Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

THIS AGREEMENT
(the “Agreement”), dated as of November 12, 2006, is by and between Tower
Group, Inc., a Delaware corporation (the “Company”), and Patrick J. Haveron
(the “Executive”).

WITNESSETH THAT

WHEREAS, the
Executive and the Company wish to enter into a written agreement setting forth
the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, this
Agreement is the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements concerning the same subject.

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein, the
Company and the Executive hereby agree as follows:

1.             Term.

(a)           Term of Employment.

(i)            The Company shall
employ the Executive, and the Executive shall serve the Company, on the terms
and subject to the conditions set forth in this Agreement, commencing on the
date the Stock Purchase Agreement by and among Certain Named Sellers therein,
Preserver Group, Inc. and Tower Group, Inc. closes (the “Effective Date”) and,
unless sooner terminated pursuant to section 4, continuing until the date that
is the (2) two-year anniversary of the Effective Date or such later date as
provided in subsection 1(a)(ii) below (the “Term of Employment”).

(ii)           The Term of
Employment shall be extended automatically for one additional year on the last
day before the second anniversary of the Effective Date and for one additional
year on each anniversary thereafter unless and until either party gives written
notice to the other not to extend this Agreement at least one year before such
extension would be effectuated.

(b)           Term of the
Agreement.  This Agreement shall
become effective on the Effective Date and shall continue in effect throughout
the Term of Employment; provided, however, the restrictive covenants contained
in section 10 of this Agreement and, as applicable, the Company’s and the
Executive’s obligations under the other provisions of this Agreement shall
survive the Term of Employment and shall continue in effect through the periods
provided therein and/or until the Company’s and/or the Executive’s obligations,
as applicable, thereunder are satisfied.

2.             Position and Duties.

(a)           Positions,
Duties, and Responsibilities.  The
Executive shall serve as the Senior Vice President, Chief Operating Officer of
the Company with such duties and responsibilities as

are
customarily assigned to the Chief Operating Officer, and suchother duties and
responsibilities not inconsistent therewith as may from time to time be
assigned to him by the Chief Executive Officer (the “CEO”) of the Company.  The Executive shall report solely to the CEO
unless the CEO or the Board of Directors of the Company (the “Board”)
determines otherwise.  The Executive
agrees to serve without additional compensation in such capacities (including,
without limitation, as an employee or director) with Company affiliates as the
CEO or the Board may in its discretion prescribe; provided, that upon
termination of the Executive’s employment with the Company, any employment,
board membership or other service relationship with such affiliate shall
automatically terminate unless otherwise determined by the parties hereto.

(b)           Time and
Attention.  Excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote substantially all of his attention and time during normal working hours
to the business and affairs of the Company and its affiliates.  It shall not be considered a violation of the
foregoing, however, for the Executive to (i) serve on corporate, industry,
educational, religious, civic, or charitable boards or committees or (ii) make
and attend to passive personal investments in such form as will not require any
material time or attention to the operations thereof during normal working time
and will not violate the provisions of section 10 hereof, so long as such
activities in clauses (i) and (ii) do not materially interfere with the
performance of the Executive’s responsibilities as an employee of the Company
in accordance with this Agreement or violate section 10 of this Agreement.

3.             Compensation. 
Except as otherwise expressly set forth below, the Executive’s
compensation shall be determined by, and in the sole discretion of, the Board.

(a)           Annual Base
Salary.  Subject to adjustment
pursuant to this subsection 3(a), the Executive shall receive an annual base
salary of $350,000 during the Term of Employment (the annual base salary in
effect from time to time, “Annual Base Salary”).  The Annual Base Salary shall be payable in
accordance with the Company’s regular payroll practice for its senior officers,
as in effect from time to time.  The
Annual Base Salary shall be reviewed from time to time, but not less frequently
than annually, and, in the sole discretion of the Board, may be adjusted but
not decreased below the amount set forth in the first sentence of this
subsection 3(a).  To the extent Annual
Base Salary is adjusted, then such adjusted salary shall be the Executive’s
Annual Base Salary for all purposes of this Agreement.

(b)           Annual Bonus Plan.  The Executive shall have an opportunity to
receive annual bonuses during the Term of Employment (the “Annual Bonus”),
subject to such terms and conditions as the Board or a delegatee thereof shall
prescribe.  The Executive’s maximum
target Annual Bonus opportunity shall be equal to 30% of his Annual Base
Salary, it being understood that the actual Annual Bonus received by the
Executive will depend on the level of attainment of performance and other
factors used by the Company to determine Annual Bonus amounts and that there is
no guarantee that an Annual Bonus will be earned.

(c)           Sign-On Equity:  The Executive shall be entitled to receive a
one-time, sign-on equity grant valued in the amount of $175,000 priced as of
the effective date of this Agreement and vesting in equal installments over three
(3) years.

(d)           Employee
Benefits; Fringe Benefits.  In
addition to the foregoing, during the Term of Employment,

(i)            to the extent not
duplicative of the specific benefits provided herein, the Executive shall be
eligible to participate in all incentive compensation, retirement, supplemental
retirement, and deferred compensation plans, policies and arrangements that are
provided generally to other senior officers of the Company;

(ii)           the Executive and,
as applicable, the Executive’s covered dependents shall be eligible to
participate in all of the Company’s health and welfare benefit plans (within
the meaning of Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended); and

(iii)          the Executive shall
be entitled to receive fringe benefits provided for senior officers of the
Company, and shall be entitled to avail himself of paid holidays, as determined
from time to time by the Company.

(e)           Vacation.  The Executive shall be entitled to not less
than four weeks of paid vacation per calendar year during the Term of Employment.  Vacation days not used within the year shall
be carried forward to subsequent years, as determined by the Company; provided, however, that the maximum carry
forward of vacation shall be two weeks.

(f)            Expenses.  The Executive shall be reimbursed by the
Company for reasonable business expenses actually incurred in rendering to the
Company the services provided for hereunder during the Term of Employment,
payable in accordance with customary Company practice, after the Executive
presents written expense statements or such other supporting information as the
Company may require of its senior officers for reimbursement of such expenses.

(g)           Executive Medical Reimbursements:
The plan will reimburse the Executive for uncovered medical expenses, up to
$5,000 per calendar year.  Expenses that
do not meet the IRS criteria cannot be submitted for reimbursement.

(h)           Automobile Allowance:  The Executive shall be entitled to receive an
annual automobile allowance of a maximum of Twelve Thousand Dollars ($12,000)
during the Term of Employment.

4.             Termination of Employment.

(a)           The Company or the
Executive may terminate the Executive’s employment at any time and for any
reason in accordance with subsection 4(b) below. The Term of Employment shall
be deemed to have ended on the last day of the

 

Executive’s employment.  The Term
of Employment shall terminate upon the Executive’s death.

(b)           Notice of
Termination.  Any purported
termination of the Executive’s employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with the notice provisions contained in
subsection 15(b) below.  For purposes of
this Agreement, a “Notice of Termination” shall mean a notice that indicates
the Date of Termination (as that term is defined in subsection 4(c) below) and,
with respect to a termination due to Disability, Cause or Good Reason, sets
forth in reasonable detail the facts and circumstances that are alleged to
provide a basis for such termination.  A
Notice of Termination from the Company shall specify whether the termination is
with or without Cause or due to the Executive’s Disability.  A Notice of Termination from the Executive
shall specify whether the termination is with or without Good Reason or due to
the Executive’s Disability or retirement.

(c)           Date of
Termination.  For purposes of this
Agreement, “Date of Termination” shall mean the date specified in the Notice of
Termination (but in no event shall such date be earlier than the 30th day
following the date the Notice of Termination is given, unless expressly agreed
to by the parties hereto) or the date of the Executive’s death.

(d)           No Waiver.  The failure to set forth any fact or
circumstance in a Notice of Termination, which fact or circumstance was not
known to the party giving the Notice of Termination when the notice was given,
shall not constitute a waiver of the right to assert such fact or circumstance
in an attempt to enforce any right under or provision of this Agreement.

(e)           Cause.  For purposes of this Agreement, “Cause”
means: (i) the Executive’s gross negligence or gross misconduct or (ii) the
Executive’s having been convicted of, or entered a plea of nolo contendere to,
a felony involving moral turpitude.  No
act or failure to act directly related to Company action or inaction that
constitutes Good Reason (as that term is defined in subsection 4(g) below)
shall constitute Cause under this Agreement if the Executive has provided a
Notice of Termination based on such Good Reason event prior to the Company’s
giving of the Notice of Termination for Cause. 
The Executive’s termination for Cause shall be effective when and if a
resolution is duly adopted by an affirmative vote of the entire Board (less the
Executive), stating that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in the Notice of Termination, and such
conduct constitutes Cause under this Agreement; provided, however, that the
Executive shall have been given the opportunity (i) to cure any act or omission
that constitutes Cause if capable of cure and (ii), together with counsel,
during the 30-day period following the receipt by the Executive of the Notice
of Termination and prior to the adoption of the Board’s resolution, to be heard
by the Board.

(f)            Disability.  For purposes of this Agreement, the Executive
shall be deemed to have a Disability if the Executive is entitled to long-term
disability benefits under the Company’s long-term disability plan or policy, as
the case may be, as in effect on the Date of Termination (as that term is
defined in subsection 4(c) above)

(g)           Good Reason.  For purposes of this Agreement, the term “Good
Reason” means the occurrence (without the Executive’s express written consent)
of any of the following acts or failures to act by the Company:

(i)            the assignment to
the Executive of duties materially inconsistent with the Executive’s position
of Chief Operating Officer, or a substantial diminution in the Executive’s
authority and duties;

(ii)           any reduction in
the Executive’s Annual Base Salary or target Annual Bonus opportunity;

(iii)          requiring the
Executive to be based more than 50 miles away from the Company’s headquarters in New York, New
York;

(iv)          the material breach
by the Company of any of its other obligations under this Agreement; or

(v)           the failure of the Company to obtain the
assumption of this Agreement as contemplated in subsection 13(b) hereof.

The Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder; provided,
however, that no such event described above shall constitute Good Reason unless
the Executive has given a Notice of Termination to the Company specifying the
condition or event relied upon for such termination within 90 days from the
Executive’s actual knowledge of the occurrence of such event and, if capable of
cure, the Company has failed to cure the condition or event constituting Good
Reason within the 30 day period following receipt of the Executive’s Notice of
Termination.

5.             Obligations of the Company upon Termination.

(a)           Termination by
the Company for other than Cause or by the Executive for Good Reason.  If the Executive’s employment is terminated
by the Company for any reason other than Cause or Disability or by the
Executive for Good Reason:

(i)            The Company shall
pay to the Executive, within thirty business days of the Date of Termination,
any earned but unpaid Annual Base Salary;

(ii)           The Company shall
pay to the Executive, within thirty business days of the Date of Termination, a prorated Annual Bonus based on (A)
the target Annual Bonus opportunity in the year in which the Date of
Termination occurs or the prior year
if no target Annual Bonus opportunity has yet been determined (disregarding any
reduction in target Annual Bonus 

 

opportunity that was the basis for a
termination by the Executive for Good Reason) and (B) the
fraction of the year the Executive was employed.

(iii)          The Company shall pay to the Executive,
within thirty business days of the Date of Termination, a lump-sum payment equal to the sum of 100% of (x) the Executive’s
Annual Base Salary in effect immediately prior to the Date of Termination
(disregarding any reduction in Annual Base Salary that was the basis for a
termination by the Executive for Good Reason), and (y) the Executive’s
target Annual Bonus opportunity for the year in which the Date of Termination
occurs or the prior year if no target Annual Bonus opportunity has yet been
determined (disregarding any reduction in target Annual Bonus opportunity that
was the basis for a termination by the Executive for Good Reason);

(iv)          For a one (1) year period after the Date of
Termination, the Company will arrange to provide the Executive (and any covered
dependents), without cost to the Executive, with life, accident and health
insurance benefits substantially similar to those the Executive and any covered
dependents were receiving immediately prior to the Notice of Termination,
except for any such benefits that were waived by the Executive in writing.  If the Company arranges to provide the
Executive and covered dependents with life, accident and health insurance
benefits, those benefits will be reduced to the extent comparable benefits are
actually received by, or made available to, the Executive by a subsequent
employer without cost during the one (1) year period following the Executive’s
Date of Termination.  The Executive must
report to the Company any such benefits that he actually receives or are made
available.  In lieu of the benefits
described in this subsection 5(a)(iv), the Company, in its sole discretion, may
elect to pay to the Executive a lump sum cash payment equal to the annual
premium that would have been paid by the Company to provide such benefits to
the Executive.  Nothing in this
subsection 5(a)(iv) will affect the Executive’s right to elect COBRA
continuation coverage in accordance with applicable law or extend the COBRA
continuation coverage period; and

(v)           The Executive shall have at least three (3)
months or until the last day of the equity term, whichever occurs first to
exercise any then vested equity awards.

(b)           Termination in
Connection with a Change in Control.

(i)            If, in anticipation
of or within the 24 month period following a Change in Control (as defined
below), the Executive’s employment is terminated by the Company for any reason
other than Cause or Disability or by the Executive for Good Reason, the
Executive shall receive the payments and benefits described in subsection 5(a)
and, in addition, all of the Executive’s outstanding equity-based awards shall
become fully vested on the Date of Termination..

(ii)           For purposes of
this Agreement, the term “Change in Control” shall mean the occurrence of any
of the following events:

(A)          any “person” (within
the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended from time to time (the “Exchange Act”) and used in
Sections 13(d) and 14(d) thereof, including a “group” as defined in Section
13(d) thereof), other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportion as the ownership of stock of the Company, (a “Person”)
that is not on the Effective Date the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 20% of the combined voting power of the Company’s then
outstanding securities becomes after the Effective Date the beneficial owner,
directly or indirectly, of securities of the Company representing more than 20% of the combined voting power of
the Company’s then outstanding securities;

(B)           individuals who, as
of the Effective Date, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board of the Company,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company)
shall be, for purposes of this definition, considered as though such person
were a member of the Incumbent Board;

(C)           consummation of a
merger, consolidation, reorganization, share exchange or similar transaction (a
“Transaction”) of the Company with any other entity, other than (I) a
Transaction that would result in the voting securities of the Company
outstanding immediately prior thereto directly or indirectly continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or a parent company) more than 80% of the combined
voting power of the voting securities of the Company or such surviving entity
or parent company outstanding immediately after such Transaction or (II) a
Transaction effected to implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 20% of the combined voting
power of the Company’s then outstanding securities;

(D)          the sale, transfer or
other disposition (in one transaction or a series of related transactions) of
more than 50% of the operating assets of the Company; or

(E)           the approval by the
shareholders of a plan or proposal for the liquidation or dissolution of the
Company.

Notwithstanding anything
to the contrary contained in the foregoing definition, an initial public
offering of the Company’s shares shall not constitute a Change in Control for
purposes of this Agreement.

(c)           Termination by
the Company for Cause or by the Executive without Good Reason.  If the Executive’s employment is terminated
by the Company for Cause the Company shall pay to the Executive, within thirty
business days of the Date of Termination, any earned but unpaid Annual Base
Salary and all outstanding stock options (whether or not then exercisable),
restricted stock and other incentive awards shall be forfeited.  If the Executive’s employment is terminated
by the Executive without Good Reason (and not due to death, Disability or
Retirement), the Company shall pay to the Executive, within thirty business
days of the Date of Termination, any earned but unpaid Annual Base Salary, the
Executive shall have three months to exercise any outstanding vested stock
options and all of the Executive’s unvested equity-based awards shall be
forfeited as of the Date of Termination.

(d)           Termination due
to death or Disability.  If the Executive’s
employment is terminated due to death or Disability, (i) the Company shall pay
to the Executive (or to the Executive’s estate or personal representative in
the case of the Executive’s death), within thirty business days after the Date
of Termination, (A) any earned but unpaid Annual Base Salary and (B) a prorated Annual Bonus based on (I)
the target Annual Bonus opportunity in the year in which the Date of
Termination occurs or the prior year
if no target Annual Bonus opportunity has yet been determined and (II)
the fraction of the year the Executive was employed, and (ii) all of the
Executive’s outstanding equity-based awards shall vest on the Date of
Termination and the Executive’s outstanding stock options shall remain
exercisable for one year following the Date of Termination.

(e)           Retirement.  If the Executive retires with at least 15
years of service and after attaining age 55, (i) the Company shall pay to the
Executive, within thirty business days after the Date of Termination, any
earned but unpaid Annual Base Salary, (ii) the Company shall pay to the
Executive, within thirty business days after the Date of Termination, a
prorated Annual Bonus based on (A) the target Annual Bonus opportunity in
the year in which the date of Termination occurs or the prior year if no Target
Annual Bonus opportunity has yet been determined and (B) the fraction of
the year the Executive was employed, (iii) the Executive shall receive
applicable retiree benefits, if any, provided at such time by the Company to
retirees or as the Company shall determine, and (iv) the Executive’s
outstanding equity-based awards shall vest on the Date of Termination, and (v)
the Executive’s vested equity-awards shall remain exercisable until the last
day of the option term thereof. For avoidance of doubt, the Executive shall not
be entitled to receive benefits pursuant to this Section 5(e) if he
receives benefits under Section 5(a), (b), (c) and (d).

6.             Certain Tax Consequences.

(a)           If any payments or
benefits paid or provided or to be paid or provided to the Executive or for his
benefit pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, his employment with the Company (a “Payment” or “Payments”)
would be subject to any excise tax (the “Excise Tax”) imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”), then the

Executive will be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes
(including any interest, penalties, additional tax, or similar items imposed
with respect thereto and the Excise Tax), including any such taxes imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

(b)           An initial
determination as to whether a Gross-Up Payment is required pursuant to this
Agreement and the amount of such Gross-Up Payment will be made at the Company’s
expense by an accounting firm selected by the Company.  The accounting firm will provide its
determination, together with detailed supporting calculations and documentation,
to the Company and the Executive within 10 days after the Date of Termination,
or such other time as requested by the Company or by the Executive.  If the accounting firm determines that no
Excise Tax is payable by the Executive with respect to a Payment or Payments,
it will furnish the Executive with an opinion reasonably acceptable to the
Executive to that effect.  The Gross-Up
Payment, if any, will be paid by the Company to the Executive within thirty business
days of the receipt of the accounting firm’s determination.  Within 10 days after the accounting firm
delivers its determination to the Executive, the Executive will have the right
to dispute the determination.  The existence
of a dispute will not in any way affect the Executive’s right to receive the
Gross-Up Payment in accordance with the determination.  If there is no dispute, the determination
will be binding, final, and conclusive upon the Company and the Executive.  If there is a dispute, the Company and the
Executive will together select a second accounting firm, which will review the
determination and the Executive’s basis for the dispute and then will render
its own determination, which will be binding, final, and conclusive on the
Company and on the Executive.  The
Company will bear all costs associated with that determination, unless the
determination is not greater than the initial determination, in which case all
such costs will be borne by the Executive.

(c)           For purposes of
determining the amount of the Gross-Up Payment, the Executive will be deemed to
pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
applicable state and local income taxes at the highest marginal rate of taxation
in the state and locality of the Executive’s residence on the Date of
Termination, net of the maximum reduction in federal income taxes that would be
obtained from deduction of those state and local taxes.

(d)           Notwithstanding
anything contained in this Agreement to the contrary, in the event that,
according to the accounting firm’s determination, an Excise Tax will be imposed
on any Payment or Payments, the Company will pay to the applicable government
taxing authorities as Excise Tax withholding, the amount of the Excise Tax that
the Company has actually withheld from the Payment or Payments in accordance
with law.

7.             Release.  Notwithstanding any provision herein to the
contrary, the Company will require that, prior to payment of any amount or
provision of any benefit under section 5 of this Agreement (other than due to
the Executive’s death), the Executive

shall have executed a
complete release of the Company and its affiliates and related parties in such
form as is reasonably required by the Company, and any waiting periods
contained in such release shall have expired.

8.             Non-Exclusivity of Rights.  Except as otherwise provided in this
Agreement, nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies for which the
Executive may qualify (other than severance policies).  Vested benefits and other amounts that the
Executive is otherwise entitled to receive under any other plan, program,
policy, or practice of, or any contract or agreement with, the Company or any
of its affiliated companies on or after the Date of Termination shall be
payable in accordance with the terms of each such plan, program, policy, practice,
contract or agreement, as the case may be, except as expressly modified by this
Agreement.

9.             Full Settlement. 
In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as
otherwise provided in subsections 5(a)(iv) and 15(e), the amount of any payment
or benefit provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.

10.           Non-Competition; Confidential
Information; and Non-Solicitation.

(a)           Non-Competition.  During the Term of Employment and for the one
(1) year period following the Date of Termination for any reason, the Executive
shall not, without the prior written consent of the Company, as a shareholder,
officer, director, partner, consultant, employee or otherwise, engage in any
business or enterprise which is “in competition” (as defined below) with the
Company, its affiliates, or their successors or assigns (such entities
collectively referred to hereinafter in this section 10 as the “Company”) in
the states of New York and New Jersey; provided, however, that the Executive’s
ownership of less than five percent of the issued and outstanding voting
securities of a publicly traded company shall not, in and of itself, be deemed
to constitute such competition.  A
business or enterprise is deemed to be “in competition” if it is engaged in any
business in which the Company either (i) is engaged in as of the Date of
Termination or (ii) as of the Date of Termination, contemplates engaging in
within one (1) year following the Date of Termination.

(b)           Confidential Information.  The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge, trade secrets, methods, know-how or data relating to the Company or
its affiliates and their businesses or acquisition prospects that the Executive
obtained or obtains during the Executive’s employment by the Company (“Confidential
Information”), provided that “Confidential Information” shall not include any
secret or confidential information, knowledge, trade secrets, methods, know-how
or data that is or becomes generally known

to the public (other than as a result of the Executive’s violation of
this section 10).  Except as may be
required and appropriate in connection with carrying out his duties under this
Agreement, the Executive shall not communicate, divulge, or disseminate any
material Confidential Information at any time during or after the Executive’s
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process; provided, however,
that if so required, the Executive will provide the Company with reasonable
notice to contest such disclosure.

(c)           Non-Solicitation.  During the Term of Employment and for the one
(1) year period following the Date of Termination for any reason, the Executive
will not, directly or indirectly, initiate any action to solicit or recruit
anyone who is then an employee of the Company for the purpose of being employed
by him or by any business, individual, partnership, firm, corporation or other
entity on whose behalf he is acting as an agent, representative, employee or
otherwise.

(d)           Non-Interference
with Customers or Producers.  During
the Term of Employment and for the one (1) year period following the Date of
Termination for any reason, the Executive will not interfere with any business
relationship between the Company and any of its customers or agents or brokers
that produce insurance business for the Company.

(e)           Remedies;
Severability.

(i)            The
Executive acknowledges that if the Executive shall breach or threaten to breach
any provision of subsections 10(a) through (d), the damages to the Company may
be substantial, although difficult to ascertain, and money damages will not
afford the Company an adequate remedy. 
Therefore, if the provisions of subsections 10(a) through (d) are
violated, in whole or in part, the Company shall be entitled to specific
performance and injunctive relief, without prejudice to other remedies the
Company may have at law or in equity.

(ii)           If
any term or provision of this section 10, or the application thereof to any
person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this section 10, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this section 10 shall be valid and enforceable to the fullest extent permitted
by law.  Moreover, if a court of
competent jurisdiction deems any provision of subsections 10(a) through (d) to
be too broad in time, scope, or area, it is expressly agreed that such
provision shall be reformed to the maximum degree that would not render it
unenforceable.

11.           Attorneys’ Fees.  Each party shall pay its own legal fees,
court costs, litigation expenses and/or arbitration expenses (as applicable) in
connection with any dispute, litigation or arbitration regarding the validity or
enforceability of, or liability under or otherwise involving, any provision of
this Agreement, except that if the Executive prevails on the majority of
material claims disputed, the Company shall pay all reasonable legal fees,
court cost, litigation expenses and/or arbitration expenses.

12.           Indemnification.  The Executive shall be indemnified by the
Company for actions taken in his position as an officer, director, employee and
agent of the Company to the greatest extent permitted by applicable law.  The Executive shall also be covered as an
insured by a liability insurance policy secured by and maintained by the
Company covering acts of officers and members of the Board.

13.           Successors.

(a)           Assignment of
Agreement.  This Agreement is
personal to the Executive and, without the prior written consent of the
Company, shall not be assignable by the Executive otherwise than by will or the
laws of descent and distribution.

(b)           Successors of the
Company.  No rights or obligations of
the Company under this Agreement may be assigned or transferred except that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall
mean the Company as herein before defined and any successor that executes and
delivers the agreement provided for in this section 13 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.

14.           Arbitration.  Except for matters covered under section 10,
in the event of any dispute or difference between the Company and the Executive
with respect to the subject matter of this Agreement and the enforcement of
rights hereunder, either the Executive or the Company may, by written notice to
the other, require such dispute or difference to be submitted to
arbitration.  The arbitrator or
arbitrators shall be selected by agreement of the parties or, if they cannot
agree on an arbitrator or arbitrators within 30 days after the date arbitration
is required by either party, then the arbitrator or arbitrators shall be
selected by the American Arbitration Association (the “AAA”) upon the
application of the Executive or the Company. 
The determination reached in such arbitration shall be final and binding
on both parties without any right of appeal or further dispute.  Execution of the determination by such
arbitrator may be sought in any court of competent jurisdiction. The
arbitrators shall not be bound by judicial formalities and may abstain from
following the strict rules of evidence and shall interpret this Agreement as an
honorable engagement and not merely as a legal obligation.  Unless otherwise agreed by the parties, any
such arbitration shall take place in New York, New York.

15.           Miscellaneous.

(a)           Governing Law and
Captions.  This Agreement shall be
governed by, and construed in accordance with, the laws of New York without
reference to principles of conflict of laws. 
The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect.

(b)           Notices.  All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or by
facsimile (provided confirmation of receipt of such facsimile is received) to
the other party or by registered or certified mail, return receipt requested,
postage prepaid, or by Federal Express or other nationally-recognized overnight
courier that requires signatures of recipients upon delivery and provides
tracking services, addressed as follows:

If to the Executive:

Patrick J. Haveron

147 Fernwood Drive

Old Tappan, New Jersey 07675

If to the Company:

Tower Group, Inc. 

120 Broadway, 31st Floor

New York, New York 10271

Attention:  General Counsel

Facsimile:  212-271-5492

or to such other address as either party furnishes to
the other in writing in accordance with this subsection 15(b).  Notices and communications shall be effective
when actually received by the addressee.

(c)           Amendment.  This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

(d)           Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. 
If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

(e)           Withholding.  Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all

federal, state, local, and foreign taxes that are required to be withheld
by applicable laws or regulations.

(f)            Waiver.  The Executive’s or the Company’s failure to
insist upon strict compliance with any provision of, or to assert any right
under, this Agreement (including, without limitation, the right of the
Executive to terminate employment for Good Reason) shall not be deemed to be a
waiver of such provision or right or of any other provision of or right under
this Agreement.

(g)           Entire
Understanding; Counterparts.  The
Executive and the Company acknowledge that this Agreement supersedes and
terminates any other severance and employment agreements between the Executive
and the Company or any Company affiliates. 
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument.

(h)           Rights and
Benefits Unsecured.  The rights and
benefits of the Executive under this Agreement may not be anticipated,
assigned, alienated, or subject to attachment, garnishment, levy, execution, or
other legal or equitable process except as required by law.  Any attempts by the Executive to anticipate,
alienate, assign, sell, transfer, pledge or encumber the same shall be void.  Payments hereunder shall not be considered
assets of the Executive in the event of insolvency or bankruptcy.

(i)            Noncontravention.  The Company represents that the Company is
not prevented from entering into, or performing this Agreement by the terms of
any law, order, rule or regulation, its by-laws or declaration of trust, or any
agreement to which it is a party.

(j)            Section and
Subsection Headings.  The section and
subsection headings in this Agreement are for convenience of reference only;
they form no part of this Agreement and shall not affect its interpretation.

IN WITNESS
WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to
the authorization of the Board, the Company has caused this Agreement to be
executed, all as of the day and year first above written.

	
  

  	
  TOWER
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael
  H. Lee

  
	
   

  	
  Its:

  	
    President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PATRICK
  J. HAVERON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  
  Patrick J. HaveronEXHIBIT 4.1

                                    FORM OF

                              CONVERTIBLE DEBENTURE

COMPANY: Medical Connections Holdings, Inc.
COMPANY ADDRESS: 2300 Glades Road, Suite 202E, Boca Raton, Florida 33431

CLOSING DATE:     ___________________

MATURITY DATE:    ___________________

PRINCIPAL AMOUNT: ___________________

<PAGE>

         MEDICAL CONNECTIONS HOLDINGS, INC., A FLORIDA CORPORATION, AND ANY
SUCCESSOR OR RESULTING CORPORATION BY WAY OF MERGER, CONSOLIDATION, SALE OR
EXCHANGE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OR OTHERWISE (THE "Company"),
FOR VALUE RECEIVED, HEREBY PROMISES TO PAY TO THE HOLDER (AS SUCH TERM IS
HEREINAFTER DEFINED), OR SUCH OTHER PERSON (AS SUCH TERM IS HEREINAFTER DEFINED)
UPON ORDER OF THE HOLDER, ON THE MATURITY DATE, THE PRINCIPAL AMOUNT (AS SUCH
TERM IS HEREINAFTER DEFINED), AS SUCH SUM MAY BE ADJUSTED PURSUANT TO ARTICLE 3,
AND TO PAY INTEREST THEREON FROM THE CLOSING DATE, AT THE RATE OF SIX PERCENT (6
%) PER ANNUM (THE "Debenture Interest Rate"), UNTIL THE PRINCIPAL AMOUNT OF THIS
DEBENTURE HAS BEEN PAID IN FULL. ALL INTEREST PAYABLE ON THE PRINCIPAL AMOUNT OF
THIS DEBENTURE SHALL BE CALCULATED ON THE BASIS OF A 360-DAY YEAR FOR THE ACTUAL
NUMBER OF DAYS ELAPSED. PAYMENT OF INTEREST OR PRINCIPAL ON THIS DEBENTURE SHALL
BE IN CASH OR, AT THE OPTION OF THE COMPANY, IN SHARES OF COMMON STOCK OF THE
COMPANY VALUED AT THE THEN APPLICABLE CONVERSION PRICE (AS DEFINED HEREIN).

DEFINITIONS

1.1 DEFINITIONS. THE TERMS DEFINED IN THIS ARTICLE WHENEVER USED IN THIS
DEBENTURE HAVE THE FOLLOWING RESPECTIVE MEANINGS:

1.1.1.A "Affiliate" HAS THE MEANING ASCRIBED TO SUCH TERM IN RULE 12B-2 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

1.1.1.B "Bankruptcy Code" MEANS THE UNITED STATES BANKRUPTCY CODE OF 1986, AS
AMENDED (11 U.S.C. SS.SS. 101 ET. SEQ.).

1.1.1.C "Business Day" MEANS A DAY OTHER THAN SATURDAY, SUNDAY OR ANY DAY ON
WHICH BANKS LOCATED IN THE STATE OF CALIFORNIA ARE AUTHORIZED OR OBLIGATED TO
CLOSE.

1.1.1.D "Capital Shares" MEANS THE COMMON STOCK AND ANY OTHER SHARES OF ANY
OTHER CLASS OR SERIES OF CAPITAL STOCK, WHETHER NOW OR HEREAFTER AUTHORIZED AND
HOWEVER DESIGNATED, WHICH HAVE THE RIGHT TO PARTICIPATE IN THE DISTRIBUTION OF
EARNINGS AND ASSETS (UPON DISSOLUTION, LIQUIDATION OR WINDING-UP) OF THE
COMPANY.

1.1.1.E "Common Shares" OR "Common Stock" MEANS SHARES OF THE COMPANY'S COMMON
STOCK.

1.1.1.F "Common Stock Issued at Conversion", WHEN USED WITH REFERENCE TO THE
SECURITIES DELIVERABLE UPON CONVERSION OF THIS DEBENTURE, MEANS ALL COMMON
SHARES NOW OR HEREAFTER OUTSTANDING AND SECURITIES OF ANY OTHER CLASS OR SERIES
INTO WHICH THIS DEBENTURE HEREAFTER SHALL HAVE BEEN CHANGED OR SUBSTITUTED,
WHETHER NOW OR HEREAFTER CREATED AND HOWEVER DESIGNATED.

1.1.1.G "Conversion" OR "conversion" MEANS THE REPAYMENT BY THE COMPANY OF THE
PRINCIPAL AMOUNT OF THIS DEBENTURE BY THE DELIVERY OF COMMON STOCK ON THE TERMS
PROVIDED IN SECTION 3.2, AND "convert," "converted," "convertible" AND LIKE
WORDS SHALL HAVE A CORRESPONDING MEANING.

1.1.1.H "Conversion Date" MEANS ANY DAY ON WHICH ALL OR ANY PORTION OF THE
PRINCIPAL AMOUNT OF THIS DEBENTURE IS CONVERTED IN ACCORDANCE WITH THE
PROVISIONS HEREOF.

1.1.1.I "Conversion Notice" MEANS A WRITTEN NOTICE OF CONVERSION SUBSTANTIALLY
IN THE FORM ANNEXED HERETO AS EXHIBIT A.

1.1.1.J "Conversion Price" ON ANY DATE OF DETERMINATION MEANS THE APPLICABLE
PRICE FOR THE CONVERSION OF THIS DEBENTURE INTO COMMON SHARES ON SUCH DAY AS SET
FORTH IN SECTION 3.1(A).

1.1.1.K "Debenture" OR "Debentures" MEANS THIS CONVERTIBLE DEBENTURE OF THE
COMPANY OR SUCH OTHER CONVERTIBLE DEBENTURE(S) EXCHANGED THEREFOR AS PROVIDED IN
SECTION 2.1.

                                       2

<PAGE>

1.1.1.L "Event of Default" HAS THE MEANING SET FORTH IN SECTION 6.1.

1.1.1.M "Holder" MEANS ______________ , ANY SUCCESSOR THERETO, OR ANY PERSON TO
WHOM THIS DEBENTURE IS SUBSEQUENTLY TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS HEREOF.

1.1.1.N "Market Price" PER COMMON SHARE MEANS THE CLOSING BID PRICE OF THE
COMMON SHARES DURING THE FIVE TRADING DAY PRIOR TO ANY CONVERSION NOTICE AS
REPORTED ON THE NASDAQ OTCBB; PROVIDED THAT, IF SUCH SECURITY IS NOT LISTED OR
ADMITTED TO TRADING ON THE NASDAQ OTCBB, AS REPORTED ON THE PRINCIPAL NATIONAL
SECURITY EXCHANGE OR QUOTATION SYSTEM ON WHICH SUCH SECURITY IS QUOTED OR LISTED
OR ADMITTED TO TRADING, OR, IF NOT QUOTED OR LISTED OR ADMITTED TO TRADING ON
ANY NATIONAL SECURITIES EXCHANGE OR QUOTATION SYSTEM, THE LOWEST PRICE OF THE
COMMON SHARES DURING ANY TRADING DAY ON THE OVER-THE-COUNTER MARKET AS REPORTED
BY BLOOMBERG LP OR A SIMILAR GENERALLY ACCEPTED REPORTING SERVICE, AS THE CASE
MAY BE.

1.1.1.O "Maximum Rate" HAS THE MEANING SET FORTH IN SECTION 6.4.

1.1.1.P "Outstanding" WHEN USED WITH REFERENCE TO COMMON SHARES OR CAPITAL
SHARES (COLLECTIVELY, "Shares") MEANS, ON ANY DATE OF DETERMINATION, ALL ISSUED
AND OUTSTANDING SHARES, AND INCLUDES ALL SUCH SHARES ISSUABLE IN RESPECT OF
OUTSTANDING SCRIP OR ANY CERTIFICATES REPRESENTING FRACTIONAL INTERESTS IN SUCH
SHARES; PROVIDED, HOWEVER, THAT ANY SUCH SHARES DIRECTLY OR INDIRECTLY OWNED OR
HELD BY OR FOR THE ACCOUNT OF THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY SHALL
NOT BE DEEMED "Outstanding" FOR PURPOSES HEREOF.

1.1.1.Q "Person" MEANS AN INDIVIDUAL, A CORPORATION, A PARTNERSHIP, AN
ASSOCIATION, A LIMITED LIABILITY COMPANY, AN UNINCORPORATED BUSINESS
ORGANIZATION, A TRUST OR OTHER ENTITY OR ORGANIZATION, AND ANY GOVERNMENT OR
POLITICAL SUBDIVISION OR ANY AGENCY OR INSTRUMENTALITY THEREOF.

1.1.1.R "Principal Amount" MEANS, FOR ANY DATE OF CALCULATION, THE PRINCIPAL SUM
SET FORTH IN THE FIRST PARAGRAPH OF THIS DEBENTURE.

1.1.1.S "SEC" MEANS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

1.1.1.T "Securities Act" MEANS THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS OF THE SEC THEREUNDER, ALL AS IN EFFECT AT THE TIME.

         All references to "cash" or "$" herein means currency of the United
States of America.

                                    ARTICLE 2

                        EXCHANGES, TRANSFER AND REPAYMENT

         SECTION 2.1 REGISTRATION OF TRANSFER OF DEBENTURES. THIS DEBENTURE,
WHEN PRESENTED FOR REGISTRATION OF TRANSFER, SHALL (IF SO REQUIRED BY THE
COMPANY) BE DULY ENDORSED, OR BE ACCOMPANIED BY A WRITTEN INSTRUMENT OF TRANSFER
IN FORM REASONABLY SATISFACTORY TO THE COMPANY DULY EXECUTED, BY THE HOLDER DULY
AUTHORIZED IN WRITING.

                                       3

<PAGE>

         SECTION 2.2 LOSS, THEFT, DESTRUCTION OF DEBENTURE. UPON RECEIPT OF
EVIDENCE SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION OR
MUTILATION OF THIS DEBENTURE AND, IN THE CASE OF ANY SUCH LOSS, THEFT OR
DESTRUCTION, UPON RECEIPT OF INDEMNITY OR SECURITY REASONABLY SATISFACTORY TO
THE COMPANY, OR, IN THE CASE OF ANY SUCH MUTILATION, UPON SURRENDER AND
CANCELLATION OF THIS DEBENTURE, THE COMPANY SHALL MAKE, ISSUE AND DELIVER, IN
LIEU OF SUCH LOST, STOLEN, DESTROYED OR MUTILATED DEBENTURE, A NEW DEBENTURE OF
LIKE TENOR AND UNPAID PRINCIPAL AMOUNT DATED AS OF THE DATE HEREOF. THIS
DEBENTURE SHALL BE HELD AND OWNED UPON THE EXPRESS CONDITION THAT THE PROVISIONS
OF THIS SECTION 2.2 ARE EXCLUSIVE WITH RESPECT TO THE REPLACEMENT OF A
MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURE AND SHALL PRECLUDE ANY AND ALL
OTHER RIGHTS AND REMEDIES NOTWITHSTANDING ANY LAW OR STATUTE EXISTING OR
HEREAFTER ENACTED TO THE CONTRARY WITH RESPECT TO THE REPLACEMENT OF NEGOTIABLE
INSTRUMENTS OR OTHER SECURITIES WITHOUT THE SURRENDER THEREOF.

         SECTION 2.3 WHO DEEMED ABSOLUTE OWNER. THE COMPANY MAY DEEM THE PERSON
IN WHOSE NAME THIS DEBENTURE SHALL BE REGISTERED UPON THE REGISTRY BOOKS OF THE
COMPANY TO BE, AND MAY TREAT IT AS, THE ABSOLUTE OWNER OF THIS DEBENTURE
(WHETHER OR NOT THIS DEBENTURE SHALL BE OVERDUE) FOR THE PURPOSE OF RECEIVING
PAYMENT OF OR ON ACCOUNT OF THE PRINCIPAL AMOUNT OF THIS DEBENTURE, FOR THE
CONVERSION OF THIS DEBENTURE AND FOR ALL OTHER PURPOSES, AND THE COMPANY SHALL
NOT BE AFFECTED BY ANY NOTICE TO THE CONTRARY. ALL SUCH PAYMENTS AND SUCH
CONVERSIONS SHALL BE VALID AND EFFECTUAL TO SATISFY AND DISCHARGE THE LIABILITY
UPON THIS DEBENTURE TO THE EXTENT OF THE SUM OR SUMS SO PAID OR THE CONVERSION
OR CONVERSIONS SO MADE.

         SECTION 2.4 REPAYMENT AT MATURITY. AT THE MATURITY DATE, THE COMPANY
SHALL REPAY THE OUTSTANDING PRINCIPAL AMOUNT OF THIS DEBENTURE IN WHOLE OR IN
PART IN CASH OR COMMON STOCK AT THE DISCRETION OF THE COMPANY, TOGETHER WITH ALL
ACCRUED AND UNPAID INTEREST THEREON, IN CASH OR COMMON STOCK IN THE SOLE AND
ABSOLUTE DISCRETION OF THE COMPANY., TO THE MATURITY DATE OR SHALL CONVERT THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS DEBENTURE AND ACCRUED AND UNPAID INTEREST
THEREON, INTO COMMON STOCK, AS PROVIDED FOR HEREIN.

                                   ARTICLE 3

                            CONVERSION OF DEBENTURE

         SECTION 3.1 CONVERSION; CONVERSION PRICE; VALUATION EVENT. AT THE
OPTION OF THE COMPANY, THIS DEBENTURE MAY BE CONVERTED, EITHER IN WHOLE OR IN
PART, UP TO THE FULL PRINCIPAL AMOUNT HEREOF INTO COMMON SHARES (CALCULATED AS
TO EACH SUCH CONVERSION TO THE NEAREST 1/100TH OF A SHARE), AT ANY TIME AND FROM
TIME TO TIME ON ANY BUSINESS DAY, SUBJECT TO COMPLIANCE WITH SECTION 3.2. THE
NUMBER OF COMMON SHARES INTO WHICH THIS DEBENTURE MAY BE CONVERTED IS EQUAL TO
THE DOLLAR AMOUNT OF THE DEBENTURE BEING CONVERTED DIVIDED BY THE CONVERSION
PRICE. IN ADDITION, THE COMPANY SHALL PAY TO THE HOLDER ON THE CONVERSION DATE,
IN CASH OR COMMON STOCK, ANY ACCRUED AND UNPAID INTEREST ON THE DEBENTURE BEING
CONVERTED AT THE OPTION OF THE COMPANY IN THE CONVERSION. THE "Conversion Price"
SHALL BE EQUAL TO THE LESSER OF $.75 PER SHARE OR 90% OF THE MARKET PRICE. IF
THERE IS NO MARKET PRICE, THE CONVERSION PRICE SHALL BE $.75 PER SHARE.

                                       4

<PAGE>

         SECTION 3.2 EXERCISE OF CONVERSION PRIVILEGE. (A) CONVERSION OF THIS
DEBENTURE MAY BE EXERCISED ON ANY BUSINESS DAY BY THE COMPANY BY TELECOPYING AN
EXECUTED AND COMPLETED CONVERSION NOTICE TO THE HOLDER (THE "CONVERSION DATE").
THE COMPANY SHALL CONVERT THIS DEBENTURE AND ISSUE THE COMMON STOCK ISSUED AT
CONVERSION IN THE MANNER PROVIDED BELOW IN THIS SECTION 3.2, AND ALL VOTING AND
OTHER RIGHTS ASSOCIATED WITH THE BENEFICIAL OWNERSHIP OF THE COMMON STOCK ISSUED
AT CONVERSION SHALL VEST WITH THE HOLDER, EFFECTIVE AS OF THE CONVERSION DATE AT
THE TIME SPECIFIED IN THE CONVERSION NOTICE. THE CONVERSION NOTICE ALSO SHALL
STATE THE NAME OR NAMES (WITH ADDRESSES) OF THE PERSONS WHO ARE TO BECOME THE
HOLDERS OF THE COMMON STOCK ISSUED AT CONVERSION IN CONNECTION WITH SUCH
CONVERSION. AS PROMPTLY AS PRACTICABLE AFTER THE RECEIPT OF THE CONVERSION
NOTICE , THE HOLDER SHALL DELIVER THE DEBENTURE TO THE COMPANY FOR CANCELLATION.
UPON RECEIPT OF THE DEBENTURE, BUT IN ANY EVENT NOT MORE THAN TWENTY (20)
BUSINESS DAYS AFTER THE COMPANY'S RECEIPT OF THE DEBENTURE, THE COMPANY SHALL
(I) ISSUE THE COMMON STOCK IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE 3
AND (II) CAUSE TO BE MAILED FOR DELIVERY BY OVERNIGHT COURIER A CERTIFICATE OR
CERTIFICATE(S) REPRESENTING THE NUMBER OF COMMON SHARES TO WHICH THE HOLDER IS
ENTITLED BY VIRTUE OF SUCH CONVERSION, AND CASH, AS PROVIDED IN SECTION 3.3, IN
RESPECT OF ANY FRACTION OF A COMMON SHARE DELIVERABLE UPON SUCH CONVERSION AND
CASH OR SHARES OF COMMON STOCK, AS APPLICABLE, REPRESENTING THE AMOUNT OF
ACCRUED AND UNPAID INTEREST OR PRINCIPAL ON THIS DEBENTURE AS OF THE CONVERSION
DATE AS DETERMINED BY THE COMPANY. THE CONVERSION NOTICE SHALL CONSTITUTE A
CONTRACT BETWEEN THE HOLDER AND THE COMPANY, WHEREBY THE HOLDER SHALL BE DEEMED
TO SUBSCRIBE FOR THE NUMBER OF COMMON SHARES WHICH IT WILL BE ENTITLED TO
RECEIVE UPON SUCH CONVERSION AND, IN PAYMENT AND SATISFACTION OF SUCH
SUBSCRIPTION TO SURRENDER THIS DEBENTURE AND TO RELEASE THE COMPANY FROM ALL
LIABILITY THEREON (EXCEPT IF AND TO THE EXTENT THAT ANY PRINCIPAL AMOUNT THEREOF
REMAINS UNCONVERTED). NO CASH PAYMENT AGGREGATING LESS THAN $1.00 SHALL BE
REQUIRED TO BE GIVEN UNLESS SPECIFICALLY REQUESTED BY THE HOLDER.

         NOTWITHSTANDING ANYTHING ELSE CONTAINED HEREIN TO THE CONTRARY, IT IS
AGREED AND UNDERSTOOD THAT ALL CONVERSION DECISIONS WILL BE AT THE SOLE AND
ABSOLUTE DISCRETION OF THE COMPANY AND THAT THE COMPANY SHALL NOT BE REQUIRED TO
ISSUE ANY SHARES OF COMMON STOCK UNTIL DELIVERY OF THE DEBENTURE BY THE HOLDER.

         SECTION 3.3 FRACTIONAL SHARES. NO FRACTIONAL COMMON SHARES OR SCRIP
REPRESENTING FRACTIONAL COMMON SHARES SHALL BE DELIVERED UPON CONVERSION OF THIS
DEBENTURE. INSTEAD OF ANY FRACTIONAL COMMON SHARES WHICH OTHERWISE WOULD BE
DELIVERED UPON CONVERSION OF THIS DEBENTURE, THE COMPANY SHALL PAY A CASH
ADJUSTMENT IN RESPECT OF SUCH FRACTION IN AN AMOUNT EQUAL TO THE SAME FRACTION
MULTIPLIED BY THE CURRENT MARKET PRICE ON THE CONVERSION DATE. NO CASH PAYMENT
OF LESS THAN $1.00 SHALL BE REQUIRED TO BE GIVEN UNLESS SPECIFICALLY REQUESTED
BY THE HOLDER.

                                       5

<PAGE>

         SECTION 3.4 ADJUSTMENTS. THE CONVERSION PRICE AND THE NUMBER OF SHARES
DELIVERABLE UPON CONVERSION OF THIS DEBENTURE ARE SUBJECT TO ADJUSTMENT FROM
TIME TO TIME AS FOLLOWS:

         RECLASSIFICATION, ETC. IN CASE THE COMPANY SHALL REORGANIZE ITS
CAPITAL, RECLASSIFY ITS CAPITAL STOCK, CONSOLIDATE OR MERGE WITH OR INTO ANOTHER
PERSON (WHERE THE COMPANY IS NOT THE SURVIVOR OR WHERE THERE IS A CHANGE IN OR
DISTRIBUTION WITH RESPECT TO THE COMMON STOCK OF THE COMPANY), SELL, CONVEY,
TRANSFER OR OTHERWISE DISPOSE OF ALL OR SUBSTANTIALLY ALL ITS PROPERTY, ASSETS
OR BUSINESS TO ANOTHER PERSON, OR EFFECTUATE A TRANSACTION OR SERIES OF RELATED
TRANSACTIONS IN WHICH MORE THAN FIFTY PERCENT (50%) OF THE VOTING POWER OF THE
COMPANY IS DISPOSED OF (EACH, A "Fundamental Corporate Change") AND, PURSUANT TO
THE TERMS OF SUCH FUNDAMENTAL CORPORATE CHANGE, SHARES OF COMMON STOCK OF THE
SUCCESSOR OR ACQUIRING CORPORATION, OR ANY CASH, SHARES OF STOCK OR OTHER
SECURITIES OR PROPERTY OF ANY NATURE WHATSOEVER (INCLUDING WARRANTS OR OTHER
SUBSCRIPTION OR PURCHASE RIGHTS) IN ADDITION TO OR IN LIEU OF COMMON STOCK OF
THE SUCCESSOR OR ACQUIRING CORPORATION ("Other Property") ARE TO BE RECEIVED BY
OR DISTRIBUTED TO THE HOLDERS OF COMMON STOCK OF THE COMPANY, THEN THE HOLDER OF
THIS DEBENTURE SHALL HAVE THE RIGHT THEREAFTER, AT THE OPTION OF THE COMPANY TO
(A) REQUIRE THE COMPANY TO PREPAY THIS DEBENTURE FOR CASH TOGETHER WITH ALL
ACCRUED AND UNPAID INTEREST THEREON TO THE DATE OF PREPAYMENT, (B) RECEIVE THE
NUMBER OF SHARES OF COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION OR OF
THE COMPANY, IF IT IS THE SURVIVING CORPORATION, AND OTHER PROPERTY AS IS
RECEIVABLE UPON OR AS A RESULT OF SUCH FUNDAMENTAL CORPORATE CHANGE BY A HOLDER
OF THE NUMBER OF SHARES OF COMMON STOCK INTO WHICH THE OUTSTANDING PORTION OF
THIS DEBENTURE MAY BE CONVERTED AT THE CONVERSION PRICE APPLICABLE IMMEDIATELY
PRIOR TO SUCH FUNDAMENTAL CORPORATE CHANGE OR (C) REQUIRE THE COMPANY, OR SUCH
SUCCESSOR, RESULTING OR PURCHASING CORPORATION, AS THE CASE MAY BE, TO, WITHOUT
BENEFIT OF ANY ADDITIONAL CONSIDERATION THEREFOR, EXECUTE AND DELIVER TO THE
HOLDER A DEBENTURE WITH SUBSTANTIAL IDENTICAL RIGHTS, PRIVILEGES, POWERS,
RESTRICTIONS AND OTHER TERMS AS THIS DEBENTURE IN AN AMOUNT EQUAL TO THE AMOUNT
OUTSTANDING UNDER THIS DEBENTURE IMMEDIATELY PRIOR TO SUCH FUNDAMENTAL CORPORATE
CHANGE. FOR PURPOSES HEREOF, "common stock of the successor or acquiring
corporation" SHALL INCLUDE STOCK OF SUCH CORPORATION OF ANY CLASS WHICH IS NOT
PREFERRED AS TO DIVIDENDS OR ASSETS OVER ANY OTHER CLASS OF STOCK OF SUCH
CORPORATION AND WHICH IS NOT SUBJECT TO PREPAYMENT AND SHALL ALSO INCLUDE ANY
EVIDENCES OF INDEBTEDNESS, SHARES OF STOCK OR OTHER SECURITIES WHICH ARE
CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY SUCH STOCK, EITHER IMMEDIATELY OR UPON
THE ARRIVAL OF A SPECIFIED DATE OR THE HAPPENING OF A SPECIFIED EVENT AND ANY
WARRANTS OR OTHER RIGHTS TO SUBSCRIBE FOR OR PURCHASE ANY SUCH STOCK. THE
FOREGOING PROVISIONS SHALL SIMILARLY APPLY TO SUCCESSIVE FUNDAMENTAL CORPORATE
CHANGES.

         SECTION 3.5 SURRENDER OF DEBENTURES. UPON ANY REDEMPTION OF THIS
DEBENTURE OR UPON MATURITY, THE HOLDER SHALL EITHER DELIVER THIS DEBENTURE BY
HAND TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES OR SURRENDER THE SAME TO
THE COMPANY AT SUCH ADDRESS BY NATIONALLY RECOGNIZED OVERNIGHT COURIER. PAYMENT
OF THE REDEMPTION PRICE OR THE AMOUNT DUE ON MATURITY, SHALL BE MADE BY THE
COMPANY TO THE HOLDER AGAINST RECEIPT OF THIS DEBENTURE (UNLESS CONVERTED AND
PAID IN COMMON STOCK) BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO SUCH
ACCOUNT(S).

                                       6
<PAGE>

                                    ARTICLE 4

                        STATUS; RESTRICTIONS ON TRANSFER

         SECTION 4.1 STATUS OF DEBENTURE. THIS DEBENTURE CONSTITUTES A LEGAL,
VALID AND BINDING OBLIGATION OF THE COMPANY, ENFORCEABLE IN ACCORDANCE WITH ITS
TERMS SUBJECT, AS TO ENFORCEABILITY, TO GENERAL PRINCIPLES OF EQUITY AND TO
PRINCIPLES OF BANKRUPTCY, INSOLVENCY, REORGANIZATION AND OTHER SIMILAR LAWS OF
GENERAL APPLICABILITY RELATING TO OR AFFECTING CREDITORS' RIGHTS AND REMEDIES
GENERALLY.

         SECTION 4.2 RESTRICTIONS ON TRANSFER. THIS DEBENTURE, AND ANY COMMON
SHARES DELIVERABLE UPON THE CONVERSION HEREOF, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT. THE HOLDER BY ACCEPTING THIS DEBENTURE AGREES THAT THIS
DEBENTURE AND THE SHARES OF COMMON STOCK TO BE ACQUIRED AS INTEREST ON AND UPON
CONVERSION OF THIS DEBENTURE MAY NOT BE ASSIGNED OR OTHERWISE TRANSFERRED UNLESS
AND UNTIL (I) THE COMPANY HAS RECEIVED THE OPINION OF COUNSEL FOR THE HOLDER
THAT THIS DEBENTURE OR SUCH SHARES MAY BE SOLD PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OR (II) A REGISTRATION STATEMENT RELATING
TO THIS DEBENTURE OR SUCH SHARES HAS BEEN FILED BY THE COMPANY AND DECLARED
EFFECTIVE BY THE SEC.

         Each certificate for shares of Common Stock deliverable hereunder shall
bear a legend as follows unless and until such securities have been sold
pursuant to an effective registration statement under the Securities Act:

                  "The securities represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended (the
                  "Securities Act"). The securities may not be offered for sale,
                  sold or otherwise transferred except (i) pursuant to an
                  effective registration statement under the Securities Act or
                  (ii) pursuant to an exemption from registration under the
                  Securities Act in respect of which the issuer of this
                  certificate has received an opinion of counsel satisfactory to
                  the issuer of this certificate to such effect. Copies of the
                  agreement covering both the purchase of the securities and
                  restrictions on their transfer may be obtained at no cost by
                  written request made by the holder of record of this
                  certificate to the Secretary of the issuer of this certificate
                  at the principal executive offices of the issuer of this
                  certificate."

                                        7
<PAGE>

                                    ARTICLE V

                                    COVENANTS

         SECTION 5.1 CONVERSION. THE COMPANY SHALL CAUSE THE TRANSFER AGENT, NOT
LATER THAN TEN (10) BUSINESS DAYS AFTER THE COMPANY'S DELIVERY OF A CONVERSION
NOTICE, TO ISSUE AND DELIVER TO THE HOLDER THE REQUISITE SHARES OF COMMON STOCK
ISSUED AT CONVERSION.

         SECTION 5.2 PAYMENT OF OBLIGATIONS. SO LONG AS THIS DEBENTURE SHALL BE
OUTSTANDING, THE COMPANY SHALL PAY, EXTEND, OR DISCHARGE AT OR BEFORE MATURITY,
ALL ITS RESPECTIVE MATERIAL OBLIGATIONS AND LIABILITIES, INCLUDING, WITHOUT
LIMITATION, TAX LIABILITIES, EXCEPT WHERE THE SAME MAY BE CONTESTED IN GOOD
FAITH BY APPROPRIATE PROCEEDINGS.

         SECTION 5.3 COMPLIANCE WITH LAWS. SO LONG AS THIS DEBENTURE SHALL BE
OUTSTANDING, THE COMPANY SHALL COMPLY WITH ALL APPLICABLE LAWS, ORDINANCES,
RULES, REGULATIONS AND REQUIREMENTS OF GOVERNMENTAL AUTHORITIES, EXCEPT FOR SUCH
NONCOMPLIANCE WHICH WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS,
PROPERTIES, PROSPECTS, CONDITION (FINANCIAL OR OTHERWISE) OR RESULTS OF
OPERATIONS OF THE COMPANY AND THE SUBSIDIARIES.

         SECTION 5.4 INSPECTION OF PROPERTY, BOOKS AND RECORDS. SO LONG AS THIS
DEBENTURE SHALL BE OUTSTANDING, THE COMPANY SHALL KEEP PROPER BOOKS OF RECORD
AND ACCOUNT IN WHICH FULL, TRUE AND CORRECT ENTRIES SHALL BE MADE OF ALL
MATERIAL DEALINGS AND TRANSACTIONS IN RELATION TO ITS BUSINESS AND ACTIVITIES
AND SHALL PERMIT REPRESENTATIVES OF THE HOLDER AT THE HOLDER'S EXPENSE TO VISIT
AND INSPECT ANY OF ITS RESPECTIVE PROPERTIES, TO EXAMINE AND MAKE ABSTRACTS FROM
ANY OF ITS RESPECTIVE BOOKS AND RECORDS, NOT REASONABLY DEEMED CONFIDENTIAL BY
THE COMPANY, AND TO DISCUSS ITS RESPECTIVE AFFAIRS, FINANCES AND ACCOUNTS WITH
ITS RESPECTIVE OFFICERS AND INDEPENDENT PUBLIC ACCOUNTANTS, ALL AT SUCH
REASONABLE TIMES AND AS OFTEN AS MAY REASONABLY BE DESIRED.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

SECTION 6.1 Events of Default. "Event of Default" wherever used herein means any
one of the following events:

                    (I) THE COMPANY SHALL DEFAULT IN THE PAYMENT OF PRINCIPAL OF
OR INTEREST ON THIS DEBENTURE AS AND WHEN THE SAME SHALL BE DUE AND PAYABLE AND,
SUCH DEFAULT SHALL CONTINUE FOR TEN (10) BUSINESS DAYS AFTER THE DATE SUCH

                                       8
<PAGE>

PAYMENT WAS DUE, OR THE COMPANY SHALL FAIL TO PERFORM OR OBSERVE ANY OTHER
COVENANT, AGREEMENT, TERM, PROVISION, UNDERTAKING OR COMMITMENT UNDER THIS
DEBENTURE, AND SUCH DEFAULT SHALL CONTINUE FOR A PERIOD OF TEN (10) BUSINESS
DAYS AFTER THE DELIVERY TO THE COMPANY OF WRITTEN NOTICE THAT THE COMPANY IS IN
DEFAULT HEREUNDER OR THEREUNDER;

                    (II) ANY OF THE REPRESENTATIONS OR WARRANTIES MADE BY THE
COMPANY HEREIN, SHALL BE FALSE OR MISLEADING IN A MATERIAL RESPECT ON THE
CLOSING DATE;

                    (III) UNDER THE LAWS OF ANY JURISDICTION NOT OTHERWISE
COVERED BY CLAUSES (IV) AND (V) BELOW, THE COMPANY OR ANY SUBSIDIARY (A) BECOMES
INSOLVENT OR GENERALLY NOT ABLE TO PAY ITS DEBTS AS THEY BECOME DUE, (B) ADMITS
IN WRITING ITS INABILITY TO PAY ITS DEBTS GENERALLY OR MAKES A GENERAL
ASSIGNMENT FOR THE BENEFIT OF CREDITORS, (C) INSTITUTES OR HAS INSTITUTED
AGAINST IT ANY PROCEEDING SEEKING (X) TO ADJUDICATE IT A BANKRUPT OR INSOLVENT,
(Y) LIQUIDATION, WINDING-UP, REORGANIZATION, ARRANGEMENT, ADJUSTMENT,
PROTECTION, RELIEF OR COMPOSITION OF IT OR ITS DEBTS UNDER ANY LAW RELATING TO
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR RELIEF OF DEBTORS INCLUDING ANY PLAN
OF COMPROMISE OR ARRANGEMENT OR OTHER CORPORATE PROCEEDING INVOLVING OR
AFFECTING ITS CREDITORS OR (Z) THE ENTRY OF AN ORDER FOR RELIEF OR THE
APPOINTMENT OF A RECEIVER, TRUSTEE OR OTHER SIMILAR PERSON FOR IT OR FOR ANY
SUBSTANTIAL PART OF ITS PROPERTIES AND ASSETS, AND IN THE CASE OF ANY SUCH
OFFICIAL PROCEEDING INSTITUTED AGAINST IT (BUT NOT INSTITUTED BY IT), EITHER THE
PROCEEDING REMAINS UNDISMISSED OR UNSTAYED FOR A PERIOD OF SIXTY (60) CALENDAR
DAYS, OR ANY OF THE ACTIONS SOUGHT IN SUCH PROCEEDING (INCLUDING THE ENTRY OF AN
ORDER FOR RELIEF AGAINST IT OR THE APPOINTMENT OF A RECEIVER, TRUSTEE, CUSTODIAN
OR OTHER SIMILAR OFFICIAL FOR IT OR FOR ANY SUBSTANTIAL PART OF ITS PROPERTIES
AND ASSETS) OCCURS OR (D) TAKES ANY CORPORATE ACTION TO AUTHORIZE ANY OF THE
ABOVE ACTIONS;

                    (IV) THE ENTRY OF A DECREE OR ORDER BY A COURT HAVING
JURISDICTION IN THE PREMISES ADJUDGING THE COMPANY OR ANY SUBSIDIARY A BANKRUPT
OR INSOLVENT, OR APPROVING AS PROPERLY FILED A PETITION SEEKING REORGANIZATION,
ARRANGEMENT, ADJUSTMENT OR COMPOSITION OF OR IN RESPECT OF THE COMPANY UNDER THE
BANKRUPTCY CODE OR ANY OTHER APPLICABLE FEDERAL OR STATE LAW, OR APPOINTING A
RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE OR SEQUESTRATOR (OR OTHER SIMILAR
OFFICIAL) OF THE COMPANY OR OF ANY SUBSTANTIAL PART OF ITS PROPERTY, OR ORDERING
THE WINDING-UP OR LIQUIDATION OF ITS AFFAIRS, AND ANY SUCH DECREE OR ORDER
CONTINUES AND IS UNSTAYED AND IN EFFECT FOR A PERIOD OF SIXTY (60) CALENDAR
DAYS;

                    (V) THE INSTITUTION BY THE COMPANY OR ANY SUBSIDIARY OF
PROCEEDINGS TO BE ADJUDICATED A BANKRUPT OR INSOLVENT, OR THE CONSENT BY IT TO
THE INSTITUTION OF BANKRUPTCY OR INSOLVENCY PROCEEDINGS AGAINST IT, OR THE
FILING BY IT OF A PETITION OR ANSWER OR CONSENT SEEKING REORGANIZATION OR RELIEF
UNDER THE BANKRUPTCY CODE OR ANY OTHER APPLICABLE FEDERAL OR STATE LAW, OR THE
CONSENT BY IT TO THE FILING OF ANY SUCH PETITION OR TO THE APPOINTMENT OF A
RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE OR SEQUESTRATOR (OR OTHER SIMILAR
OFFICIAL) OF THE COMPANY OR OF ANY SUBSTANTIAL PART OF ITS PROPERTY, OR THE
MAKING BY IT OF AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS, OR THE ADMISSION BY
IT IN WRITING OF ITS INABILITY TO PAY ITS DEBTS GENERALLY AS AND WHEN THEY
BECOME DUE, OR THE TAKING OF CORPORATE ACTION BY THE COMPANY IN FURTHERANCE OF
ANY SUCH ACTION;

                    (VI) A FINAL JUDGMENT OR FINAL JUDGMENTS FOR THE PAYMENT OF
MONEY SHALL HAVE BEEN ENTERED BY ANY COURT OR COURTS OF COMPETENT JURISDICTION
AGAINST THE COMPANY AND REMAINS UNDISCHARGED FOR A PERIOD (DURING WHICH
EXECUTION SHALL BE EFFECTIVELY STAYED) OF THIRTY (30) DAYS, PROVIDED THAT THE
AGGREGATE AMOUNT OF ALL SUCH JUDGMENTS AT ANY TIME OUTSTANDING (TO THE EXTENT
NOT PAID OR TO BE PAID, AS EVIDENCED BY A WRITTEN COMMUNICATION TO THAT EFFECT
FROM THE APPLICABLE INSURER, BY INSURANCE) EXCEEDS ONE HUNDRED THOUSAND DOLLARS
($100,000);

                                       9
<PAGE>

1.1.1.U IT BECOMES UNLAWFUL FOR THE COMPANY TO PERFORM OR COMPLY WITH ITS
OBLIGATIONS UNDER THIS DEBENTURE IN ANY RESPECT;

         SECTION 6.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. IF AN
EVENT OF DEFAULT OCCURS AND IS CONTINUING, THEN AND IN EVERY SUCH CASE THE
HOLDER MAY, BY A NOTICE IN WRITING TO THE COMPANY, DEMAND IMMEDIATE REPAYMENT OF
THE DEBENTURE TOGETHER WITH ACCRUED INTEREST. REPAYMENT MAY BE MADE AT THE
OPTION OF THE COMPANY IN SHARES OF COMMON STOCK OR IN CASH

         SECTION 6.3 MAXIMUM INTEREST RATE. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, IF AT ANY TIME THE APPLICABLE INTEREST RATE AS PROVIDED FOR HEREIN
SHALL EXCEED THE MAXIMUM LAWFUL RATE WHICH MAY BE CONTRACTED FOR, CHARGED, TAKEN
OR RECEIVED BY THE HOLDER IN ACCORDANCE WITH ANY APPLICABLE LAW (THE "Maximum
Rate"), THE RATE OF INTEREST APPLICABLE TO THIS DEBENTURE SHALL BE LIMITED TO
THE MAXIMUM RATE. TO THE GREATEST EXTENT PERMITTED UNDER APPLICABLE LAW, THE
COMPANY HEREBY WAIVES AND AGREES NOT TO ALLEGE OR CLAIM THAT ANY PROVISIONS OF
THIS NOTE COULD GIVE RISE TO OR RESULT IN ANY ACTUAL OR POTENTIAL VIOLATION OF
ANY APPLICABLE USURY LAWS.

         SECTION 6.4 REMEDIES NOT WAIVED. NO COURSE OF DEALING BETWEEN THE
COMPANY AND THE HOLDER OR ANY DELAY IN EXERCISING ANY RIGHTS HEREUNDER SHALL
OPERATE AS A WAIVER BY THE HOLDER.

                                   ARTICLE VII

                                 MISCELLANEOUS

         SECTION 7.1 NOTICE OF CERTAIN EVENTS. IN THE CASE OF THE OCCURRENCE OF
ANY EVENT DESCRIBED IN SECTION 3.4 OF THIS DEBENTURE, THE COMPANY SHALL CAUSE TO
BE MAILED TO THE HOLDER OF THIS DEBENTURE AT ITS LAST ADDRESS AS IT APPEARS IN
THE COMPANY'S SECURITY REGISTRY, AT LEAST TWENTY (20) DAYS PRIOR TO THE
APPLICABLE RECORD, EFFECTIVE OR EXPIRATION DATE HEREINAFTER SPECIFIED (OR, IF
SUCH TWENTY (20) DAYS' NOTICE IS NOT POSSIBLE, AT THE EARLIEST POSSIBLE DATE
PRIOR TO ANY SUCH RECORD, EFFECTIVE OR EXPIRATION DATE), A NOTICE THEREOF,
INCLUDING, IF APPLICABLE, A STATEMENT OF (Y) THE DATE ON WHICH A RECORD IS TO BE
TAKEN FOR THE PURPOSE OF SUCH DIVIDEND, DISTRIBUTION, ISSUANCE OR GRANTING OF
RIGHTS, OPTIONS OR WARRANTS, OR IF A RECORD IS NOT TO BE TAKEN, THE DATE AS OF
WHICH THE HOLDERS OF RECORD OF COMMON STOCK TO BE ENTITLED TO SUCH DIVIDEND,
DISTRIBUTION, ISSUANCE OR GRANTING OF RIGHTS, OPTIONS OR WARRANTS ARE TO BE
DETERMINED OR (Z) THE DATE ON WHICH SUCH RECLASSIFICATION, CONSOLIDATION,
MERGER, SALE, TRANSFER, DISSOLUTION, LIQUIDATION OR WINDING-UP IS EXPECTED TO
BECOME EFFECTIVE, AND THE DATE AS OF WHICH IT IS EXPECTED THAT HOLDERS OF RECORD
OF COMMON STOCK WILL BE ENTITLED TO EXCHANGE THEIR SHARES FOR SECURITIES, CASH
OR OTHER PROPERTY DELIVERABLE UPON SUCH RECLASSIFICATION, CONSOLIDATION, MERGER,
SALE TRANSFER, DISSOLUTION, LIQUIDATION OR WINDING-UP.

                                       10
<PAGE>

         SECTION 7.2 WITHHOLDING. TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE
COMPANY MAY WITHHOLD AMOUNTS FOR OR ON ACCOUNT OF ANY TAXES IMPOSED OR LEVIED BY
OR ON BEHALF OF ANY TAXING AUTHORITY IN THE UNITED STATES HAVING JURISDICTION
OVER THE COMPANY FROM ANY PAYMENTS MADE PURSUANT TO THIS DEBENTURE.

         SECTION 7.3 TRANSMITTAL OF NOTICES. EXCEPT AS MAY BE OTHERWISE PROVIDED
HEREIN, ANY NOTICE OR OTHER COMMUNICATION OR DELIVERY REQUIRED OR PERMITTED
HEREUNDER SHALL BE IN WRITING AND SHALL BE DELIVERED PERSONALLY, OR SENT BY
TELECOPIER MACHINE OR BY A NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, AND
SHALL BE DEEMED GIVEN WHEN SO DELIVERED PERSONALLY, OR BY TELECOPIER MACHINE OR
OVERNIGHT COURIER SERVICE AS FOLLOWS:

                  (1) If to the Company, to:

                           Medical Connections Holdings, Inc.
                           2300 Glades Road
                           Suite 202E
                           Boca Raton, Florida 33431
                           Telephone:       561-353-1039
                           Facsimile:       561-750-9241

                  (2) If to the Holder, to:

                      ________________________

                      ________________________

Each of the Holder or the Company may change the foregoing address by notice
given pursuant to this Section 7.4.

         SECTION 7.4 ATTORNEYS' FEES. SHOULD ANY PARTY HERETO EMPLOY AN ATTORNEY
FOR THE PURPOSE OF ENFORCING OR CONSTRUING THIS DEBENTURE, OR ANY JUDGMENT BASED
ON THIS DEBENTURE, IN ANY LEGAL PROCEEDING WHATSOEVER, INCLUDING INSOLVENCY,
BANKRUPTCY, ARBITRATION, DECLARATORY RELIEF OR OTHER LITIGATION, THE PREVAILING
PARTY SHALL BE ENTITLED TO RECEIVE FROM THE OTHER PARTY OR PARTIES THERETO
REIMBURSEMENT FOR ALL REASONABLE ATTORNEYS' FEES AND ALL REASONABLE COSTS,
INCLUDING BUT NOT LIMITED TO SERVICE OF PROCESS, FILING FEES, COURT AND COURT
REPORTER COSTS, INVESTIGATIVE COSTS, EXPERT WITNESS FEES, AND THE COST OF ANY
BONDS, WHETHER TAXABLE OR NOT, AND THAT SUCH REIMBURSEMENT SHALL BE INCLUDED IN
ANY JUDGMENT OR FINAL ORDER ISSUED IN THAT PROCEEDING. THE "PREVAILING PARTY"
MEANS THE PARTY DETERMINED BY THE COURT TO MOST NEARLY PREVAIL AND NOT
NECESSARILY THE ONE IN WHOSE FAVOR A JUDGMENT IS RENDERED.

                                       11
<PAGE>

         SECTION 7.5 GOVERNING LAW. THIS DEBENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA (WITHOUT GIVING
EFFECT TO CONFLICTS OF LAWS PRINCIPLES). WITH RESPECT TO ANY SUIT, ACTION OR
PROCEEDINGS RELATING TO THIS DEBENTURE, THE COMPANY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF FLORIDA SITTING IN PALM
BEACH COUNTY AND HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

         SECTION 7.6 Waiver of Jury Trial. To the fullest extent permitted by
law, each of the parties hereto hereby knowingly, voluntarily and intentionally
waives its respective rights to a jury trial of any claim or cause of action
based upon or arising out of this Debenture or any other document or any
dealings between them relating to the subject matter of this Debenture and other
documents. Each party hereto (i) certifies that neither of their respective
representatives, agents or attorneys has represented, expressly or otherwise,
that such party would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that it has been induced to enter into
this Debenture by, among other things, the mutual waivers and certifications
herein.

         SECTION 7.7 HEADINGS. THE HEADINGS OF THE ARTICLES AND SECTIONS OF THIS
DEBENTURE ARE INSERTED FOR CONVENIENCE ONLY AND DO NOT CONSTITUTE A PART OF THIS
DEBENTURE.

         SECTION 7.8 PAYMENT DATES. WHENEVER ANY PAYMENT HEREUNDER SHALL BE DUE
ON A DAY OTHER THAN A BUSINESS DAY, SUCH PAYMENT SHALL BE MADE ON THE NEXT
SUCCEEDING BUSINESS DAY.

         SECTION 7.9 BINDING EFFECT. EACH HOLDER BY ACCEPTING THIS DEBENTURE
AGREES TO BE BOUND BY AND COMPLY WITH THE TERMS AND PROVISIONS OF THIS
DEBENTURE.

         SECTION 7.10 NO STOCKHOLDER RIGHTS. EXCEPT AS OTHERWISE PROVIDED
HEREIN, THIS DEBENTURE SHALL NOT ENTITLE THE HOLDER TO ANY OF THE RIGHTS OF A
STOCKHOLDER OF THE COMPANY, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO VOTE, TO
RECEIVE DIVIDENDS AND OTHER DISTRIBUTIONS, OR TO RECEIVE ANY NOTICE OF, OR TO
ATTEND, MEETINGS OF STOCKHOLDERS OR ANY OTHER PROCEEDINGS OF THE COMPANY, UNLESS
AND TO THE EXTENT CONVERTED INTO SHARES OF COMMON STOCK IN ACCORDANCE WITH THE
TERMS HEREOF.

         SECTION 7.11 Facsimile Execution. Facsimile execution shall be deemed
originals.

                                       12
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
by its duly authorized officer on the date of this Debenture.

                                              Medical Connections Holdings, Inc.

                                              By:
                                                 -------------------------------

                                              Title:
                                                     ---------------------------

                                              "HOLDER"

                                              Signature:
                                                        ------------------------

                                              Date:
                                                    ----------------------------

                                       13
<PAGE>

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