the number
of  days  for  which  such principal amount was outstanding, divided by (II) the
Conversion Price on the Conversion Date, provided, that if the Holder shall have
                                         --------
elected  to  receive  the  interest due on a Conversion Date in cash, subsection
(ii)  shall  not  be  used  in the calculation of the number of shares of Common
Stock  issuable  upon  a  conversion  hereunder.

     (B)     Notwithstanding  anything  to  the contrary contained herein, if on
any  Conversion  Date:

          (1)  the  number  of  shares  of  Common Stock at the time authorized,
unissued  and  unreserved  for  all  purposes,  or  held  as  treasury stock, is
insufficient  to pay principal and interest hereunder in shares of Common Stock;

<PAGE>
          (2) after the Principal and Interest Effectiveness Date (the ninetieth
day  after  closing)  such  shares  of  Common Stock  (x) are not registered for
resale pursuant to an effective Underlying Shares Registration Statement and (y)
may  not be sold without volume restrictions pursuant to Rule 144(k) promulgated
under  the Securities Act (as defined in Section 6), as determined by counsel to
the  Company  pursuant  to  a written opinion letter, addressed to the Company's
transfer agent in the form and substance acceptable to the applicable Holder and
such  transfer  agent (if the shares of Common Stock are permitted by the Holder
to  be  delivered  under  this  clause  (2)  prior to the Effectiveness Date (as
defined  in  the  Registration  Rights  Agreement)  and thereafter an Underlying
Shares Registration Statement shall be declared effective by the Commission, the
Company  shall,  within three Trading Days after the date of such declaration of
effectiveness,  exchange such shares for shares of Common Stock that are free of
restrictive  legends  of  any  kind);

          (3)  the  Common  Stock is not listed or quoted for trading on the OTC
Bulletin  Board  ("OTC')  or  on  a  Subsequent  Market;
                   ---

          (4)  the  Company  has  failed  to  timely  satisfy  its  conversion
obligations
hereunder;  or

          (5)  the  issuance  of  such  shares of Common Stock would result in a
violation  of Sections 4(a)(ii), then, at the option of the Holder, the Company,
in  lieu of delivering shares of Common Stock pursuant to Section 4(a)(i), shall
deliver, within three Trading Days of each applicable Conversion Date, an amount
in  cash  equal  to  the  product  of  the  outstanding  principal amount of the
Debentures  to  be  converted  plus  any  interest  due  therein  divided by the
conversion  price  and multiplied by the highest closing price of the stock from
date  of  the  conversion  notice  till the date that such cash payment is made.

     (C)     The Holder shall effect conversions by simultaneously delivering to
the  Company and the Escrow Agent a completed notice in the form attached hereto
as  Exhibit A (a "Conversion Notice"), including a completed Conversion Schedule
    ---------     -----------------
in the form of Schedule 1 to the Conversion Notice (on each Conversion Date, the
               ----------
"Conversion  Schedule").  The  Conversion Schedule shall set forth the remaining
 --------------------
principal  amount  of this Debenture and all accrued and unpaid interest thereon
subsequent to the conversion at issue.  The date on which a Conversion Notice is
delivered  is the "Conversion Date."  Unless the Holder is converting the entire
                   ---------------
principal amount outstanding under this Debenture, the Holder is not be required
to  physically  surrender  this  Debenture  to  the  Company  in order to effect
conversions.  Subject to Section 4(b), each Conversion Notice, once given, shall
be  irrevocable.  Conversions  hereunder  shall  have the effect of lowering the
outstanding  principal  amount  of  this  Debenture  plus all accrued and unpaid
interest thereon in an amount equal to the applicable conversion, which shall be
evidenced  by  entries set forth in the Conversion Schedule.  The Holder and the
Company  shall  maintain  records showing the principal amount converted and the
date  of  such  conversions.  In  the  event  of any dispute or discrepancy, the
records  of  the Holder shall be controlling and determinative in the absence of
manifest  error.

<PAGE>
       (ii)     Certain Conversion  Restrictions. A  Holder  may  not  convert
              ---------------------------------
Debentures or receive shares of Common Stock as payment of interest hereunder to
the  extent  such conversion or receipt of such interest payment would result in
the  Holder,  together  with  any  affiliate  thereof,  beneficially  owning (as
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
promulgated  thereunder)  in excess of 9.999% of the then issued and outstanding
shares  of  Common  Stock,  including  shares  issuable  upon conversion of, and
payment  of interest on, the Debentures held by such Holder after application of
this  Section.  Since  the Holder will not be obligated to report to the Company
the  number  of  shares  of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue would result in the issuance of shares
of  Common  Stock  in  excess of 9.999% of the then outstanding shares of Common
Stock  without regard to any other shares which may be beneficially owned by the
Holder  or  an  affiliate  thereof,  the  Holder  shall  have  the authority and
obligation  to  determine whether the restriction contained in this Section will
limit  any  particular  conversion  hereunder  and to the extent that the Holder
determines  that  the  limitation  contained  in  this  Section  applies,  the
determination  of  which  portion  of  the  principal  amount  of Debentures are
convertible  shall  be  the responsibility and obligation of the Holder.  If the
Holder  has  delivered  a Conversion Notice for a principal amount of Debentures
that,  without  regard to any other shares that the Holder or its affiliates may
beneficially  own,  would  result  in  the  issuance  in excess of the permitted
amount  hereunder,  the  Company  shall notify the Holder of this fact and shall
honor  the conversion for the maximum principal amount permitted to be converted
on such Conversion Date in accordance with the periods described in Section 4(b)
and,  at  the  option of the Holder, either retain any principal amount tendered
for  conversion  in  excess  of  the  permitted  amount  hereunder  for  future
conversions  or  return  such  excess  principal  amount  to  the  Holder.  The
provisions  of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 65 days prior notice to the Company.
Other  Holders  shall  be  unaffected  by  any  such  waiver.

     (b)     (i)     Not  later  than  three  Trading  Days after any Conversion
Date,  (i)  the Escrow Agent is hereby authorized and directed to deliver to the
Holder  a certificate or certificates which shall be free of restrictive legends
and  trading  restrictions  representing  the  number  of shares of Common Stock
issuable  upon  such conversion in accordance with the terms hereof (if there is
no Escrow Agent for such purpose or for any reason there are insufficient shares
of  Common Stock deposited with the Escrow Agent for delivery to the Holder upon
conversion  hereunder,  the  Corporation will deliver to the Holder within three
Trading Days the shares of Common Stock being acquired upon the conversion), and
(ii)  if the Holder has elected to receive accrued interest in cash, the Company
will  deliver  to  the  Holder a bank check, payable to Holder, in the amount of
accrued  and  unpaid  interest.  If  requested  by a Holder, the Company and the
Escrow  Agent  will  use  their  best  efforts  to  deliver  conversion  shares
electronically  through  the Depository Trust Corporation or another established
clearing  corporation  performing  similar functions.  If shares of Common Stock
issuable  following  a  Conversion Notice are not delivered to or as directed by
the Holder by the third Trading Day after a Conversion Date, the Holder shall be
entitled by written notice to the Escrow Agent and the Company at any time on or
before  its  receipt  of such shares, to rescind such conversion, in which event
the  Company  shall  immediately  return  to the Holder a Debenture in principal
amount  equal  to  the  principal  amount, interest and all other amounts due in
respect  of  the Conversion Notice (provided the Holder is converting the entire
principal  amount  outstanding  under  this  Debenture).

       (ii)    If the Company fails to deliver to the Holder such certificate or
certificates  pursuant  to  Section  4(b)(i)  by the third Trading Day after the
Conversion  Date,  the  Company shall pay to such Holder, in cash, as liquidated
damages  and  not  as  a  penalty,  $5,000 for each Trading Day after such third
Trading Day until such certificates are delivered.  Nothing herein shall limit a
Holder's  right to pursue actual damages or declare an Event of Default pursuant
to  Section  3  herein  for  the  Company's  failure  to  deliver  certificates
representing  shares of Common Stock upon conversion within the period specified
herein  and such Holder shall have the right to pursue all remedies available to
it  at  law  or  in  equity  including, without limitation, a decree of specific
performance and/or injunctive relief.  The exercise of any such rights shall not
prohibit  the  Holders  from  seeking  to  enforce damages pursuant to any other
Section  hereof or under applicable law.  Further, if the Company shall not have
delivered  any cash due in respect of conversions of Debentures or as payment of
interest  thereon by the third Trading Day after the Conversion Date, the Holder
may,  by  notice  to  the Company, require the Company to issue shares of Common
Stock  pursuant  to  Section  4(c),  except that for such purpose the Conversion
Price  applicable  thereto  shall  be  the lesser of the Conversion Price on the
Conversion Date and the Conversion Price on the date of such Holder demand.  Any
such  shares  will  be  subject  to  the  provision  of  this  Section.

<PAGE>
       (iii)     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(b)(i)  by the third Trading Day after the Conversion Date, and if
after such third 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  Underlying  Shares  which  the  Holder  anticipated receiving upon such
conversion  (a  "Buy-In"),  then the Company shall (A) pay in cash to the Holder
                 ------
(in  addition  to any remedies available to or elected by the Holder) the amount
by which (x) the Holder's total purchase price (including brokerage commissions,
if  any)  for  the  Common Stock so purchased exceeds (y) the product of (1) the
aggregate  number  of  shares  of  Common  Stock  that  such  Holder anticipated
receiving from the conversion at issue multiplied by (2) the 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 reissue Debentures in principal amount
equal  to  the  principal  amount  of the attempted conversion or deliver to the
Holder  the number of shares of Common Stock that would have been issued had the
Company  timely  complied  with its delivery requirements under Section 4(b)(i).
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 Underlying Shares on
the  date  of  conversion  was  a  total  of  $10,000  under  clause  (A) of the
immediately  preceding sentence, the Company shall be required to pay the Holder
$1,000.  The  Holder  shall  provide  the  Company written notice indicating the
amounts  payable  to  the  Holder  in  respect  of  the Buy-In.  Notwithstanding
anything  contained  herein to the contrary, if a Holder requires the Company to
make  payment  in  respect  of  a  Buy-In  for  the  failure  to  timely deliver
certificates  hereunder  and  the  Company timely pays in full such payment, the
Company  shall  not  be  required  to  pay  such Holder liquidated damages under
Section  4(b)(ii)  in  respect  of  the  certificates  resulting in such Buy-In.

     (c)     (i)     The  conversion price (the "Conversion Price") in effect on
                                                 ----------------
any  Conversion  Date shall be the lesser of (1) $.04 and (2) 70% of the average
of  the  lowest  three  inter-day  trading  prices  (which  need  not  occur  on
consecutive  Trading  Days) during the thirty Trading Days immediately preceding
the  applicable  Conversion  Date  (which  may include Trading Days prior to the
Original  Issue  Date),  provided,  that such thirty Trading Day period shall be
                         --------
extended  for the number of Trading Days during such period in which (A) trading
in  the  Common  Stock  is  suspended by, or not traded on, the pink sheets or a
Subsequent  Market  on  which  the Common Stock is then listed, or (B) after the
date  declared  effective  by the Commission, the Underlying Shares Registration
Statement  is either not effective or  the Prospectus included in the Underlying
Shares  Registration  Statement  may not be used by the Holder for the resale of
Underlying  Shares.

<PAGE>
       (ii)    If the Company, at any time while the Debentures are outstanding,
(a) shall pay a stock dividend or otherwise make a distribution or distributions
on  shares  of  its  Common  Stock  or  any  other  equity  or equity equivalent
securities  payable  in shares of Common Stock, (b) subdivide outstanding shares
of Common Stock into a larger number of shares, (c) combine (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares,  or  (d)  issue  by  reclassification  of shares of the Common Stock any
shares  of capital stock of the Company, then the Initial Conversion Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of  Common  Stock  (excluding  treasury  shares, if any) outstanding before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding  after  such  event.  Any  adjustment  made pursuant to this Section
shall  become  effective immediately after the record date for the determination
of  stockholders  entitled  to  receive  such dividend or distribution and shall
become  effective  immediately  after  the  effective  date  in  the  case  of a
subdivision,  combination  or  re-classification.

       (iii)     If the Company,  at  any time while Debentures are outstanding,
shall  issue rights, options or warrants to all holders of Common Stock (and not
to  Holders)  entitling them to subscribe for or purchase shares of Common Stock
at  a  price  per  share less than the Per Share Market Value at the record date
mentioned below, then the Conversion Price shall be multiplied by a fraction, of
which  the  denominator  shall  be  the  number  of  shares  of the 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 of which the numerator shall be the number of
shares  of  the  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 such Per Share Market Value.  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 stockholders entitled to receive such
rights,  options  or  warrants.  However, upon the expiration of any such right,
option  or  warrant to purchase shares of the Common Stock the issuance of which
resulted  in  an adjustment in the Conversion Price pursuant to this Section, if
any  such  right,  option  or  warrant  shall  expire  and  shall  not have been
exercised,  the  Conversion  Price  shall  immediately  upon  such expiration be
recomputed  and  effective  immediately upon such expiration be increased to the
price  which  it  would  have  been (but reflecting any other adjustments in the
Conversion  Price  made  pursuant  to  the  provisions of this Section after the
issuance  of such rights or warrants) had the adjustment of the Conversion Price
made  upon  the  issuance  of  such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common  Stock  actually  purchased  upon the exercise of such rights, options or
warrants  actually  exercised.

<PAGE>
       (iv)     If the Company  or  any  subsidiary  thereof, as applicable with
respect  to  Common  Stock  Equivalents  (as  defined  below), at any time while
Debentures  are  outstanding,  shall  issue  shares  of  Common Stock or rights,
warrants,  options  or  other  securities  or  debt that are convertible into or
exchangeable  for  shares of Common Stock ("Common Stock Equivalents") entitling
                                            ------------------------
any Person to acquire shares of Common Stock, at a price per share less than the
Conversion  Price  (if the holder of the Common Stock or Common Stock Equivalent
so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or  due  to  warrants, options or rights per share which is issued in connection
with such issuance, be entitled to receive shares of Common Stock at a price per
share  which is less than the Conversion Price, such issuance shall be deemed to
have  occurred  for less than the Conversion Price), then, at the sole option of
the  Holder,  the  Conversion  Price shall be adjusted to mirror the conversion,
exchange  or  purchase  price  for such Common Stock or Common Stock Equivalents
(including  any  reset  provisions  thereof) at issue.  Such adjustment shall be
made  whenever  such  Common  Stock or Common Stock Equivalents are issued.  The
Company  shall  notify the Holder and the Escrow Agent in writing, no later than
the  business  day  following  the  issuance of any Common Stock or Common Stock
Equivalent  subject  to this section, indicating therein the applicable issuance
price,  or of applicable reset price, exchange price, conversion price and other
pricing  terms.  No  adjustment  under this Section shall be made as a result of
(i)  issuances  of  Common  Stock  or  Common  Stock  Equivalents  to the extent
disclosed  in  Schedule  2.1(c)  to  the  Purchase Agreement, (ii) issuances and
exercises  of options to purchase shares of Common Stock issued for compensatory
purposes  pursuant to any of the Company's stock option or stock purchase plans,
or  (iii)  exercises  under the Warrants (as defined in the Purchase Agreement).

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

       (vi)     In case of  any  reclassification  of  the  Common  Stock or any
compulsory  share  exchange pursuant to which the Common Stock is converted into
other  securities, cash or property, the Holders shall have the right thereafter
to, at their option, (A) convert the then outstanding principal amount, together
with  all accrued but unpaid interest and any other amounts then owing hereunder
in respect of this Debenture only into the shares of stock and other securities,
cash  and property receivable upon or deemed to be held by holders of the Common
Stock  following such reclassification or share exchange, and the Holders of the
Debentures  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 then outstanding principal amount, together with all accrued but
unpaid  interest  and  any other amounts then owing hereunder in respect of this
Debenture  could  have been converted immediately prior to such reclassification
or  share exchange would have been entitled or (B) require the Company to prepay
the  aggregate  of  its  outstanding  principal  amount  of Debentures, plus all
interest  and  other  amounts  due and payable thereon, at a price determined in
accordance  with  Section  3(b).  The  entire  prepayment price shall be paid in
cash.  This  provision  shall similarly apply to successive reclassifications or
share  exchanges.

       (vii)  Company share reserve  not  less than 200% of the shares of Common
Stock issuable upon conversion in full of the Debentures and exercise in full of
the Warrants; and within five Business Days following the receipt by the Company
of  a Purchaser's notice that such minimum number of Underlying Shares is not so
reserved,  the  Company  shall promptly reserve a sufficient number of shares of
Common  Stock  to  comply  with  such  requirement.

       (vii)     All calculations under  this  Section  4  shall  be made to the
nearest  cent  or  the  nearest  1/100th  of  a  share,  as the case may be.  No
adjustments in either the Conversion Price or the Initial Conversion Price shall
be  required  if such adjustment is less than $0.01, provided, however, that any
                                                     --------
adjustments which by reason of this Section are not required to be made shall be
carried  forward  and  taken  into  account  in  any  subsequent  adjustment.

<PAGE>
       (viii)     Whenever either the Initial Conversion Price or the Conversion
Price  is  adjusted pursuant to any of Section 4(c)(ii) - (v), the Company shall
promptly mail to each Holder a notice setting forth the Initial Conversion Price
or  Conversion  Price  (as applicable) after such adjustment and setting forth a
brief  statement  of  the  facts  requiring  such  adjustment.

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

<PAGE>
       (x)     In case of any (1) merger or consolidation of the Company with or
into  another  Person,  or  (2) sale by the Company of more than one-half of the
assets of the Company in one or a series of related transactions, a Holder shall
have  the  right  to (A) exercise any rights under Section 3(b), (B) convert its
aggregate  principal  amount  of  Debentures then outstanding into the shares of
stock  and  other  securities, cash and property receivable upon or deemed to be
held  by  holders  of Common Stock following such merger, consolidation or sale,
and such Holder shall be entitled upon such event or series of related events to
receive  such  amount  of  securities, cash and property as the shares of Common
Stock  into  which such aggregate principal amount of Debentures could have been
converted  immediately  prior  to such merger, consolidation or sales would have
been  entitled,  or  (C)  in  the case of a merger or consolidation, require the
surviving  entity to issue to the Holder convertible debentures with a principal
amount  equal  to the aggregate principal amount of Debentures then held by such
Holder,  plus  all  accrued and unpaid interest and other amounts owing thereon,
which  newly issued convertible debentures shall have terms identical (including
with  respect  to  conversion)  to  the  terms  of  this Debenture, and shall be
entitled to all of the rights and privileges of a Holder of Debentures set forth
herein  and the agreements pursuant to which the Debentures were issued.  In the
case  of clause (C), the conversion price applicable for the newly issued shares
of convertible preferred stock or convertible debentures shall be based upon the
amount  of  securities,  cash and property that each share of Common Stock would
receive in such transaction and the Conversion Price in effect immediately prior
to  the  effectiveness  or  closing date for such transaction.  The terms of any
such merger, sale or consolidation shall include such terms so as to continue to
give  the  Holders  the  right  to receive the securities, cash and property set
forth  in  this  Section upon any conversion or redemption following such event.
This  provision  shall  similarly  apply  to  successive  such  events.

     (d)     The  Company  covenants  that it will at all times reserve and keep
available  out  of its authorized and unissued shares of Common Stock solely for
the  purpose  of  issuance  upon  conversion  of  the  Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or  any  other  actual  contingent  purchase  rights  of  persons other than the
Holders,  not  less  than  such  number  of  shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments  and  restrictions  of  Section  4(b))  upon  the  conversion of the
outstanding  principal  amount  of  the  Debentures  and  payment  of  interest
hereunder.  The  Company covenants that all shares of Common Stock that shall be
so  issuable shall, upon issue, be duly and validly authorized, issued and fully
paid,  nonassessable  and,  if  the Underlying Shares Registration Statement has
been  declared effective under the Securities Act, registered for public sale in
accordance  with  such  Underlying  Shares  Registration  Statement.

     (e)     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.

     (f)     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.

<PAGE>
     (g)     Any  and  all  notices  or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Conversion
Notice,  shall  be  in writing and delivered personally, by facsimile, sent by a
nationally  recognized  overnight  courier  service  or  sent  by  certified  or
registered mail, postage prepaid, addressed to the Company, at 2961 W. MacArthur
Blvd.,  Suite 121, Santa Ana, CA 92704, Facsimile No.: 714/ 436-9728, attention:
Steve  Fryer,  or  such  other  address  or  facsimile number as the Company may
specify  for such purposes by notice to the Holders delivered in accordance with
this  Section,  with  a  copy  to  (other  than  for  Conversion  Notices)  [
],  Facsimile  No.:  [   ]  [        ], Attn: [       ].  Any and all notices or
other communications or deliveries to be provided by the Company hereunder shall
be  in  writing  and  delivered  personally,  by facsimile, sent by a nationally
recognized  overnight  courier  service or sent by certified or registered mail,
postage  prepaid,  addressed to each Holder at the facsimile telephone number or
address  of  such  Holder  appearing  on the books of the Company, or if no such
facsimile  telephone  number  or  address  appears,  at  the  principal place of
business  of  the  Holder.  Any  notice  or  other  communication  or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number  specified  in this Section prior to 5:00 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication  is  delivered  via  facsimile  at  the facsimile telephone number
specified  in this Section later than 5:00 p.m. (New York City time) on any date
and  earlier  than 11:59 p.m. (New York City time) on such date, (iii) four days
after  deposit  in  the  United States mail, (iv) the Business Day following the
date  of mailing, if sent by nationally recognized overnight courier service, or
(v)  upon  actual  receipt  by  the  party to whom such notice is required to be
given.

     Section  5.   Definitions.  For  the  purposes  hereof, the following terms
     -----------   -----------
shall  have  the  following  meanings:

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

<PAGE>
     "Change  of  Control  Transaction"  means  the  occurrence of any of (i) an
      --------------------------------
acquisition  after  the  date hereof by an individual or legal entity or "group"
(as  described  in  Rule  13d-5(b)(1)  promulgated  under  the  Exchange Act) of
effective  control  (whether  through  legal  or beneficial ownership of capital
stock  of  the  Company,  by  contract  or otherwise) of in excess of 33% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more  than  one-half of the members of the Company's board of directors which is
not  approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was  approved  by  a  majority  of the members of the board of directors who are
members  on  the  date  hereof),  (iii)  the  merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
50%  or  more  of  the  assets  of  the  Company  in  one or a series of related
transactions,  or (iv) the execution by the Company of an agreement to which the
Company  is a party or by which it is bound, providing for any of the events set
forth  above  in  (i),  (ii)  or  (iii).

     "Commission"  means  the  Securities  and  Exchange  Commission.
      ----------

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

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

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

<PAGE>
     "Person"  means a corporation, an association, a partnership, organization,
      ------
a  business,  an  individual, a government or political subdivision thereof or a
governmental  agency.

     "Purchase  Agreement"  means  the  Secured  Convertible  Debenture Purchase
      -------------------
Agreement,  dated  February  [   ],  200,  to which the Company and the original
Holder  are  parties,  as amended, modified or supplemented from time to time in
accordance  with  its  terms.

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

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

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

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

     "Underlying  Shares"  means  the  shares  of  Common  Stock  issuable  upon
      ------------------
conversion  of Debentures or as payment of interest in accordance with the terms
      --
hereof.

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

<PAGE>
     Section  6.       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,  herein  prescribed.  This  Debenture  is  a  direct obligation of the
Company.  This  Debenture  ranks  pari  passu  with  all other Debentures now or
                                  ----  -----
hereafter  issued  under  the  terms  set  forth  herein.  As  long as there are
Debentures  outstanding,  the  Company shall not and shall cause it subsidiaries
not  to,  without  the  consent  of  the  Holders,  (i) amend its certificate of
incorporation,  bylaws  or other charter documents so as to adversely affect any
rights  of  the Holders; (ii) repay, repurchase or offer to repay, repurchase or
otherwise  acquire  shares  of its Common Stock or other equity securities other
than  as  to the Underlying Shares to the extent permitted or required under the
Transaction  Documents; or (iii) enter into any agreement with respect to any of
the  foregoing.   The  Company  may  only  voluntarily  prepay  the  outstanding
principal  amount  on  the  Debentures  in  accordance  with  Section  5 hereof.

     Section  7.       This Debenture shall not entitle the Holder to any of the
     -----------
rights  of a stockholder of the Company, including without limitation, the right
to  vote, to receive dividends and other distributions, or to receive any notice
of,  or  to  attend,  meetings  of  stockholders or any other proceedings of the
Company,  unless  and  to  the  extent  converted into shares of Common Stock in
accordance  with  the  terms  hereof.

     Section  8.       If  this  Debenture  shall  be mutilated, lost, stolen or
     -----------
destroyed,  the  Company shall execute and deliver, in exchange and substitution
for  and  upon  cancellation  of  a  mutilated  Debenture,  or  in lieu of or in
substitution  for a lost, stolen or destroyed debenture, a new Debenture for the
principal  amount  of this Debenture so mutilated, lost, stolen or destroyed but
only  upon  receipt  of  evidence  of  such  loss,  theft or destruction of such
Debenture,  and  of  the  ownership  hereof,  and  indemnity,  if requested, all
reasonably  satisfactory  to  the  Company.

     Section  9.  No  indebtedness of the Company is senior to this Debenture in
     -----------
right  of payment, whether with respect to interest, damages or upon liquidation
or dissolution or otherwise. The Company will not and will not permit any of its
subsidiaries  to,  directly  or indirectly, enter into, create, incur, assume or
suffer  to  exist any indebtedness of any kind, on or with respect to any of its
property  or  assets  now owned or hereafter acquired or any interest therein or
any  income  or profits therefrom that is senior in any respect to the Company's
obligations  under  the  Debentures.

     Section  10.  This  Debenture  shall  be  governed  by  and  construed  in
     ------------
accordance  with  the  laws  of  the State of New York, without giving effect to
     ---
conflicts  of  laws  thereof.  The  Company  and  the  Holder hereby irrevocably
submits to the exclusive 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, or that such suit, action or proceeding is
improper.  Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or  proceeding by receiving a copy thereof sent to the Company at the address in
effect  for  notices  to  it  under this instrument and agrees that such service
shall  constitute  good  and  sufficient  service of process and notice thereof.
Nothing  contained herein shall be deemed to limit in any way any right to serve
process  in  any  manner  permitted  by  law.  Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law.  Each  party  irrevocably  waives,  to  the  fullest  extent  permitted  by
applicable  law,  any  and  all  right  to trial by jury in any legal proceeding
arising  out  of  or relating to this Agreement or the transactions contemplated
hereby.  If  either  party shall commence an action or proceeding to enforce any
provisions  of  a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its' attorneys fees and
other  costs  and  expenses  incurred  with  the  investigation, preparation and
prosecution  of  such  action  or  proceeding.

<PAGE>
     Section  11.  Any  waiver  by  the Company or the Holder of a breach of any
     ------------
provision  of this Debenture shall not operate as or be construed to be a waiver
of  any  other breach of such provision or of  any breach of any other provision
of  this  Debenture.  The  failure  of  the Company or the Holder to insist upon
strict  adherence  to  any term of this Debenture on one or more occasions shall
not  be  considered  a  waiver  or deprive that party of the right thereafter to
insist  upon  strict adherence to that term or any other term of this Debenture.
Any  waiver  must  be  in  writing.

     Section  12.  If  any  provision  of  this Debenture is invalid, illegal or
     ------------
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision  is  inapplicable to any person or circumstance, it shall nevertheless
remain  applicable to all other persons and circumstances.  If it shall be found
that  any  interest  or other amount deemed interest due hereunder shall violate
applicable  laws  governing usury, the applicable rate of interest due hereunder
shall  automatically be lowered to equal the maximum permitted rate of interest.
The  Company  covenants (to the extent that it may lawfully do so) that it shall
not  at  any  time insist upon, plead, or in any manner whatsoever claim or take
the  benefit  or  advantage  of,  any  stay, extension or usury law or other law
which  would  prohibit  or forgive the Company from paying all or any portion of
the  principal of or interest on the Debentures as contemplated herein, wherever
enacted,  now  or  at  any  time  hereafter  in  force,  or which may affect the
covenants  or  the performance of this indenture, and the Company (to the extent
it  may lawfully do so) hereby expressly waives all benefits or advantage of any
such  law,  and  covenants  that it will not, by resort to any such law, hinder,
delay  or  impeded  the execution of any power herein granted to the Holder, but
will  suffer  and  permit  the execution of every such as though no such law has
been  enacted.

     Section  13.  Whenever  any  payment or other obligation hereunder shall be
     ------------
due  on  a day other than a Business Day, such payment shall be made on the next
succeeding  Business  Day.

     Section  14.  The  payment  obligations  under  this  Debenture  and  the
     ------------
obligations  of  the Company to the Holder arising upon the conversion of all or
     ---
any  of  the  Debentures  in  accordance  with the provisions hereof are secured
pursuant  to  the  Security  Agreement  (as  defined in the Purchase Agreement).

     Section  15.  Injunction  -  Posting  of  Bond.  The Company may not refuse
     ------------  --------------------------------
conversion  of  a  Note  based  on  any  claim  that  such Subscriber or any one
associated  or affiliated with such Subscriber has been engaged in any violation
of  law, or for any other reason, unless, an injunction from a court, on notice,
restraining  and  or enjoining conversion of all or part of said Note shall have
been  sought and obtained and the Company posts a surety bond for the benefit of
such  Subscriber  in  the  amount  of  130%  of the amount of the Note, which is
subject  to  the  injunction,  which  bond  shall  remain  in  effect  until the
completion  of  arbitration/litigation  of the dispute and the proceeds of which
shall  be  payable to such Subscriber to the extent Subscriber obtains judgment.

<PAGE>

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

                               PEN  INTERCONNECT,  INC.

                               By:  /s/  Steven  Fryer
                                         -------------
                               Name:     [Steven  Fryer          ]
                               Title:     [CEO                   ]

<PAGE>

11903-00011/845991.2
                                    EXHIBIT  A

                              NOTICE  OF  CONVERSION

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

The  undersigned  hereby elects to convert the attached Debenture into shares of
common  stock,  $0.01  par  value  per  share  (the  "Common  Stock"),  of  Pen
Interconnect,  Inc(the "Company") according to the conditions hereof, as of the
date  written  below.  If  shares are to be issued in the name of a person other
than  the  undersigned, the undersigned will pay all transfer taxes payable with
respect  thereto  and  is  delivering herewith such certificates and opinions as
reasonably  requested  by  the  Company in accordance therewith.  No fee will be
charged  to  the  holder  for any conversion, except for such transfer taxes, if
any.

Conversion  calculations:      ----------------------------------------------
                               Date to Effect Conversion
                               ----------------------------------------------
                               Principal Amount of Debentures to be Converted

                               Payment of Interest in Kind  _ Yes
                                                            _ No
                                 If yes,  $  _______ of Interest Accrued
                                 on  Account  of Conversion at Issue
                               ----------------------------------------------
                               Number of shares of Common Stock to be Issued
                               ----------------------------------------------
                               Applicable  Conversion  Price
                               ----------------------------------------------
                               Signature
                               -----------------------------
                               Name
                               -----------------------------
                               Address

<PAGE>
                                  SCHEDULE  1

                            CONVERSION  SCHEDULE

                             PEN INTERCONNECT, INC.
      8% Secured Convertible Debentures due March [   ], 2002, in the aggregate
   principal amount of $75,000 issued by Pen Interconnect, Inc.  This Conversion
Schedule reflects conversions made under Section 4(a)(i) of the above referenced
                                   Debentures.

                                      Dated:

<TABLE>
<CAPTION>

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

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

</TABLE>

<PAGE>

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