**Exhibit 10.20**

 

**8.50% SECURED CONVERTIBLE DEBENTURE**

**DUE NOVEMBER 17, 2013**

THIS 8.50% SECURED CONVERTIBLE DEBENTURE is the duly authorized and validly issued 8.50% Secured Convertible Debenture of Accentia Biopharmaceuticals, Inc., a Florida corporation (the“Company”), having its principal place of business at 324 South Hyde Park Ave., Suite 350, Tampa, Florida 33606, designated as its 8.50% Secured Convertible Debenture due November 17, 2013 (this debenture, the“Debenture” and, collectively with the other debentures issued under Article 5.7.1 of the Plan, the “Debentures”). This Debenture and the Conversion Shares issuable upon conversion of this Debenture are issued bythe Company, pursuant to Section 1145 of the Bankruptcy Code and Article 5.7.1 of the Plan in exchange for the Holder’s claims against the Company, and are exempt from the requirements of Section 5 of the Securities Act and state andlocal securities laws and requirements by virtue of Section 1145 of the Bankruptcy Code. This Debenture and the Conversion Shares may be transferred, sold or resold by the Holder or any holders thereof without registration or restriction;provided that the transfer, sale or resale of this Debenture and the Conversion Shares by any recipient thereof would not be exempted under Section 1145 of the Bankruptcy Code if such recipient is deemed to be an underwriter. 

FOR VALUE RECEIVED, the Company promises to pay to                             or its registered assigns (the “Holder”), or shall havepaid pursuant to the terms hereunder, the principal sum of $          on November 17, 2013 (the “Maturity Date”) or such earlier date as this Debenture is required or permitted tobe repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof. This Debenture is subject to the following additionalprovisions: 

Section 1. Definitions. For the purposes hereof, in addition to the termsdefined elsewhere in this Debenture, the following terms shall have the following meanings: 

“Affiliate” means any Person that, directly or indirectly through one or moreintermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. 

“Alternate Consideration” shall have the meaning set forth in Section 5(e).

“Bankruptcy Case” means, collectively, the cases of the Company and itsSubsidiaries pending before the Bankruptcy Court under Chapter 11 of the Bankruptcy Code, and jointly administered under Case No. 8:08-bk-17795-KRM. 

“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§ 101etseq.

 
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“Bankruptcy Court” means the United StatesBankruptcy Court for the Middle District of Florida, Tampa Division. 

“BankruptcyEvent” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization,arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or anySignificant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other orderapproving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditorswith a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any ofthe foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing. 

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(c). 

“Board of Directors” means the board of directors of the Company. 

“Business Day” means any day except any Saturday, any Sunday, any day which shall be afederal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. 

“Buy-In” shall have the meaning set forth in Section 4(d)(v). 

“Change of Control Transaction” means the occurrence after the date hereof of any 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 capitalstock of the Company, by contract or otherwise) of in excess of 40% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures), (b) the Company merges into or consolidates with any other Person, orany Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 60% of the aggregate voting power of the Company or thesuccessor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than

 
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60% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the membersof the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the date hereof (or by those individuals who are serving as members of the Board of Directors on any date whosenomination 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), or (e) the execution by the Company of an agreement to which the Company is a party or by which it isbound, providing for any of the events set forth in clauses (a) through (d) above. 

“Commission” means the United States Securities and Exchange Commission. 

“Common Stock” means the common stock, par value $.001 per share, of the Company andstock of any other class of securities into which such securities may hereafter be reclassified or changed into. 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, withoutlimitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 

“Conversion Date” shall have the meaning set forth in Section 4(a). 

“Conversion Price” shall have the meaning set forth in Section 4(b). 

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1attached hereto. 

“Conversion Shares” means, collectively, the shares ofCommon Stock issuable upon conversion of this Debenture in accordance with the terms hereof. 

“Debenture Register” shall have the meaning set forth in Section 2(c). 

“Equity Conditions” means, during the period in question, (a) the Company shall haveduly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the Holder, if any, (b) the Company shall have paid all liquidated damages and other amounts owing to the Holder in respect of thisDebenture, (c) the Common Stock is trading on a Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (d) there is asufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the Conversion Shares, (e) there is no existing Event of Default or no existing event which, with the passage of time or thegiving of notice, would constitute an Event of Default, (f) the issuance of the shares in question (or, in the case of an Optional Redemption, the shares issuable upon conversion in full of the Optional Redemption Amount) to the

 
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Holder would not violate the limitations set forth in Section 4(c) herein, (g) there has been no public announcement of a pending or proposed Fundamental Transaction or Change ofControl Transaction that has not been consummated, and (h) the Holder is not in possession of any information provided by the Company that constitutes, or may constitute, material non-public information. 

“Event of Default” shall have the meaning set forth in Section 8(a). 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules andregulations promulgated thereunder. 

“Forced Conversion” shall have themeaning set forth in Section 6(b). 

“Forced Conversion Date” shall have the meaning setforth in Section 6(b). 

“Forced Conversion Notice” shall have the meaningset forth in Section 6(b). 

“Forced Conversion Notice Date” shall havethe meaning set forth in Section 6(b). 

“Fundamental Transaction” shallhave the meaning set forth in Section 5(e). 

“GAAP” means United Statesgenerally accepted accounting principles applied on a consistent basis during the periods involved. 

“Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $150,000 (other than trade accounts payable incurred in the ordinary course of business),(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties byendorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and (z) the present value of any lease payments in excess of $150,000 due under leases required to be capitalized inaccordance with GAAP. 

“Interest Conversion Rate” means the lesser of(a) the Conversion Price or (b) 90% of the lesser of (i) the average of the VWAPs for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Interest Payment Date or (ii) the averageof the VWAPs for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the date the applicable Interest Conversion Shares are issued and delivered if such delivery is after the Interest Payment Date. 

“Interest Conversion Shares” shall have the meaning set forth in Section 2(b).

“Interest Payment Date” shall have the meaning set forth inSection 2(a). 

 
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“Mandatory Default Amount” means the sum of(a) the greater of (i) the outstanding principal amount of this Debenture, plus all accrued and unpaid interest hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand ornotice is required to create an Event of Default) or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded or otherwise due or(y) paid in full, whichever has a higher VWAP, or (ii) 120% of the outstanding principal amount of this Debenture, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages duein respect of this Debenture. 

“New York Courts” shall have the meaning setforth in Section 9(d). 

“Notice of Conversion” shall have the meaning setforth in Section 4(a). 

“Optional Redemption” shall have the meaning setforth in Section 6(a). 

“Optional Redemption Amount” means the sum of(a) 100% of the then outstanding principal amount of the Debenture subject to an Optional Redemption, (b) accrued but unpaid interest and (c) all liquidated damages and other amounts due in respect of the Debenture. 

“Optional Redemption Date” shall have the meaning set forth in Section 6(a).

“Optional Redemption Notice” shall have the meaning set forth inSection 6(a). 

“Optional Redemption Notice Date” shall have the meaningset forth in Section 6(a). 

“Optional Redemption Period” shall have themeaning set forth in Section 6(a). 

“Original Issue Date” means the dateof the first issuance of this Debenture as set forth above, regardless of any transfers of this Debenture and regardless of the number of instruments which may be issued to evidence this Debenture. 

“Person” means an individual or corporation, partnership, trust, incorporated orunincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 

“Plan” means the First Amended Joint Plan of Reorganization of AccentiaBiopharmaceuticals, Inc., Analytica International, Inc., TEAMM Pharmaceuticals, Inc., AccentRx, Inc., and Accentia Specialty Pharmacy, Inc. under Chapter 11 of Title 11, United States Code dated as of August 16, 2010, as modified by the FirstModification to First Amended Joint Plan of Reorganization of Accentia Biopharmaceuticals, Inc., Analytica International, Inc., TEAMM Pharmaceuticals, Inc., AccentRx, Inc., and Accentia Specialty Pharmacy, Inc. under Chapter 11 of Title 11, UnitedStates Code dated 

 
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as of October 25, 2010 and as further modified from time to time, as filed in the Bankruptcy Case. 

“Securities Act” means the Securities Act of 1933, as amended, and the rules andregulations promulgated thereunder. 

“Security Agreement” shall have themeaning set forth in Section 9(j). 

“Share Delivery Date” shall have themeaning set forth in Section 4(d)(ii). 

“Subsidiary” means any subsidiaryof the Company as of the Original Issue Date and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof. 

“Subsidiary Guarantee” shall have the meaning set forth in Section 9(j). 

“Threshold Period” shall have the meaning set forth in Section 6(b). 

“Trading Day” means a day on which a Trading Market is open for trading; provided that,if the Common Stock is not on a Trading Market, then as reported on any day in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices). 

“Trading Market” means any of the following markets or exchanges on which the CommonStock is listed or quoted for trading on the date in question: the New York Stock Exchange, the NYSE AMEX, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the OTCQB Marketplace, or the OTC Bulletin Board (or anysuccessors to any of the foregoing). 

“Transaction Documents” means theDebenture, the Security Agreement, the Subsidiary Guarantee, and the Warrant. 

“Transfer Agent” means StockTrans, Inc. or any successor transfer agent engaged by theCompany. 

“Variable Rate Transaction” means a transaction in which the Company(i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchangerate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise orexchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security (but not including customary full ratchet or weighted average anti-dilution provisions) or upon the occurrence of specifiedor contingent events directly or indirectly related to the business of the Company or the 

 
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market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.

“VWAP” means, for any date, the price of the Common Stock determined by thefirst of the following clauses that applies: (a) if the Common Stock is then listed or quoted for trading on a Trading Market, the volume weighted average price per share of the Common Stock for such date (or the nearest preceding date) on theTrading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) if the Common Stock is not thenlisted or quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices),the most recent bid price per share of the Common Stock so reported for such date; or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder andreasonably acceptable to the Company. 

“Warrant” means the Common StockPurchase Warrant (Class 6) to purchase shares of Common Stock issued to the Holder pursuant to the Plan. 

Section 2. Interest. 

a) Payment of Interest. The Company shall pay interest to the Holder on the aggregate unconvertedand then outstanding principal amount of this Debenture at the rate of 8.50% per annum, which interest shall begin accruing on the Original Issue Date, and be payable on the Conversion Date or the Forced Conversion Date (as to that principalamount then being converted), on the Optional Redemption Date (as to that principal amount then being redeemed) and on the Maturity Date (each such date, an “Interest Payment Date”) (if any Interest Payment Date is not a BusinessDay, then the applicable payment shall be due on the next succeeding Business Day). 

b)Payment of Interest in Cash or Shares of Common Stock. Any interest payment on the Optional Redemption Date or on the Maturity Date shall be paid in cash. Any interest payment on the Conversion Date or on the Forced Conversion Date shall bepaid in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock determined by dividing the amount of interest then due under this Debenture by the Interest Conversion Rate. The shares of Common Stock issued to theHolder upon the conversion of accrued but unpaid interest on a Conversion Date or a Forced Conversion Date are referred to herein as “Interest Conversion Shares.” 

c) Interest Calculations. Interest shall be calculated on the basis of a 365-day year and shallaccrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Payment ofinterest in shares of Common Stock shall otherwise occur pursuant to Section 4(d)(ii) 

 
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herein and, solely for purposes of the payment of interest in shares of Common Stock, the Interest Payment Date shall be deemed the Conversion Date or the Forced Conversion Date, as applicable.Interest shall cease to accrue with respect to any principal amount converted, provided that the Company actually delivers the Conversion Shares within the time period required by Section 4(d)(ii) herein. Interest hereunder will be paid to thePerson in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “Debenture Register”). 

d) Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late feeat an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law, which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.

e) Prepayment. Except as otherwise set forth in this Debenture, the Company may notprepay any portion of the principal amount of this Debenture without the prior written consent of the Holder. 

Section 3. Registration of Transfers and Exchanges. 

a) Different Denominations. This Debenture is exchangeable for an equal aggregate principal amountof Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange. 

b) Reliance on Debenture Register. Prior to due presentment for transfer to the Company of thisDebenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all otherpurposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. 

Section 4. Conversion. 

a)Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time andfrom time to time (subject to the conversion limitations set forth in Section 4(c) hereof); provided, however, that the Holder may not deliver a Notice of Conversion (as defined below) to the Company for the conversion of aprincipal amount of this Debenture of less than $10,000 at any time. The Holder shall effect a conversion by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice ofConversion”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in aNotice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect a conversion hereunder, the Holder shall not be required to physically surrender

 
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this Debenture to the Company unless the entire principal amount of this Debenture has been so converted (and all accrued and unpaid interest converted into shares of Common Stock). Conversionshereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable amount converted. The Holder and the Company shall maintain records showing the principal amount(s) converted and thedate of such conversion(s). The Company may deliver an objection to a Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall becontrolling and determinative in the absence of manifest error. **The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of thisDebenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.**

b) Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $1.10, subject to adjustment herein (the “Conversion Price”). 

c) Conversion Limitations. The Company shall not effect a conversion of this Debenture, and aHolder shall not have the right to convert this Debenture, to the extent that after giving effect to the conversion as set forth on the Notice of Conversion, the Holder (together with the Holder’s Affiliates and any other Person acting as agroup together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stockbeneficially 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 such determination is being made, but shall exclude the number of shares ofCommon Stock which would be issuable upon exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents), subject to a limitation onconversion 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 4(c), beneficial ownership shall becalculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this Section 4(c) applies, the determination of whether this Debenture is convertible (in relation to other securities owned bythe Holder together with any Affiliates) shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Debenture may be converted (in relation toother securities owned by the Holder together with any Affiliates), subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company when it delivers a Notice ofConversion that such Notice of Conversion has not violated the restrictions set forth in this Section 4(c), and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to anygroup status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 4(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on thenumber of 

 
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outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q Quarterly Report or Form 10-K Annual Report, as the case may be, (y) a more recent publicannouncement 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. Upon the written or oral request of a Holder, the Company shall within two(2) Trading 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 orexercise 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. The “Beneficial Ownership Limitation” shallbe 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by the Holder. The Holder, upon not less than 61 days’prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(c), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stockoutstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Debenture held by the Holder and the provisions of this Section 4(c) shall continue to apply. Any such increase or decrease will notbe effective until the 61st day after such notice isdelivered to the Company. The provisions of this Section 4(c) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(c) to correct this paragraph (or any portion hereof) whichmay be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in thisSection 4(c) shall apply to a successor holder of this Debenture. 

d) Mechanics of Conversion.

i. Conversion Shares Issuable Upon Conversion. The number of Conversion Shares issuableupon a conversion hereunder shall be determined, with respect to any principal amount being converted, by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.The number of Interest Conversion Shares issuable upon a conversion hereunder shall be determined, with respect to any accrued and unpaid interest on the principal amount being converted, by the quotient obtained by dividing (x) such interestamount by (y) the Interest Conversion Rate. 

ii. Delivery of Certificate(s) UponConversion. Not later than three Trading Days after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the ConversionShares which shall be free of restrictive legends and trading restrictions representing the number of Conversion Shares being acquired upon the conversion of this Debenture. The Company shall use its best efforts to deliver any certificate orcertificates required to be delivered by the Company under this Section 4(d)(ii) electronically through the Depository Trust 

 
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Company or another established clearing corporation performing similar functions. 

iii. Failure to Deliver Certificates. If the certificate or certificates representing the Conversion Shares are not delivered to, or as directed by, the Holder by the Share Delivery Date, theHolder shall be entitled to elect, by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind the Notice of Conversion, in which event the Company shall promptly return to the Holder anyoriginal Debenture delivered to the Company and the Holder shall promptly return to the Company the certificates representing such Conversion Shares. 

iv. Obligations Absolute; Partial Liquidated Damages. The Company’sobligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver orconsent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or anyother Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder inconnection with the issuance and delivery of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holderof this Debenture shall elect to convert all or part of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in anyviolation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a suretybond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlyingdispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares upon a properly noticed conversion. If the Company fails for any reasonto deliver to the Holder a certificate or certificates representing the Conversion Shares pursuant to Section 4(d)(ii) by the fifth Trading Day after the Conversion Date, the Company shall pay to the Holder, in cash, as liquidated damages andnot as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such fifth (5th) Trading Day until such certificates are delivered. Nothingherein shall limit 

 
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a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the periodspecified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rightsshall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law. 

v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to theHolder a certificate or certificates representing the Conversion Shares on or before the Share Delivery Date pursuant to Section 4(d)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in anopen market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon theconversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including any brokerage commissions) forthe shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price atwhich the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to the principalamount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(d)(ii). For example, if the Holderpurchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions)giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating theamounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or inequity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture asrequired pursuant to the terms hereof. 

vi. Reservation of Shares Issuable UponConversion. The Company covenants that, during the period this Debenture is outstanding, it will at all times 

 
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reserve and keep available out of its authorized and unissued shares of Common Stock for the sole 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 aggregate number of shares of the Common Stock as shall be issuable (taking into account theadjustments and restrictions of Section 5) 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, uponissue, be duly authorized, validly issued, fully paid and nonassessable. 

vii. FractionalShares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, theCompany shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share. 

viii. Transfer Taxes. The issuance of certificates for Conversion Shares shall be made withoutcharge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates; provided that, the Company shall not be required to pay any tax that may be payable in respect ofany transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates unless oruntil the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 

Section 5. Certain Adjustments. 

a) Stock Dividends and Stock Splits. If the Company, at any time while this Debenture isoutstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any sharesof Common Stock issued by the Company upon conversion of, or payment of interest on, this Debenture), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stocksplit) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then in each case the Conversion Price shallbe multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares ofCommon Stock outstanding 

 
13 

immediately after such event. Any adjustment made pursuant to this Section 5(a) shall become effective immediately after the record date for the determination of stockholders entitled toreceive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. 

b) [RESERVED] 

c) Subsequent Rights Offerings. If the Company, at any time while this Debenture is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders of theDebentures) entitling them to subscribe for or purchase shares of Common Stock at a price per share that is less than the VWAP on the record date referenced below, then the Conversion Price shall be multiplied by a fraction of which the denominatorshall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be thenumber of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming delivery to the Company in full ofall consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for thedetermination of stockholders entitled to receive such rights, options or warrants. 

d) ProRata Distributions. If the Company, at any time while this Debenture is outstanding, shall distribute to all holders of Common Stock (and not to Holders of the Debentures) evidences of its indebtedness or assets (including cash and cashdividends) or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination ofstockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per sharefair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one (1) outstanding share of the Common Stock as determined by the Board of Directors of the Company in good faith. Ineither case the adjustments shall be described in a statement delivered to the Holder describing the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one (1) share of Common Stock. Suchadjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. 

e) Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) theCompany effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to

 
14 

which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock orany compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (each, a “Fundamental Transaction”), then, upon any subsequent conversion of thisDebenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash orproperty as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one (1) share of Common Stock (the “AlternateConsideration”). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect ofone (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of theAlternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receivesupon any conversion of this Debenture following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holdera new debenture consistent with the foregoing provisions and evidencing the Holder’s right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall includeterms requiring any such successor or surviving entity to comply with the provisions of this Section 5(e) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogousto a Fundamental Transaction. 

f) Calculations. All calculations under thisSection 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sumof the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding. 

g) Notice to the Holder. 

i. Adjustmentto Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting fortha brief statement of the facts requiring such adjustment. If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at whichsuch securities may be converted or exercised. 

 
15 

ii. Notice to Allow Conversion by Holder. If(A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Companyshall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be requiredin connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby theCommon Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall causeto be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendardays prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not tobe taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger,sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash orother property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of thecorporate action required to be specified in such notice. The Holder is entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice. 

Section 6. Optional Redemption; Forced Conversion. 

a) Optional Redemption at Election of Company. Subject to the provisions ofthis Section 6(a), at any time after the Original Issue Date, the Company may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “OptionalRedemption Notice Date”) of its irrevocable election to redeem all or some of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption Amount on the 20th Trading Day following the Optional Redemption Notice Date (suchdate, the “Optional Redemption Date”, such 20 Trading Day period, the “Optional Redemption Period” and such redemption, the “Optional Redemption”). The Optional Redemption Amount is payable in fullon the Optional Redemption Date. The Company may only effect an Optional 

 
16 

Redemption if each of the Equity Conditions shall have been met (unless waived in writing by the Holder) on each Trading Day during the period commencing on the Optional Redemption Notice Datethrough to the Optional Redemption Date and through and including the date payment of the Optional Redemption Amount is actually made in full. If any of the Equity Conditions shall cease to be satisfied at any time during the Optional RedemptionPeriod, then the Holder may elect to nullify the Optional Redemption Notice by notice to the Company within 3 Trading Days after the first day on which any such Equity Condition has not been met (provided that if, by a provision of the TransactionDocuments, the Company is obligated to notify the Holder of the non-existence of an Equity Condition, such notice period shall be extended to the third Trading Day after proper notice from the Company) in which case the Optional Redemption Noticeshall be null and void, abinitio. The Company covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date all amounts owing thereon are dueand paid in full. The Company’s determination to pay an Optional Redemption in cash shall be applied ratably to all of the holders of the then outstanding Debentures. 

b) Forced Conversion. Notwithstanding anything herein to the contrary, if commencing on the six(6) month anniversary of the Original Issue Date, the VWAP for each of any ten (10) consecutive Trading Days (such period, the “Threshold Period”) exceeds 150% of the then effective Conversion Price, then the Company may,within three (3) Trading Days after the end of any such Threshold Period, deliver a written notice to the Holder (a “Forced Conversion Notice” and the date such notice is delivered to the Holder, the “Forced ConversionNotice Date” and such conversion, the “Forced Conversion”) to cause the Holder to convert all or part of the then outstanding principal amount of this Debenture at the then Conversion Price, plus accrued but unpaidinterest, liquidated damages and other amounts owing to the Holder under this Debenture at the Interest Conversion Rate, it being agreed that the “Conversion Date” for purposes of Section 4 shall be deemed to occur on the thirdTrading Day following the Forced Conversion Notice Date (such third Trading Day, the “Forced Conversion Date”). The Company may not deliver a Forced Conversion Notice, and any Forced Conversion Notice delivered by the Company shallnot be effective, unless all of the Equity Conditions are met (unless waived in writing by the Holder) on each Trading Day occurring during the applicable Threshold Period through and including the later of the Forced Conversion Date and the TradingDay after the date such Conversion Shares pursuant to such conversion are delivered to the Holder. Any Forced Conversion shall be applied ratably to all Holders of Debentures, provided that any voluntary conversions by a Holder shall be appliedagainst the Holder’s pro rata allocation, thereby decreasing the aggregate amount forcibly converted hereunder if only a portion of this Debenture is forcibly converted. For purposes of clarification, a Forced Conversion shall be subject to allof the provisions of Section 4, including, without limitation, the provision requiring payment of liquidated damages and limitations on conversions. 

c) Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be payable onthe Optional Redemption Date. If any portion of the 

 
17 

payment pursuant to an Optional Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annumor the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, bywritten notice to the Company given at any time thereafter, to invalidate such Optional Redemption, ab initio, and, with respect to the Company’s failure to honor the Optional Redemption, the Company shall have no further right toexercise such Optional Redemption. Notwithstanding anything to the contrary in this Section 6, the Company’s determination to redeem in cash or its elections under Section 6(b) shall be applied ratably among the Holders of Debentures.The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company.

Section 7. Negative Covenants. As long as any portion of this Debenture remainsoutstanding, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly: 

a) amend its charter documents, including, without limitation, its articles or certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

b) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a deminimis number of shares of its Common Stock or Common Stock Equivalents other than repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed anaggregate of $100,000 for all officers and directors during the term of this Debenture; 

c)repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata basis, other than regularly scheduled principal and interest payments as such terms are in effect as of the OriginalIssue Date or any payments to its creditors or the creditors of its Subsidiaries as required under the Plan, provided that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exists oroccurs; 

d) pay cash dividends or distributions on any equity securities of the Company;

e) enter into any transaction with any Affiliate of the Company which would be required to bedisclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required forboard approval); or 

 
18 

f) enter into any agreement with respect to any of theforegoing. 

Section 8. Events of Default. 

a) “Event of Default” means, wherever used herein, any of the following events (whateverthe reason for such event and whether such event 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 governmentalbody): 

i. any default in the payment of (A) the principal amount of any Debenture or(B) interest, liquidated damages and other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date, an Optional Redemption Date or the Maturity Date or by acceleration orotherwise), which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within three (3) Trading Days; 

ii. the Company shall fail to observe or perform any other covenant or agreement contained in theDebentures (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure is not cured, if possible to cure, within theearlier to occur of (A) five (5) Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) ten (10) Trading Days after the Company has become or should have become aware of suchfailure; 

iii. a default or event of default (subject to any grace or cure period provided inthe applicable agreement, document or instrument) shall occur under any material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below); 

iv. any representation or warranty made in this Debenture, any written statement pursuant hereto or anyother report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made; 

v. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X)shall be subject to a Bankruptcy Event; 

vi. the Company or any Subsidiary shall default on anyof its obligations under 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

 
19 

borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $150,000, whether such indebtedness now exists or shallhereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; 

vii. the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market andshall not be eligible to resume listing or quotation for trading thereon within five (5) Trading Days; 

viii. the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in excess of 40% of its assets in one transaction or a seriesof related transactions (whether or not such sale would constitute a Change of Control Transaction); 

ix. the Company shall fail for any reason to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant to Section 4(d) or the Company shall provide at any timenotice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Debentures in accordance with the terms hereof; or 

x. any monetary judgment, writ or similar final process shall be entered or filed against the Company, anySubsidiary or any of their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days. 

b) Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amountof this Debenture, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the MandatoryDefault Amount. Commencing five (5) days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection with suchacceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all ofits rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder ofthe Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such 

 
20 

rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. 

Section 9. Miscellaneous. 

a)Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by anationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance withthis Section 9(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier serviceaddressed to the Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of business of the Holder. Any notice or other communication ordeliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile (if to the Company, at the facsimile number specified on the signature page)prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile (if to the Company, at the facsimile number specified on the signature page)between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service or (iv) upon actual receipt bythe party to whom such notice is required to be given. 

b) Absolute Obligation. Exceptas expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debentureat the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company. This Debenture ranks paripassu with all other Debentures now or hereafter issued under the termsset forth herein. 

c) Lost or Mutilated Debenture. If this Debenture shall be mutilated,lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for theprincipal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company. 

d) Governing Law. All questions concerning the construction, validity, enforcement andinterpretation of this Debenture shall be governed by and construed and 

 
21 

enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning theinterpretation, enforcement and defense of the transactions contemplated by this Debenture (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the stateand federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any disputehereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Debenture), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are an improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of processand consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it underthis Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted byapplicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplatedhereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs andexpenses incurred in the investigation, preparation and prosecution of such action or proceeding. 

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

f) Severability. If any provision of this Debenture is invalid, illegal or unenforceable, thebalance 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 otheramount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Companycovenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit orforgive the Company from paying all or any portion of 

 
22 

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 thisDebenture, 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 impede the execution of any power hereingranted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted. 

g) Next Business Day. 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. 

h) Headings. The headings contained herein are for convenience only, do not constitute a part ofthis Debenture and shall not be deemed to limit or affect any of the provisions hereof. 

i)Assumption. Any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Debenture pursuant to writtenagreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new debenture of such successor entity evidenced by a written instrument substantially similarin form and substance to this Debenture, including, without limitation, having a principal amount and interest rate equal to the principal amount and the interest rate of this Debenture and having similar ranking to this Debenture, which shall besatisfactory to the Holder (any such approval not to be unreasonably withheld or delayed). The provisions of this Section 9(i) shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to anylimitations of this Debenture. 

j) Secured Obligation and Guaranteed Obligation. Theobligations of the Company under this Debenture are (i) secured by certain assets of the Company pursuant to the Security Agreement, dated as of November 17, 2010 (the “Security Agreement”), between the Company and theHolders, and (ii) guaranteed by the Subsidiaries pursuant to the Subsidiary Guarantee, dated as of November 17, 2010, of each Subsidiary in favor of the Holders (the “Subsidiary Guarantee”). 

k) Waivers and Amendments. This Debenture may be modified or amended or the provisions hereofwaived with the prior written consent of the Company and the holders of 67% or more of the aggregate principal amount of all Debentures then outstanding. 

********************* 

*(Signature Page Follows)*

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

 
**ACCENTIA BIOPHARMACEUTICALS, INC.**By: 
 
 Name: Samuel S. Duffey Title: PresidentFacsimile No. for delivery of notices:                        
 
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**ANNEX A**

**NOTICE OF CONVERSION**

The undersigned hereby elects to convert principal under the 8.50% Secured Convertible Debenture due November 17, 2013 of Accentia Biopharmaceuticals, Inc., a Florida corporation (the“Company”), into shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person otherthan the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to theholder for any conversion, except for such transfer taxes, if any. 

By the delivery of this Notice ofConversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4(c) of this Debenture, as determined in accordance with Section 13(d) of theExchange Act. 

The undersigned agrees to comply with the prospectus delivery requirements under the applicablesecurities laws in connection with any transfer of the aforesaid shares of Common Stock. 

 
Conversion calculations:  Date to Effect Conversion: Principal Amount of Debenture to be Converted: Amount of Interest to be paid in Common Stock: Number of shares of Common Stock to be issued: Signature: Name: Address for Delivery of Common Stock Certificates: Or DWAC Instructions: Broker No:                      Account No:                  
 
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**Schedule 1**

**CONVERSION SCHEDULE**

The 8.50% Secured Convertible Debenture due November 17, 2013 in the original principal amount of $             is issued byAccentia Biopharmaceuticals, Inc., a Florida corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture. 

Date: 

 

Date of Conversion

(or for first entry,

Original Issue Date)
 
Amount of

Conversion
 
Aggregate

Principal

Amount

Remaining

Subsequent to

Conversion

(ororiginal

Principal

Amount)
 
Company Attest
            
 
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