Document:

NEITHER
THIS SECURITY NOR ANY SECURITIES WHICH MAY BE ISSUED UPON EXERCISE OF THIS
SECURITY HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR OTHER JURISDICTION
OR ANY EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND SUCH OTHER LAWS AND REQUIREMENTS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR LISTING OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
SUCH REGISTRATION AND/OR LISTING REQUIREMENTS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH WILL BE
REASONABLY ACCEPTABLE TO THE COMPANY.

     

    AMERICAN
SCIENTIFIC RESOURCES, INCORPORATED

     

    COMMON
STOCK WARRANT

     

    
      	No._____  	
              May 13,
      2010       
  

            

    

     

    American
Scientific Resources, Incorporated, a Nevada  corporation (the “Company”),
hereby certifies that Granite Financial Group, LLC, its permissible transferees,
designees, successors and assigns (collectively, the “Holder”),
for value received, is entitled to purchase from the Company at any time and
from time to time commencing on the date first appearing above (the “Issuance
Date”), up to and through 12:01a.m. (EST) on the date
seven   (7) years from the Issuance Date (the “Termination
Date”) up to 20,000,000 shares (each, a “ Warrant Share”
and collectively the “ Warrant Shares”)
of the Company’s common stock, at an exercise price per Share equal to $.01 (the
“Exercise
Price”).  The number of Warrant Shares purchasable hereunder
and the Exercise Price are subject to adjustment as provided in Section 4
hereof.

     

    This
Warrant is being issued by the Company in a private placement pursuant to the
Stock Purchase Agreement by and between the Company and the Holder, dated the
date hereof as amended and/or supplemented.

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    1.           Method of Exercise;
Payment.

     

    (a)           Exercise.  The
purchase rights represented by this Warrant may be exercised, for cash, by the
Holder, in whole or in part, at any time, or from time to time, by the surrender
of this Warrant (with the notice of exercise form (the "Notice of
Exercise") attached hereto as Exhibit A duly
executed) at the principal office of the Company, and by payment to the Company
of an amount equal to the Exercise Price multiplied by the number of the Warrant
Shares being purchased, which amount may be paid, at the election of the Holder,
by wire transfer or certified check payable to the order of the Company. The
person or persons in whose name(s) any certificate(s) representing Warrant
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the Warrant Shares represented thereby (and such Warrant
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is
exercised.  The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face
hereof.    If at any time after the Initial Exercise
Date there is no effective registration statement registering, or no current
prospectus available for, the resale of the Warrant Shares by the Holder, then
this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:

     

    
      	 	
              (A)
      =  

            	
              the
      VWAP on the Trading Day immediately preceding the date of such
      election;

            

    

     

    
      	 	
              (B)
      =   

            	
              the
      Exercise Price of this Warrant, as adjusted;
and

            

    

     

    
      
        	  	
                (X)
      =

              	
                the
      number of Warrant Shares issuable upon exercise of this Warrant in
      accordance with the terms of this Warrant by means of a cash exercise
      rather than a cashless
exercise.

              

      

    

    

    “Trading Day” means a
day on which the New York Stock Exchange is open for business.

    

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE Amex, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, or the OTC Bulletin Board.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    "VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading 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 then listed 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 OTC Markets, Inc. (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; 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 Board of Directors of the Company, the fees and expenses of
which shall be paid by the Company.

    

     (b)           Stock
Certificates.  In the event of any exercise of the rights
represented by this Warrant, as promptly as practicable after this Warrant is
surrendered and delivered to the Company along with all other appropriate
documentation on or after the date of exercise and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of Warrant Shares issuable upon such exercise.  In the
event this Warrant is exercised in part, the Company at its expense will execute
and deliver a new Warrant of like tenor exercisable for the number of Warrant
Shares for which this Warrant may then be exercised.

    

    (c)           Taxes.  The
issuance of the Warrant Shares upon the exercise of this Warrant, and the
delivery of certificates or other instruments representing such Warrant Shares,
shall be made without charge to the Holder for any tax or other charge in
respect of such issuance.

    

    (d)           Reserved..

    2.           Warrant.

     

    
      (a)    Exchange, Transfer and
Replacement.  At any time prior to the exercise hereof, this
Warrant may be exchanged upon presentation and surrender to the Company, alone
or with other warrants of like tenor of different denominations registered in
the name of the same Holder, for another warrant or warrants of like tenor in
the name of such Holder exercisable for the aggregate number of Shares as the
warrant or warrants surrendered.

    

     

    
      (b)    Replacement of
Warrant.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of any such loss, theft, or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver in lieu thereof,
a new Warrant of like tenor.

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    (c)    Cancellation; Payment of
Expenses.  Upon the surrender of this Warrant in connection
with any transfer, exchange or replacement as provided in this Section 2, this
Warrant shall be promptly canceled by the Company.  The Holder shall
pay all taxes and all other expenses (including legal expenses, if any, incurred
by the Holder or transferees) and charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this Section
2.

     

    (d)   Warrant
Register.  The Company shall maintain, at its principal
executive offices (or at the offices of the transfer agent for the Warrant or
such other office or agency of the Company as it may designate by notice to the
holder hereof), a register for this Warrant (the “Warrant
Register”), in which the Company shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of this Warrant.

     

    3.           Rights and Obligations of
Holders of this Warrant.  The Holder of this Warrant shall not,
by virtue hereof, be entitled to any rights of a stockholder in the Company,
either at law or in equity; provided, however, that in the
event any certificate representing shares of Common Stock or other securities is
issued to the holder hereof upon exercise of this Warrant, such holder shall,
for all purposes, be deemed to have become the holder of record of such Common
Stock on the date on which this Warrant, together with a duly executed Notice of
Exercise, was surrendered and payment of the aggregate Exercise Price was made,
irrespective of the date of delivery of such Common Stock
certificate.

     

    4.           Adjustments.

     

    (a)           Stock Dividends,
Reclassifications, Recapitalizations, Etc.  While this Warrant
is outstanding, in the event the Company:  (i) pays a dividend in
Common Stock or makes a distribution in Common Stock, (ii) subdivides its
outstanding Common Stock into a greater number of shares, (iii) combines
its outstanding Common Stock into a smaller number of shares or
(iv) increases or decreases the number of shares of Common Stock
outstanding by reclassification of its Common Stock (including a
recapitalization in connection with a consolidation or merger in which the
Company is the continuing corporation), then (1) the Exercise Price on the
record date of such division or distribution or the effective date of such
action shall be adjusted by multiplying such Exercise Price by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and
(2) the number of shares of Common Stock for which this Warrant may be
exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event.

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

              (b)     Subsequent Equity
Sales. If the Company or any Subsidiary thereof, as applicable, at any
time while this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock, at an effective price per share less than the
then Exercise Price (such lower price, the “Base Share Price” and
such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the Exercise Price, such issuance shall be
deemed to have occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then, the Exercise Price shall be reduced and only reduced
to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall
be equal to the aggregate Exercise Price prior to such
adjustment.  Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued.  Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this in respect of
an   Issuance.  The Company shall notify the Holder, in
writing, no later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section, of such issuance,
indicating in such notice the applicable issuance price, or applicable reset
price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise. “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of the Debentures or Warrants issued
pursuant to the Stock Purchase Agreement between the Company
and  Granite Financial Group LLC dated February 16, 2010 and May 13,
2010 and/or other securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date hereof, provided that
such securities have not been amended since the date hereof to increase the
number of such securities or to decrease the exercise, exchange or conversion
price of such securities, and (c) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of
the Company, provided that any such issuance shall only be to a Person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities.

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

     (c)           Combination:
Liquidation.  While this Warrant is outstanding, (i) In
the event of a Combination (as defined below), each Holder shall have the right
to receive upon exercise of the Warrant the kind and amount of shares of capital
stock or other securities or property which such Holder would have been entitled
to receive upon or as a result of such Combination had such Warrant been
exercised immediately prior to such event (subject to further adjustment in
accordance with the terms hereof).  Unless paragraph (ii) is
applicable to a Combination, the Company shall provide that the surviving or
acquiring Person (as defined below) (the “Successor
Company”) in such Combination will assume by written instrument the
obligations under this Section 4 and
the obligations to deliver to the Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the Holder may be
entitled to acquire. “Combination”
means an event in which the Company consolidates with, mergers with or into, or
sells all or substantially all of its assets to another Person, where “Person”
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity;
(ii) In the event of (x) a Combination where consideration to the holders of
Common Stock in exchange for their shares is payable solely in cash or (y) the
dissolution, liquidation or winding-up of the Company, the Holders shall be
entitled to receive, upon surrender of their Warrant, distributions on an equal
basis with the holders of Common Stock or other securities issuable upon
exercise of the Warrant, as if the Warrant had been exercised immediately prior
to such event, less the Exercise Price.  In case of any Combination
described in this Section 4, the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with an agent
or trustee for the benefit of the Holders of the funds, if any, necessary to pay
to the Holders the amounts to which they are entitled as described
above.  After such funds and the surrendered Warrant are received, the
Company is required to deliver a check in such amount as is appropriate (or, in
the case or consideration other than cash, such other consideration as is
appropriate) to such Person or Persons as it may be directed in writing by the
Holders surrendering such Warrant.

     

     (d)
Notice of
Adjustment.  Whenever the Exercise Price or the number of
shares of Common Stock and other property, if any, issuable upon exercise of the
Warrant is adjusted, as provided in this Section 4, the
Company shall deliver to the holders of the Warrant in accordance with Section 10 a
certificate of the Company’s Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
(i) the Board of Directors determined the fair value of any evidences of
indebtedness, other securities or property or warrants, options or other
subscription or purchase rights and (ii) the Current Market Value (as defined
below) of the Common Stock was determined, if either of such determinations were
required), and specifying the Exercise Price and number of shares of Common
Stock issuable upon exercise of the Warrant after giving effect to such
adjustment.

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (e)  Notice of Certain
Transactions.  While this Warrant is outstanding, in the event
that the Company shall propose (a) to pay any dividend payable in
securities of any class to the holders of its Common Stock or to make any other
non-cash dividend or distribution to the holders of its Common Stock,
(b) to offer the holders of its Common Stock rights to subscribe for or to
purchase any securities convertible into shares of Common Stock or shares of
stock of any class or any other securities, rights or options, (c) to
effect any capital reorganization, reclassification, consolidation or merger
affecting the class of Common Stock, as a whole, or (d) to effect the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
the Company shall, within the time limits specified below, send to each Holder a
notice of such proposed action or offer.  Such notice shall be mailed
to the Holders at their addresses as they appear in the Warrant Register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
issuable upon exercise of each Warrant and the Exercise Price after giving
effect to any adjustment pursuant to Section 4 which
will be required as a result of such action.  Such notice shall be
given as promptly as possible and (x) in the case of any action covered by
clause (a) or (b) above, at least ten (10) days prior to the record date for
determining holders of the Common Stock for purposes of such action or (y) in
the case of any other such action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of Common Stock, whichever shall be the earlier.

     

    (f)  Current Market
Value.  The “Current
Market Value” per share of Common Stock or any other security at any date
means (i) if the security is not registered under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”) and/or traded on a national securities exchange, quotation system
or bulletin board, (a) the value of the security, determined in good faith by
the Board of Directors of the Company and certified in a board resolution, based
on the most recently completed arm’s-length transaction between the Company and
a Person other than an affiliate of the Company or between any two such Persons
and the closing of which occurs on such date or shall have occurred within the
six-month period preceding such date, or (b) if no such transaction shall have
occurred within the six-month period, the value of the security as determined by
an independent financial expert or an agreed upon financial valuation model or
(ii) if the security is registered under the Exchange Act and/or traded on a
national securities exchange, quotation system or bulletin board, the average of
the daily closing bid prices (or  the equivalent in an
over-the-counter market) for each day on which the Common Stock is traded for
any period on the principal securities exchange or other securities market on
which the common stock is being traded (each, a “Trading
Day”) during the period commencing thirty (30) days before such date and
ending on the date one (1) day prior to such date.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    5.           RESERVED.

     

    6.           Fractional
Shares.  In lieu of issuance of a fractional share upon any
exercise hereunder, the Company will issue an additional whole share in lieu of
that fractional share, calculated on the basis of the Exercise
Price.

     

    7.           Legends.  Prior
to issuance of the shares of Common Stock underlying this Warrant, all such
certificates representing such shares shall bear a restrictive legend to the
effect that the Shares represented by such certificate have not been registered
under the Securities Act of 1933, as amended (the “Securities
Act”), and that the Shares may not be sold or transferred in the absence
of such registration or an exemption therefrom, such legend to be substantially
in the form of the bold-face language appearing at the top of Page 1 of this
Warrant.

     

    8.           Disposition of Warrants or
Shares.  The Holder of this Warrant, each transferee hereof and
any holder and transferee of any Shares, by his or its acceptance thereof,
agrees that no public distribution of Warrants or Shares will be made in
violation of the provisions of the Securities Act.  Furthermore, it
shall be a condition to the transfer of this Warrant that any transferee thereof
deliver to the Company his or its written agreement to accept and be bound by
all of the terms and conditions contained in this Warrant.

     

    9.           Merger or
Consolidation.  The Company will not merge or consolidate with
or into any other corporation, or sell or otherwise transfer its property,
assets and business substantially as an entirety to another corporation, unless
the corporation resulting from such merger or consolidation (if not the
Company), or such transferee corporation, as the case may be, shall expressly
assume, by supplemental agreement reasonably satisfactory in form and substance
to the Holder, the due and punctual performance and observance of each and every
covenant and condition of this Warrant to be performed and observed by the
Company.

     

    10.         Notices.  Any
notice, request of other document required or permitted to Except as otherwise
specified herein to the contrary, all notices, requests, demands and other
communications required or desired to be given hereunder shall only be effective
if given in writing by certified or registered U.S. mail with return receipt
requested and postage prepaid; by private overnight delivery service (e.g.
Federal Express); by facsimile transmission (if no original documents or
instruments must accompany the notice); or by personal delivery.  Any
such notice shall be deemed to have been given (a) on the business day
immediately following the mailing thereof, if mailed by certified or registered
U.S. mail as specified above; (b) on the business day immediately following
deposit with a private overnight delivery service if sent by said service; (c)
upon receipt of confirmation of transmission if sent by facsimile transmission;
or (d) upon personal delivery of the notice.  All such notices shall
be sent to the following addresses (or to such other address or addresses as a
party may have advised the other in the manner provided in this Section 10):

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    
      
        
          
            	
                    if
      to the Company:

                  	
                    American
      Scientific Resources, Incorporated

                  
	 
      	
                    1112
      Weston Road, Unit 278

                  
	 
      	
                    Weston,
      Florida 33326

                  
	 
      	
                    Attention:
      Christopher F. Tirotta

                  
	 
      	
                    President

                  
	 
      	
                    Facsimile:
      (954) 665-2820

                  
	 
      	 
      
	

                    with
      copy to:

                  	
                    Sichenzia
      Ross Friedman Ference LLP

                  
	 
      	
                    61
      Broadway, 32nd Floor

                  
	 
      	
                    New
      York, NY 10006

                  
	 
      	
                    Attention:  David
      B. Manno, Esq.

                  
	 
      	
                    Facsimile:
      (212) 930-9725

                  

          

        

      

    

    

    Notwithstanding the time of effectiveness of notices set forth in
this Section
10, a Notice of Exercise shall not be deemed effectively given until it
has been duly completed and submitted to the Company together with this original
Warrant and payment of the Exercise Price in a manner set forth in this Section
10.

     

      11.           Limitation on
Exercise. Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon
any exercise of this Warrant (or otherwise in respect hereof) shall be limited
to the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its affiliates and any other persons whose beneficial ownership
of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 4.99% of the total
number of issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. The holder may waive the restriction in whole or in part
upon and effective after 61 days prior written notice to the Company. This
provision shall not restrict the number of shares of Common Stock which a Holder
may receive or beneficially own in order to determine the amount of
securities or other consideration that such Holder may receive in the event
of a merger or other business combination or reclassification involving the
Company.

    

    12.           Governing Law and
Jurisdiction.  This Warrant shall be governed by and construed
solely and exclusively in accordance with and pursuant to the internal laws of
the State of New York. Any action brought concerning the transactions
contemplated by this Warrant shall be brought only in the civil or state courts
of New York or in the federal courts located in the State of New
York.

     

    13.           Successors and
Assigns.  This Warrant shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns.

     

    14.           Headings.  The
headings of various sections of this Warrant have been inserted for reference
only and shall not affect the meaning or construction of any of the provisions
hereof.

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    15.           Severability. If any
provision of this Warrant is held to be unenforceable under applicable law, such
provision shall be excluded from this Warrant, and the balance hereof shall be
interpreted as if such provision were so excluded.

     

    16.           Modification and
Waiver.  This Warrant and any provision hereof may be amended,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder.

     

    17.           Specific
Enforcement.  The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Warrant were not performed in accordance with their specific terms or were
otherwise breached.  It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which either of them may
be entitled by law or equity.

     

    18.           Assignment.  This
Warrant may be transferred or assigned, in whole or in part, at any time and
from time to time by the then Holder by submitting this Warrant to the Company
together with a duly executed Assignment in substantially the form and substance
of the Form of Assignment which accompanies this Warrant as Exhibit B
hereto, and, upon the Company’s receipt thereof, and in any event, within five
(5) business days thereafter, the Company shall issue a Warrant to the Holder to
evidence that portion of this Warrant, if any as shall not have been so
transferred or assigned.

     

    (Signature
Page Immediately Follows)

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed, manually or by facsimile,
by one of its officers thereunto duly authorized.

     

    
      
        
          	 
      	
                  AMERICAN
      SCIENTIFIC RESOURCES, INC.

                
	 
      	 
      	 
      
	
                  Date:
      May 13, 2010

                	
                  By:

                	 
	 
      	
                  Name: 
      Christopher Tirotta

                  Title:
      President

                

        

      

    

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    EXHIBIT
A

    TO

    WARRANT

     

    NOTICE OF
EXERCISE

     

    To Be
Executed by the Holder

    in Order
to Exercise the Warrant

     

    The
undersigned Holder hereby elects to purchase _______ Shares pursuant to the
attached Warrant, and requests that certificates for securities be issued in the
name of:

     

    __________________________________________________________

    (Please
type or print name and address)

     

    __________________________________________________________

    __________________________________________________________

    __________________________________________________________

    (Social
Security or Tax Identification Number)

     

    and
delivered

    to:___________________________________________________________________________________

    _____________________________________________________________________________________.

     

    (Please
type or print name and address if different from above)

     

    (1)  Payment
shall take the form of (check applicable box):

     

    [  ]
in lawful money of the United States; or

     

    [ ] [if
permitted] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection
2(c).

     

    (2)  Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

    

    _______________________________

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    

    _______________________________

     

    _______________________________

    

    (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

    

    
      
        
          	 
      	
                  HOLDER:

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	 
      	
                          Name:

                          Title:

                          Address:

                
	
                    

                  Dated:_______________________

                	 
      	 
      

        

      

    

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

    TO

    WARRANT

     

    FORM OF
ASSIGNMENT

    (To be
signed only on transfer of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto
_____________ the right represented by the within Warrant to purchase ______
shares of Common Stock of American Scientific Resources, Incorporated, a Nevada
corporation, to which the within Warrant relates, and appoints
____________________ Attorney to transfer such right on the books of American
Scientific Resources, Incorporated, a Nevada corporation, with full power of
substitution of premises.

     

    
      
        
          
            	
                    Dated:

                  	
                    By:

                  	  
      
	 
      	 
      	
                          Name:  

                          Title:

                    (signature
      must conform to name

                    of
      holder as specified on the fact

                    of
      the Warrant)

                  
	 	 
	 
      	
                    Address:

                  

          

        

      

    

     

    Signed in
the presence of :

     

    Dated:

    
      
         

      

      
        -14-NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE 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 AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

    

    Original
Issue Date: May 13, 2010

    

    $400,000

    

    12%
CONVERTIBLE DEBENTURE

    DUE
MAY 13, 2012

    

    THIS12% CONVERTIBLE DEBENTURE is one of
a series of duly authorized and validly issued 12% Convertible Debentures of
AMERICAN SCIENTIFIC RESOURCES, INCORPORATED, a Nevada corporation, (the “Company”), having its
principal place of business at 1112 Weston Road, Unit 278 Weston, FL 33326,
designated as its 12% Convertible Debenture due May 13, 2012 (this debenture,
the “Debenture”
and, collectively with the other debentures of such series, the “Debentures”).

    

    FOR VALUE
RECEIVED, the Company promises to pay to Granite Financial Group, LLC or its
registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $400,000 on May
13, 2012 (the “Maturity Date”) or
such earlier date as this Debenture is required or permitted to be 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 additional provisions:

    

    Section
1.         Definitions.  For
the purposes hereof, in addition to the terms defined elsewhere in this
Debenture, (a) capitalized terms not otherwise defined herein shall have the
meanings set forth in the Subscription Agreement and (b) the following terms
shall have the following meanings:

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, 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 Event”
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), if any 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
any Significant 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 order approving 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 within 60 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 creditors with 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 of the foregoing or takes any
corporate or other action for the purpose of effecting any of the
foregoing.

    

    “Base Conversion
Price” shall have the meaning set forth in Section 5(b).

    

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

    

    “Business Day” means
any day except any Saturday, any Sunday, any day which shall be a federal 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).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “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 capital
stock of the Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company (other than by means of conversion or exercise
of the Debentures and the Securities issued together with the Debentures), (b)
the Company merges into or consolidates with any other Person, or any 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 66% of the aggregate voting power of the Company or
the successor entity of such transaction, or (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 66% 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 members of 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 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), or (e) 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 in clauses (a) through (d) above. Notwithstanding anything to the contrary
herein, a Change of Control Transaction shall not occur if Christopher F.
Tirotta continues to be the Company’s Chief Executive Officer.

    

    “Common Stock
Equivalents” means any securities of the Company or the subsidiaries of
the Company (“Subsidiaries”) which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred
stock, rights, options, warrants 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” shall
have the meaning ascribed to such term in Section 4.

    

    “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 1 attached
hereto.

    

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

    

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

    

    “Dilutive Issuance”
shall have the meaning set forth in Section 5(b).

    

    “Dilutive Issuance
Notice” shall have the meaning set forth in Section 5(b).

    

    “Equity Conditions”
means, during the period in question, (a) the Company shall have duly honored
all conversions and redemptions scheduled to occur or occurring by virtue of one
or more Notices of Conversion of the Holder, if any (b) there is a sufficient
number of authorized but unissued and otherwise unreserved shares of Common
Stock for the issuance of all of the shares issuable pursuant to the Transaction
Documents, (c) the issuance of the shares in question to the Holder would not
violate the limitations set forth in Section 4(c), (d) there has been no public
announcement of a pending or proposed Fundamental Transaction or Change of
Control Transaction that has not been consummated, (i) the Holder is not in
possession of any information provided by the Company that constitutes, or may
constitute, material non-public information.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of the Debentures or Warrants issued
pursuant to the Stock Purchase Agreement between the Company
and  Granite Financial Group LLC dated February 16, 2010, and May ___,
2010 and/or other securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date hereof, provided that
such securities have not been amended since the date hereof to increase the
number of such securities or to decrease the exercise, exchange or conversion
price of such securities, and (c) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of
the Company, provided that any such issuance shall only be to a Person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities.

    

    “Event of Default”
shall have the meaning set forth in Section 9(a).

    

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

    

    “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $100,000
(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 by
endorsement 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 $100,000 due under leases required to be
capitalized in accordance with GAAP.

    

    “Interest Conversion
Rate”  shall equal the Conversion Price.

    

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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    “Late Fees” shall have
the meaning set forth in Section 2(c).

    

    “Mandatory Default
Amount”  means the sum of (a) 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 or notice 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, and (b) all
other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

    

    “New York Courts”
shall have the meaning set forth in Section 10(d).

    

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

    

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

    

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

     

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

    

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

    

    “Subsidiary” shall
have the meaning set forth in the Purchase Agreement.

    

    “Subscription
Agreement”  means the Subscription Agreement between the
Company and the Holder dated May __, 2010.

    

    “Trading Day” means a
day on which the New York Stock Exchange is open for business.

    

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE Amex, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, or the OTC Bulletin Board.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    "VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading 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 then listed 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 OTC Markets, Inc. (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; 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 Board of Directors of the Company, the fees and expenses of
which shall be paid by the Company.

     

    Section
2.             Interest.

    

    a)           Payment of Interest in Cash
or Kind. The Company shall pay (or cause to be paid) interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Debenture at the rate of 12% per annum (if paid in shares of Common Stock,
in accordance with this Section 2(a)), or 10% per annum (if paid in cash)
payable annually on or before December 31st,
beginning on the first such date after the Original Issue Date, on each
Conversion Date (as to that principal amount then being converted), and on the
Maturity Date (each such date, an “Interest Payment
Date”) (if any Interest Payment Date is not a Business Day, then the
applicable payment shall be due on the next succeeding Business Day), in
cash  or, at the Company’s option, in duly authorized, validly issued,
fully, paid non-assessable shares of Common Stock at the Interest Conversion
Rate (the dollar amount to be paid in shares, the “Interest Share Amount”) or a
combination thereof; provided, however, that payment
in shares of Common Stock may only occur if (i) all of the Equity Conditions
have been met (unless waived by the Holder in writing) during the 10 Trading
Days immediately prior to the applicable Interest Payment Date  (the
“Interest Notice
Period”). The number of shares to be applied against such Interest Share
Amount equal to the quotient of (x) the applicable Interest Share Amount divided
by (y) the then Conversion Price assuming for such purposes that the Interest
Payment Date is the Trading Day immediately prior to the commencement of the
Interest Notice Period (the “Interest Conversion
Shares”).   Subject to the terms and conditions herein,
the decision whether to pay interest hereunder in cash, shares of Common Stock
or a combination thereof shall be at the sole discretion of the
Company.  Prior to the commencement of any Interest Notice Period, the
Company shall deliver to the Holder a written notice of its election to pay
interest hereunder on the applicable Interest Payment Date either in cash,
shares of Common Stock or a combination thereof and the Interest Share Amount as
to the applicable Interest Payment Date, provided that the Company may indicate
in such notice that the election contained in such notice shall apply to future
Interest Payment Dates until revised by a subsequent notice.  During
any Interest Notice Period, the Company’s election (whether specific to an
Interest Payment Date or continuous) shall be irrevocable as to such Interest
Payment Date.  Subject to the aforementioned conditions, failure to
timely deliver such written notice to the Holder shall be deemed an election by
the Company to pay the interest on such Interest Payment Date in
cash.  The aggregate number of shares of Common Stock otherwise
issuable to the Holder on an Interest Payment Date shall be reduced by the
number of Interest Conversion Shares previously issued to the Holder in
connection with such Interest Payment Date.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    b)         Interest
Calculations. Interest shall be calculated on the basis of a 360-day
year, consisting of twelve 30 calendar day periods, and shall accrue 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.  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 the Person in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of this Debenture (the “Debenture
Register”).

    

    c)           Late
Fee.  All overdue accrued and unpaid interest to be paid
hereunder shall entail a late fee at an interest rate equal to the lesser of 17%
per annum or the maximum rate permitted by applicable law (the “Late Fees”) which
shall accrue daily from the date such interest is due hereunder through and
including the date of actual payment in full.

    

    d)         
 Prepayment.  The
Company may prepay 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 amount of 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)           Investment
Representations. This Debenture has been issued subject to certain
investment representations of the original Holder set forth in the
Subscription  Agreement and may be transferred or exchanged only in
compliance with the Subscription Agreement and applicable federal and state
securities laws and regulations.

    

    c)           Reliance on Debenture
Register. Prior to due presentment for transfer to the Company of this
Debenture, 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
other purposes, whether or not this Debenture is overdue, and neither the
Company nor any such agent shall be affected by notice to the
contrary.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    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 and from time to
time (subject to the conversion limitations set forth in Section 4(c)
hereof).  The Holder shall effect conversions (each, a “Conversion”) by
delivering to the Company a Notice of Conversion, the form of which is attached
hereto as Annex
A (each, a “Notice of
Conversion”), 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 a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder.  To effect conversions hereunder, the
Holder shall not be required to physically surrender this Debenture to the
Company unless the entire principal amount of this Debenture, plus all accrued
and unpaid interest thereon, has been so converted. Conversions hereunder shall
have the effect of lowering the outstanding principal amount of this Debenture
in an amount equal to the applicable conversion.  The Holder and the
Company shall maintain records showing the principal amount(s) converted and the
date of such conversion(s).  The Company may deliver an objection to
any Notice of Conversion within 1 Business Day of delivery of such Notice of
Conversion.  In the event of any dispute or discrepancy, the records
of the Holder shall be controlling 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 this
Debenture, the unpaid and unconverted principal amount of this Debenture may be
less than the amount stated on the face hereof.

    

    b)           Conversion
Price.   The term “Conversion Price” as used herein shall
be equal to the lesser of (A) $.0066 per share, or (B) .90 multiplied by the
“Volume Weighted Average Price” for the Borrower’s Common Stock for the ten
trading days immediately prior to the Conversion Date provided, however, and
notwithstanding anything to the contrary herein, the Conversion Price shall not
be below $.0015 (the “Conversion
Price”).

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    c)           Holder’s Restriction on
Conversion. The Company shall not effect any conversion of this
Debenture, and a Holder shall not have the right to convert any portion of this
Debenture, to the extent that after giving effect to the conversion set forth on
the applicable Notice of Conversion, the Holder (together with the Holder’s
Affiliates, and any other person or entity acting as a group 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 Stock beneficially owned
by the Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon conversion of this Debenture with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which are issuable upon (A) conversion of the remaining, unconverted
principal amount of this Debenture beneficially owned by the Holder or any of
its Affiliates and (B) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company  subject to a
limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Debentures or the Warrants)
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 be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder.  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 by the Holder together with any Affiliates) and of which
principal amount of this Debenture is convertible 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 to other securities owned by the Holder together with any
Affiliates) and which principal amount of this Debenture is convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure compliance with
this restriction, the Holder will be deemed to represent to the Company each
time it delivers a Notice of Conversion that such Notice of Conversion has not
violated the restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such
determination.  In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 4(c), in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as stated in the most recent of the
following: (A) the Company’s most recent periodic or annual report, as the case
may be; (B) a more recent public announcement by the Company; or (C) a more
recent notice by the Company or the Company’s 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 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 or exercise of
securities of the Company, including this Debenture, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 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 Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
conversion of this Debenture held by the Holder and the Beneficial Ownership
Limitation provisions of this Section 4(c) shall continue to
apply.  Any such increase or decrease will not be effective until the
61st
day after such notice is delivered to the Company.  The
Beneficial Ownership Limitation provisions of this paragraph 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) which may
be defective or inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Debenture.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              d)

            	
              Mechanics of
      Conversion.

            

    

    

    i.           Conversion Shares Issuable
Upon Conversion of Principal Amount.  The number of Conversion
Shares issuable upon a conversion hereunder shall be determined by the quotient
obtained by dividing (x) the outstanding principal amount of this Debenture to
be converted by (y) the Conversion Price.

    

    ii.           Delivery of Certificate Upon
Conversion. Not later than five Trading Days after each Conversion Date
(the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the
Holder (A) a certificate or certificates representing the Conversion Shares
representing the number of Conversion Shares being acquired upon the conversion
of this Debenture and (B) a bank check in the amount of accrued and unpaid
interest.

    

    iii.           Failure to Deliver
Certificates.  If in the case of any Notice of Conversion such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the third Trading Day after the Conversion Date, the Holder
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 such
Conversion, in which event the Company shall promptly return to the Holder any
original Debenture delivered to the Company and the Holder shall promptly return
to the Company the Common Stock certificates representing the principal amount
of this Debenture unsuccessfully tendered for conversion to the
Company.

    

    iv.           Obligation Absolute; Partial
Liquidated Damages.  The Company’s obligations 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 or consent 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 any
other 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 in connection with the issuance 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 Holder of this
Debenture shall elect to convert any or all 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 any
violation 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 surety bond 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 underlying dispute 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 or, if
applicable, cash, upon a properly noticed conversion.  If the Company
fails for any reason to deliver to the Holder such certificate or certificates
pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date,
the Company shall pay to the Holder, in cash, as liquidated damages and not 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 (5th) Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such third
(3th)
Trading Day until such certificates are delivered.  Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of
Default pursuant to Section 9 hereof for the Company’s failure to deliver
Conversion Shares within the period specified 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 rights shall not prohibit
the Holder from seeking to enforce damages pursuant to any other Section hereof
or under applicable law.

    
      
         

      

      
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    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 the Holder such certificate or certificates by 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 an open 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 the conversion
relating to such Share Delivery Date (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any other remedies
available to or elected by the Holder) the amount by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the 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 at which 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 principal amount
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
Holder purchases 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 the amounts 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 in equity 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 as required pursuant to
the terms hereof.

    
      
         

      

      
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    vi.           Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will at all times
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 (and the other holders of the Debentures), not less than
such aggregate number of shares of the Common Stock as shall (subject to the
terms and conditions set forth in the Purchase Agreement) be issuable (taking
into account the adjustments and restrictions of Section 5) upon the conversion
of the outstanding principal amount of this Debenture.  The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and
non-assessable.

    

    vii.           Fractional Shares. 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
Holder would otherwise be entitled to purchase upon such conversion, the Company
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 shares of the Common
Stock on conversion of this Debenture shall be made without charge 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 of any 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 or
until 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.

    

    (e)  No Mandatory
Conversion.  Other than as specifically set forth herein, the
Company may not compel the Holder to convert this Debenture.

    
      
         

      

      
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    Section
5.             Certain
Adjustments.

    

    a)           Stock Dividends and Stock
Splits.  If the Company, at any time while this Debenture is
outstanding: (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
shares of Common Stock issued by the Company upon conversion of, or payment of
interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of a reverse
stock split) 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 the Conversion Price
shall be 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 of Common Stock outstanding immediately after such
event.  Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
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.

    

    b)           Subsequent Equity
Sales.  If, at any time while this Debenture is outstanding,
the Company or any Subsidiary, as applicable, sells or grants any option to
purchase or sells or grants any right to reprice, or otherwise disposes of or
issues (or announces any sale, grant or any option to purchase or other
disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower
than the then Conversion Price  that would be in effect at the time of
such issuance (such lower price, the “Base Conversion
Price” and such issuances, collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is lower than the Conversion Price, such issuance shall be
deemed to have occurred for less than the Conversion Price on such date of the
Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base
Conversion Price.  Such adjustment shall be made whenever such Common
Stock or Common Stock Equivalents are issued.  Notwithstanding the
foregoing, no adjustment will be made under this Section 5(b) in respect of an
Exempt Issuance.  The Company shall notify the Holder in writing, no
later than 1 Business Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section 5(b), indicating therein the
applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon
the occurrence of any Dilutive Issuance, the Holder is entitled to receive a
number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether the Holder accurately
refers to the Base Conversion Price in the Notice of
Conversion.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    c)           Subsequent Rights
Offerings.  If the Company, at any time while the Debenture is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share that is lower than the VWAP on the record date
referenced below, then the Conversion Price shall be multiplied by a fraction of
which the denominator shall 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 the number 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 of all 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 the
determination of stockholders entitled to receive such rights, options or
warrants.

    

    d)           Pro Rata
Distributions. If the Company, at any time while this Debenture is
outstanding, distributes to all holders of Common Stock (and not to the Holders)
evidences of its indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security (other than the
Common Stock, which shall be subject to Section 5(b)), then in each such case
the Conversion Price shall be adjusted by multiplying such Conversion Price in
effect immediately prior to the record date fixed for determination of
stockholders 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
fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to 1 outstanding share of the Common
Stock as determined by the Board of Directors of the Company in good
faith.  In either 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 1 share
of Common Stock.  Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.

    
      
         

      

      
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    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) the Company 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 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 or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then upon any subsequent conversion of this Debenture, 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 or
property 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 1 share of Common Stock (the “Alternate
Consideration”).  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 of 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 the Alternate 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 receives upon 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 Holder a
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
include terms 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 analogous to a Fundamental Transaction.

    

    f)           RESERVED.

    

    g)           Calculations.  All
calculations under this Section 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 sum of the number of shares of
Common Stock (excluding any treasury shares of the Company) issued and
outstanding.

    

    h)           Notice to the
Holder.

    

    i.           Adjustment to Conversion
Price.  Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 5, the Company shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.

    
      
         

      

      
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    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 Company shall 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 required in 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, of any
compulsory share exchange whereby the Common 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 cause to 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) calendar days 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 to be 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 or other 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 the corporate 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.             Reserved.

    

     Section
7.           Negative Covenants.
As long as any portion of this Debenture remains outstanding, unless the holders
of at least 51% in principal amount of the then outstanding Debentures shall
have otherwise given prior written consent, the Company shall not, and shall not
permit any of its subsidiaries (whether or not a Subsidiary on the Original
Issue Date) to, directly or indirectly:

    

    a)           repay,
repurchase or offer to repay, repurchase or otherwise acquire any of its
outstanding shares of its Common Stock or Common Stock Equivalents other than as
permitted or required under the Debenture or Warrant;

    

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

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    c)           sell
any of its assets other than in the ordinary course of its business unless the
proceeds from such sale are used to repay the amount of any outstanding
Debentures, including all interest due thereon or

    

    d)           enter
into any agreement with respect to any of the foregoing.

    

       Section
8.           Holder’s Right to
Accelerate.  Upon the occurrence of a (i) Change of Control
Transaction or (ii) Fundamental Transaction, the Holder shall have the right,
for a period of 90 days, at its option, to declare the outstanding principal
amount, together with unpaid interest thereon, due and payable.

    

        Section
9.              Events of
Default.

    

    a)           “Event of Default”
means, wherever used herein, any of the following events (whatever the 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 governmental
body):

    

     
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 or the
Maturity Date or by acceleration or otherwise) which default, solely in the case
of an interest payment or other default under clauses (A) and (B) above, is not
cured within 7 days;

    

     
ii.           the Company
shall fail to observe or perform any other covenant or agreement contained in
the Debentures (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 (vii) below) which failure is not cured, if possible to cure, within
the earlier to occur of (A) 5 Trading Days after notice of such failure sent by
the Holder or by any other Holder to the Company and (B) 10 Trading Days after
the Company has become or should have become aware of such failure;

    

     
iii.           a default
or event of default (subject to any grace or cure period provided in the
applicable agreement, document or instrument) shall occur under  the
Subscription Agreement;

    

     
iv.           any
representation or warranty made in this Debenture or the Subscription Agreement,
any written statement pursuant hereto or thereto or any other 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;

    
      
         

      

      
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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; or

    

     
vi.           the Company
shall fail for any reason to deliver certificates to a Holder prior to the
sixth  Trading Day after a Conversion Date pursuant to Section 4(d) or
the Company shall provide at any time notice 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.

    

    b)           Remedies Upon Event of
Default. If any Event of Default occurs, the outstanding principal amount
of 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
Mandatory Default Amount.  Commencing 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 of 17% 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 such acceleration 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 of its rights and
remedies hereunder and all other remedies available to it under applicable
law.  Such acceleration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a holder
of the Debenture until such time, if any, as the Holder receives full payment
pursuant to this Section 9(b).  No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent
thereon.

    
      
         

      

      
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    Section
10.           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 a nationally
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 with
this Section 10(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 service addressed to each 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 or deliveries 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 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 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 by the party to whom such notice is required to be
given.

    

    b)           Absolute Obligation.
Except as 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 Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed.  This Debenture is a direct debt obligation of the
Company.  

    

    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 the principal 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)           Jurisdiction.   This
Debenture and all issues arising out of this Debenture  will be
governed by and construed solely and exclusively under and pursuant to the laws
of the State of New York as applied to agreements among New York residents
entered into and to be performed entirely within New York. Any action brought
concerning the transactions contemplated by this Debenture shall be brought only
in the civil or state courts of Florida or in the federal courts located in the
State of New York.

    

    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 any breach 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 right thereafter 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.

    
      
         

      

      
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    f)           Severability.  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 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 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, 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 impede 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.

    

    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 of
this 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 and the Subscription Agreement pursuant to
written agreements 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 similar in 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 be satisfactory to the Holder
(any such approval not to be unreasonably withheld or delayed).  The
provisions of this Section 10(i) shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations
of this Debenture.

    

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

     

    (Signature
Pages Follow)

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

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

    

    
      
        
          
            	
                    AMERICAN SCIENTIFIC RESOURCES,
      INC.  

                  
	 
      	 
      
	
                    By:

                  	  
      
	 
      	
                    Name:
      Christopher F. Tirotta

                    Title:
      President

                  

          

        

      

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    ANNEX
A

    

    NOTICE
OF CONVERSION

    

    The undersigned hereby elects to
convert principal under the 12% Convertible Debenture due May 13, 2012 of
American Scientific Resources Incorporated, a Nevada 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 other than 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 the holder for any conversion,
except for such transfer taxes, if any.

    

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

    

    The undersigned agrees to comply with
the prospectus delivery requirements under the applicable securities 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:

    

    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:______________

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Schedule
1

    

    CONVERSION
SCHEDULE

    

    The 12%
Convertible Debentures due on May 13, 2012 in the aggregate principal amount of
$____________ are issued by American Scientific Resources Inc. a Nevada
corporation.  This Conversion Schedule reflects conversions made under
Section 4 of the above referenced Debenture.

    

    Dated:

    

    
      	
              Date
      of Conversion

              (or
      for first entry,

              Original
      Issue Date)

            	 
      	
              Amount
      of 

              Conversion

            	 
      	
              Aggregate

              Principal

              Amount

              Remaining

              Subsequent
      to 

              Conversion

              (or
      original

              Principal
      

              Amount)

            	 
      	
              Company
      Attest

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      

    

    
      
         

      

      
        23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]