c54638_ex4-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing






Exhibit 4.1


NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN
SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. 


NANOSCIENCE TECHNOLOGIES, INC.

 SECURED CONVERTIBLE DEBENTURE 

	 	
	
Issuance Date: July 31, 2008		 		
Original Principal Amount:   
$61,000	
	
No. NANS-6-1		 		 	




                       FOR VALUE RECEIVED, Nanoscience Technologies, Inc., a Nevada corporation (the "Company"), hereby promises to pay to the order of YA GLOBAL INVESTMENTS, L.P. or its registered assigns (the "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 the applicable
Interest Rate from the date set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, whether upon the Maturity Date or acceleration,
conversion, redemption or otherwise (in each case in accordance with the terms hereof).  This Secured Convertible Debenture including all Secured Convertible Debentures issued in exchange, transfer or replacement hereof, is referred to as the
"Debenture". Certain capitalized terms used herein are defined in Section 16. 

               (1)     GENERAL TERMS 


                       (a)     Payment of Principal. On the Maturity Date, the Company shall pay to the
Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest. The "Maturity Date" shall be July __, 2009, as may be extended at the option of
the Holder (i) in the event that, and for so long as, an Event of Default (as defined below) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall have occurred and be
continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to cure would result in an Event of Default. Other than as specifically permitted by this Debenture, the Company may not
prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder. 












                       (b)     Interest. Interest shall accrue on the outstanding principal balance hereof at
an annual rate equal to 14% (“Interest Rate”). Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent
permitted by applicable law. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Debenture is registered on the records of the Company regarding registration and
transfers of Debentures at the option of the Company in cash, or, provided that the Equity Conditions are then satisfied converted into Common Stock at the applicable Conversion Price on the Trading Day immediately prior to the date paid.


                       (c)     Security.  The Debenture is secured by the Pledged Property as defined in the
Security Agreement (the “Security Agreement”) between the Company and the Holder dated July 28, 2006.

                       (d)     Use of Proceeds. The proceeds to the Company in exchange for the
Company’s issuance of this Debenture will be disbursed to the parties and in the amounts set forth on Exhibit A hereto. The Company acknowledges that it will receive no
proceeds from the issuance of this Debenture. 


               (2)     EVENTS OF DEFAULT.

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

                                 (i)            The Company's failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under
this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder) or any other Transaction Documents; 

                                 (ii)           The
    Company or any subsidiary of the Company shall commence, or there shall be
    commenced against the Company or any  subsidiary of the Company under any
    applicable bankruptcy or insolvency laws as now or hereafter in effect or
    any successor thereto, or the Company or any subsidiary of the Company commences
    any other proceeding under any reorganization,  arrangement, adjustment of
    debt, relief of debtors, dissolution, insolvency or liquidation or similar
    law of any jurisdiction whether now or hereafter in effect relating to the
    Company or any subsidiary of the Company or there is commenced against  the
    Company or any subsidiary of the Company any such bankruptcy, insolvency
    or other proceeding which remains undismissed for a period of 61 days; or
    the Company or any subsidiary of the Company is adjudicated insolvent or
    bankrupt; or any order of  relief or other order approving any such case
    or proceeding is entered; or the Company or any subsidiary of the Company
    suffers any appointment of any custodian, private or court appointed receiver
    or the like for it or any substantial part of its  property which continues
    undischarged or unstayed for a period of 61 days; or the Company or any subsidiary
    of the Company makes a general assignment for the benefit of creditors; or
    the Company or any subsidiary of the Company shall fail to pay, or  shall
    state that it is unable to pay, or shall be unable to pay, its debts generally
    as they become due; or the Company or any subsidiary of the Company shall
    call a meeting of its 


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creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of
or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing; 

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

                                 (iv)            If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed
for trading and shall not again be quoted or listed for trading on any Primary Market within 5 Trading Days of such delisting: (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market,
or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”); 

                                 (v)       The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in
Section 6) unless in connection with such Change of Control Transaction this Debenture is retired;

                                 (vi)     The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock
within 5 Business Days after the applicable Conversion Failure or (B) notice, written or oral, to any holder of the Debentures, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any
Debentures into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c); 

                                 (vii)     The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within
3 Business Days after such payment is due;

                                 (viii)     The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise
commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document which is not cured within the time prescribed. 

                       (b)     During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full
unpaid Principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the
Holder


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may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to
convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, (other than
required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

               (3)     REDEMPTION. The Company at its option shall have the right to redeem
(“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt
of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) there is no Equity Conditions Failure. The Company shall
pay an amount equal to the principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to 15% of the Principal amount being redeemed, and
accrued Interest, (collectively referred to as the “Company Additional Redemption Amount”).
In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have 3 Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set
forth in Section 4(b). On the 4th Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to the Principal amount redeemed after giving effect to conversions effected
during the 3 Business Day period. 

               (4)     CONVERSION OF DEBENTURE. This Debenture shall be convertible into shares of
the Company's Common Stock, on the terms and conditions set forth in this Section 4. 

                       (a)     Conversion Right. Subject to the provisions of Section 4(c), 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 4(b), at
the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the
"Conversion Rate"). 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 transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery
of Common Stock upon conversion of any Conversion Amount.

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


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                                 (ii)     "Conversion Price" means, as of any
Conversion Date (as defined below) or other date of determination, the lesser of (a) $0.009 (the “Fixed Conversion Price”), subject to adjustment as provided herein,
or (b) 80% of the lowest Volume Weighted Average Price during the 30 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”).


                        (b)     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., New York 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 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the
Company with respect to this Debenture in the case of its loss, theft or destruction).  On or before the 3rd Business Day following the date of receipt of a Conversion Notice (the "Share Delivery
Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to Section 4(b)(iv) hereof and provided that the Transfer Agent is participating in the Depository
Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's
or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified
in the Conversion Notice, a certificate, 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 which certificates shall not bear any restrictive legends unless required
pursuant to Section 4(b)(iv) hereof. If this Debenture is physically surrendered for conversion 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 3 Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture 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 upon the transmission of a Conversion Notice.

                                 (ii)     Company's Failure to Timely Convert. If within 3 Trading Days after the
Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within 3 Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase
price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such 


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certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date. 

                                 (iii)     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 reissuance of this Debenture upon physical surrender of this Debenture.  The Holder and the Company shall
maintain records showing the Principal and Interest 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. 

                                 (iv)     Legends. So long as is required by this Section 4(b)(iii), a restrictive
legend in substantially the following form will be printed on the shares of Common Stock issuable upon conversion of this Debenture: 


  
    
      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES
        AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

  




Certificates evidencing shares of Common Stock issued upon conversion of this Debenture shall not contain any legend (including the legend set forth above), (i) while a registration statement covering the resale of such
security is effective under the Securities Act, (ii) following any sale of such shares of Common Stock issuable upon conversion of this Debenture pursuant to Rule 144, (iii) if such shares of Common Stock are eligible for sale under Rule 144, or
(iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). The Company shall cause its counsel to issue a legal opinion to the
Company’s transfer agent promptly after the effective date (the “Effective Date”) of a registration statement if required by the Company’s transfer agent to
effect the removal of the legend hereunder. If all or any portion of this Debenture is exercised by a Buyer that is not an Affiliate of the Company (a “Non-Affiliated Buyer”) at a time


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when there is an effective registration statement to cover the resale of the shares of Common Stock issued upon conversion of this Debenture, such shares of Common Stock shall be issued free of all legends. The Company
agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4(b)(iv), it will, no later than 3 Trading Days following the delivery by a Non-Affiliated Buyer to the Company or the Company’s
transfer agent of a certificate representing shares of Common Stock issued upon conversion of this Debenture with a restrictive legend (such 3rd Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Non-Affiliated Buyer a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions
to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.


                        (c)     Limitations on Conversions. 

                            (i)     Beneficial
      Ownership. The Company shall not effect
      any conversions of this  Debenture and the Holder shall not have the right
      to convert any portion of this Debenture or receive shares of Common Stock
      as payment of interest hereunder to the extent that after giving effect
      to such conversion or receipt of such interest  payment, the Holder, together
      with any affiliate thereof, would beneficially own (as determined in accordance
      with Section 13(d) of the Exchange Act and the rules promulgated thereunder)
      in excess of 4.99% of the number of shares of Common Stock  outstanding
      immediately after giving effect to such conversion or receipt of shares
      as payment of interest. Since the Holder will not be obligated to report
      to the Company the number of shares of Common Stock it may hold at the
      time of a conversion  hereunder, unless the conversion at issue would result
      in the issuance of shares of Common Stock in excess of 4.99% of the then
      outstanding shares of Common Stock without regard to any other shares which
      may be beneficially owned by the Holder or an  affiliate thereof, the Holder
      shall have the authority and obligation to determine whether the restriction
      contained in this Section will limit any particular conversion hereunder
      and to the extent that the Holder determines that the limitation  contained
      in this Section applies, the determination of which portion of the principal
      amount of this Debenture is convertible shall be the responsibility and
      obligation of the Holder. If the Holder has delivered a Conversion Notice
      for a principal  amount of this Debenture that, without regard to any other
      shares that the Holder or its affiliates may beneficially own, would result
      in the issuance in excess of the permitted amount hereunder, the Company
      shall notify the Holder of this fact and  shall honor the conversion for
      the maximum principal amount permitted to be converted on such Conversion
      Date in accordance with Section 4(a) and, any principal amount tendered
      for conversion in excess of the permitted amount hereunder shall remain
       outstanding under this Debenture. The provisions of this Section may be
       waived by a Holder (but only as to itself and not to any other Holder)
       upon not less than 65 days prior notice to the Company. Other Holders
       shall be unaffected by any such  waiver. 


                        (d)     Other Provisions. 

                            (i)     The
    Company shall at all times reserve and keep available out of its authorized
    Common Stock the full number of shares  of Common Stock issuable upon conversion
    of all outstanding amounts under this Debenture; and within 3 Business Days
    following the receipt by the Company of a Holder's notice that such minimum
    number of 


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Underlying Shares is not so reserved, the Company shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement. 


                                (ii)     All calculations
under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

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

                                (iv)     Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to
Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.


               (5)     Adjustments to Conversion Price 

                        (a)     Adjustment of Conversion Price upon Issuance of Common Stock. If the Company,
at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock for a consideration per share (the “New
Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (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. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable: 

                                (i)     Issuance
      of Options. If the Company in any
      manner grants or sells any Options  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 


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share. For purposes of this Section, 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 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 or sale of such Convertible Securities for such price per share.  For the purposes of this Section, the "lowest 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 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, 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, 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 are convertible into or exchangeable or
exercisable for Common Stock changes at any time, 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, if the terms of any Option or Convertible Security that was
outstanding as of the Issuance 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)     Calculation of Consideration Received. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been
issued for the difference


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of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such
transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount
received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the
Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the
fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company. 

                                (v)     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. 

                       (b)     Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d)
issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record
date for the determination of


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stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. 

                       (c)     Purchase Rights.  If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. 

                       (d)     Other Events.  If any event occurs of the type contemplated by the provisions
of this Section 4 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will
make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.


                       (e)     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, at the
Holder's option, (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. 

                       (f)     Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder
a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. 


11












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

             (6)     NOTICES.
       Any notices, consents, waivers or other communications required or  permitted
  to be given under the terms hereof must be in writing and will be deemed
  to have been delivered: (i) upon receipt, when delivered personally; (ii)
  upon receipt, when sent by facsimile (provided confirmation of transmission
  is mechanically  or electronically generated and kept on file by the sending
  party); or (iii) one (1) Trading Day after deposit with a nationally recognized
  overnight delivery service, in each case properly addressed to the party
  to receive the same. The addresses  and facsimile numbers for such communications
  shall be: 

	
If to the Company, to:		 		
Nanoscience Technologies, Inc.	
	 		 		
45 Rockefeller Plaza, Suite 2000 #43	
	 		 		
New York, NY 10111	
	 		 		
Attention: John Ruddy	
	 		 		
Telephone: 212-332-3443	
	 		 		
Facisimile: 212-332-2401	
	 	





12











	With a copy to: 	 	Sichenzia Ross Friedman Ference
        LLP 
	 		 		
1065 Avenue of the Americas, 21st Floor	
	 		 		
New York, NY 10018	
	 		 		
Telephone: 212-930-9700	
	 		 		
Facisimile:  212-930-9725	
	 		 		
Facisimile:  732-577-1188	
	 	
	
If to the Holder:		 		
YA Global Investments, LP	
	 		 		
101 Hudson Street, Suite 3700	
	 		 		
Jersey City, NJ 07302	
	 		 		
Attention:	Mark Angelo 
	 		 		
Telephone:		(201) 985-8300 
	 	
	
With a copy to:		 		
David Gonzalez, Esq.	
	 		 		
101 Hudson Street – Suite 3700	
	 		 		
Jersey City, NJ 07302	
	 		 		
Telephone:		
      (201)
      985-8300	
	 		 		
Facsimile:		
      (201)
      985-8266	




       or
    at such other address and/or facsimile number and/or to the attention of
    such other person as the recipient party has specified by written notice
    given to each other party three (3) Business  Days prior to the effectiveness
    of such change. Written confirmation of receipt (i) given by the recipient
    of such notice, consent, waiver or other communication, (ii) mechanically
    or electronically generated by the sender's facsimile machine  containing
    the time, date, recipient facsimile number and an image of the first page
    of such transmission or (iii) provided by a nationally recognized overnight
    delivery service, shall be rebuttable evidence of personal service, receipt
    by facsimile  or receipt from a nationally recognized overnight delivery
    service in accordance with clause (i), (ii) or (iii) above, respectively. 

             (7)     Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the
Company. As long as this Debenture is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely
affect any rights of the Holder (which shall include combining (by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares); (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of
its Common Stock or other equity securities other than as to the Underlying Shares to the extent permitted or required under the Transaction Documents; or (iii) enter into any agreement with respect to any of the foregoing.


13












             (8)     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. 

             (9)     No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to interest,
damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Company will not and will not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any
indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Company under this
Debenture. 

             (10)     This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without
giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in
Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in
such jurisdictions.

             (11)     If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder
promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any
workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or
any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder. 

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

             (13)     If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain
in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall
violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay,


14













extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted. 

             (14)     Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day. 

             (15)     THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT. 

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

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

                       (b)     "Bloomberg" means Bloomberg Financial Markets. 

                       (c)     “Business Day” means any day except
Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close. 

                       (d)     “Change of Control Transaction”
means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of
convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not
approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was
approved by a majority of the members of the board of directors who are members on the date hereof), (c) the 


15













merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the
Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c). 

                       (e)     “Closing Bid Price” means the price
per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg. 

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


                       (g)     “Commission” means the Securities and Exchange Commission.


                       (h)     “Common Stock” means the common
stock, par value $.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified. 

                       (i)     "Equity Conditions" means that each of the
following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"),
either (x) the Underlying Shares Registration Statement filed pursuant to the Registration Rights Agreement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring
determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state
securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or
suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity
Conditions Measuring Period, the Company shall have delivered the shares of Common Stock deliverable upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common
Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall
not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration
Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable
shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws. 


16












                       (j)     "Equity Conditions Failure" means that on any
applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder). 

                       (k)     “Exchange Act” means the Securities
Exchange Act of 1934, as amended. 

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

                       (m)     “Original Issue Date” means the
date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture. 

                       (n)     “Person” means a corporation, an
association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency. 

                       (o)      “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 

                       (p)     “Trading Day” means a day on which
the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then
Trading Day shall mean a Business Day. 

                       (q)     “Transaction Documents” means any
Securities Purchase Agreements between the Company and the Holder and any other agreements delivered in connection with such Securities Purchase Agreements. 

                       (r)     “Underlying Shares” means the
shares of Common Stock issuable upon conversion of this Debenture or as payment of interest in accordance with the terms hereof. 

                       (s)     “Underlying Shares Registration Statement” means a registration statement covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder. 

                       (t)     "Volume Weighted Average Price" means, for
any security as of any date, the daily dollar volume-weighted average price for such security as reported by Bloomberg through its “Historical Price Table Screen (HP)” with Market: Weighted Ave function selected, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg, 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.


[Signature Page Follows]


17












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

	 	COMPANY:  

      NANOSCIENCE TECHNOLOGIES, INC. 

      

      By: ________________________

      Name:

      Title: 


 













EXHIBIT I 

CONVERSION NOTICE


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


TO:  


          The
undersigned hereby irrevocably elects to convert $______________________________________
of the principal amount of Debenture No.NANS-6-1 into Shares of Common Stock
of NANOSCIENCE
 TECHNOLOGIES, INC., according to the conditions
 stated therein, as of the Conversion Date written below. 

	
Conversion Date:		 		 	
	
Conversion Amount to be		 		 	
	
converted:		 		
$	
	
Conversion Price:		 		
$	
	
Number of shares of Common		 		 	
	
Stock to be issued:		 		 	
	
Amount of Debenture		 		 	
	
Unconverted:		 		
$	




Please issue the shares of Common Stock in the following name and to the following address: 

Issue to:   

	Authorized Signature: 	 	 
	
Name:		 	 
	
Title:		 	 
	
Broker DTC Participant Code:		 	 
	
Account Number: