Document:

Exhibit 10.20

                          GUARANTY AND PLEDGE AGREEMENT

                  GUARANTY AND PLEDGE AGREEMENT (this "Agreement"), dated as of
April 16, 2003, among Torbay Holdings, Inc., a Delaware corporation (the
"Company"), William Thomas Large (the "Pledgor"), AJW Partners, LLC, a limited
liability company ("AJW"), New Millennium Capital Partners II, LLC, a limited
liability company ("New Millennium"), AJW Offshore, Ltd., a limited liability
company ("Offshore"), and AJW Qualified Partners, LLC, a limited liability
company ("Qualified" and, together with AJW, New Millennium and Offshore, the
"Pledgees").

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS, the Company and the Pledgees are parties to that
certain Securities Purchase Agreement, of even date herewith (the "Purchase
Agreement"), pursuant to which the Company (i) has issued (a) 12% secured
convertible debentures in the aggregate principal amount of $50,000 and (b)
stock purchase warrants to purchase an aggregate of 100,000 shares of the
Company's common stock, $0.0001 par value per share (the "Common Stock") and
(ii) will issue, pursuant to Section 1(d) of the Purchase Agreement, (a) 12%
secured convertible debentures in the aggregate principal amount of $200,000,
and (b) stock purchase warrants to purchase an aggregate of 400,000 shares of
the Common Stock; and

                  WHEREAS, as a material inducement to the Pledgees to enter
into the Purchase Agreement, the Pledgees have required and the Pledgor has
agreed (i) to unconditionally guarantee the timely and full satisfaction of all
obligations of the Company, whether matured or unmatured, now or hereafter
existing or created and becoming due and payable (the "Obligations") to the
Pledgees, their successors, endorsees, transferees or assigns under the
Transaction Documents (as defined in the Purchase Agreement) to the extent of
the Collateral (as defined in Section 5 hereof), and (ii) to grant to the
Pledgees, their successors, endorsees, transferees or assigns a security
interest in the number of shares of Common Stock currently owned by the Pledgor
as set forth below the Pledgor's signature on the signature page hereto
(collectively, the "Shares"), as collateral security for Obligations. Terms used
and not defined herein shall have the meaning ascribed to them in the Purchase
Agreement.

                  NOW, THEREFORE, in consideration of the foregoing recitals,
and the mutual covenants contained herein, the parties hereby agree as follows:

                  1.  Guaranty.  To the extent of the  Collateral,  the  Pledgor
hereby absolutely,  unconditionally and irrevocably  guarantees to the Pledgees,
their  successors,  endorsees,  transferees  and  assigns  the due and  punctual
performance  and  payment  of  the  Obligations  owing  to the  Pledgees,  their
successors,  endorsees,  transferees  or assigns  when due,  all at the time and
place and in the amount and manner  prescribed  in, and  otherwise in accordance
with,  the  Transaction   Documents,   regardless  of  any  defense  or  set-off
counterclaim  which the  Company or any other  person  may have or  assert,  and
regardless  of whether or not the  Pledgees or anyone on behalf of the  Pledgees
shall have  instituted any suit,  action or proceeding or exhausted its remedies
or taken any steps to enforce any rights against the Company or any other person
to

<PAGE>

compel any such  performance or observance or to collect all or part of any such
amount, either pursuant to the provisions of the Transaction Documents or at law
or in equity, and regardless of any other condition or contingency.  The Pledgor
shall have no  obligation  whatsoever  to the  Pledgees  beyond  the  Collateral
pledged for the Obligations set forth herein.

                  2. Waiver of Demand. The Pledgor hereby  unconditionally:  (i)
waives  any  requirement  that the  Pledgees,  in the  event of a breach  in any
material respect by the Company of any of its  representations  or warranties in
the Transaction  Documents,  first make demand upon, or seek to enforce remedies
against, the Company or any other person before demanding payment of enforcement
hereunder;  (ii) covenants that this Agreement will not be discharged  except by
complete  performance of all the  Obligations  to the extent of the  Collateral;
(iii) agrees that this  Agreement  shall remain in full force and effect without
regard to, and shall not be affected or impaired,  without  limitation,  by, any
invalidity,  irregularity  or  unenforceability  in  whole  or in  part  of  the
Transaction  Documents  or any  limitation  on  the  liability  of  the  Company
thereunder, or any limitation on the method or terms of payment thereunder which
may now or  hereafter  be caused or imposed in any manner  whatsoever;  and (iv)
waives diligence, presentment and protest with respect to, and notice of default
in the  performance  or payment of any  Obligation  by the  Company  under or in
connection with the Transaction Documents.

                  3. Release. The obligations,  covenants, agreements and duties
of the  Pledgor  hereunder  shall not be  released,  affected or impaired by any
assignment or transfer, in whole or in part, of the Transaction Documents or any
Obligation,  although made without  notice to or the consent of the Pledgor,  or
any  waiver by the  Pledgees,  or by any other  person,  of the  performance  or
observance  by the Company or the Pledgor of any of the  agreements,  covenants,
terms or conditions contained in the Transaction Documents, or any indulgence in
or the  extension  of the  time  or  renewal  thereof,  or the  modification  or
amendment  (whether  material or  otherwise),  or the  voluntary or  involuntary
liquidation,  sale or other  disposition  of all or any  portion of the stock or
assets  of  the  Company  or  the  Pledgor,  or  any  receivership,  insolvency,
bankruptcy,  reorganization, or other similar proceedings, affecting the Company
or the  Pledgor or any assets of the Company or the  Pledgor,  or the release of
any proper from any security for any  Obligation,  or the impairment of any such
property or security,  or the release or discharge of the Company or the Pledgor
from the performance or observance of any agreement, covenant, term or condition
contained in or arising out of the Transaction Documents by operation of law, or
the merger or consolidation of the Company, or any other cause,  whether similar
or dissimilar to the foregoing.

4.                Subrogation.

                  (a)  Unless  and  until   complete   performance  of  all  the
Obligations to the extent of the  Collateral,  the Pledgor shall not be entitled
to  exercise  any right of  subrogation  to any of the  rights  of the  Pledgees
against the Company or any collateral  security or guaranty held by the Pledgees
for the payment or  performance of the  Obligations,  nor shall the Pledgor seek
any  reimbursement  from the Company in respect of payments  made by the Pledgor
hereunder.

                  (b) In the extent that the Pledgor  shall become  obligated to
perform  or pay any sums  hereunder,  or in the event  that for any  reason  the
Company is now or shall hereafter become indebted to the Pledgor,  the amount of
such sum shall at all times be

                                       2
<PAGE>

subordinate  as to lien,  time of  payment  and in all  other  respects,  to the
amounts owing to the Pledgees  under the  Transaction  Documents and the Pledgor
shall not enforce or receive  payment  thereof until all  Obligations due to the
Pledgees  under the  Transaction  have been  performed or paid.  Nothing  herein
contained  is intended or shall be construed to give to the Pledgor any right of
subrogation in or under the Transaction  Documents,  or any right to participate
in any way  therein,  or in any right,  title or  interest  in the assets of the
Pledgees.

                  5. Security.  As collateral  security for the punctual payment
and performance,  when due, by the Company of all the  Obligations,  the Pledgor
hereby pledges with, hypothecates,  transfers and assigns to the Pledgees all of
the Shares and all proceeds, shares and other securities received, receivable or
otherwise  distributed  in respect of or in exchange for the Shares,  including,
without  limitation,  any shares and other securities into which such Shares may
be convertible or exchangeable  (collectively,  the "Additional  Collateral" and
together  with the  Shares,  the  "Collateral").  Simultaneously  herewith,  the
Pledgor  shall  deliver to the  Pledgees  the  certificate(s)  representing  the
Shares,  stamped with a bank  medallion  guarantee,  along with a stock transfer
power duly  executed  in blank by the  Pledgor,  to be held by the  Pledgees  as
security.  Any  Collateral  received  by the Pledgor on or after the date hereof
shall be immediately  delivered to the Pledgees together with any executed stock
powers or other transfer documents requested by the Pledgees,  which request may
be made at any time prior to the date when the Obligations  shall have been paid
and otherwise satisfied in full.

                  6. Voting Power, Dividends, Etc. and other Agreements.

                  (a)  Unless  and  until an Event of  Default  (as set forth in
Section 7 hereof) has occurred, the Pledgor shall be entitled to:

                                    (i)  Exercise all voting  and/or  consensual
                  powers pertaining to the Collateral,  or any part thereof, for
                  all purposes;

                                    (ii) Receive and retain  dividends paid with
                  respect to the Collateral; and

                                    (iii) Receive the benefits of any income tax
                  deductions  available to the Pledgor as a  shareholder  of the
                  Company.

                  (b)  The  Pledgor  agrees  that  it  will  not  sell,  assign,
transfer, pledge, hypothecate, encumber or otherwise dispose of the Collateral.

                  (c) The Pledgor and the Company jointly and severally agree to
pay all  costs  including  all  reasonable  attorneys'  fees  and  disbursements
incurred by the Pledgees in enforcing  this  Agreement  in  accordance  with its
terms.

                                       3
<PAGE>

                  7. Default and Remedies.

                  (a) For the  purposes  of this  Agreement,  "Event of Default"
shall mean:

                                    (i)   default   in  or  under   any  of  the
                  Obligations  after  the  expiration,   without  cure,  of  any
                  applicable cure period;

                                    (ii) a breach in any material respect by the
                  Company of any of its  representations  or  warranties  in the
                  Transaction Documents; or

                                    (iii) a breach in any  material  respect  by
                  the Pledgor of any of its  representations  or  warranties  in
                  this Agreement.

                  (b) the  Pledgees  shall have the  following  rights  upon any
Event of Default:

                                    (i) the rights and remedies  provided by the
                  Uniform  Commercial  Code as  adopted by the State of New York
                  (the "UCC") (as said law may at any time be amended);

                                    (ii) the right to  receive  and  retain  all
                  dividends,  payments and other  distributions of any kind upon
                  any or all of the Collateral;

                                    (iii)  the  right to cause any or all of the
                  Collateral to be transferred to its own name or to the name of
                  its designee and have such  transfer  recorded in any place or
                  places deemed appropriate by the Pledgees; and

                                    (iv)  the  right to  sell,  at a  public  or
                  private  sale,  the  Collateral  or any part thereof for cash,
                  upon  credit  or for  future  delivery,  and at such  price or
                  prices in accordance  with the UCC (as such law may be amended
                  from time to time). Upon any such sale the Pledgees shall have
                  the right to deliver,  assign and  transfer  to the  purchaser
                  thereof the  Collateral so sold.  The Pledgees  shall give the
                  Pledgor  not less than ten (10)  days'  written  notice of its
                  intention to make any such sale. Any such sale,  shall be held
                  at such time or times during  ordinary  business  hours and at
                  such place or places as the  Pledgees may fix in the notice of
                  such  sale.  The  Pledgees  may  adjourn or cancel any sale or
                  cause  the  same  to  be  adjourned   from  time  to  time  by
                  announcement  at the time and place  fixed  for the sale,  and
                  such  sale may be made at any time or place to which  the same
                  may be so adjourned. In case of any sale of all or any part of
                  the Collateral  upon terms calling for payments in the future,
                  any  Collateral so sold may be retained by the Pledgees  until
                  the selling  price is paid by the purchaser  thereof,  but the
                  Pledgees  shall incur no  liability in the case of the failure
                  of such  purchaser  to take up and pay for the  Collateral  so
                  sold and, in the case of such  failure,  such  Collateral  may
                  again be sold upon like notice. The Pledgees, however, instead
                  of exercising  the power of sale herein  conferred  upon them,
                  may  proceed  by a  suit  or  suits  at law  or in  equity  to
                  foreclose the security  interest and sell the  Collateral,  or
                  any portion thereof,  under a judgment or decree of a court or
                  courts of  competent  jurisdiction,
                                       4

<PAGE>

                  the Pledgor  having been given due notice of all such  action.
                  The Pledgees shall incur no liability as a result of a sale of
                  the  Collateral or any part thereof.  All proceeds of any such
                  sale,  after deducting the reasonable  expenses and reasonable
                  attorneys' fees incurred in connection  with such sale,  shall
                  be applied in reduction of the Obligations, and the remainder,
                  if any, shall be paid to the Pledgor.

                  8. Application of Proceeds;  Release. The proceeds of any sale
or  enforcement of or against all or any part of the  Collateral,  and any other
cash or collateral at the time held by the Pledgees hereunder,  shall be applied
by the Pledgees first to the payment of the reasonable costs of any such sale or
enforcement,  then to reimburse the Pledgees for any damages,  costs or expenses
incurred by the Pledgees as a result of an Event of Default, then to the payment
of the  principal  amount or stated valued (as  applicable)  of, and interest or
dividends  (as  applicable)  and any  other  payments  due in  respect  of,  the
Obligations.  The remainder,  if any,  shall be paid to the Pledgor.  As used in
this  Agreement,  "proceeds"  shall mean  cash,  securities  and other  property
realized in respect of, and distributions in kind of, the Collateral,  including
any thereof received under any reorganization, liquidation or adjustment of debt
of any issuer of securities included in the Collateral.

                  9. Representations and Warranties.

                  (a) The Pledgor hereby represents and warrants to the Pledgees
that:

                                    (i) the Pledgor has full power and authority
                  and  legal  right to pledge  the  Collateral  to the  Pledgees
                  pursuant to this  Agreement and this  Agreement  constitutes a
                  legal,   valid  and  binding   obligation   of  the   Pledgor,
                  enforceable in accordance with its terms.

                                    (ii) the execution, delivery and performance
                  of this Agreement and other  instruments  contemplated  herein
                  will not violate any  provision  of any order or decree of any
                  court  or  governmental  instrumentality  or of any  mortgage,
                  indenture, contract or other agreement to which the Pledgor is
                  a party or by which  the  Pledgor  and the  Collateral  may be
                  bound,  and will not result in the creation or  imposition  of
                  any lien,  charge or encumbrance on, or security  interest in,
                  any of the Pledgor's  properties pursuant to the provisions of
                  such mortgage, indenture, contract or other agreement.

                                    (iii) the  Pledgor  is the sole  record  and
                  beneficial owner of all of the Shares; and

                                    (iv) the Pledgor  owns the  Collateral  free
                  and clear of all Liens.

                  (b) The Company represents and warrants to the Pledgees that:

                                    (i)  it  has no  knowledge  that  any of the
                  representations  or  warranties  of  the  Pledgor  herein  are
                  incorrect or false in any material respect;

                                    (ii) all of the Shares were validly  issued,
                  fully paid and non-assessable; and

                                    (iii) the  Pledgor is the  record  holder of
                  the Shares.

                                       5
<PAGE>

                  10. No Waiver; No Election of Remedies. No failure on the part
of the Pledgees to exercise,  and no delay in  exercising,  any right,  power or
remedy  hereunder  shall  operate as a waiver  thereof;  nor shall any single or
partial  exercise by the  Pledgees of any right,  power or remedy  preclude  any
other or further exercise  thereof or the exercise of any other right,  power or
remedy. The remedies herein provided are cumulative and are not exclusive of any
remedies  provided by law. In  addition,  the exercise of any right or remedy of
the Pledgees at law or equity or under this  Agreement  or any of the  documents
shall not be deemed to be an election of Pledgee's rights or remedies under such
documents or at law or equity.

                  11. Termination. This Agreement shall terminate on the date on
which all  Obligations  have been  performed,  satisfied,  paid or discharged in
full.

                  12. Further  Assurances.  The parties hereto agree that,  from
time to time upon the written request of any party hereto, they will execute and
deliver such further  documents  and do such other acts and things as such party
may reasonably  request in order fully to effect the purposes of this Agreement.
The  Pledgees  acknowledge  that  they are  aware  that  Pledgor  shall  have no
obligations  whatsoever to the Pledgees  beyond the  Collateral  pledged for the
Obligations set forth herein,  and no request for further assurance may or shall
increase such Obligations.

                  13. Miscellaneous.

                  (a)   Modification.   This   Agreement   contains  the  entire
understanding  between the parties with respect to the subject matter hereof and
specifically  incorporates all prior oral and written agreements relating to the
subject matter hereof. No portion or provision of this Agreement may be changed,
modified,  amended,  waived,  supplemented,  discharged,  canceled or terminated
orally or by any course of dealing,  or in any manner other than by an agreement
in writing, signed by the party to be charged.

                  (b)  Notice.  Any and all notices or other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  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 6:30 p.m. (New
York City time) on a Business Day (as defined in the Purchase  Agreement),  (ii)
the Business Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile  telephone  number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m.  (New York City time) on such date,  (iii) the Business Day following
the  date of  mailing,  if  sent  by  nationally  recognized  overnight  courier
services,  or (iv) upon  actual  receipt  by the  party to whom  such  notice is
required to be given. The address for such notices and  communications  shall be
as follows:

                                       6

<PAGE>

                   If to the Company:

                                       Torbay Holdings, Inc.
                                       4 Mulford Place, Suite 2G
                                       Hempstead, New York 11550
                                       Attention: William Thomas Large
                                       Facsimile: 509-472-4654

                   With copies to:     Seth A. Farbman, PC
                                       301 Eastwood Road
                                       Woodmere, New York 11598
                                       Attention: Seth A. Farbman, Esq.
                                       Facsimile: 516-569-6084

                   If to the Pledgor:  William Thomas Large
                                       c/o Torbay Holdings, Inc.
                                       4 Mulford Place, Suite 2G
                                       Hempstead, New York 11550
                                       Attention: William Thomas Large
                                       Facsimile: 509-472-4654

                   If to the Pledgees: AJW Partners, LLC
                                       1044 Northern Boulevard
                                       Suite 302
                                       Roslyn, New York 11576
                                       Facsimile No.: (516) 739-7115
                                       Attn: Corey S. Ribotsky

                                       New Millennium Capital Partners II, LLC
                                       1044 Northern Boulevard
                                       Suite 302
                                       Roslyn, New York 11576
                                       Facsimile No.: (516) 739-7115
                                       Attn: Corey S. Ribotsky

                                       AJW Offshore, Ltd.
                                       1044 Northern Boulevard
                                       Suite 302
                                       Roslyn, New York 11576
                                       Facsimile No.: (516) 739-7115
                                       Attn: Corey S. Ribotsky

                                       and

                                       7
<PAGE>

                                       AJW Qualified Partners, LLC
                                       1044 Northern Boulevard
                                       Suite 302
                                       Roslyn, New York 11576
                                       Facsimile No.: (516) 739-7115
                                       Attn: Corey S. Ribotsky

                    With copies to:    Ballard Spahr Andrews & Ingersoll, LLP
                                       1735 Market Street, 51st Fl.
                                       Philadelphia, PA 19103
                                       Facsimile No.: (215) 864-8999
                                       Attn: Gerald J. Guarcini, Esq.

                  (c) Invalidity.  If any part of this Agreement is contrary to,
prohibited  by, or deemed invalid under  applicable  laws or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

                  (d) Benefit of Agreement. This Agreement shall be binding upon
and inure to the parties hereto and their respective successors and assigns.

                  (e) Mutual Agreement. This Agreement embodies the arm's length
negotiation  and mutual  agreement  between the parties  hereto and shall not be
construed against either party as having been drafted by it.

                  (f) New York Law to Govern.  This Agreement  shall be governed
by and construed and enforced in accordance  with the internal laws of the State
of New York without regard to the  principals of conflicts of law thereof.  Each
party 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 party  hereby  irrevocably
waives  personal  service of process and consents to process being served in any
such suit,  action or  proceeding by mailing a copy thereof to such party at the
address in effect for  notices to it under this  agreement  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.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       8
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Guaranty and Pledge Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.

                                  TORBAY HOLDINGS, INC.

                                  By:
                                  ----------------------------------------
                                  William Thomas Large
                                  President and Chief Executive Officer

                                  Pledgees:

                                  AJW PARTNERS, LLC
                                  By: SMS Group, LLC

                                  By:
                                  ----------------------------------------
                                  Corey S. Ribotsky
                                  Manager

                                  NEW MILLENNIUM CAPITAL PARTNERS II, LLC
                                  By: First Street Manager II, LLC

                                  By:
                                  ----------------------------------------
                                  Corey S. Ribotsky
                                  Manager

                                  AJW OFFSHORE, LTD.
                                  By: First Street Manager II, LLC

                                  By:
                                  ----------------------------------------
                                  Corey S. Ribotsky
                                  Manager

                                  AJW QUALIFIED PARTNERS, LLC
                                  By: AJW Manager, LLC

                                  By:
                                  ----------------------------------------
                                  Corey S. Ribotsky
                                  Manager

                                       9

<PAGE>

                                  Pledgor:

                                  William Thomas Large

                                  Number of Shares subject to this pledge: ____

                                  Date such Shares were acquired: ________

                                       10Exhibit 10.21

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
          THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
          OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
          ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY
          FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION
          IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR
          REGULATION S UNDER SAID ACT.

                          SECURED CONVERTIBLE DEBENTURE

Hempstead, New York
April 16, 2003                                                           $16,666

                  FOR  VALUE  RECEIVED,   TORBAY  HOLDINGS,   INC.,  a  Delaware
corporation  (hereinafter called the "Borrower"),  hereby promises to pay to the
order of AJW Qualified  Partners,  LLC or registered  assigns (the "Holder") the
sum of Sixteen Thousand Six Hundred  Sixty-Six Dollars  ($16,666),  on April 16,
2004 (the "Maturity Date"),  and to pay interest on the unpaid principal balance
hereof at the rate of twelve  percent  (12%) per annum from April 16,  2003 (the
"Issue  Date") until the same  becomes due and  payable,  whether at maturity or
upon  acceleration  or by prepayment  or  otherwise.  Any amount of principal or
interest on this Debenture which is not paid when due shall bear interest at the
rate of fifteen percent (15%) per annum from the due date thereof until the same
is paid ("Default  Interest").  Interest  shall  commence  accruing on the issue
date,  shall be computed on the basis of a 365-day year and the actual number of
days elapsed and shall be payable, at the option of the Holder, either quarterly
on March 31, June 30,  September  30 and  December 31 of each year  beginning on
June 30,  2003,  or at the time of  conversion  of the  principal  to which such
interest  relates in accordance with Article I below. All payments due hereunder
(to the extent not converted into common stock,  $.0001 par value per share,  of
the Borrower (the "Common  Stock") in accordance with the terms hereof) shall be
made in lawful  money of the United  States of America  or, at the option of the
Holder, in whole or in part, in shares of Common Stock of the Borrower valued at
the then applicable  Conversion Price (as defined herein). All payments shall be
made at such  address as the Holder  shall  hereafter  give to the  Borrower  by
written  notice  made in  accordance  with  the  provisions  of this  Debenture.
Whenever any amount expressed to be due by the terms of this Debenture is due on
any day which is not a business  day, the same shall  instead be due on the next
succeeding day which is a business day and, in the case of any interest  payment
date  which  is not the  date on  which  this  Debenture  is paid in  full,  the
extension of the due date  thereof  shall not be taken into account for purposes
of  determining  the  amount  of  interest  due on  such  date.  As used in this
Debenture,  the term  "business  day" shall mean any day

                                       2

<PAGE>

other than a Saturday, Sunday or a day on which commercial banks in the city of
New York, New York are authorized or required by law or executive order to
remain closed. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated April 16, 2003, pursuant to which this Debenture was originally
issued (the "Purchase Agreement").

                  This  Debenture  is free from all  taxes,  liens,  claims  and
encumbrances  with  respect  to the issue  thereof  and shall not be  subject to
preemptive  rights or other similar rights of  stockholders  of the Borrower and
will not impose personal  liability upon the holder thereof.  The obligations of
the Borrower  under this  Debenture  shall be secured by that  certain  Security
Agreement  dated  by and  between  the  Borrower  and the  Holder  of even  date
herewith.

                  The following terms shall apply to this Debenture:

                          ARTICLE I. CONVERSION RIGHTS

     1.1 Conversion  Right.  Subject to the Stockholder  Approval (as defined in
Section  4(1) of the Purchase  Agreement),  the Holder shall have the right from
time to time,  and at any time on or prior to the  earlier  of (i) the  Maturity
Date and (ii) the date of payment of the  Default  Amount (as defined in Article
III) pursuant to Section 1.6(a) or Article III, the Optional  Prepayment  Amount
(as defined in Section 5.1 or any  payments  pursuant  to Section  1.7,  each in
respect of the  remaining  outstanding  principal  amount of this  Debenture  to
convert all or any part of the outstanding and unpaid  principal  amount of this
Debenture  into fully paid and  non-assessable  shares of Common Stock,  as such
Common Stock exists on the Issue Date,  or any shares of capital  stock or other
securities  of the  Borrower  into which such Common  Stock shall  hereafter  be
changed  or  reclassified  at the  conversion  price  (the  "Conversion  Price")
determined as provided herein (a "Conversion");  provided,  however,  that in no
event shall the Holder be entitled to convert any portion of this  Debenture  in
excess of that portion of this Debenture upon conversion of which the sum of (1)
the number of shares of Common  Stock  beneficially  owned by the Holder and its
affiliates  (other than shares of Common Stock which may be deemed  beneficially
owned through the ownership of the unconverted  portion of the Debentures or the
unexercised  or  unconverted  portion  of any  other  security  of the  Borrower
(including,  without limitation, the warrants issued by the Borrower pursuant to
the  Purchase  Agreement)  subject to a  limitation  on  conversion  or exercise
analogous to the limitations  contained  herein) and (2) the number of shares of
Common Stock  issuable upon the conversion of the portion of this Debenture with
respect to which the  determination  of this proviso is being made, would result
in  beneficial  ownership by the Holder and its  affiliates of more than 4.9% of
the  outstanding  shares of Common  Stock.  For  purposes  of the proviso to the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended,  and  Regulations  13D-G  thereunder,  except as otherwise  provided in
clause  (1) of  such  proviso.  The  Holder  of this  Debenture  may  waive  the
limitations  set forth  herein by  sixty-one  (61)  days  written  notice to the
Company.  The number of shares of Common Stock to be issued upon each conversion
of this  Debenture  shall be  determined by dividing the  Conversion  Amount (as
defined  below) by the  applicable  Conversion  Price then in effect on the date
specified in the notice of conversion,  in the form attached hereto as Exhibit A
(the  "Notice  of  Conversion"),  delivered  to the  Borrower  by the  Holder in

                                       2

<PAGE>

accordance  with Section 1.4 below;  provided  that the Notice of  Conversion is
submitted by facsimile (or by other means  resulting in, or reasonably  expected
to result in, notice) to the Borrower  before 6:00 p.m., New York, New York time
on such conversion date (the "Conversion  Date").  The term "Conversion  Amount"
means,  with respect to any  conversion  of this  Debenture,  the sum of (1) the
principal  amount of this Debenture to be converted in such  conversion plus (2)
accrued and unpaid  interest,  if any, on such principal  amount at the interest
rates  provided  in this  Debenture  to the  Conversion  Date  plus (3)  Default
Interest,  if any,  on the  amounts  referred  to in the  immediately  preceding
clauses (1) and/or (2) plus (4) at the Holder's option,  any amounts owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section 2(c) of
that certain Registration Rights Agreement, dated as of April 16, 2003, executed
in  connection  with  the  initial  issuance  of this  Debenture  and the  other
Debentures issued on the Issue Date (the "Registration Rights Agreement").

     1.2 Conversion Price.

     (a)  Calculation of Conversion  Price.  The  Conversion  Price shall be the
lesser of (i) the  Variable  Conversion  Price (as defined  herein) and (ii) the
Fixed Conversion Price (as defined herein) (subject,  in each case, to equitable
adjustments  for  stock  splits,  stock  dividends  or rights  offerings  by the
Borrower  relating  to  the  Borrower's  securities  or  the  securities  of any
subsidiary of the Borrower, combinations,  recapitalization,  reclassifications,
extraordinary distributions and similar events). The "Variable Conversion Price"
shall mean the  Applicable  Percentage  (as defined  herein)  multiplied  by the
Market Price (as defined herein). "Market Price" means the average of the lowest
three (3) Trading  Prices (as  defined  below) for the Common  Stock  during the
twenty  (20)  Trading  Day period  ending one  Trading Day prior to the date the
Conversion  Notice is sent by the  Holder to the  Borrower  via  facsimile  (the
"Conversion Date").  "Trading Price" means, for any security as of any date, the
intraday trading price on the  Over-the-Counter  Bulletin Board (the "OTCBB") as
reported by a reliable  reporting  service mutually  acceptable to and hereafter
designated  by Holders of a  majority  in  interest  of the  Debentures  and the
Borrower or, if the OTCBB is not the principal trading market for such security,
the intraday trading price of such security on the principal securities exchange
or trading  market  where such  security  is listed or traded or, if no intraday
trading price of such security is available in any of the foregoing manners, the
average of the intraday  trading  prices of any market  makers for such security
that are listed in the "pink sheets" by the National  Quotation Bureau,  Inc. If
the Trading  Price cannot be  calculated  for such  security on such date in the
manner  provided  above,  the Trading  Price  shall be the fair market  value as
mutually determined by the Borrower and the holders of a majority in interest of
the Debentures being converted for which the calculation of the Trading Price is
required in order to determine the Conversion Price of such Debentures. "Trading
Day"  shall mean any day on which the Common  Stock is  actually  traded for any
period on the OTCBB, or on the principal securities exchange or other securities
market on which the Common Stock is then being traded.  "Applicable  Percentage"
shall mean 50.0%. The "Fixed Conversion Price" shall mean $.05.

     (b) Conversion Price During Major Announcements.  Notwithstanding  anything
contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes
a public  announcement  that it intends to  consolidate  or merge with any other
corporation  (other  than a merger in which the  Borrower  is the  surviving  or
continuing  corporation  and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any person,

                                       3
<PAGE>

group or entity  (including the Borrower)  publicly  announces a tender offer to
purchase  50% or more of the  Borrower's  Common  Stock (or any  other  takeover
scheme)  (the date of the  announcement  referred  to in  clause  (i) or (ii) is
hereinafter  referred to as the "Announcement  Date"), then the Conversion Price
shall,  effective upon the Announcement Date and continuing through the Adjusted
Conversion Price  Termination Date (as defined below),  be equal to the lower of
(x) the  Conversion  Price which  would have been  applicable  for a  Conversion
occurring  on the  Announcement  Date and (y) the  Conversion  Price  that would
otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date,  the  Conversion  Price shall be  determined  as set forth in this Section
1.2(a). For purposes hereof,  "Adjusted Conversion Price Termination Date" shall
mean,  with  respect to any  proposed  transaction  or tender offer (or takeover
scheme) for which a public  announcement  as contemplated by this Section 1.2(b)
has been  made,  the date upon  which the  Borrower  (in the case of clause  (i)
above)  or the  person,  group or  entity  (in the case of  clause  (ii)  above)
consummates or publicly announces the termination or abandonment of the proposed
transaction  or tender  offer (or  takeover  scheme)  which  caused this Section
1.2(b) to become operative.

     1.3 Authorized Shares.  Subject to the Stockholder  Approval (as defined in
Section 4(1) of the Purchase Agreement),  the Borrower covenants that during the
period  the  conversion  right  exists,  the  Borrower  will  reserve  from  its
authorized and unissued  Common Stock a sufficient  number of shares,  free from
preemptive  rights,  to provide for the  issuance of Common  Stock upon the full
conversion of this  Debenture and the other  Debentures  issued  pursuant to the
Purchase Agreement. The Borrower is required at all times to have authorized and
reserved  two times the number of shares  that is  actually  issuable  upon full
conversion of the Debentures (based on the Conversion Price of the Debentures or
the Exercise  Price of the Warrants in effect from time to time) (the  "Reserved
Amount"). The Reserved Amount shall be increased from time to time in accordance
with  the  Borrower's  obligations  pursuant  to  Section  4(h) of the  Purchase
Agreement.  The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable.  In addition, if the Borrower
shall issue any  securities  or make any change to its capital  structure  which
would  change  the number of shares of Common  Stock  into which the  Debentures
shall be convertible at the then current Conversion Price, the Borrower shall at
the  same  time  make  proper  provision  so that  thereafter  there  shall be a
sufficient  number of shares of Common Stock authorized and reserved,  free from
preemptive  rights, for conversion of the outstanding  Debentures.  The Borrower
(i) acknowledges that it has irrevocably  instructed its transfer agent to issue
certificates  for the Common Stock issuable upon  conversion of this  Debenture,
and (ii)  agrees that its  issuance  of this  Debenture  shall  constitute  full
authority  to its officers and agents who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Common Stock in accordance with the terms and conditions of this Debenture.

     If, at any time a Holder of this Debenture  submits a Notice of Conversion,
and the Borrower  does not have  sufficient  authorized  but unissued  shares of
Common  Stock  available  to  effect  such  conversion  in  accordance  with the
provisions of this Article I (a "Conversion  Default"),  subject to Section 4.8,
the  Borrower  shall issue to the Holder all of the shares of Common Stock which
are then  available  to effect such  conversion.  The portion of this  Debenture
which the Holder included in its Conversion  Notice and which exceeds the amount
which is then  convertible  into  available  shares of Common Stock (the "Excess
Amount") shall,  notwithstanding  anything to the contrary contained herein, not
be convertible  into Common

                                       4
<PAGE>

Stock in accordance  with the terms hereof until (and at the Holder's  option at
any time after) the date additional shares of Common Stock are authorized by the
Borrower  to permit  such  conversion,  at which  time the  Conversion  Price in
respect  thereof  shall  be  the  lesser  of (i)  the  Conversion  Price  on the
Conversion  Default Date (as defined below) and (ii) the Conversion Price on the
Conversion  Date  thereafter  elected  by the  Holder  in  respect  thereof.  In
addition,  the Borrower shall pay to the Holder  payments  ("Conversion  Default
Payments") for a Conversion Default in the amount of (x) the sum of (1) the then
outstanding  principal  amount of this  Debenture  plus (2)  accrued  and unpaid
interest  on  the  unpaid  principal  amount  of  this  Debenture   through  the
Authorization Date (as defined below) plus (3) Default Interest,  if any, on the
amounts referred to in clauses (1) and/or (2), multiplied by (y) .24, multiplied
by (z) (N/365),  where N = the number of days from the day the holder  submits a
Notice of  Conversion  giving  rise to a  Conversion  Default  (the  "Conversion
Default  Date")  to the  date  (the  "Authorization  Date")  that  the  Borrower
authorizes a sufficient number of shares of Common Stock to effect conversion of
the full outstanding principal balance of this Debenture. The Borrower shall use
its best efforts to  authorize a sufficient  number of shares of Common Stock as
soon as  practicable  following  the  earlier  of (i) such time that the  Holder
notifies the Borrower or that the Borrower  otherwise  becomes  aware that there
are or likely will be insufficient  authorized and unissued shares to allow full
conversion thereof and (ii) a Conversion Default. The Borrower shall send notice
to the Holder of the  authorization  of additional  shares of Common Stock,  the
Authorization  Date  and the  amount  of  Holder's  accrued  Conversion  Default
Payments.  The accrued Conversion Default Payments for each calendar month shall
be paid in cash or shall be convertible into Common Stock (at such time as there
are sufficient  authorized shares of Common Stock) at the applicable  Conversion
Price, at the Holder's option, as follows:

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

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

     The Holder's  election shall be made in writing to the Borrower at any time
prior to 6:00  p.m.,  New  York,  New York  time,  on the third day of the month
following the month in which  Conversion  Default  payments have accrued.  If no
election is made,  the Holder shall be deemed to have  elected to receive  cash.
Nothing  herein shall limit the Holder's  right to pursue actual damages (to the
extent in excess of the Conversion  Default Payments) for the Borrower's failure
to maintain a sufficient  number of authorized  shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

     1.4 Method of Conversion.

     (a) Mechanics of Conversion.  Subject to Section 1.1, this Debenture may be
converted  by the Holder in whole or in part at any time from time to time after
the Issue

                                       5
<PAGE>

Date, by (A)  submitting to the Borrower a Notice of Conversion (by facsimile or
other reasonable means of communication  dispatched on the Conversion Date prior
to 6:00  p.m.,  New York,  New York time) and (B)  subject  to  Section  1.4(b),
surrendering this Debenture at the principal office of the Borrower.

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

     (c)  Payment of Taxes.  The  Borrower  shall not be required to pay any tax
which may be  payable  in  respect  of any  transfer  involved  in the issue and
delivery of shares of Common Stock or other securities or property on conversion
of this  Debenture in a name other than that of the Holder (or in street  name),
and the  Borrower  shall not be  required to issue or deliver any such shares or
other  securities or property unless and until the person or persons (other than
the Holder or the  custodian in whose street name such shares are to be held for
the Holder's  account)  requesting  the issuance  thereof shall have paid to the
Borrower  the  amount  of  any  such  tax  or  shall  have  established  to  the
satisfaction of the Borrower that such tax has been paid.

     (d) Delivery of Common Stock Upon Conversion.  Upon receipt by the Borrower
from the  Holder  of a  facsimile  transmission  (or other  reasonable  means of
communication) of a Notice of Conversion meeting the requirements for conversion
as provided in this Section  1.4, the Borrower  shall issue and deliver or cause
to be issued and delivered to or upon the order of the Holder  certificates  for
the Common Stock  issuable  upon such  conversion  within two (2) business  days
after such receipt  (and,  solely in the case of conversion of the entire unpaid
principal amount hereof,  surrender of this Debenture) (such second business day
being  hereinafter  referred to as the  "Deadline") in accordance with the terms
hereof and the Purchase Agreement (including,  without limitation, in accordance
with  the   requirements  of  Section  2(g)  of  the  Purchase   Agreement  that
certificates for shares of Common Stock issued on or after the effective date of
the Registration  Statement upon conversion of this Debenture shall not bear any
restrictive legend).

                                       6
<PAGE>

     (e)  Obligation of Borrower to Deliver  Common  Stock.  Upon receipt by the
Borrower of a Notice of Conversion,  the Holder shall be deemed to be the holder
of record of the Common Stock  issuable upon such  conversion,  the  outstanding
principal amount and the amount of accrued and unpaid interest on this Debenture
shall be reduced to reflect such conversion,  and, unless the Borrower  defaults
on its obligations  under this Article I, all rights with respect to the portion
of this Debenture being so converted shall forthwith  terminate except the right
to receive the Common Stock or other securities, cash or other assets, as herein
provided,  on such  conversion.  If the  Holder  shall  have  given a Notice  of
Conversion as provided  herein,  the Borrower's  obligation to issue and deliver
the  certificates  for  Common  Stock  shall  be  absolute  and   unconditional,
irrespective of the absence of any action by the Holder to enforce the same, any
waiver or consent with  respect to any  provision  thereof,  the recovery of any
judgment  against any person or any action to enforce  the same,  any failure or
delay in the  enforcement of any other  obligation of the Borrower to the holder
of record, or any setoff, counterclaim,  recoupment,  limitation or termination,
or any breach or alleged breach by the Holder of any obligation to the Borrower,
and  irrespective  of any other  circumstance  which might  otherwise limit such
obligation of the Borrower to the Holder in connection with such conversion. The
Conversion  Date  specified in the Notice of Conversion  shall be the Conversion
Date so long as the Notice of Conversion is received by the Borrower before 6:00
p.m., New York, New York time, on such date.

     (f) Delivery of Common Stock by Electronic Transfer.  In lieu of delivering
physical  certificates  representing  the Common Stock issuable upon conversion,
provided the Borrower's  transfer agent is participating in the Depository Trust
Company  ("DTC") Fast  Automated  Securities  Transfer  ("FAST")  program,  upon
request  of the Holder  and its  compliance  with the  provisions  contained  in
Section 1.1 and in this Section 1.4, the Borrower  shall use its best efforts to
cause its transfer  agent to  electronically  transmit the Common Stock issuable
upon  conversion to the Holder by crediting the account of Holder's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.

     (g) Failure to Deliver  Common Stock Prior to Deadline.  Without in any way
limiting the Holder's right to pursue other remedies,  including  actual damages
and/or equitable relief,  the parties agree that if delivery of the Common Stock
issuable upon  conversion of this  Debenture is more than two (2) days after the
Deadline (other than a failure due to the circumstances described in Section 1.3
above,  which failure shall be governed by such Section) the Borrower  shall pay
to the Holder $2,000 per day in cash,  for each day beyond the Deadline that the
Borrower  fails to deliver such Common Stock.  Such cash amount shall be paid to
Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the Holder (by written  notice to the Borrower by the first
day of the month following the month in which it has accrued), shall be added to
the principal  amount of this  Debenture,  in which event  interest shall accrue
thereon  in  accordance  with the terms of this  Debenture  and such  additional
principal  amount shall be convertible  into Common Stock in accordance with the
terms of this Debenture.

     1.5  Concerning  the  Shares.  The  shares of Common  Stock  issuable  upon
conversion  of this  Debenture  may not be sold or  transferred  unless (i) such
shares are sold pursuant to an effective registration statement under the Act or
(ii) the  Borrower  or its  transfer  agent  shall have been  furnished  with an
opinion  of  counsel  (which  opinion  shall be in  form,

                                       7
<PAGE>

substance   and  scope   customary   for  opinions  of  counsel  in   comparable
transactions)  to the effect  that the shares to be sold or  transferred  may be
sold or  transferred  pursuant to an exemption from such  registration  or (iii)
such  shares are sold or  transferred  pursuant  to Rule 144 under the Act (or a
successor  rule)  ("Rule  144")  or  (iv)  such  shares  are  transferred  to an
"affiliate"  (as  defined  in Rule 144) of the  Borrower  who  agrees to sell or
otherwise  transfer the shares only in accordance  with this Section 1.5 and who
is an  Accredited  Investor  (as defined in the Purchase  Agreement).  Except as
otherwise  provided  in the  Purchase  Agreement  (and  subject  to the  removal
provisions  set forth  below),  until  such time as the  shares of Common  Stock
issuable upon conversion of this Debenture have been registered under the Act as
contemplated  by the  Registration  Rights  Agreement or  otherwise  may be sold
pursuant to Rule 144 without any  restriction  as to the number of securities as
of a particular  date that can then be immediately  sold,  each  certificate for
shares of Common Stock  issuable upon  conversion of this Debenture that has not
been so included in an  effective  registration  statement  or that has not been
sold  pursuant to an  effective  registration  statement  or an  exemption  that
permits  removal  of the  legend,  shall  bear  a  legend  substantially  in the
following form, as appropriate:

               "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
               SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
               ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
               UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
               SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
               TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
               UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SAID ACT."

                  The legend set forth above  shall be removed and the  Borrower
shall issue to the Holder a new certificate therefor free of any transfer legend
if (i) the  Borrower or its  transfer  agent  shall have  received an opinion of
counsel,  in form,  substance  and scope  customary  for  opinions of counsel in
comparable  transactions,  to the effect  that a public sale or transfer of such
Common Stock may be made without  registration  under the Act and the shares are
so sold or  transferred,  (ii) such Holder provides the Borrower or its transfer
agent with reasonable  assurances that the Common Stock issuable upon conversion
of this  Debenture  (to the  extent  such  securities  are  deemed  to have been
acquired on the same date) can be sold pursuant to Rule 144 or (iii) in the case
of the Common Stock issuable upon conversion of this Debenture, such security is
registered  for sale by the Holder  under an  effective  registration  statement
filed under the Act or  otherwise  may be sold  pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then
be immediately  sold.  Nothing in this Debenture  shall (i) limit the Borrower's
obligation under the Registration Rights Agreement or (ii) affect in any way the
Holder's obligations to comply with applicable  prospectus delivery requirements
upon the resale of the securities referred to herein.

     1.6 Effect of Certain Events.

     (a) Effect of Merger, Consolidation,  Etc. At the option of the Holder, the
sale, conveyance or disposition of all or substantially all of the assets of the
Borrower, the effectuation by the Borrower of a transaction or series of related
transactions  in

                                       8
<PAGE>

which more than 50% of the voting  power of the  Borrower is disposed of, or the
consolidation, merger or other business combination of the Borrower with or into
any other  Person (as  defined  below) or Persons  when the  Borrower is not the
survivor  shall  either:  (i) be deemed to be an Event of Default (as defined in
Article  III)  pursuant  to which the  Borrower  shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount
equal to the  Default  Amount (as  defined  in  Article  III) or (ii) be treated
pursuant  to  Section  1.6(b)  hereof.   "Person"  shall  mean  any  individual,
corporation, limited liability company, partnership, association, trust or other
entity or organization.

     (b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this
Debenture  is  issued  and  outstanding  and prior to  conversion  of all of the
Debentures,  there  shall be any  merger,  consolidation,  exchange  of  shares,
recapitalization,  reorganization,  or other similar event, as a result of which
shares of  Common  Stock of the  Borrower  shall be  changed  into the same or a
different number of shares of another class or classes of stock or securities of
the Borrower or another  entity,  or in case of any sale or conveyance of all or
substantially  all of the assets of the Borrower other than in connection with a
plan of complete liquidation of the Borrower,  then the Holder of this Debenture
shall  thereafter  have the right to receive upon  conversion of this Debenture,
upon the basis and upon the terms and conditions specified herein and in lieu of
the shares of Common Stock  immediately  theretofore  issuable upon  conversion,
such stock,  securities  or assets which the Holder would have been  entitled to
receive  in  such   transaction  had  this  Debenture  been  converted  in  full
immediately  prior to such  transaction  (without  regard to any  limitations on
conversion set forth herein), and in any such case appropriate  provisions shall
be made with respect to the rights and interests of the Holder of this Debenture
to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares issuable upon
conversion of the Debenture) shall thereafter be applicable, as nearly as may be
practicable in relation to any securities or assets thereafter  deliverable upon
the conversion hereof.  The Borrower shall not effect any transaction  described
in this Section  1.6(b)  unless (a) it first gives,  to the extent  practicable,
thirty (30) days prior  written  notice (but in any event at least  fifteen (15)
days  prior  written  notice)  of the  record  date of the  special  meeting  of
stockholders  to approve,  or if there is no such record date, the  consummation
of,  such   merger,   consolidation,   exchange  of  shares,   recapitalization,
reorganization  or other similar event or sale of assets  (during which time the
Holder  shall be  entitled  to convert  this  Debenture)  and (b) the  resulting
successor  or  acquiring  entity  (if  not  the  Borrower)  assumes  by  written
instrument the obligations of this Section 1.6(b).  The above  provisions  shall
similarly apply to successive consolidations, mergers, sales, transfers or share
exchanges.

     (c) Adjustment Due to  Distribution.  If the Borrower shall declare or make
any  distribution  of its assets (or rights to acquire its assets) to holders of
Common  Stock as a dividend,  stock  repurchase,  by way of return of capital or
otherwise (including any dividend or distribution to the Borrower's stockholders
in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a "Distribution"),  then the Holder of this Debenture shall
be entitled,  upon any conversion of this Debenture after the date of record for
determining stockholders entitled to such Distribution, to receive the amount of
such  assets  which would have been  payable to the Holder  with  respect to the
shares of Common Stock  issuable upon such  conversion  had such Holder been the
holder of such shares of Common  Stock on the record date for the  determination
of stockholders entitled to such Distribution.

                                       9
<PAGE>

     (d)  Adjustment  Due to  Dilutive  Issuance.  If,  at  any  time  when  any
Debentures  are issued and  outstanding,  the  Borrower  issues or sells,  or in
accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any
shares of Common Stock for no  consideration  or for a  consideration  per share
(before  deduction  of  reasonable   expenses  or  commissions  or  underwriting
discounts or allowances in connection  therewith) less than the Fixed Conversion
Price in effect on the date of such issuance (or deemed issuance) of such shares
of Common  Stock (a "Dilutive  Issuance"),  then  immediately  upon the Dilutive
Issuance,  the Fixed  Conversion  Price  will be  reduced  to the  amount of the
consideration  per share  received by the  Borrower in such  Dilutive  Issuance;
provided that only one adjustment will be made for each Dilutive Issuance.

     The Borrower  shall be deemed to have issued or sold shares of Common Stock
if the Borrower in any manner issues or grants any warrants,  rights or options,
whether or not immediately  exercisable,  to subscribe for or to purchase Common
Stock or other  securities  convertible  into or  exchangeable  for Common Stock
("Convertible Securities") (such warrants, rights and options to purchase Common
Stock or Convertible  Securities are  hereinafter  referred to as "Options") and
the price per share for which Common Stock is issuable upon the exercise of such
Options is less than the Fixed Conversion  Price then in effect,  then the Fixed
Conversion  Price  shall be equal to such price per share.  For  purposes of the
preceding sentence, the "price per share for which Common Stock is issuable upon
the exercise of such Options" is determined by dividing (i) the total amount, if
any, received or receivable by the Borrower as consideration for the issuance or
granting of all such Options,  plus the minimum  aggregate  amount of additional
consideration,  if any,  payable to the  Borrower  upon the exercise of all such
Options,  plus, in the case of Convertible Securities issuable upon the exercise
of such  Options,  the  minimum  aggregate  amount of  additional  consideration
payable upon the  conversion  or exchange  thereof at the time such  Convertible
Securities first become  convertible or exchangeable,  by (ii) the maximum total
number of shares of Common Stock  issuable upon the exercise of all such Options
(assuming full conversion of Convertible Securities, if applicable).  No further
adjustment to the Conversion Price will be made upon the actual issuance of such
Common  Stock  upon the  exercise  of such  Options  or upon the  conversion  or
exchange of Convertible Securities issuable upon exercise of such Options.

     Additionally, the Borrower shall be deemed to have issued or sold shares of
Common  Stock if the  Borrower  in any  manner  issues or sells any  Convertible
Securities,  whether or not immediately  convertible  (other than where the same
are issuable  upon the  exercise of Options),  and the price per share for which
Common Stock is issuable upon such conversion or exchange is less than the Fixed
Conversion Price then in effect,  then the Fixed Conversion Price shall be equal
to such price per share. For the purposes of the preceding sentence,  the "price
per share for which Common Stock is issuable  upon such  conversion or exchange"
is determined by dividing (i) the total amount,  if any,  received or receivable
by the  Borrower  as  consideration  for  the  issuance  or  sale  of  all  such
Convertible  Securities,   plus  the  minimum  aggregate  amount  of  additional
consideration,  if any,  payable to the Borrower upon the conversion or exchange
thereof at the time such  Convertible  Securities  first become  convertible  or
exchangeable,  by (ii) the  maximum  total  number of  shares  of  Common  Stock
issuable upon the conversion or exchange of all such Convertible Securities.  No
further  adjustment to the Fixed  Conversion  Price will be made upon the actual
issuance of such Common Stock upon  conversion  or exchange of such  Convertible
Securities.

                                       10
<PAGE>

     (e) Purchase  Rights.  If, at any time when any  Debentures  are issued and
outstanding,  the  Borrower  issues  any  convertible  securities  or  rights to
purchase stock,  warrants,  securities or other property (the "Purchase Rights")
pro rata to the record holders of any class of Common Stock,  then the Holder of
this  Debenture will be entitled to acquire,  upon the terms  applicable to such
Purchase  Rights,  the  aggregate  Purchase  Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Debenture (without regard to any limitations on
conversion  contained herein)  immediately  before the date on which a record is
taken for the grant,  issuance  or sale of such  Purchase  Rights or, if no such
record is taken,  the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

     (f)  Notice of  Adjustments.  Upon the  occurrence  of each  adjustment  or
readjustment of the Conversion Price as a result of the events described in this
Section  1.6,  the  Borrower,  at  its  expense,  shall  promptly  compute  such
adjustment  or  readjustment  and  prepare  and  furnish  to  the  Holder  of  a
certificate  setting forth such adjustment or readjustment and showing in detail
the facts upon which such  adjustment  or  readjustment  is based.  The Borrower
shall,  upon the  written  request  at any time of the  Holder,  furnish to such
Holder a like  certificate  setting forth (i) such  adjustment or  readjustment,
(ii) the  Conversion  Price at the time in effect and (iii) the number of shares
of Common Stock and the amount, if any, of other securities or property which at
the time would be received upon conversion of the Debenture.

     1.7 Trading Market  Limitations.  Unless  permitted by the applicable rules
and regulations of the principal  securities market on which the Common Stock is
then listed or traded,  in no event shall the Borrower issue upon  conversion of
or otherwise pursuant to this Debenture and the other Debentures issued pursuant
to the Purchase Agreement more than the maximum number of shares of Common Stock
that the Borrower can issue pursuant to any rule of the principal  United States
securities  market on which the Common Stock is then traded (the "Maximum  Share
Amount"),  which, as of the Issue Date shall be 5,940,949  shares (19.99% of the
total shares  outstanding  on the Issue Date),  subject to equitable  adjustment
from time to time for  stock  splits,  stock  dividends,  combinations,  capital
reorganizations  and similar events relating to the Common Stock occurring after
the date  hereof.  Once the  Maximum  Share  Amount has been issued (the date of
which is  hereinafter  referred to as the  "Maximum  Conversion  Date"),  if the
Borrower fails to eliminate any  prohibitions  under applicable law or the rules
or  regulations of any stock  exchange,  interdealer  quotation  system or other
self-regulatory  organization  with jurisdiction over the Borrower or any of its
securities on the  Borrower's  ability to issue shares of Common Stock in excess
of the Maximum Share Amount (a "Trading Market  Prepayment  Event"),  in lieu of
any further right to convert this  Debenture,  and in full  satisfaction  of the
Borrower's  obligations  under this  Debenture,  the  Borrower  shall pay to the
Holder,  within fifteen (15) business days of the Maximum  Conversion  Date (the
"Trading Market Prepayment  Date"), an amount equal to 130% times the sum of (a)
the then outstanding  principal amount of this Debenture  immediately  following
the Maximum  Conversion Date, plus (b) accrued and unpaid interest on the unpaid
principal  amount of this Debenture to the Trading Market  Prepayment Date, plus
(c) Default  Interest,  if any, on the amounts  referred to in clause (a) and/or
(b)  above,  plus (d) any  optional  amounts  that may be added  thereto  at the
Maximum  Conversion  Date by the Holder in accordance with the terms hereof (the
then outstanding  principal amount of this Debenture  immediately  following the

                                       11
<PAGE>

Maximum  Conversion  Date, plus the amounts  referred to in clauses (b), (c) and
(d) above  shall  collectively  be  referred  to as the  "Remaining  Convertible
Amount").  With respect to each Holder of  Debentures,  the Maximum Share Amount
shall refer to such  Holder's pro rata share  thereof  determined  in accordance
with Section 4.8 below. In the event that the sum of (x) the aggregate number of
shares of Common Stock issued upon  conversion  of this  Debenture and the other
Debentures  issued  pursuant to the Purchase  Agreement  plus (y) the  aggregate
number of shares of Common Stock that remain  issuable  upon  conversion of this
Debenture and the other  Debentures  issued pursuant to the Purchase  Agreement,
represents at least one hundred  percent (100%) of the Maximum Share Amount (the
"Triggering  Event"),  the Borrower will use its best efforts to seek and obtain
Stockholder  Approval  (or obtain  such other  relief as will allow  conversions
hereunder  in  excess  of the  Maximum  Share  Amount)  as soon  as  practicable
following the Triggering  Event and before the Maximum  Conversion Date. As used
herein,  "Stockholder  Approval"  means  approval  by  the  stockholders  of the
Borrower to authorize  the issuance of the full number of shares of Common Stock
which would be issuable upon full conversion of the then outstanding  Debentures
but for the Maximum Share Amount.

     1.8 Status as  Stockholder.  Upon submission of a Notice of Conversion by a
Holder,  (i) the shares covered  thereby  (other than the shares,  if any, which
cannot be issued  because their  issuance  would exceed such Holder's  allocated
portion  of the  Reserved  Amount  or  Maximum  Share  Amount)  shall be  deemed
converted  into shares of Common Stock and (ii) the Holder's  rights as a Holder
of such converted portion of this Debenture shall cease and terminate, excepting
only the right to receive  certificates  for such shares of Common  Stock and to
any remedies provided herein or otherwise  available at law or in equity to such
Holder  because of a failure by the  Borrower  to comply  with the terms of this
Debenture.   Notwithstanding  the  foregoing,  if  a  Holder  has  not  received
certificates  for all shares of Common Stock prior to the tenth (10th)  business
day after the  expiration  of the Deadline  with respect to a conversion  of any
portion of this  Debenture  for any reason,  then  (unless the Holder  otherwise
elects to retain  its  status as a holder of Common  Stock by so  notifying  the
Borrower) the Holder shall regain the rights of a Holder of this  Debenture with
respect to such  unconverted  portions of this Debenture and the Borrower shall,
as soon as practicable,  return such unconverted  Debenture to the Holder or, if
the Debenture has not been surrendered,  adjust its records to reflect that such
portion of this Debenture has not been converted. In all cases, the Holder shall
retain all of its rights and remedies  (including,  without limitation,  (i) the
right to receive  Conversion  Default  Payments  pursuant  to Section 1.3 to the
extent  required  thereby  for  such  Conversion   Default  and  any  subsequent
Conversion  Default and (ii) the right to have the Conversion Price with respect
to subsequent  conversions  determined  in accordance  with Section 1.3) for the
Borrower's failure to convert this Debenture.

                         ARTICLE II. CERTAIN COVENANTS

     2.1  Distributions on Capital Stock. So long as the Borrower shall have any
obligation  under this  Debenture,  the Borrower  shall not without the Holder's
written consent (a) pay, declare or set apart for such payment,  any dividend or
other distribution  (whether in cash, property or other securities) on shares of
capital stock other than  dividends on shares of Common Stock solely in the form
of  additional  shares of Common Stock or (b) directly or  indirectly or through
any subsidiary  make any other payment or distribution in respect of its capital
stock

                                       12
<PAGE>

except for  distributions  pursuant  to any  shareholders'  rights plan which is
approved by a majority of the Borrower's disinterested directors.

     2.2  Restriction on Stock  Repurchases.  So long as the Borrower shall have
any obligation under this Debenture, the Borrower shall not without the Holder's
written consent redeem,  repurchase or otherwise acquire (whether for cash or in
exchange for property or other  securities or otherwise) in any one  transaction
or series of related transactions any shares of capital stock of the Borrower or
any warrants, rights or options to purchase or acquire any such shares.

     2.3  Borrowings.  So long as the Borrower shall have any  obligation  under
this Debenture,  the Borrower shall not,  without the Holder's  written consent,
create,  incur,  assume or suffer to exist any  liability  for  borrowed  money,
except (a)  borrowings in existence or committed on the date hereof and of which
the  Borrower  has  informed  Holder in writing  prior to the date  hereof,  (b)
indebtedness  to trade  creditors  or  financial  institutions  incurred  in the
ordinary  course of business or (c)  borrowings,  the proceeds of which shall be
used to repay this Debenture.

     2.4 Sale of Assets. So long as the Borrower shall have any obligation under
this Debenture,  the Borrower shall not,  without the Holder's  written consent,
sell,  lease or  otherwise  dispose  of any  significant  portion  of its assets
outside the ordinary  course of business.  Any consent to the disposition of any
assets may be conditioned on a specified use of the proceeds of disposition.

     2.5 Advances and Loans.  So long as the Borrower  shall have any obligation
under this  Debenture,  the Borrower  shall not,  without the  Holder's  written
consent,  lend money,  give credit or make advances to any person,  firm,  joint
venture or corporation,  including,  without  limitation,  officers,  directors,
employees, subsidiaries and affiliates of the Borrower, except loans, credits or
advances (a) in existence or committed on the date hereof and which the Borrower
has  informed  Holder  in  writing  prior  to the date  hereof,  (b) made in the
ordinary course of business or (c) not in excess of $50,000.

     2.6  Contingent  Liabilities.  So  long  as the  Borrower  shall  have  any
obligation  under this Debenture,  the Borrower shall not,  without the Holder's
written consent, assume, guarantee,  endorse,  contingently agree to purchase or
otherwise  become liable upon the obligation of any person,  firm,  partnership,
joint  venture  or   corporation,   except  by  the  endorsement  of  negotiable
instruments  for  deposit  or  collection  and except  assumptions,  guarantees,
endorsements and  contingencies (a) in existence or committed on the date hereof
and which the Borrower has informed  Holder in writing prior to the date hereof,
and (b) similar transactions in the ordinary course of business.

                         ARTICLE III. EVENTS OF DEFAULT

     If any of the  following  events of default  (each,  an "Event of Default")
shall occur:

                                       13
<PAGE>

     3.1 Failure to Pay  Principal  or Interest.  The Borrower  fails to pay the
principal  hereof or interest  thereon  when due on this  Debenture,  whether at
maturity,  upon a Trading Market  Prepayment Event pursuant to Section 1.7, upon
acceleration or otherwise.

     3.2 Conversion and the Shares. The Borrower fails to issue shares of Common
Stock to the  Holder  (or  announces  or  threatens  that it will not  honor its
obligation to do so) upon exercise by the Holder of the conversion rights of the
Holder in accordance  with the terms of this Debenture (for a period of at least
sixty (60)  days,  if such  failure  is solely as a result of the  circumstances
governed by Section 1.3 and the  Borrower is using its best efforts to authorize
a sufficient number of shares of Common Stock as soon as practicable),  fails to
transfer  or  cause  its  transfer  agent  to  transfer  (electronically  or  in
certificated  form) any  certificate  for shares of Common  Stock  issued to the
Holder upon  conversion of or otherwise  pursuant to this  Debenture as and when
required by this Debenture or the  Registration  Rights  Agreement,  or fails to
remove any restrictive legend (or to withdraw any stop transfer  instructions in
respect thereof) on any certificate for any shares of Common Stock issued to the
Holder upon  conversion of or otherwise  pursuant to this  Debenture as and when
required by this Debenture or the  Registration  Rights  Agreement (or makes any
announcement,  statement  or  threat  that it  does  not  intend  to  honor  the
obligations  described in this  paragraph)  and any such failure shall  continue
uncured (or any  announcement,  statement or threat not to honor its obligations
shall not be rescinded  in writing)  for ten (10) days after the Borrower  shall
have been notified thereof in writing by the Holder.

     3.3  Failure  to  Timely  File  Registration  or Effect  Registration.  The
Borrower fails to file the Registration  Statement  within  forty-five (45) days
following the Filing Date (as defined in the Registration  Rights  Agreement) or
obtain  effectiveness  with  the  Securities  and  Exchange  Commission  of  the
Registration  Statement  within one hundred five (105) days following the Filing
Date or such Registration  Statement lapses in effect (or sales cannot otherwise
be made  thereunder  effective,  whether by reason of the Borrower's  failure to
amend or supplement  the  prospectus  included  therein in  accordance  with the
Registration   Rights   Agreement  or  otherwise)  for  more  than  twenty  (20)
consecutive  days or forty  (40)  days in any  twelve  month  period  after  the
Registration Statement becomes effective;

     3.4 Breach of  Covenants.  The Borrower  breaches any material  covenant or
other  material term or condition  contained in Sections 1.3, 1.6 or 1.7 of this
Debenture,  or Sections 4(c),  4(e),  4(h),  4(i),  4(j), 4(l), 4(m) or 5 of the
Purchase Agreement and such breach continues for a period of ten (10) days after
written notice thereof to the Borrower from the Holder;

     3.5  Breach  of  Representations  and  Warranties.  Any  representation  or
warranty  of  the  Borrower  made  herein  or in  any  agreement,  statement  or
certificate  given  in  writing  pursuant  hereto  or  in  connection   herewith
(including,  without  limitation,  the Purchase  Agreement and the  Registration
Rights  Agreement),  shall be false or misleading  in any material  respect when
made and the  breach of which  has (or with the  passage  of time  will  have) a
material  adverse  effect  on the  rights of the  Holder  with  respect  to this
Debenture, the Purchase Agreement or the Registration Rights Agreement;

                                       14
<PAGE>

     3.6  Receiver or Trustee.  The Borrower or any  subsidiary  of the Borrower
shall make an assignment  for the benefit of creditors,  or apply for or consent
to the appointment of a receiver or trustee for it or for a substantial  part of
its  property or  business,  or such a receiver or trustee  shall  otherwise  be
appointed;

     3.7 Judgments. Any money judgment, writ or similar process shall be entered
or filed  against the Borrower or any  subsidiary  of the Borrower or any of its
property or other  assets for more than  $50,000,  and shall  remain  unvacated,
unbonded or unstayed for a period of twenty (20) days unless otherwise consented
to by the Holder, which consent will not be unreasonably withheld;

     3.8  Bankruptcy.  Bankruptcy,  insolvency,  reorganization  or  liquidation
proceedings or other  proceedings for relief under any bankruptcy law or any law
for the relief of debtors  shall be instituted by or against the Borrower or any
subsidiary of the Borrower;

     3.9  Delisting of Common  Stock.  The  Borrower  shall fail to maintain the
listing of the Common  Stock on at least one of the OTCBB,  the Nasdaq  National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American
Stock Exchange; or

     3.10 Default Under Other  Debentures.  An Event of Default has occurred and
is continuing under any of the other Debentures  issued pursuant to the Purchase
Agreement,

then,  upon the occurrence and during the  continuation  of any Event of Default
specified in Section 3.1,  3.2,  3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
of  the  Holders  of a  majority  of  the  aggregate  principal  amount  of  the
outstanding  Debentures  issued pursuant to the Purchase  Agreement  exercisable
through the  delivery of written  notice to the  Borrower by such  Holders  (the
"Default  Notice"),  and upon the occurrence of an Event of Default specified in
Section 3.6 or 3.8, the Debentures shall become  immediately due and payable and
the Borrower shall pay to the Holder,  in full  satisfaction  of its obligations
hereunder,  an amount  equal to the greater of (i) 130% times the sum of (w) the
then outstanding  principal amount of this Debenture plus (x) accrued and unpaid
interest on the unpaid principal amount of this Debenture to the date of payment
(the  "Mandatory  Prepayment  Date") plus (y) Default  Interest,  if any, on the
amounts  referred to in clauses (w) and/or (x) plus (z) any amounts  owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section 2(c) of
the Registration Rights Agreement (the then outstanding principal amount of this
Debenture  to the date of payment  plus the amounts  referred to in clauses (x),
(y) and (z)  shall  collectively  be  known  as the  "Default  Sum") or (ii) the
"parity  value" of the Default Sum to be prepaid,  where  parity value means (a)
the highest  number of shares of Common Stock  issuable  upon  conversion  of or
otherwise  pursuant to such Default Sum in  accordance  with Article I, treating
the Trading Day  immediately  preceding  the  Mandatory  Prepayment  Date as the
"Conversion Date" for purposes of determining the lowest  applicable  Conversion
Price,  unless the Default  Event arises as a result of a breach in respect of a
specific  Conversion  Date in  which  case  such  Conversion  Date  shall be the
Conversion  Date),  multiplied  by (b) the highest  Closing Price for the Common
Stock during the period  beginning on the date of first  occurrence of the Event
of  Default  and  ending  one day prior to the  Mandatory  Prepayment  Date (the
"Default  Amount") and all other amounts  payable  hereunder  shall  immediately
become due and payable, all without demand,  presentment or notice, all of which
hereby  are  expressly  waived,  together  with all  costs,  including,  without
limitation,  legal fees and

                                       15
<PAGE>

expenses, of collection,  and the Holder shall be entitled to exercise all other
rights and remedies  available at law or in equity. If the Borrower fails to pay
the Default  Amount  within five (5) business  days of written  notice that such
amount is due and payable,  then the Holder shall have the right at any time, so
long as the  Borrower  remains  in default  (and so long and to the extent  that
there are sufficient  authorized shares), to require the Borrower,  upon written
notice,  to  immediately  issue,  in lieu of the Default  Amount,  the number of
shares of Common Stock of the Borrower  equal to the Default  Amount  divided by
the Conversion Price then in effect.

                           ARTICLE IV. MISCELLANEOUS

     4.1 Failure or  Indulgence  Not Waiver.  No failure or delay on the part of
the Holder in the  exercise of any power,  right or  privilege  hereunder  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
such power,  right or privilege preclude other or further exercise thereof or of
any other right, power or privileges. All rights and remedies existing hereunder
are  cumulative  to, and not  exclusive  of, any  rights or  remedies  otherwise
available.

     4.2 Notices.  Any notice herein  required or permitted to be given shall be
in  writing  and may be  personally  served or  delivered  by courier or sent by
United  States  mail and  shall be deemed to have been  given  upon  receipt  if
personally served (which shall include telephone line facsimile transmission) or
sent by courier or three (3) days after  being  deposited  in the United  States
mail, certified,  with postage pre-paid and properly addressed, if sent by mail.
For the  purposes  hereof,  the  address of the Holder  shall be as shown on the
records of the  Borrower;  and the  address of the  Borrower  shall be 4 Mulford
Place, Suite 2G, Hempstead, New York 11550, facsimile number: 509-472-4654. Both
the Holder and the  Borrower  may change the  address  for service by service of
written notice to the other as herein provided.

     4.3 Amendments. This Debenture and any provision hereof may only be amended
by an  instrument  in writing  signed by the Borrower  and the Holder.  The term
"Debenture" and all reference thereto, as used throughout this instrument, shall
mean this instrument (and the other  Debentures  issued pursuant to the Purchase
Agreement) as originally executed, or if later amended or supplemented,  then as
so amended or supplemented.

     4.4  Assignability.  This Debenture  shall be binding upon the Borrower and
its successors and assigns,  and shall inure to be the benefit of the Holder and
its  successors  and  assigns.  Each  transferee  of this  Debenture  must be an
"accredited   investor"   (as   defined  in  Rule   501(a)  of  the  1933  Act).
Notwithstanding  anything in this Debenture to the contrary,  this Debenture may
be pledged as collateral in connection  with a bona fide margin account or other
lending arrangement.

     4.5  Cost  of  Collection.  If  default  is  made  in the  payment  of this
Debenture,  the  Borrower  shall  pay the  Holder  hereof  costs of  collection,
including reasonable attorneys' fees.

     4.6  Governing  Law.  THIS  DEBENTURE  SHALL BE  ENFORCED,  GOVERNED BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE

                                       16
<PAGE>

STATE OF NEW YORK  APPLICABLE  TO AGREEMENTS  MADE AND TO BE PERFORMED  ENTIRELY
WITHIN SUCH STATE,  WITHOUT  REGARD TO THE  PRINCIPLES OF CONFLICT OF LAWS.  THE
BORROWER  HEREBY  SUBMITS TO THE  EXCLUSIVE  JURISDICTION  OF THE UNITED  STATES
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
UNDER THIS DEBENTURE,  THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE
DEFENSE OF AN INCONVENIENT  FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES  FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
CLASS MAIL SHALL BE DEEMED IN EVERY  RESPECT  EFFECTIVE  SERVICE OF PROCESS UPON
THE PARTY IN ANY SUCH SUIT OR  PROCEEDING.  NOTHING  HEREIN SHALL AFFECT  EITHER
PARTY'S  RIGHT TO SERVE  PROCESS  IN ANY OTHER  MANNER  PERMITTED  BY LAW.  BOTH
PARTIES  AGREE  THAT A  FINAL  NON-APPEALABLE  JUDGMENT  IN  ANY  SUCH  SUIT  OR
PROCEEDING  SHALL BE CONCLUSIVE  AND MAY BE ENFORCED IN OTHER  JURISDICTIONS  BY
SUIT ON SUCH  JUDGMENT OR IN ANY OTHER LAWFUL  MANNER.  THE PARTY WHICH DOES NOT
PREVAIL IN ANY DISPUTE ARISING UNDER THIS DEBENTURE SHALL BE RESPONSIBLE FOR ALL
FEES AND EXPENSES,  INCLUDING  ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY
IN CONNECTION WITH SUCH DISPUTE.

     4.7 Certain  Amounts.  Whenever  pursuant to this Debenture the Borrower is
required to pay an amount in excess of the outstanding  principal amount (or the
portion  thereof  required  to be paid at that  time)  plus  accrued  and unpaid
interest  plus Default  Interest on such  interest,  the Borrower and the Holder
agree that the actual  damages to the Holder from the receipt of cash payment on
this Debenture may be difficult to determine and the amount to be so paid by the
Borrower  represents  stipulated  damages  and not a penalty  and is intended to
compensate  the  Holder  in part for loss of the  opportunity  to  convert  this
Debenture and to earn a return from the sale of shares of Common Stock  acquired
upon  conversion  of this  Debenture  at a price in excess of the price paid for
such shares pursuant to this Debenture. The Borrower and the Holder hereby agree
that such amount of stipulated  damages is not plainly  disproportionate  to the
possible  loss to the Holder  from the  receipt of a cash  payment  without  the
opportunity to convert this Debenture into shares of Common Stock.

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

                                       17
<PAGE>

     4.9 Damages Shares.  The shares of Common Stock that may be issuable to the
Holder  pursuant to Sections 1.3 and 1.4(g)  hereof and pursuant to Section 2(c)
of the  Registration  Rights  Agreement  ("Damages  Shares") shall be treated as
Common Stock issuable upon  conversion of this Debenture for all purposes hereof
and shall be subject to all of the limitations and afforded all of the rights of
the  other  shares  of  Common  Stock  issuable  hereunder,   including  without
limitation,  the  right  to be  included  in the  Registration  Statement  filed
pursuant to the  Registration  Rights  Agreement.  For  purposes of  calculating
interest payable on the outstanding principal amount hereof, except as otherwise
provided herein,  amounts  convertible  into Damages Shares ("Damages  Amounts")
shall not bear  interest but must be converted  prior to the  conversion  of any
outstanding  principal amount hereof,  until the outstanding  Damages Amounts is
zero.

     4.10  Denominations.  At the request of the Holder,  upon surrender of this
Debenture,  the Borrower  shall  promptly  issue new Debentures in the aggregate
outstanding  principal amount hereof, in the form hereof, in such  denominations
of at least $50,000 as the Holder shall request.

     4.11 Purchase Agreement.  By its acceptance of this Debenture,  each Holder
agrees to be bound by the applicable terms of the Purchase Agreement.

     4.12 Notice of Corporate  Events.  Except as otherwise  provided below, the
Holder of this Debenture shall have no rights as a Holder of Common Stock unless
and only to the extent that it converts this  Debenture  into Common Stock.  The
Borrower shall provide the Holder with prior  notification of any meeting of the
Borrower's  stockholders  (and copies of proxy  materials and other  information
sent to stockholders). In the event of any taking by the Borrower of a record of
its stockholders for the purpose of determining stockholders who are entitled to
receive  payment of any dividend or other  distribution,  any right to subscribe
for, purchase or otherwise acquire  (including by way of merger,  consolidation,
reclassification  or  recapitalization)  any  share of any  class  or any  other
securities  or property,  or to receive any other  right,  or for the purpose of
determining  stockholders  who  are  entitled  to vote in  connection  with  any
proposed sale, lease or conveyance of all or substantially  all of the assets of
the  Borrower  or any  proposed  liquidation,  dissolution  or winding up of the
Borrower,  the Borrower shall mail a notice to the Holder,  at least twenty (20)
days prior to the record  date  specified  therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution,  right or other event, and a brief statement  regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time. The Borrower shall make a public  announcement  of any event
requiring notification to the Holder hereunder substantially simultaneously with
the  notification  to the Holder in  accordance  with the terms of this  Section
4.12.

     4.13  Remedies.  The  Borrower  acknowledges  that  a  breach  by it of its
obligations  hereunder will cause  irreparable harm to the Holder,  by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly,  the
Borrower  acknowledges  that the  remedy at law for a breach of its  obligations
under this Debenture will be inadequate and agrees,  in the event of a breach or
threatened breach by the Borrower of the provisions of this Debenture,  that the
Holder shall be entitled,  in addition to all other available remedies at law or

                                       18
<PAGE>

in equity, and in addition to the penalties  assessable herein, to an injunction
or  injunctions  restraining,  preventing or curing any breach of this Debenture
and to  enforce  specifically  the terms and  provisions  thereof,  without  the
necessity of showing  economic loss and without any bond or other security being
required.

                         ARTICLE V. OPTIONAL PREPAYMENT

     5.1 Optional Prepayment. Notwithstanding anything to the contrary contained
in this Article V, for not more than thirty (30) days from the date  hereof,  so
long as (i) no Event of Default or Trading  Market  Prepayment  Event shall have
occurred and be  continuing,  and (ii) the  Borrower has a sufficient  number of
authorized  shares of Common Stock reserved for issuance upon full conversion of
the  Debentures,  then at any time after the Issue Date, the Borrower shall have
the right,  exercisable  on not less than ten (10)  Trading  Days prior  written
notice to the  Holders of the  Debentures  (which  notice may not be sent to the
Holders  of the  Debentures  until the  Borrower  is  permitted  to  prepay  the
Debentures  pursuant  to this  Section  5.1),  to prepay all of the  outstanding
Debentures  in  accordance  with this  Section  5.1.  Any  notice of  prepayment
hereunder  (an "Optional  Prepayment")  shall be delivered to the Holders of the
Debentures at their registered  addresses  appearing on the books and records of
the Borrower and shall state (1) that the  Borrower is  exercising  its right to
prepay  all of the  Debentures  issued  on the  Issue  Date  and (2) the date of
prepayment (the "Optional Prepayment Notice").  On the date fixed for prepayment
(the  "Optional  Prepayment  Date"),  the  Borrower  shall  make  payment of the
Optional  Prepayment  Amount  (as  defined  below)  to or upon the  order of the
Holders as  specified by the Holders in writing to the Borrower at least one (1)
business day prior to the Optional  Prepayment  Date. If the Borrower  exercises
its right to prepay the  Debentures,  the  Borrower  shall  make  payment to the
holders of an amount in cash (the  "Optional  Prepayment  Amount") equal to 150%
multiplied  by the sum of (w) the  then  outstanding  principal  amount  of this
Debenture plus (x) accrued and unpaid interest on the unpaid principal amount of
this Debenture to the Optional  Prepayment  Date plus (y) Default  Interest,  if
any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed
to the Holder  pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section
2(c) of the Registration Rights Agreement (the then outstanding principal amount
of this Debenture to the date of payment plus the amounts referred to in clauses
(x), (y) and (z) shall collectively be known as the "Optional  Prepayment Sum").
Notwithstanding notice of an Optional Prepayment, the Holders shall at all times
prior to the Optional  Prepayment  Date maintain the right to convert all or any
portion  of the  Debentures  in  accordance  with  Article I and any  portion of
Debentures so converted after receipt of an Optional Prepayment Notice and prior
to the  Optional  Prepayment  Date set forth in such  notice and  payment of the
aggregate Optional Prepayment Amount shall be deducted from the principal amount
of Debentures which are otherwise subject to prepayment pursuant to such notice.
If the  Borrower  delivers  an Optional  Prepayment  Notice and fails to pay the
Optional  Prepayment  Amount due to the Holders of the Debentures within two (2)
business days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to redeem the Debentures pursuant to this Section 5.1.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

                  IN WITNESS  WHEREOF,  Borrower has caused this Debenture to be
signed in its name by its duly authorized officer this 16th day of April, 2003.

                                TORBAY HOLDINGS, INC.

                                By:    ______________________________
                                       William Thomas Large
                                       President and Chief Executive Officer

                                       20

<PAGE>

                                                                       EXHIBIT A

                              NOTICE OF CONVERSION
                    (To be Executed by the Registered Holder
                       in order to Convert the Debentures)

     The undersigned  hereby  irrevocably  elects to convert  $________principal
amount of the Debenture  (defined below) into shares of common stock,  par value
$.0001  per  share  ("Common  Stock"),  of Torbay  Holdings,  Inc.,  a  Delaware
corporation  (the  "Borrower")  according to the  conditions of the  convertible
debentures of the Borrower dated as of April 16, 2003 (the "Debentures"),  as of
the date written  below.  If securities 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.  No fee will
be charged to the Holder for any conversion,  except for transfer taxes, if any.
A copy of each  Debenture  is attached  hereto (or  evidence  of loss,  theft or
destruction thereof).

     The  Borrower  shall  electronically  transmit  the Common  Stock  issuable
pursuant to this Notice of Conversion to the account of the  undersigned  or its
nominee with DTC through its Deposit  Withdrawal Agent Commission system ( "DWAC
Transfer").

              Name of DTC Prime Broker:_________________________________________

              Account Number:___________________________________________________

     In lieu of  receiving  shares of Common  Stock  issuable  pursuant  to this
Notice of Conversion by way of a DWAC Transfer,  the undersigned hereby requests
that the Borrower issue a certificate or  certificates  for the number of shares
of  Common  Stock set  forth  below  (which  numbers  are based on the  Holder's
calculation  attached hereto) in the name(s) specified  immediately below or, if
additional space is necessary, on an attachment hereto:

              Name:_____________________________________________________________

              Address:__________________________________________________________

     The  undersigned  represents  and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Debentures  shall be made pursuant to registration  of the securities  under the
Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from
registration under the Act.

                Date of Conversion:_____________________________________________
                Applicable Conversion Price:____________________________________
                Number of Shares of Common Stock to be Issued Pursuant to
                Conversion of the Debentures:___________________________________
                Signature:______________________________________________________
                Name:___________________________________________________________
                Address:________________________________________________________

     The Borrower shall issue and deliver shares of Common Stock to an overnight
courier not later than three  business  days  following  receipt of the original
Debenture(s) to be converted, and shall make payments pursuant to the Debentures
for the number of business days such issuance and delivery is late.

                                      A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}]]