Exhibit 10.2

EXHIBIT A

FORM OF SENIOR CONVERTIBLE DEBENTURE

NEITHER THE ISSUANCE AND SALE OF THIS DEBENTURE NOR THE SECURITIES INTO WHICH
THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. ANY TRANSFEREE OF THIS DEBENTURE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS DEBENTURE, INCLUDING SECTION 19(a) HEREOF.

WT HOLDINGS CORPORATION

SENIOR CONVERTIBLE DEBENTURE

 

Issuance Date: October 6, 2006    Original Principal Amount: U.S. $___________

FOR VALUE RECEIVED, WT Holdings Corporation, a Delaware corporation (the
“Company”), hereby promises to pay to the order of [NAME OF BUYER] or registered
assigns (“Holder”) the amount set out above as the Original Principal Amount (as
reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined
below), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest (“Interest”) on any outstanding Principal
at a rate of eight percent (8.0%) per annum ( the “Interest Rate”), from the
date set out above as the Issuance Date (the “Issuance Date”) until the same
becomes due and payable, whether upon an Interest Date (as defined below), the
Maturity Date, acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof). This Senior Convertible Debenture
(including all Senior Convertible Debentures issued in exchange, transfer or
replacement hereof, this “Debenture”) is one of an issue of Senior Convertible
Debentures (collectively, the “Debentures” and such other Senior Convertible
Debentures, the “Other Debentures”) issued pursuant to the Securities Purchase
Agreement (as defined below). Certain capitalized terms are defined in
Section 24.

(1) MATURITY. On the Maturity Date, the Holder shall surrender this Debenture to
the Company and the Company shall pay to the Holder an amount in cash
representing all outstanding Principal and accrued and unpaid Interest. The
“Maturity Date” shall be October 6, 2009, as may be extended at the option of
the Holder (i) in the event that, and

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for so long as, an Event of Default (as defined in Section 4(a)) shall have
occurred and be continuing or any event shall have occurred and be continuing
which with the passage of time and the failure to cure would result in an Event
of Default and (ii) through the date that is ten (10) Business Days after the
consummation of a Change of Control in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5) is
delivered prior to the Maturity Date.

(2) INTEREST; INTEREST RATE. Interest on this Debenture shall commence accruing
on the Issuance Date and shall be computed on the basis of a 365-day year and
actual days elapsed and shall be payable in arrears on the last day of each
three month period during the period beginning on the Issuance Date and ending
on, and including, the Maturity Date (each, an “Interest Date”) with the first
Interest Date being December 31, 2006. Interest shall be payable on each
Interest Date in cash. From and after the occurrence of an Event of Default, the
Interest Rate shall be increased to twelve percent (12%). In the event that such
Event of Default is subsequently cured, the adjustment referred to in the
preceding sentence shall cease to be effective as of the date of such cure;
provided that the Interest as calculated at such increased rate during the
continuance of such Event of Default shall continue to apply to the extent
relating to the days after the occurrence of such Event of Default through and
including the date of cure of such Event of Default.

(3) CONVERSION OF NOTES. This Debenture shall be convertible into shares of
Common Stock of the Company, on the terms and conditions set forth in this
Section 3.

(a) Conversion Right. Subject to the provisions of Section 3(d), at any time or
times on or after the Issuance Date, the Holder shall be entitled to convert any
portion of the outstanding and unpaid Conversion Amount (as defined below) into
fully paid and nonassessable shares of Common Stock in accordance with
Section 3(c), at the Conversion Rate (as defined below). The Company shall not
issue any fraction of a share of Common Stock upon any conversion. If the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up to the
nearest whole share. The Company shall pay any and all taxes that may be payable
with respect to the issuance and delivery of Common Stock upon conversion of any
Conversion Amount.

(b) Conversion Rate. The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the
“Conversion Rate”).

(i) “Conversion Amount” means the portion of the Principal to be converted,
redeemed or otherwise with respect to which this determination is being made.

(ii) “Conversion Price” means, as of any Conversion Date (as defined below) or
other date of determination, $0.24, subject to adjustment as provided herein.

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(c) Mechanics of Conversion.

(i) Optional Conversion. To convert any Conversion Amount into shares of Common
Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by
facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., Pacific
Time, on such date, a copy of an executed notice of conversion in the form
attached hereto as Exhibit I (the “Conversion Notice”) to the Company and (B) if
required by Section 3(c)(iii), surrender this Debenture to a common carrier for
delivery to the Company as soon as practicable on or following such date (or an
indemnification undertaking with respect to this Debenture in the case of its
loss, theft or destruction). On or before the second (2nd) Business Day
following the date of receipt of a Conversion Notice, the Company shall transmit
by facsimile a confirmation of receipt of such Conversion Notice to the Holder
and the Company’s transfer agent, (the “Transfer Agent”). On or before the third
(3rd) Business Day following the date of receipt by the Company and its counsel
of a Conversion Notice (the “Share Delivery Date”), the Company shall issue and
deliver to the address as specified in the Conversion Notice, a certificate or
certificates, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder shall be entitled. Any
accrued and unpaid Interest as of the applicable Conversion Date on any
Conversion Amount converted hereunder shall be paid to the Holder on the next
succeeding Interest Date following such Conversion Date. If this Debenture is
physically surrendered for conversion as required by Section 3(c)(iii) and the
outstanding Principal of this Debenture is greater than the Principal portion of
the Conversion Amount being converted, then the Company shall as soon as
practicable and in no event later than ten (10) Business Days after receipt of
this Debenture and at its own expense, issue and deliver to the holder a new
Debenture (in accordance with Section 16(d)) representing the outstanding
Principal not converted. The Person or Persons entitled to receive the shares of
Common Stock issuable upon a conversion of this Debenture shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
the Conversion Date.

(ii) Book-Entry. Notwithstanding anything to the contrary set forth herein, upon
conversion of any portion of this Debenture in accordance with the terms hereof,
the Holder shall not be required to physically surrender this Debenture to the
Company unless (A) the full Conversion Amount represented by this Debenture is
being converted or (B) the Holder has provided the Company with prior written
notice (which notice may be included in a Conversion Notice) requesting physical
surrender and reissue of this Debenture. The Holder and the Company shall
maintain records showing the Principal converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to the
Holder and the Company, so as not to require physical surrender of this
Debenture upon conversion.

(iii) Pro Rata Conversion; Disputes. In the event that the Company receives a
Conversion Notice from more than one holder of Debentures for the same
Conversion Date and the Company can convert some, but not all, of such portions
of the Debentures submitted for conversion, the Company, subject to
Section 3(d), shall convert from each holder of Debentures electing to have
Debentures converted on such date a pro rata amount of such holder’s portion of
its Debentures submitted for conversion based on the principal amount of
Debentures submitted for conversion on such date by such holder relative to the
aggregate principal amount of all Debentures submitted for conversion on such
date. In the event of a dispute as to the number of shares of Common Stock
issuable to the Holder in

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connection with a conversion of this Debenture, the Company shall issue to the
Holder the number of shares of Common Stock not in dispute and resolve such
dispute in accordance with Section 19.

(d) Limitations on Conversions. The Company shall not effect any conversion of
this Debenture, and the Holder of this Debenture shall not have the right to
convert any portion of this Debenture pursuant to Section 3(a), to the extent
that after giving effect to such conversion, the Holder (together with the
Holder’s affiliates) would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the number of shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Debenture with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) conversion of the remaining, nonconverted
portion of this Debenture beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any Other Debentures or warrants) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its affiliates. Except as set forth in the preceding sentence,
for purposes of this Section 3(d)(i), beneficial ownership shall be calculated
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Section 3(d)(i), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-KSB, Form 10-K, Form 10-QSB, Form 10-Q or Form 8-K, as the case may be
(y) a more recent public announcement by the Company or (z) any other notice by
the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within five (5) Business Days confirm orally
and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Debenture, by the Holder or its affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
By written notice to the Company, the Holder may increase or decrease the
Maximum Percentage to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company, and
(ii) any such increase or decrease will apply only to the Holder and not to any
other holder of Debentures.

(4) RIGHTS UPON EVENT OF DEFAULT.

(a) Event of Default. Notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without notice, application or motion to, hearing before, or
order of the Bankruptcy Court or any notice to the Company, the occurrence of
any one or more of the following events (regardless of the reason therefor)
shall constitute an “Event of Default” hereunder:

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(i) the Company’s failure to pay to the Holder any amount of Principal, Interest
or other amounts when and as due under this Debenture or any other Transaction
Document (as defined in the Securities Purchase Agreement) or any other
agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby to which the Holder is a
party, except, (A) in the case of a failure to pay Interest when and as due, in
which case only if such failure continues for a period of at least five
(5) Business Days and (B) in the case of a failure to pay Registration Delay
Payments when and as due, in which case only after the Company receives notice
from the Holder or, with respect to Registration Delay Payments, any other
holder of Debentures of such failure and the failure continues for a period of
at least five (5) Business Days (a “Payment Default”);

(ii) after the Issuance Date, the Company or any of its Subsidiaries, pursuant
to or within the meaning of the Bankruptcy Code or any similar Federal, foreign
or state law for the relief of debtors (collectively, “Bankruptcy Law”),
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) petitions or applies to any tribunal for
the appointment of a receiver, trustee, assignee, liquidator or similar official
(a “Custodian”), (D) makes a general assignment for the benefit of its creditors
or (E) admits in writing that it is generally unable to pay its debts as they
become due;

(iii) a court of competent jurisdiction shall enter a decree or order for relief
in respect of the Company or any of its Subsidiaries in an involuntary case
under any Bankruptcy Law hereafter in effect, which decree or order is not
stayed; or any other similar relief shall be granted under any applicable
federal or state law; or (ii) an involuntary case shall be commenced against the
Company or any of its Subsidiaries under any Bankruptcy Law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a Custodian or other officer having similar powers over the
Company or any of its Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary
appointment of an interim Custodian of the Company or any of its Subsidiaries
for all or a substantial part of its property; or a warrant of attachment,
execution or similar process shall have been issued against any substantial part
of the property of the Company or any of its Subsidiaries, and any such event
described in this clause (ii) shall continue for sixty (60) days without having
been dismissed, bonded or discharged;

(iv) the Company materially breaches any representation, warranty, covenant or
other term or condition of any Transaction Document, except, in the case of a
breach of a covenant which is curable, only if such breach continues for a
period of at least ten (10) consecutive Business Days following the earlier of
(A) the day on which the Company becomes, or should have become, aware of such
breach and (B) the day on which the Company receives written notice of such
breach from the Holder or any holder of Other Debentures;

(v) any breach or failure in any respect to comply with Section 13 of this
Debenture except, in the case of a breach which is curable, only if such breach
continues for a period of at least ten (10) Business Days;

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(vi) any Event of Default (as defined in the Other Debentures) occurs with
respect to any Other Debentures, which continues uncured for a period of ten
(10) Business Days;

(vii) the Company and/or its Subsidiaries fail to make a required payment or
payments on Indebtedness of $250,000 or more in aggregate principal amount and
such failure continues for more than ten (10) Business Days;

(viii) there shall have occurred an acceleration of the stated maturity of any
Indebtedness of the Company or its Subsidiaries of $250,000 or more in aggregate
principal amount (which acceleration is not rescinded, annulled or otherwise
cured within ten (10) Business Days of receipt by the Company or a Subsidiary of
notice of such acceleration); and

(ix) a final, non-appealable judgment which, in the aggregate with other
outstanding final judgments against the Company and its Subsidiaries, exceeds
$500,000 shall be rendered against the Company or a Subsidiary and within sixty
(60) days after entry thereof, such judgment is not discharged or execution
thereof stayed pending appeal, or within sixty (60) days after the expiration of
such stay, such judgment is not discharged.

(5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

(a) Assumption. The Company shall not enter into or be party to a Fundamental
Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Debenture and the other Transaction
Documents in accordance with the provisions of this Section 5(a) pursuant to
written agreements in form and substance satisfactory to the Required Holders
and approved by the Required Holders prior to such Fundamental Transaction (such
satisfaction and approval not to be unreasonably withheld), including agreements
to deliver to each holder of Debentures in exchange for such Debentures a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to the Debentures, including, without limitation,
having a principal amount and interest rate equal to the principal amounts and
the interest rates of the Debentures held by such holder and having similar
ranking to the Debentures, and satisfactory to the Required Holders and (ii) the
Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market.
Upon the occurrence of any Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Debenture referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Debenture with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of the Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon conversion or redemption of this Debenture at any
time after the consummation of the Fundamental Transaction, in lieu of the
shares of the Company’s Common Stock (or other securities, cash, assets or other
property) purchasable upon the conversion or redemption of the Debentures prior
to such Fundamental

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Transaction, such shares of publicly traded common stock (or their equivalent)
of the Successor Entity, as adjusted in accordance with the provisions of this
Debenture. The provisions of this Section shall apply similarly and equally to
successive Fundamental Transactions and shall be applied without regard to any
limitations on the conversion or redemption of this Debenture.

(6) RIGHTS UPON OTHER CORPORATE EVENTS.

(a) Other Corporate Events. In addition to and not in substitution for any other
rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a “Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon a
conversion of this Debenture, (i) in addition to the shares of Common Stock
receivable upon such conversion, such securities or other assets to which the
Holder would have been entitled with respect to such shares of Common Stock had
such shares of Common Stock been held by the Holder upon the consummation of
such Corporate Event (without taking into account any limitations or
restrictions on the convertibility of this Debenture) or (ii) in lieu of the
shares of Common Stock otherwise receivable upon such conversion, such
securities or other assets received by the holders of shares of Common Stock in
connection with the consummation of such Corporate Event in such amounts as the
Holder would have been entitled to receive had this Debenture initially been
issued with conversion rights for the form of such consideration (as opposed to
shares of Common Stock) at a conversion rate for such consideration commensurate
with the Conversion Rate. Provision made pursuant to the preceding sentence
shall be in a form and substance satisfactory to the Required Holders. The
provisions of this Section shall apply similarly and equally to successive
Corporate Events and shall be applied without regard to any limitations on the
conversion or redemption of this Debenture.

(7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

(a) Full Ratchet Adjustment of Conversion Price upon Issuance of Common Stock.
After the Closing Date and until October 6, 2007, and subject to the limits set
forth in Section 7(d)(v), if the Company issues any shares of Common Stock in a
bona fide offering of its securities (including the issuance or sale of shares
of Common Stock owned or held by or for the account of the Company, but
excluding shares of Common Stock deemed to have been issued or sold by the
Company in connection with any Excluded Securities) for a consideration per
share (the “New Issuance Price”) less than a price (the “Applicable Price”)
equal to the Conversion Price in effect immediately prior to such issue or sale
(the foregoing a “Dilutive Issuance”), then immediately after such Dilutive
Issuance, the Conversion Price then in effect shall be reduced to an amount
equal to the New Issuance Price.

(b) Weighted Average Adjustment of Conversion Price upon Issuance of Common
Stock. If and whenever on or after October 6, 2007 and until the Maturity Date,
and subject to the limits set forth in Section 7(d)(v), the Company issues any
shares of Common Stock (including the issuance or sale of shares of Common Stock
owned or held by or for the account of the Company, but excluding shares of
Common Stock deemed to have been issued or sold by the Company in connection
with any Excluded Securities) for a New Issuance Price less

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than the Conversion Price in effect immediately prior to such issue or sale in a
Dilutive Issuance, then immediately after such Dilutive Issuance, the Conversion
Price then in effect shall be reduced to an amount equal to a price determined
by multiplying such Conversion Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding and deemed issued pursuant
to Section 7(d) immediately prior to such issuance plus the number of shares of
Common Stock that the aggregate consideration received by this Company for such
issuance would purchase at such Conversion Price; and the denominator of which
shall be the number of shares of Common Stock outstanding and deemed issued
pursuant to Section 7(d) immediately prior to such issuance plus the number of
shares of such Additional Stock.

(c) Market Based Adjustment of Conversion Price. On the first anniversary of the
Closing, and subject to the limits set forth in Section 7(d)(v), the Conversion
Price shall be adjusted upward or downward to equal the price equal to the
average closing price for all of the Trading Days between the Closing Date and
the one year anniversary thereafter (“Market Price”).

(d) Provisions Applicable to Conversion Price Adjustments. For purposes of
determining the adjusted Conversion Price under Sections 7(a), 7(b) or 7(c)
above, the following provisions shall apply:

(i) Issuance of Options. If the Company in any manner grants or sells any
Options (other than any Excluded Securities) and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion or exchange or exercise of any Convertible Securities
issuable upon exercise of such Option is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the granting or sale of such
Option for such price per share. For purposes of this Section 7(d)(i), the
“lowest price per share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion or exchange or exercise of any
Convertible Securities issuable upon exercise of such Option” shall be equal to
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange
or exercise of any Convertible Security issuable upon exercise of such Option.
No further adjustment of the Conversion Price shall be made upon the actual
issuance of such share of Common Stock or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such Common Stock
upon conversion or exchange or exercise of such Convertible Securities.

(ii) Issuance of Convertible Securities. If the Company in any manner issues or
sells any Convertible Securities (other than Excluded Securities) and the lowest
price per share for which one share of Common Stock is issuable upon such
conversion or exchange or exercise thereof is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the issuance of sale of such
Convertible Securities for such price per share. For the purposes of this
Section 7(d)(ii), the “price per share for which one share of Common Stock is
issuable upon such conversion or exchange or exercise” shall be equal to the sum
of the lowest amounts

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of consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon the issuance or sale of the Convertible
Security and upon the conversion or exchange or exercise of such Convertible
Security. No further adjustment of the Conversion Price shall be made upon the
actual issuance of such share of Common Stock upon conversion or exchange or
exercise of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment
of the Conversion Price had been or are to be made pursuant to other provisions
of this Section 7(d), no further adjustment of the Conversion Price shall be
made by reason of such issue or sale.

(iii) Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options (other than Excluded Securities), the additional
consideration, if any, payable upon the issue, conversion, exchange or exercise
of any Convertible Securities, or the rate at which any Convertible Securities
(other than Excluded Securities) are convertible into or exchangeable or
exercisable for Common Stock is changed, the Conversion Price in effect at the
time of such change shall be adjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible Securities provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 7(d)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Closing Date are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change. No adjustment shall be made if such adjustment would result in an
increase of the Conversion Price then in effect.

(iv) Definition of Excluded Securities. For purposes of this Agreement,
“Excluded Securities” shall mean:

(A) shares of Common Stock issued pursuant to a transaction described in
Section 7(e) hereof;

(B) shares of Common Stock issued or deemed issued to employees, consultants,
officers or directors (if in transactions with primarily non-financing purposes)
of this Company directly or pursuant to an Approved Stock Plan;

(C) shares of Common Stock issued or issuable (1) in a bona fide, firmly
underwritten public offering under the Act resulting in aggregate gross proceeds
of at least $10,000,000, or (2) upon exercise of warrants or rights granted to
underwriters in connection with such a public offering;

(D) shares of Common Stock issued pursuant to the conversion or exercise of
convertible or exercisable securities outstanding as of the date hereof,
including the Debentures, the Warrants and the Placement Agent Warrants (as
defined in the Securities Purchase Agreeement) or subsequently issued pursuant
to this Section 7(d)(iv), provided such securities are not amended after the
date hereof to increase the number of shares of Common Stock issuable thereunder
or to lower the exercise or conversion price thereof;

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(E) shares of Common Stock issued or issuable in connection with a bona fide
business acquisition of or by this Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise, each as approved by the
Board of Directors of this Company, however, excluding shares issued or issuable
in connection with a transaction between the Company and an Affiliate; or

(F) shares of Common Stock issued or issuable in connection with any transaction
where such securities so issued are deemed included in the definition of
“Excluded Securities” by the affirmative vote or written consent of the Required
Holders.

(v) Limitations on Adjustments in Conversion Price. Notwithstanding the
foregoing, the Conversion Price shall not be adjusted pursuant to this Section 7
to a price below $0.192 or above $0.264 (as adjusted for changes in
capitalization pursuant to a transaction described in Section 7(e)).

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

(vii) in case the Company shall declare a dividend or make any other
distribution upon any stock of the Company (other than the Common Stock) payable
in Common Stock, Options or Convertible Securities, then any Common Stock,
Options or Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or sold
without consideration; provided, that if any adjustment is made to the
Conversion Price as a result of a declaration of a dividend and such dividend is
rescinded, the Conversion Price shall be appropriately readjusted to the
Conversion Price in effect had such dividend not been declared;

(viii) In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor, after deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith. In case any
shares of Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board, after deduction of any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith. In case any Options shall be issued in
connection with the issuance and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good faith by
the Board of

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Directors of the Company. If Common Stock, Options or Convertible Securities
shall be issued or sold by the Company and, in connection therewith, other
Options or Convertible Securities (the “Additional Rights”) are issued, then the
consideration received or deemed to be received by the Company shall be reduced
by the fair market value of the Additional Rights (as determined using the
Black-Scholes option pricing model or another method mutually agreed to by the
Company and the Holder). The Board shall respond promptly, in writing, to an
inquiry by the Holder as to the fair market value of the Additional Rights.

(e) Adjustment of Conversion Price upon Subdivision or Combination of Common
Stock. If the Company at any time on or after the Closing Date subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company at any time on or after the
Closing Date combines (by combination, reverse stock split or otherwise) one or
more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
will be proportionately increased.

(8) COMPANY’S RIGHT OF OPTIONAL REDEMPTION; MANDATORY CONVERSION.

(a) Optional Redemption by Company. At any time from and after the Issuance Date
and prior to the Maturity Date, provided that the Registration Statement filed
pursuant to the Registration Rights Agreement shall have been effective for at
least the twenty (20) Trading Days prior to the Optional Redemption Date:

(i) the Company shall have the right to redeem all of the outstanding Principal
then remaining under this Debenture as designated in the Optional Redemption
Notice, as of the Optional Redemption Date (an “Optional Redemption”) in cash at
a price equal to 125% of the outstanding Principal amount being redeemed plus
any accrued and unpaid Interest thereon.

(ii) The Company may exercise its right to require redemption under this
Section 8(a) by delivering a written notice thereof by facsimile and overnight
courier to all, but not less than all, of the holders of Debentures and the
Transfer Agent (the “Optional Redemption Notice” and the date all of the holders
received such notice is referred to as the “Optional Redemption Notice Date”).
The Optional Redemption Notice shall state the date on which the Optional
Redemption shall occur (the “Optional Redemption Date”) which date shall be ten
(10) Business Days after the Optional Redemption Notice Date.

(iii) If the Company elects to cause an Optional Redemption pursuant to
Section 8(a)(i), then it must simultaneously take the same action with respect
to the Other Debentures.

(b) Mandatory Conversion. At any time after the first anniversary of the Closing
Date and until the Maturity Date, the Company may at its sole discretion,
provided that

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(1) the Registration Statement filed pursuant to the Registration Rights
Agreement shall have been effective for at least thirty (30) Trading Days prior
to the Mandatory Conversion Date, (2) the Weighted Average Price of the
Company’s Common Stock for any thirty (30) consecutive Trading Days commencing
after the Closing Date is greater than $0.48 per share, and (3) the average
daily trading dollar volume of the Company’s common stock is of a value of no
less than $350,000, the Company may submit a notice to the Holders electing to
convert all then outstanding Debentures into Common Stock at the then-applicable
Conversion Price (“Mandatory Conversion”). On the date of delivery by the
Company of such notice (“Mandatory Conversion Date”), the converted Debentures
shall for all purposes be deemed converted into the right to receive shares of
Common Stock, and all other rights of the Holder under this Debenture, with the
exception of provisions relating to the Mandatory Conversion, shall terminate.
Upon Mandatory Conversion, the Holder shall promptly surrender this Debenture to
the Company and execute any documentation reasonably requested by the Company in
connection with the issuance of shares of Common Stock in the Mandatory
Conversion.

(9) [reserved]

(10) NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Articles of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Debenture, and will at all times in good faith carry out all of the
provisions of this Debenture and take all action as may be required to protect
the rights of the Holder of this Debenture.

(11) RESERVATION OF AUTHORIZED SHARES.

(a) Reservation. The Company initially shall reserve out of its authorized and
unissued Common Stock a number of shares of Common Stock for each of the
Debentures equal to at least 110% of the Conversion Rate with respect to the
Conversion Amount of each such Debenture as of the Issuance Date. So long as any
of the Debentures are outstanding, the Company shall take all action necessary
to reserve and keep available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Debentures, 110% of
the number of shares of Common Stock as shall from time to time be necessary to
effect the conversion of all of the Debentures then outstanding; provided that
at no time shall the number of shares of Common Stock so reserved be less than
the number of shares required to be reserved of the previous sentence (without
regard to any limitations on conversions) (the “Required Reserve Amount”). The
initial number of shares of Common Stock reserved for conversions of the
Debentures and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Debentures based on the principal
amount of the Debentures held by each holder at the Closing (as defined in the
Securities Purchase Agreement) or increase in the number of reserved shares, as
the case may be (the “Authorized Share Allocation”). In the event that a holder
shall sell or otherwise transfer any of such holder’s Debentures, each
transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any
Person which

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ceases to hold any Debentures shall be allocated to the remaining holders of
Debentures, pro rata based on the principal amount of the Debentures then held
by such holders.

(b) Insufficient Authorized Shares. If at any time while any of the Debentures
remain outstanding, the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Debentures at least a number of shares of Common
Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then
the Company shall immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Debentures then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than 60 days after the occurrence of such Authorized Share
Failure, the Company shall obtain stockholder approval for an increase in the
number of authorized shares of Common Stock. In connection with obtaining such
approval, the Company shall use its best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its
board of directors to recommend to the stockholders that they approve such
proposal.

(12) VOTING RIGHTS. The Holder shall have no voting rights as the holder of this
Debenture, except as required by law, including but not limited to the General
Corporation Law of Delaware, and as expressly provided in this Debenture.

(13) COVENANTS.

(a) Affirmative Covenants: So long as any amount due under this Debenture is
outstanding and until the earlier of (i) the indefeasible payment in full of all
amounts payable by the Company hereunder and (ii) the conversion in full of this
Debenture:

(i) The Company shall and shall cause each of its Subsidiaries to (A) do all
things necessary to remain duly organized, validly existing, and in good
standing as a domestic corporation under the laws of the State of Delaware and
(B) maintain all requisite authority to conduct its business in those
jurisdictions in which its business is conducted.

(ii) The Company shall promptly notify the Holder in writing of any information
which indicates that any financial statements which are the subject of any
representation contained in the Transaction Documents, or which are furnished to
the Holder pursuant to the Transaction Documents, fail, in any material respect,
to present fairly, as of the date thereof and for the period covered thereby,
the financial condition and results of operations purported to be presented
therein, disclosing the nature thereof.

(iii) The Company shall promptly notify the Holder of the occurrence of any
Event of Default or any event which, with the giving of notice, the lapse of
time or both would constitute an Event of Default, which notice shall include a
written statement as to such occurrence, specifying the nature thereof and the
action (if any) which is proposed to be taken with respect thereto.

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(iv) The Company shall and shall cause each Subsidiary to pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or property, except those that are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.

(v) The Company shall and shall cause each Subsidiary to all times maintain with
financially sound and reputable insurance companies insurance covering its
assets and its businesses in such amounts and covering such risks (including,
without limitation, hazard, business interruption and public liability) as is
consistent with sound business practice and as may be obtained at commercially
reasonable rates.

(vi) The Company shall and shall cause each Subsidiary to comply with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which they may be subject except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.

(vii) The Company shall and shall cause each Subsidiary to use commercially
reasonable efforts to do all things necessary to maintain, preserve, protect and
keep its properties in good repair, working order and condition and use
commercially reasonable efforts to make all necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted.

(b) Negative Covenants. So long as any amount due under this Debenture is
outstanding and until the earlier of (i) the indefeasible payment in full of all
amounts payable by the Company hereunder and (ii) the conversion of this
Debenture, without the prior written consent of the Required Holders (for
purposes of this Section 13(b), any Debentures held by any employee, director or
officer of the Company or any Subsidiary shall not be deemed to be outstanding):

(i) The Company shall not and shall cause each Subsidiary not to create, incur,
guarantee, issue, assume or in any manner become liable in respect of any
Indebtedness, other than Permitted Indebtedness.

(ii) The Company shall not and shall cause each Subsidiary not to create, incur,
assume or suffer to exist any Lien upon any of its property, whether now owned
or hereafter acquired other than Permitted Liens.

(iii) The Company shall not and shall cause each Subsidiary not to, directly or
indirectly, enter into or permit to exist any material transaction or series of
related material transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service (other
than service as an employee or director)) with, or for the benefit of, any of
its employees, directors or Affiliates other than a wholly owned Subsidiary.

(iv) The Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or
make any

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payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private
transactions or otherwise), all or any portion of any Permitted Indebtedness,
whether by way of payment in respect of principal of (or premium, if any) or
interest on, such Indebtedness if at the time such payment is due or is
otherwise made or, after giving effect to such payment, an event constituting,
or that with the passage of time and without being cured would constitute, an
Event of Default has occurred and is continuing.

(v) The Company shall not and shall cause each Subsidiary not to settle, or
agree to indemnify or defend third parties against, any material lawsuit, except
as may be required by judicial or regulatory order or by agreements entered into
prior to the date hereof on a basis consistent with past practice. A material
lawsuit shall be any lawsuit in which the amount in controversy exceeds
$500,000.

(vi) The Company shall not and shall cause each Subsidiary not to amend its
bylaws, certificate of incorporation or other charter document in a manner
adverse to the Holder.

(vii) The Company shall not, and shall cause each of its Subsidiaries not to,
directly or indirectly, declare or pay any dividends on account of any shares of
any class or series of its capital stock now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of its
capital stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares.

(viii) The Company shall not and shall cause each Subsidiary not to make or own
any Investment in any Person, including without limitation any joint venture,
other than (A) Permitted Investments, (B) operating deposit accounts with banks,
(C) Hedging Agreements entered into in the ordinary course of the Company’s
financial planning and not for speculative purposes and (D) Investments by the
Company in the capital stock of any wholly owned Subsidiary.

(ix) The Company shall not and shall cause each Subsidiary not to, directly or
indirectly, become or remain liable as lessee or as a guarantor or other surety
with respect to any lease of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, which the Company or any Subsidiary
(a) has sold or transferred or is to sell or to transfer to any other Person, or
(b) intends to use for substantially the same purpose as any other property
which has been or is to be sold or transferred by the Company or any Subsidiary
to any Person in connection with such lease.

(c) Rank. All payments due under this Debenture (a) shall rank pari passu with
all Other Debentures and (b) shall be senior to all other Indebtedness of the
Company.

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(14) AMENDMENTS TO TERMS OF DEBENTURES. The affirmative vote at a meeting duly
called for such purpose or the written consent without a meeting of the Required
Holders shall be required for any change or amendment to terms of this Debenture
or the Other Debentures. Any change or amendment so approved shall be binding
upon all existing and future holders of this Debenture and any Other Debentures.

(15) TRANSFER. This Debenture may be offered, sold, assigned or transferred by
the Holder without the consent of the Company, subject only to the provisions of
Section 2(f) of the Securities Purchase Agreement.

(16) REISSUANCE OF THIS DEBENTURE.

(a) Transfer. If this Debenture is to be transferred, the Holder shall surrender
this Debenture to the Company, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Debenture (in accordance with
Section 16(d)), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less then the
entire outstanding Principal is being transferred, a new Debenture (in
accordance with Section 16(d)) to the Holder representing the outstanding
Principal not being transferred. The Holder and any assignee, by acceptance of
this Debenture, acknowledge and agree that, by reason of the provisions of
Section 3(c)(iii) and this Section 16(a), following conversion or redemption of
any portion of this Debenture, the outstanding Principal represented by this
Debenture may be less than the Principal stated on the face of this Debenture.

(b) Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Debenture, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this
Debenture, the Company shall execute and deliver to the Holder a new Debenture
(in accordance with Section 16(d)) representing the outstanding Principal.

(c) Debenture Exchangeable for Different Denominations. This Debenture is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Debenture or Debentures (in accordance with Section 16(d)
and in principal amounts of at least $100,000) representing in the aggregate the
outstanding Principal of this Debenture, and each such new Debenture will
represent such portion of such outstanding Principal as is designated by the
Holder at the time of such surrender.

(d) Issuance of New Debentures. Whenever the Company is required to issue a new
Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall
be of like tenor with this Debenture, (ii) shall represent, as indicated on the
face of such new Debenture, the Principal remaining outstanding (or in the case
of a new Debenture being issued pursuant to Section 16(a) or Section 16(c), the
Principal designated by the Holder which, when added to the principal
represented by the other new Debentures issued in connection with such issuance,
does not exceed the Principal remaining outstanding under this Debenture
immediately prior to such issuance of new Debentures), (iii) shall have an
issuance date, as indicated on the face of such new Debenture, which is the same
as the Issuance Date of this Debenture, (iv) shall

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have the same rights and conditions as this Debenture, and (v) shall represent
accrued Interest on the Principal and Interest of this Debenture, from the
Issuance Date.

(17) CONSTRUCTION; HEADINGS. This Debenture shall be deemed to be jointly
drafted by the Company and all the Purchasers (as defined in the Securities
Purchase Agreement) and shall not be construed against any person as the drafter
hereof. The headings of this Debenture are for convenience of reference and
shall not form part of, or affect the interpretation of, this Debenture.

(18) 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 privilege.

(19) DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Closing Bid Price, the Closing Sale Price or the Weighted Average Price or the
arithmetic calculation of the Conversion Rate or the Redemption Price, the
Company shall submit the disputed determinations or arithmetic calculations via
facsimile within two (2) Business Days of receipt of the Conversion Notice or
Redemption Notice or other event giving rise to such dispute, as the case may
be, to the Holder. If the Holder and the Company are unable to agree upon such
determination or calculation within one (1) Business Day of such disputed
determination or arithmetic calculation being submitted to the Holder, then the
Company shall, within two (2) Business Days submit via facsimile (a) the
disputed determination of the Closing Bid Price, the Closing Sale Price or the
Weighted Average Price to an independent, reputable investment bank selected by
the Company and approved by Holders representing a majority of the then
outstanding Principal or (b) the disputed arithmetic calculation of the
Conversion Rate or the Redemption Price to the Company’s independent, outside
accountant. The Company, at the Company’s expense, shall cause the investment
bank or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
five (5) Business Days from the time such investment bank or accountant receives
the disputed determinations or calculations. Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

(20) NOTICES; PAYMENTS.

(a) Notices. Whenever notice is required to be given under this Debenture,
unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this
Debenture, including in reasonable detail a description of such action and the
reason therefore. Without limiting the generality of the foregoing, the Company
will give written notice to the Holder (i) as soon as practicable upon any
adjustment of the Conversion Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least twenty
(20) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common Stock,
(B) with respect to any pro rata subscription offer to holders of Common

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Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.

(b) Payments. Whenever any payment of cash is to be made by the Company to any
Person pursuant to this Debenture, such payment shall be made in lawful money of
the United States of America by a check drawn on the account of the Company and
sent via overnight courier service to such Person at such address as previously
provided to the Company in writing (which address, in the case of each of the
Purchasers, shall initially be as set forth on the Schedule of Buyers attached
to the Securities Purchase Agreement); provided that the Holder may elect to
receive a payment of cash via wire transfer of immediately available funds by
providing the Company with prior written notice setting out such request and the
Holder’s wire transfer instructions. 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 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.

(21) CANCELLATION. After all Principal, accrued Interest and other amounts at
any time owed on this Debenture has been paid in full, this Debenture shall
automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

(22) WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Debenture and
the Securities Purchase Agreement.

(23) GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to
the choice of law principles thereof.

(24) CERTAIN DEFINITIONS. For purposes of this Debenture, the following terms
shall have the following meanings:

(a) “Affiliate” means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person.

(b) “Approved Stock Plan” means any equity compensation plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company’s securities may be issued to any employee, officer, consultant or
director for services provided to the Company.

(c) “Bloomberg” means Bloomberg Financial Markets.

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(d) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by law
to remain closed.

(e) “Calendar Quarter” means each of: the period beginning on and including
January 1 and ending on and including March 31; the period beginning on and
including April 1 and ending on and including June 30; the period beginning on
and including July 1 and ending on and including September 30; and the period
beginning on and including October 1 and ending on and including December 31.

(f) “Change of Control” means any Fundamental Transaction other than (A) any
reorganization, recapitalization or reclassification of the Common Stock in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving entity
or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities, or (B) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company.

(g) “Closing Bid Price” and “Closing Sale Price” means, for any security as of
any date, the last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by Bloomberg, or, if the
Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the case may be,
then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or trading market for
such security, the last closing bid price or last trade price, respectively, of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last
trade price, respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing
Sale Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the
case may be, of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such
dispute shall be resolved pursuant to Section 19. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.

(h) “Closing Date” shall have the meaning set forth in the Securities Purchase
Agreement, which date is the date the Company initially issued Debentures
pursuant to the terms of the Securities Purchase Agreement.

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(i) “Common Stock” means the shares of common stock, par value $0.0001 per
share, of the Company.

(j) “Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock.

(k) “Eligible Market” means the Principal Market, The New York Stock Exchange,
Inc., the American Stock Exchange, the Nasdaq National Market or The Nasdaq
Capital Market.

(l) “Excluded Securities” shall have the meaning set forth in Section 7(d)(iv)
hereof.

(m) “Fundamental Transaction” means that the Company shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another
Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company, including
intellectual property, to another Person, or (iii) allow another Person to make
a purchase, tender or exchange offer that is accepted by the holders of more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by the Person or Persons making or party to, or associated
or affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than the 50% of either the outstanding shares of Common Stock or
the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), (v) reorganize, recapitalize or
reclassify its Common Stock (other than a reverse of forward stock split) or
(vi) any “person” or “group” (as these terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock.

(n) “GAAP” means United States generally accepted accounting principles,
consistently applied.

(o) “Hedging Agreement” means any interest rate swap, collar, cap, floor or
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure executed in connection with hedging the interest rate exposure of
any Person and any confirming letter executed pursuant to such agreement, all as
amended, supplemented, restated or otherwise modified from time to time.

(p) “Investment” means, for any Person: (a) the acquisition (whether for cash,
property, services or securities or otherwise) of capital stock, bonds, notes,
debentures,

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partnership or other ownership interests or other securities of any other Person
or any agreement to make any such acquisition (including, without limitation,
any “short sale” or any sale of any securities at a time when such securities
are not owned by the Person entering into such sale); (b) the making of any
deposit with, or advance, loan or other extension of credit to, any other Person
(including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person), but excluding any such advance, loan or extension of credit having
a term not exceeding 90 days arising in connection with the sale of inventory or
supplies by such Person in the ordinary course of business; (c) the entering
into of any guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such Person; or (d) the
entering into of any Hedging Agreement.

(q) “Options” means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.

(r) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.

(s) “Permitted Indebtedness” means (i) Indebtedness incurred by the Company
pursuant to a line of credit issued by an institutional lender or commercial
bank, up an aggregate principal amount of $2,000,000, (ii) Indebtedness that is
made expressly subordinate in right of payment to the Indebtedness evidenced by
this Debenture, up an aggregate principal amount of $2,000,000, provided that
such Indebtedness shall not be convertible by its holders or lenders into shares
of capital stock, (iii) Indebtedness evidenced by the Debentures,
(iv) Indebtedness secured by Permitted Liens, (v) Indebtedness to trade
creditors incurred in the ordinary course of business, and (vi) extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that
the principal amount is not increased or the terms modified to impose more
burdensome terms upon the Company or its Subsidiary, as the case may be.

(t) “Permitted Investments” means all Investments other than investments in
marketable securities issued by other Persons (including, without limitation,
any “short sale” or any sale of any securities at a time when such securities
are not owned by the Person entering into such sale), and other than securities
issued by Persons involved in lines of business unrelated to the Company’s line
of business.

(u) “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a liability

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that is not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, (iv) Liens securing the Company’s obligations under the
Debentures, (v) Liens (A) upon or in any equipment acquired or held by the
Company or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
equipment, (vi) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (i) and (v) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the Indebtedness being extended, renewed or refinanced does
not increase, (vii) leases or subleases and licenses and sublicenses granted to
others in the ordinary course of the Company’s business, not interfering in any
material respect with the business of the Company and its Subsidiaries taken as
a whole and (viii) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payments of custom duties in connection with the
importation of goods

(v) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

(w) “Principal Market” means the OTC Bulletin Board.

(x) “Required Holders” means the holders of Debentures representing over 50% of
the aggregate principal amount of the Debentures then outstanding.

(y) “SEC” means the United States Securities and Exchange Commission.

(z) “Securities Purchase Agreement” means that certain securities purchase
agreement by and among the Company and the initial holders of the Debentures
pursuant to which the Company issued the Debentures.

(aa) “Successor Entity” means the Person, which may be the Company, formed by,
resulting from or surviving any Fundamental Transaction or the Person with which
such Fundamental Transaction shall have been made, provided that if such Person
is not a publicly traded entity whose common stock or equivalent equity security
is quoted or listed for trading on an Eligible Market, Successor Entity shall
mean such Person’s Parent Entity.

(bb) “Trading Day” means any day on which the Common Stock are traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock are then traded; provided that
“Trading Day” shall not include any day on which the Common Stock are scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the

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closing time of trading on such exchange or market, then during the hour ending
at 4:00 p.m., New York Time).

(cc) “Transaction Documents” has the meaning ascribed to such term in the
Securities Purchase Agreement.

(dd) “Warrants” has the meaning ascribed to such term in the Securities Purchase
Agreement, and shall include all warrants issued in exchange therefor or
replacement thereof.

(ee) “Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during
the period beginning at 9:30:01 a.m., New York Time (or such other time as the
Principal Market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York Time (or such other time as the Principal Market
publicly announces is the official close of trading) as reported by Bloomberg
through its “Volume at Price” functions, or, if the foregoing does not apply,
the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York Time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00 p.m., New York Time (or such other time as such market publicly
announces is the official close of trading) as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in
the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau,
Inc.). If the Weighted Average Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Weighted Average Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 19. All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed as
of the Issuance Date set out above.

 

WT HOLDINGS CORPORATION

By:   

      

Ricky Tsoi

 

Chief Executive Officer

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EXHIBIT I

WT HOLDINGS CORPORATION

CONVERSION NOTICE

Reference is made to the Senior Convertible Debenture (the “Debenture”) issued
to the undersigned by WT Holdings Corporation (the “Company”). In accordance
with and pursuant to the Debenture, the undersigned hereby elects to convert the
Conversion Amount (as defined in the Debenture) of the Debenture indicated below
into shares of Common Stock (as defined in the Debenture), as of the date
specified below.

Date of Conversion:
______________________________________________________________________________

Aggregate Conversion Amount to be converted:
___________________________________________________________

Please confirm the following information:
___________________________________________________________________

Conversion Price:
__________________________________________________________________________________

Number of shares of Common Stock to be issued:
_________________________________________________________

Please issue the Common Stock into which the Debenture is being converted in the
following name and to the following address:

 

Issue to:

                       

Facsimile Number:
___________________________________________________________________________________

Authorization:
_______________________________________________________________________________________

By:
_________________________________________________________________________________________

Title:
__________________________________________________________________________________

Dated:
___________________________________________________________________________________________________

Account Number:
____________________________________________________________________________________

(if electronic book entry transfer)

Transaction Code Number:
____________________________________________________________________________

(if electronic book entry transfer)

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ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs
[Insert Name of Transfer Agent] to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated
______________ from the Company and acknowledged and agreed to by [Insert Name
of Transfer Agent].

 

WT HOLDINGS CORPORATION

By:

      

Name:

   

Title: