Document:

Trust  Agreement

EXECUTION COPY

J.P. MORGAN ACCEPTANCE CORPORATION I

as Depositor

HSBC BANK USA, NATIONAL ASSOCIATION,

as Trustee

U.S. BANK NATIONAL ASSOCIATION,

as Securities Administrator

_________________________________________

TRUST AGREEMENT

Dated as of September 1, 2007

__________________________________________

TABLE OF CONTENTS

ARTICLE I  DEFINED TERMS

1

ARTICLE II  THE TRUST

5

Section 2.01.  Transfer of Exchangeable REMIC Certificates

5

Section 2.02.  Certificates

5

Section 2.03.  Exchanges

5

Section 2.04.  Delivery of Instruments

6

Section 2.05.  Distribution Date Statements to Certificateholders

6

ARTICLE III  CERTIFICATES; DISTRIBUTIONS

7

Section 3.01.  Issuance of Certificates

7

Section 3.02.  Trust Account

7

Section 3.03.  Distributions

7

Section 3.04.  Allocation of Realized Losses

8

ARTICLE IV  LIMITATION OF LIABILITY

8

ARTICLE V  THE TRUSTEE

8

ARTICLE VI  TERMINATION

8

ARTICLE VII  SUPPLEMENTAL AGREEMENTS

9

ARTICLE VIII  MISCELLANEOUS

9

Section 8.01.  Certificateholders

9

Section 8.02.  Governing Law

9

Section 8.03.  Demands, Notices and Communications

10

Section 8.04.  Severability of Provisions

10

Section 8.05.  Tax Status and Reporting

10

APPENDIX A

A-1

APPENDIX A

Available Combinations

EXHIBIT I

Form of Certificates

EXHIBIT II

Form of Exchange Letter

This TRUST AGREEMENT (this “Trust Agreement”), dated as of September 1, 2007, is executed by and among J.P. MORGAN ACCEPTANCE CORPORATION I, as depositor under the Pooling and Servicing Agreement (as defined below), HSBC BANK USA, NATIONAL ASSOCIATION, as trustee (the “Trustee”), and U.S. BANK NATIONAL ASSOCIATION, as securities administrator (in such capacity, the “Securities Administrator”).

RECITALS

WHEREAS, the J.P. Morgan Acceptance Corporation I, as depositor, U.S. Bank National Association, as master servicer and securities administrator and HSBC Bank USA, National Association, as trustee, have entered into the Pooling and Servicing Agreement dated as of September 1, 2007 (the “Pooling and Servicing Agreement”), creating and establishing J.P. Morgan Mortgage Trust 2007-A5 (the “Underlying Trust”);

WHEREAS, the Underlying Trust has issued a series of certificates known as the Mortgage Pass-Through Certificates, Series 2007-A5 along with certain uncertificated interests (collectively, the “REMIC Classes”), evidencing the entire beneficial interests in the Underlying Trust;

WHEREAS, all or a portion of the Exchangeable Classes (as defined herein) issued hereunder, each representing an undivided beneficial ownership interest in the related Exchangeable REMIC Classes (as defined herein), may be exchanged for a proportionate interest in such Exchangeable REMIC Classes in the combinations set forth on Appendix A and made a part hereof;

WHEREAS, all or a portion of the Exchangeable REMIC Classes may be exchanged for the Exchangeable Classes in the same manner; and

WHEREAS, the parties hereto desire to create this Trust to issue the Exchangeable Classes and the Exchangeable REMIC Classes subject to the terms and conditions set forth herein.

NOW THEREFORE, the parties to this Trust Agreement, in the several capacities hereinabove set forth, do hereby declare and establish this Trust Agreement and do hereby undertake and otherwise agree as follows:

ARTICLE I

DEFINED TERMS

Capitalized terms used and not defined herein shall have the respective meanings assigned to them in the Pooling and Servicing Agreement and the rules of construction set forth therein shall apply hereto.  In addition, whenever used in this Trust Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

“Aggregate Denomination”:  As to any Class and date of determination, the aggregate of the denominations of the Outstanding Certificates of such Class on such date.

“Allocation Ratio”:  With respect to each Class of Exchangeable REMIC Certificates, a fraction, the numerator of which is equal to the Aggregate Denomination of such Class of Exchangeable REMIC Certificates at the close of business on the related Record Date and the denominator of which is the Initial Authorized Denomination with respect to such Exchangeable REMIC Class.

“Authorized Officer”:  The Chairman of the Board, the President or any Executive Vice President, Senior Vice President or Vice President.

“Certificate”:  A grantor trust pass-through security issued hereunder in a book-entry form as authorized by this Trust Agreement, substantially in the form of Exhibit I hereto.

“Certificate Principal Balance”:  With respect to any Certificate, the product of the related Class Principal Balance multiplied by a fraction the numerator of which is the Denomination of such Certificate and the denominator of which is the related Class Principal Balance.

“Certificate Registrar”:  For the purposes of this Trust Agreement, the Certificate Registrar appointed pursuant to Section 3.02 of the Pooling and Servicing Agreement which shall act as Certificate Registrar under this Trust Agreement subject to the terms and conditions and entitled to the same rights, protections and indemnities set forth in the Pooling and Servicing Agreement.

“Class”:  Each Class of Certificates issued or issuable hereunder as set forth in Section 2.02 hereto.

“Class Interest Distribution Amount”:  As to each Class of Exchangeable REMIC Certificates and Distribution Date, an amount equal to the product of (i) the aggregate of the distributions on such Distribution Date in respect of interest on the related REMIC Class and (ii) the related Allocation Ratio.  As to each Class of Exchangeable Certificates in an Exchangeable Combination and Distribution Date, such class’s pro rata portion, based on the amount of interest due each such class at the related Certificate Interest Rate, of the product of (i) the aggregate of the distributions of interest on such Distribution Date to the related REMIC Class and (ii) one minus the Allocation Ratio for the Exchangeable REMIC Certificates related to the related REMIC Class.

“Class Notional Amount”:  With respect to the Class 1-A-1S and Class 4-A-1S Certificates, the Class Notional Amount set forth in the Pooling and Servicing Agreement. 

“Class Principal Balance”:  With respect to any Class of Exchangeable REMIC Certificates, at any time, the Class Principal Amount of the related REMIC Class multiplied by the related Allocation Ratio.  With respect to any Class of Exchangeable Certificates, other than an Interest-Only Exchangeable Class, at any time, the product of (i) the product of (a) the Class Principal Amount of the related REMIC Class and (b) one minus the Allocation Ratio for the Exchangeable REMIC Certificates related to the related REMIC Class and (ii) a fraction, the numerator of which is the Maximum Original Certificate Principal Amount for such Class of Exchangeable Certificates (as set forth in the table in Appendix A) and the denominator of which is the Maximum Original Certificate Principal Amount of all Exchangeable Certificates in such Exchangeable Combination.  The Class Principal Balance of each Interest-Only Exchangeable Class shall be zero.

“Class Principal Distribution Amount”:  As to each Class of Exchangeable REMIC Certificates and Distribution Date, an amount equal to the product of (i) the aggregate of the distributions on such Distribution Date in respect of principal on the related REMIC Class and (ii) the related Allocation Ratio. As to each Exchangeable Combination and Distribution Date, an amount equal to the product of (i) the aggregate of the distributions of principal on such Distribution Date in respect of the related REMIC Class and (ii) one minus the Allocation Ratio for the Exchangeable REMIC Certificates related to the related REMIC Class.  On each Distribution Date, the Class Principal Distribution Amount of each Interest-Only Exchangeable Class shall be zero.

“Code”:  The Internal Revenue Code of 1986, as amended, including any successor or amendatory provisions.

“Denomination”:  As to any Certificate, the amount indicated on the face of such Certificate.

“Distribution Date”:  As to any Exchangeable Class, the Distribution Date for the Related REMIC Classes.

“Exchangeable Class” or “Exchangeable Certificate”:  means any or all of the Class 1-A-1M, Class 1-A-1S, Class 4-A-1M and Class 4-A-1S Certificates.

“Exchangeable Combination”: means any of the exchangeable combinations listed in Appendix A.

“Exchangeable REMIC Classes” or “Exchangeable REMIC Certificates”:  The Class 1-A-1 and Class 4-A-1 Certificates, or the Certificates of each such Class, as the context may require, issued hereunder.

“Initial Authorized Denomination”:  With respect to any Exchangeable Certificate or Exchangeable REMIC Certificate, the amount set forth with respect to such Class in Appendix A under the heading, “Maximum Class Principal Balance or Notional Amount.”

“Interest-Only Exchangeable Class”:  The Class 1-A-1S or Class 4-A-1S Certificates, as the context may require.

“Interest Rate”:  With respect to each Interest Accrual Period and interest-bearing Related REMIC Class, the per annum rate specified or determined pursuant to the Pooling and Servicing Agreement for such Interest Accrual Period.  With respect to each Interest Accrual Period and  Exchangeable Class, the per annum rate set forth with respect to such Class in Appendix A under the heading “Class Coupon.”

“Issue Date”:  September 27, 2007.

“Outstanding Certificate”:  Any Outstanding Exchangeable Certificate and Outstanding Exchangeable REMIC Certificate.

“Outstanding Exchangeable Certificate”:  Any Exchangeable Certificate issued hereunder; provided, however, that upon the exchange of any Exchangeable Certificate pursuant to Section 2.03 hereof, the Exchangeable Certificate so exchanged shall be deemed no longer to be an Outstanding Certificate, and each Exchangeable REMIC Certificate issued in exchange therefor shall be deemed to be an Outstanding Exchangeable REMIC Certificate.

“Outstanding Exchangeable REMIC Certificate”:  Any Exchangeable REMIC Certificate issued on the Issue Date; provided, however, that upon the exchange of any Exchangeable REMIC Certificate pursuant to Section 2.03 hereof, the Exchangeable REMIC Certificate so exchanged shall be deemed no longer to be an Outstanding Exchangeable REMIC Certificate, and the Exchangeable Certificate issued in exchange therefor shall be deemed to be an Outstanding Exchangeable Certificate.

“Prospectus”:  The prospectus dated April 26, 2007 as supplemented by a prospectus supplement dated September 26, 2007, relating to the J.P. Morgan Mortgage Loan Trust 2007-A5 Mortgage Pass-Through Certificates.

“Realized Loss Allocation Amount”:  As to each Class of Exchangeable REMIC Certificates and each Distribution Date, an amount equal to the product of (i) the Realized Losses on such Distribution Date allocated to the related REMIC Class and (ii) the related Allocation Ratio.  As to each Class of Exchangeable Certificates, other than an Interest-Only Exchangeable Class, and each Distribution Date, such Class’s pro rata portion, based on Class Principal Balance, of the product of (i) the aggregate of the Realized Losses on such Distribution Date allocated to the related REMIC Class and (ii) one minus the Allocation Ratio for the Exchangeable REMIC Certificates related to the related REMIC Class.  On each Distribution Date, the Realized Loss Allocation Amount with respect to each Interest-Only Exchangeable Class shall be zero.

“REMIC Classes” or “REMIC Certificates”:  The Class 1-A-1 and Class 4-A-1 Certificates, or the Certificates of each such Class, as the context may require, issued by the Underlying Trust in uncertificated form.

“Related REMIC Class”:  As to any Exchangeable Class the related Exchangeable REMIC Class.

“REMIC Combination” means either of REMIC Combination 1 or REMIC Combination 2, as applicable.

“REMIC Combination 1” means the Class 1-A-1 Certificates.

“REMIC Combination 2” means the Class 4-A-1 Certificates.

“Trust”:  The trust created by this Trust Agreement, the corpus of which consists of the Trust Fund.

“Trust Account”:  As defined in Section 3.02 hereof.

“Trust Fund”:  The corpus of the trust created by this Trust Agreement, consisting of the Trust Account and the Uncertificated REMIC Interests issued by the Underlying Trust and all payments thereon and all rights thereunder.

“Underlying Trust”:  J.P. Morgan Mortgage Trust 2007-A5.

ARTICLE II

THE TRUST

Section 2.01.  Transfer of Exchangeable REMIC Certificates.  Upon the presentation and surrender by any Holder of its Exchangeable REMIC Certificates in the appropriate combination as set forth on Appendix A, such Holder shall hereunder transfer, assign, set over and otherwise convey to the Trustee, all of such Holder’s right, title and interest in and to such Exchangeable REMIC Certificates, including all payments of interest thereon received after the month of the Issue Date.

The Trustee acknowledges (i) the transfer and assignment to it of the Uncertificated REMIC Interests pursuant to Section 5.06 of the Pooling and Servicing Agreement and (ii) any transfer and assignment of certificated Exchangeable REMIC Certificates pursuant to the foregoing paragraph, and hereby declares that it will hold the same in trust for the Certificateholders on the terms in this Trust Agreement contained.

Section 2.02.  Certificates.  The Certificates authorized by this Trust Agreement shall consist of each Exchangeable Class and certificated Exchangeable REMIC Class having the characteristics specified or determined as described in Appendix A, and otherwise shall be subject to the terms and provisions set forth herein.

Section 2.03.  Exchanges.  Exchangeable Certificates shall be exchangeable on the books of DTC for Exchangeable REMIC Certificates, and Exchangeable REMIC Certificates shall be exchangeable on the books of The Depository Trust Company (“DTC”) for Exchangeable Certificates, on and after the Closing Date, by notice to the Securities Administrator substantially in the form of Exhibit I hereto or, under the terms and conditions hereinafter set forth and otherwise in accordance with the procedures specified in the Pooling and Servicing Agreement.

Certificates of the Classes of Exchangeable REMIC Certificates shall be exchangeable for the related Class of Exchangeable Certificates in respective denominations determined based on the proportion that the initial Certificate Principal Balances of such Exchangeable REMIC Certificates bear to the original Certificate Principal Balance of the related Exchangeable Certificates, as set forth in Appendix A.  Upon any such exchange the portions of the Exchangeable REMIC Certificates designated for exchange shall be deemed cancelled and replaced by the Exchangeable Certificate issued in exchange therefor.  Correspondingly, Exchangeable Certificates may be further designated for exchange for Certificates of the related Exchangeable REMIC Classes in respective denominations determined based on the proportion that the initial Certificate Principal Balances of such Exchangeable REMIC Certificates bear to the original Certificate Principal Balances of the related Exchangeable Certificates, as set forth in Appendix A.  There shall be no limitation on the number of exchanges authorized pursuant to this Section 2.03, and, except as provided in the following two paragraphs, no fee or other charge shall be payable to the Trustee, the Securities Administrator or DTC in connection therewith.

In order to effect an exchange of Certificates, the Certificateholder shall notify the Securities Administrator in writing or by e-mail at sfs.exchange@usbank.com no later than two Business Days before the proposed exchange date.  The exchange date with respect to the Certificates may be any Business Day other than the first or last Business Day of the month subject to the Securities Administrator’s approval.  The notice must be on the Certificateholder’s letterhead, carry a medallion stamp guarantee and set forth the following information: the CUSIP number of both Certificates to be exchanged and Certificates to be received; outstanding Certificate Principal Amount and the Original Certificate Principal Amount of the Certificates to be exchanged; the Certificateholder’s DTC participant number; and the proposed exchange date.  After receiving the notice, the Securities Administrator shall e-mail the Certificateholder with wire payment instructions relating to the exchange fee.  A notice becomes irrevocable on the second Business Day before the proposed exchange date.

Notwithstanding any other provision herein set forth, a fee of $5000 shall be payable to the Securities Administrator in connection with each exchange.

The Securities Administrator shall make the first distribution on an Exchangeable Certificate or an Exchangeable REMIC Certificate received in an exchange transaction on the Distribution Date in the month following the month of the exchange to the Certificateholder of record as of the close of business on the last day of the month of the exchange.

Section 2.04.  Delivery of Instruments.  The Securities Administrator shall furnish to each Holder, upon request, copies of this Trust Agreement, without attachments, applicable to the Certificate(s) held by such Holder.

Section 2.05.  Distribution Date Statements to Certificateholders.  Not later than each Distribution Date, the Securities Administrator shall make available to each Certificateholder, the Depositor, the Trustee and any other interested parties a statement setting forth:

(i)

exchanges that took place since the last Distribution Date;

(ii)

the designations of the classes that were created;

(iii)

if the distribution to the Holders of such Class of Certificates is less than the full amount that would be distributable to such Holders if there were sufficient funds available therefor, the amount of the shortfall and the allocation thereof as between principal and interest;

(iv)

the balances of the outstanding Exchangeable Certificates, including Notional Amounts;

(v)

the pass-through rates on the outstanding Classes of Exchangeable Certificates;

(vi)

interest and principal paid, and losses allocated, to the outstanding Classes of Exchangeable Certificates; and

(vii)

if no exchanges have occurred.

ARTICLE III

CERTIFICATES; DISTRIBUTIONS

Section 3.01.  Issuance of Certificates.  The Classes of Certificates shall be issued in book-entry form and shall be maintained in the names of the record owners thereof as entries on the books of DTC.  Such Certificates shall be in authorized denominations of $100,000 and integral multiples of $1 in excess thereof and may be transferred or pledged in accordance with and subject to regulations governing use of the book-entry system (as the same shall be in effect at the time of any such transfer or pledge) and procedures that are followed generally for book-entry securities.

Section 3.02.  Trust Account.  On or before the Issue Date, the Securities Administrator shall either (i) open with a depository institution one or more trust accounts in the name of the Trustee on behalf of the Trust Fund that shall collectively be the “Trust Account,” (ii) in lieu of maintaining any such account or accounts, maintain the Trust Account by means of appropriate entries on its books and records designating all amounts credited thereto in respect of the Uncertificated REMIC Interests and all investments of any such amounts as being held by it in its capacity as Securities Administrator for the benefit of the Holders of the Certificates or (iii) maintain the Trust Account in the form of any combination of accounts or book entries described in clauses (i) and (ii) above.  Any manner or manners in which the Trust Account is maintained may at any time be changed without notice to, or the approval of, Holders of the Certificates so long as funds held in the Trust Fund by, or for the account of, the Securities Administrator shall at all times be identified.  To the extent that the Trust Account is maintained by the Securities Administrator in the manner provided for in clause (ii) above, all references herein to deposits and withdrawals from the Trust Account shall be deemed to refer to credits and debits to the related books of the Securities Administrator.

The Securities Administrator shall deposit in the Trust Account all distributions in respect of the Uncertificated REMIC Interests received by it as Securities Administrator hereunder.  All such distributions deposited from time to time in the Trust Account and all investments made with such moneys, including all income or other gain from such investments, shall be held by the Securities Administrator in the Trust Account as part of the Trust Fund as herein provided, subject to withdrawal by the Securities Administrator for distributions on the Certificates.

Section 3.03.  Distributions.  On each Distribution Date, the Securities Administrator shall withdraw from the Trust Account the Class Interest Distribution Amount for each Class of Certificates entitled to interest and shall make the appropriate distributions to the Holders of each such Class.  On each Distribution Date, the Trust Administrator shall withdraw from the Trust Account the Class Principal Distribution Amount for each Exchangeable Combination and shall distribute the Class Principal Distribution Amount for (a) Related Exchangeable Combination 1 (as set forth in Appendix A) to the Class 1-A-1M Certificates, until its Class Principal Balance is reduced to zero and (b) Related Exchangeable Combination 2 (as set forth in Appendix A) to the Class 4-A-1M Certificates, until its Class Principal Balance is reduced to zero.  All distributions of such Class Principal Distribution Amounts and Class Interest Distribution Amounts that are made with respect to a particular Class shall be made pro rata among all Certificates of such class in proportion to their respective Certificate Principal Balances or Class Notional Amounts, as applicable, with no preference or priority of any kind.

Section 3.04.  Allocation of Realized Losses.  On each Distribution Date, the Realized Loss Allocation Amount for each Class shall be applied to such Class in reduction of its Class Principal Balance.  As among any Class, such Realized Loss Allocation Amount shall be applied, pro rata, among all Certificates of such class in proportion to their respective Certificate Principal Balances with no preference or priority of any kind.

ARTICLE IV

LIMITATION OF LIABILITY

The Trustee and the Securities Administrator shall be entitled to the same rights, protections and indemnities afforded to them under the Pooling and Servicing Agreement.

ARTICLE V

THE TRUSTEE

In the event that there shall be any matter arising under the Pooling and Servicing Agreement that requires the vote of Holders of Certificates outstanding thereunder, the Trustee as the holder of the related Uncertificated REMIC Interests shall vote such Uncertificated REMIC Interests in such amounts and proportions as shall reflect instructions received from Holders of any Outstanding Exchangeable REMIC Certificates and any Outstanding Exchangeable Certificates outstanding.

ARTICLE VI

TERMINATION

The respective obligations and responsibilities of the Securities Administrator and the Trustee shall terminate as to the Trust Fund upon the same terms and conditions as the Pooling and Servicing Agreement.

ARTICLE VII

SUPPLEMENTAL AGREEMENTS

This Trust Agreement may be amended or supplemented from time to time by the Depositor, the Securities Administrator and the Trustee upon the same terms and conditions as the Pooling and Servicing Agreement may be amended or supplemented.

ARTICLE VIII

MISCELLANEOUS

Section 8.01.  Certificateholders.  The death or incapacity of any Certificateholder shall neither operate to terminate this Trust Agreement, nor entitle such Certificateholder’s legal representative or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding-up of the affairs of the Trust Fund, nor otherwise affect the rights, duties and obligations of any of the parties to this Trust Agreement.

Except as provided in Article V and Article VII, no Certificateholder shall have any right to vote or in any manner otherwise control the operation and management of the Trust Fund or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third person by reason of any action taken by the parties to this Trust Agreement pursuant to any provision hereof.

No Certificateholder shall have any right, by virtue of any provision of this Trust Agreement, to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Trust Agreement unless an Event of Default shall have occurred and be continuing in respect of this Trust Agreement.  It is understood and intended, and is expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue of any provision of this Trust Agreement to affect, disturb or prejudice the rights of the Holders of any other such Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all Certificateholders.  For the protection and enforcement of the provisions of the Section, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Section 8.02.  Governing Law.  THIS TRUST AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Section 8.03.  Demands, Notices and Communications.  All formal demands, notices and communications by and among the Trustee, the Securities Administrator, the Certificate Registrar and the Holder of any Certificate shall be in writing and delivered in person or by first class mail, postage prepaid to the Trustee and the Rating Agencies at their addresses set forth in the Pooling and Servicing Agreement.  Any notice so mailed within the time prescribed in this Trust Agreement shall be conclusively presumed to have been duly given whether or not the Person to whom such notice shall have been directed receives such notice.

Section 8.04.  Severability of Provisions.  If any one or more of the covenants, agreements, provisions or terms of this Trust Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Trust Agreement and shall in no way affect the validity or enforceability of the other provisions of this Trust Agreement or of the Certificates or the rights of the Holders thereof.

Section 8.05.  Tax Status and Reporting.  It is intended that the Trust Fund created hereunder be considered a “grantor trust” under the Code.  Based upon such characterization, within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Securities Administrator shall mail to each person who so requests in writing and who at anytime during such calendar year shall have been a Certificateholder the necessary information under applicable law for preparation of such Holder’s federal and state income tax returns unless substantially similar information has been previously provided to such Certificateholder.

For federal income tax purposes, the grantor trust created hereunder shall have a calendar year taxable year.  The Securities Administrator shall prepare or cause to be prepared and shall file or cause to be filed with the Internal Revenue Service and applicable state or local tax authorities, income tax information returns for each taxable year with respect to the grantor trust.

IN WITNESS WHEREOF, the parties hereto hereby execute this Trust Agreement, as of the day and year first above written.

HSBC BANK USA, NATIONAL ASSOCIATION,

solely in its capacity as Trustee

By: /s/ Alexander Pabon            

Name: Alexander Pabon

Title: Vice President

U.S. BANK NATIONAL ASSOCIATION,

in its capacity as Securities Administrator

By: /s/ Shannon M. Rantz     

Name: Shannon M. Rantz

Title: Vice President

J.P. MORGAN ACCEPTANCE CORPORATION I,

as Depositor

By:

/s/ Rosa Hyun           

Name: /s/ Rosa Hyun

Title: Vice President

APPENDIX A

AVAILABLE COMBINATIONS(1) 

				
	REMIC Certificates

	Exchangeable Certificates

	

REMIC Class

	

Original Certificate Principal Amount or Certificate Notional Amount

	

Exchangeable Classes 

	Maximum Original 

Certificate Principal Amount or 

Certificate Notional Amount

	

	 
	

Related Exchangeable Combination 1

	 

	1-A-1

	$23,138,900 (2)

	1-A-1M

	$23,138,900 (2)

	 
	 
	1-A-1S*

	$23,138,900 (2) 

	

	 
	

Related Exchangeable Combination 2

	 

	4-A-1

	$298,842,000 (3)

	4-A-1M

	$298,842,000 (3)

	 
	 
	4-A-1S*

	$298,842,000 (3)

_____________

  *  Interest-Only Class

(1)

Classes of REMIC Certificates may be exchanged only in the proportion that the original balances of such certificates bear to one another as shown above.

(2)

On any date of determination, the maximum original Class Principal Balance of all classes of Certificates in the Class 1-A-1 Complex is $23,138,900.

(3)

On any date of determination, the maximum original Class Principal Balance of all classes of Certificates in the Class 4-A-1 Complex is $298,842,000.

EXHIBIT I

(FORM OF CERTIFICATE)

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS AN [EXCHANGEABLE REMIC CERTIFICATE] [EXCHANGE CERTIFICATE] AND MAY BE EXCHANGED FOR THE [EXCHANGE CERTIFICATES] [EXCHANGEABLE REMIC CERTIFICATES] IN THE RELATED COMBINATION GROUP.

FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (1) A BENEFICIAL OWNERSHIP INTEREST OF ONE OR MORE “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR (2) BENEFICIAL OWNERSHIP INTEREST OF CERTAIN PAYMENTS ON ONE OR MORE REGULAR INTERESTS.

[For Interest-Only Certificates Only] [THIS CERTIFICATE HAS NO PRINCIPAL BALANCE AND IS NOT ENTITLED TO ANY DISTRIBUTIONS IN RESPECT OF PRINCIPAL.]

		
	Certificate No.:

	[1]

	Cut-off Date:

	September 1, 2007

	First Distribution Date:

	October 25, 2007

	Last Scheduled Distribution Date:

	October 25, 2037    

	Pass-Through Rate:

	[________]%

[Variable in accordance with the Agreement]

	[Initial Certificate Principal Balance of this Certificate (“Denomination”):]

	$[____________]

	[Initial Certificate Principal Balances of all Certificates of this Class:]

	$[____________]

	[Initial Maximum Certificate Principal Balance of all Certificates of this Class:]

	$[_____________]

	[Initial Notional Amount of this Certificate (“Denomination”):]

	$[____________]

	[Initial Notional Amount of all Certificates of this Class:]

	$[____________]

	[Initial Maximum Notional Amount of all Certificates of this Class:]

	$[____________]

	CUSIP:

	[_____________]

J.P. MORGAN ACCEPTANCE CORPORATION I

J.P. MORGAN MORTGAGE TRUST 2007-A5

Mortgage Pass-Through Certificates, Series 2007-A5

Class [_]-A-[_] [Exchangeable REMIC Certificate][Exchangeable Certificate]

evidencing a percentage interest in the distributions allocable to the Certificates of the above-referenced Class with respect to a Trust Fund consisting primarily of the Trust Account and the Uncertificated REMIC Interests issued by the Underlying Trust (consisting primarily of adjustable-rate mortgage loans (the “Underlying Mortgage Loans”) secured by first liens on one- to four-family residential properties), and all payments thereon and all rights thereunder

J.P. Morgan Acceptance Corporation I, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth herein.  Accordingly, the Certificate Principal Balance at any time may be less than the Certificate Principal Balance as set forth herein.  This Certificate does not evidence an obligation of, or an interest in, and is not guaranteed by the Depositor, the Transferor, the Master Servicer, the Securities Administrator, the Custodians or the Trustee referred to below or any of their respective affiliates.  None of this Certificate, the Trust Fund or the Underlying Mortgage Loans are guaranteed or insured by any governmental agency or instrumentality.

This certifies that CEDE & CO. is the registered owner of the Percentage Interest evidenced by this Certificate in certain monthly distributions with respect to a Trust Fund consisting primarily of the Trust Account and the Uncertificated REMIC Interests deposited by J.P. Morgan Acceptance Corporation I (the “Depositor”) and issued by the Underlying Trust (consisting primarily of adjustable-rate mortgage loans (the “Underlying Mortgage Loans”) secured by first liens on one- to four-family residential properties), and all payments thereon and all rights thereunder.  The Trust Fund was created pursuant to a Trust Agreement dated as of the Cut-off Date specified above (the “Trust Agreement”) among the Depositor, HSBC Bank USA, National Association, as trustee (the “Trustee”), and U.S. Bank National Association, as securities administrator (the “Securities Administrator”).  The Underlying Trust was created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off Date specified above (the “Pooling Agreement”) among the Depositor, U.S. Bank National Association, as master servicer (in such capacity, the “Master Servicer”) and as securities administrator (in such capacity, the “Securities Administrator”), JPMorgan Chase Bank, National Association, a national banking association, and The Bank of New York Trust Company, N.A., a national banking association, as custodians (each a “Custodian and together, the “Custodians”) and HSBC Bank USA, National Association, as trustee (the “Trustee”).  Distributions on this Certificate will be made primarily from collections on the Uncertificated REMIC Interests pursuant to the terms of the Trust Agreement, which in turn will be made primarily from collections on the applicable Underlying Mortgage Loans pursuant to the terms of the Pooling Agreement.  To the extent not defined herein, the capitalized terms used herein have the meanings assigned in the Trust Agreement.  This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound..

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

This Certificate shall not be entitled to any benefit under the Trust Agreement or be valid for any purpose unless manually countersigned by an authorized signatory of the Securities Administrator.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated: September __, 2007

U.S. BANK NATIONAL ASSOCIATION,

as Securities Administrator

By:______________________________

Countersigned:

By: ______________________________

Authorized Signatory of

U.S. BANK NATIONAL ASSOCIATION,

as Securities Administrator

J.P. MORGAN ACCEPTANCE CORPORATION I

J.P. MORGAN ALTERNATIVE LOAN TRUST 2007-A5

Mortgage Pass-Through Certificates, Series 2007-A5

This Certificate is one of a duly authorized issue of Certificates designated as J.P. Morgan Acceptance Corporation I, J.P. Morgan Mortgage Trust 2007-A5, Mortgage Pass-Through Certificates, of the Series specified on the face hereof (herein collectively called the “Certificates”), and representing a beneficial ownership interest in the Trust Fund (consisting primarily of the Trust Account and the Uncertificated REMIC Interests issued by the Underlying Trust (consisting primarily of adjustable-rate mortgage loans (the “Underlying Mortgage Loans”) secured by first liens on one- to four-family residential properties) created by the Trust Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it will look solely to the funds on deposit in the Trust Account for payment hereunder and that the Securities Administrator is not liable to the Certificateholders for any amount payable under this Certificate or the Trust Agreement or, except as expressly provided in the Trust Agreement, subject to any liability under the Trust Agreement.

This Certificate does not purport to summarize the Trust Agreement or Pooling Agreement and reference is made to the Trust Agreement and Pooling Agreement for the interests, rights and limitations of rights, benefits, obligations and duties evidenced thereby, and the rights, duties and immunities of the Securities Administrator.

Pursuant to the terms of the Trust Agreement and the Pooling Agreement, a distribution will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following (the “Distribution Date”), commencing on the first Distribution Date specified on the face hereof, to the Person in whose name this Certificate is registered at the close of business on the applicable Record Date in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to Holders of Certificates of the Class to which this Certificate belongs on such Distribution Date pursuant to the Trust Agreement.  The Record Date applicable to each Distribution Date for the Certificates is the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs.

Distributions on this Certificate shall be made by wire transfer of immediately available funds to the account of the Holder hereof at a bank or other entity having appropriate facilities therefor, if such Certificateholder shall have so notified the Securities Administrator in writing at least five Business Days prior to the related Record Date and such Certificateholder shall satisfy the conditions to receive such form of payment set forth in the Pooling Agreement, or, if not, by check mailed by first class mail to the address of such Certificateholder appearing in the Certificate Register.  The final distribution on each Certificate will be made in like manner, but only upon presentment and surrender of such Certificate at the Corporate Trust Office of the Securities Administrator or such other location specified in the notice to Certificateholders of such final distribution.

The Pooling Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Securities Administrator and the rights of the Certificateholders under the Pooling Agreement at any time by the Transferor, the Depositor, the Master Servicer, the Securities Administrator, the Custodians and the Trustee with the consent of the Holders of Certificates affected by such amendment evidencing the requisite Percentage Interest, as provided in the Pooling Agreement.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange therefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Pooling Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

The Trust Agreement may be amended or supplemented from time to time by the Depositor, the Securities Administrator and the Trustee upon the same terms and conditions as the Pooling Agreement may be amended or supplemented.

As provided in the Trust Agreement and Pooling Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register of the Securities Administrator upon surrender of this Certificate for registration of transfer at the offices that the Securities Administrator designates for such purposes, accompanied by a written instrument of transfer in form satisfactory to the Securities Administrator and the Certificate Registrar duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations and evidencing the same aggregate Percentage Interest in the Trust Fund will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in denominations specified in the Trust Agreement.  As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same Class in authorized denominations and evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

This Certificate is an [Exchangeable REMIC Certificate][Exchangeable Certificate] and may be exchanged for the [Exchangeable Certificates][Exchangeable REMIC Certificates] in the related Combination Group specified in the Trust Agreement, subject to certain terms and conditions specified in the Trust Agreement, including the payment to the Securities Administrator of a fee of $5,000 with respect to each exchange.  This Certificate may be exchanged for another Certificate or Certificates in the related Combination Group only on the days of each month specified in the Trust Agreement.

The Depositor, the Master Servicer, the Securities Administrator and the Trustee and any agent of the Depositor, the Master Servicer, the Securities Administrator or the Trustee may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Depositor, the Master Servicer, the Securities Administrator, the Trustee, nor any such agent shall be affected by any notice to the contrary.

On any Distribution Date on which the Pool Principal Balance (as defined in the Pooling Agreement) is less than 5% of the aggregate Cut-off Date Principal Balances of the Underlying Mortgage Loans, the Master Servicer will have the option to repurchase, in whole, from the Underlying Trust all remaining Underlying Mortgage Loans and all property acquired in respect of the Underlying Mortgage Loans at a purchase price determined as provided in the Pooling Agreement.  In the event that no such optional termination occurs, the obligations and responsibilities created by the Pooling Agreement will terminate upon the later of the maturity or other liquidation (or any advance with respect thereto) of the last Underlying Mortgage Loan remaining in the Underlying Trust or the disposition of all property in respect thereof and the distribution to Certificateholders of all amounts required to be distributed pursuant to the Pooling Agreement.  In no event, however, will the trust created by the Pooling Agreement continue beyond the expiration of 21 years from the death of the last survivor of the descendants living at the date of the Pooling Agreement of a certain person named in the Pooling Agreement.

Any term used herein that is defined in the Trust Agreement shall have the meaning assigned in the Trust Agreement, and nothing herein shall be deemed inconsistent with that meaning.  Any term used herein that is not defined in the Trust Agreement and that is defined in the Pooling Agreement shall have the meaning assigned in the Pooling Agreement, and nothing herein shall be deemed inconsistent with that meaning.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ___

____________________________________________________________

____________________________________________________________

(Please print or typewrite name and address including postal zip code of assignee)

the Percentage Interest evidenced by the within Certificate and hereby authorizes the transfer of registration of such Percentage Interest to assignee on the Certificate Register of the Trust Fund.

I (We) further direct the Securities Administrator to issue a new Certificate of a like denomination and Class, to the above named assignee and deliver such Certificate to the following address:

Dated: 

______________________________

Signature by or on behalf of assignor

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately available funds to _______________________________________________________________ ______________________________________________________________________________

______________________________________________________________________________ for the account of ______________________________________________________________, account number ______________, or, if mailed by check, to __________________________.  

Statements should be mailed to ______________________________________________ ______________________________________________________________________________

_____________________________________________________________________________.

This information is provided by, ______________________________ the assignee named above, or ______________________________, as its agent.

STATE OF 

)

)

ss.:

COUNTY OF 

)

On the

day of _______, 200_   before me, a notary public in and for said State, personally appeared ___________________________________, known to me who, being by me duly sworn, did depose and say that he executed the foregoing instrument.

______________________________

Notary Public

[Notarial Seal]

EXHIBIT II

FORM OF EXCHANGE LETTER

 __________, 20__

U.S. Bank National Association

[                                    ]

[                                    ]

Attention: JPMMT Series 2007-A4 

Re:

J.P. Morgan Mortgage Trust 2007-A5,

Mortgage Pass-Through Certificates, Series 2007-A5

Ladies and Gentlemen:

Pursuant to the terms of that certain Trust Agreement dated as of September 1, 2007 (the “Trust Agreement”), by and among J.P. Morgan Acceptance Corporation I., as depositor, HSBC Bank USA,  National Association, as trustee (the “Trustee”) and U.S. Bank National Association, as master servicer and securities administrator (the “Securities Administrator”), we hereby present and surrender the [Exchangeable REMIC Certificates] [Exchangeable Certificates] specified on Schedule I attached hereto [(the “Exchangeable REMIC Certificates”)] [(the “Exchangeable Certificates”)] and transfer, assign, set over and otherwise convey to the Securities Administrator, all of our right, title and interest in and to the [Exchangeable REMIC Certificates] [Exchangeable Certificates] including all payments of interest thereon received after _________________, 2007, in exchange for the [Exchangeable Certificates][Exchangeable REMIC Certificates] specified on Schedule I attached hereto.  

We agree that upon such exchange the portions of the [Exchangeable REMIC Certificates][Exchangeable Certificates] designated for exchange shall be deemed cancelled and replaced by the [Exchangeable Certificates][Exchangeable REMIC Certificates] issued in exchange therefor. We confirm that we have paid a fee of $5000 to the Securities Administrator in connection with such exchange.

Sincerely,

By:  ______________________________

Name: 

Title:   

Acknowledged by:

U.S. BANK NATIONAL ASSOCIATION, 

as Securities Administrator

By:  ______________________________

Name: 

Title:ex4-1.htm

    Exhibit
      4.1

     

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

     

    IR
      BIOSCIENCES HOLDINGS, INC.

     

    Secured
      Convertible Debenture

     

    
      	
              Issuance
                Date:  January 3, 2008

            	
              Original
                Principal
                Amount:     $2,000,000

            
	
              No.
                IRBO-1-1

            	 

    

    

    FOR
      VALUE RECEIVED, IR
      BIOSCIENCES HOLDINGS, INC., a Delaware corporation (the "Company"), hereby
      promises to pay to the order of YA GLOBAL INVESTMENTS, L.P. or registered
      assigns (the "Holder") the amount
      set out above as the Original Principal Amount (as reduced pursuant to the
      terms
      hereof pursuant to redemption, conversion or otherwise, the "Principal") when due,
      whether upon the Maturity Date (as defined below), acceleration, redemption
      or
      otherwise (in each case in accordance with the terms hereof) and to pay interest
      ("Interest") on
      any outstanding Principal at the applicable Interest Rate from the date set
      out
      above as the Issuance Date (the "Issuance Date") until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below), the Maturity Date or acceleration, conversion, redemption or otherwise
      (in each case in accordance with the terms hereof).  This Secured
      Convertible Debenture (including all Secured Convertible Debentures issued
      in
      exchange, transfer or replacement hereof, this "Debenture") is one
      of
      an issue of Secured Convertible Debentures issued pursuant to the Securities
      Purchase Agreement (collectively, the "Debentures" and such
      other Senior Convertible Debentures, the "Other
      Debentures").  Certain capitalized terms used herein are
      defined in Section 17.

     

    (1) GENERAL
      TERMS

     

    (a) Payment
      of
      Principal.  On
      the Maturity Date, the Company shall pay to the Holder an amount in cash
      representing all outstanding Principal, accrued and unpaid Interest. The
      "Maturity Date"
      shall be December 31, 2010, as may be extended at the option of the Holder
      (i)
      in the event that, and for so long as, an Event of Default (as defined below)
      shall have occurred and be continuing on the Maturity Date (as may be extended
      pursuant to this Section 1) or any event shall have occurred and be continuing
      on the Maturity Date (as may be extended pursuant to this Section 1) that with
      the passage of time and the failure to cure would result in an Event of
      Default.  Other than as specifically permitted by this Debenture, the
      Company may not prepay or redeem any portion of the outstanding Principal
      without the prior written consent of the Holder.

     

    (b) Interest.  Interest
      shall accrue on the outstanding principal balance hereof at an annual rate
      equal
      to eight percent (8%) (“Interest
      Rate”).  Interest shall be calculated on the basis of a 365-day
      year and the actual number of days elapsed, to the extent permitted by
      applicable law.  Interest hereunder shall be paid on each Interest
      Payment Date and on the Maturity Date (or sooner as provided herein) to the
      Holder or its assignee in whose name this Debenture is registered on the records
      of the Company regarding registration and transfers of Debentures at the option
      of the Company in cash, or, provided that the Equity Conditions are then
      satisfied (or waived by the Holders) converted into Common Stock at the Interest
      Conversion Price on the Trading Day immediately prior to the date
      paid.

     

    (c) Security.  The
      obligations of the Company hereunder are (i) guaranteed by each subsidiary
      of
      the Company pursuant to a Guaranty Agreement dated the date hereof (the “Guaranty”), (ii)
      secured by a pledge of the Pledged Property (as defined in the Security
      Agreement (the “Security Agreement”)
      among the Holder, the Company, and each subsidiary of the Company, and (iii)
      further secured by a pledge of the Patent Collateral (as defined in the Patent
      Security Agreement (the “Patent Security Agreement”)
      among the Holder, the Company, and each subsidiary of the Company

     

    (2) EVENTS
      OF
      DEFAULT.

     

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (iii) The
      Company or any subsidiary of the Company shall default in any of its obligations
      under any other debenture or any mortgage, credit agreement or other facility,
      indenture agreement, factoring agreement or other instrument under which there
      may be issued, or by which there may be secured or evidenced any indebtedness
      for borrowed money or money due under any long term leasing or factoring
      arrangement of the Company or any subsidiary of the Company in an amount
      exceeding $500,000, whether such indebtedness now exists or shall hereafter
      be
      created and such default shall result in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable;

     

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

     

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

     

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

     

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

     

    (viii) The
      Company shall fail to observe or perform any other covenant, agreement or
      warranty contained in, or otherwise commit any breach or default of any
      provision of this Debenture (except as may be covered by Section 2(a)(i) through
      2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which
      is not cured within the time prescribed.

     

    (ix) any
      Event
      of Default (as defined in the Other Debentures) occurs with respect to any
      Other
      Debentures.

     

    (b) During
      the time that any portion of this Debenture is outstanding, if any Event of
      Default has occurred, the full unpaid Principal amount of this Debenture,
      together with interest and other amounts owing in respect thereof, to the date
      of acceleration shall become at the Holder's election, immediately due and
      payable in cash; provided however, the Holder may request (but shall have no
      obligation to request) payment of such amounts in Common Stock of the
      Company.  Furthermore, in addition to any other remedies, the Holder
      shall have the right (but not the obligation) to convert this Debenture at
      any
      time after (x) an Event of Default or (y) the Maturity Date at the applicable
      Conversion Price.  The Holder need not provide and the Company hereby
      waives any presentment, demand, protest or other notice of any kind, (other
      than
      required notice of conversion) and the Holder may immediately and without
      expiration of any grace period enforce any and all of its rights and remedies
      hereunder and all other remedies available to it under applicable law. Such
      declaration may be rescinded and annulled by Holder at any time prior to payment
      hereunder. No such rescission or annulment shall affect any subsequent Event
      of
      Default or impair any right consequent thereon.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (3) COMPANY
      CONVERSION OR
      REDEMPTION.

     

    (a) Company
      Cash
      Redemption.  The Company at its option shall have the right to
      redeem (“Optional
      Redemption”) a portion or all amounts outstanding under this Debenture
      prior to the Maturity Date by delivering a written notice to the Holder of
      its
      intention to make a redemption (the “Redemption Notice”)
      setting forth the amount of Principal it desires to redeem, Interest thereon,
      and any applicable Redemption Premium (as defined below) (collectively, the
      “Redemption
      Amount”), confirming that the conditions to such redemption have been
      satisfied, and setting forth the date the Optional Redemption is to be made
      (the
“Redemption
      Date”).  Once a Redemption Notice is delivered to the Holder,
      the Debenture (or portion thereof) called for redemption shall become
      irrevocably due and payable on the applicable Redemption Date and at the
      applicable Redemption Amount.

     

    (b) Redemption
      Below the Fixed
      Conversion Price.  If on the date
      of        delivery of a Redemption
      Notice (a “Redemption Notice Date”) the Closing Bid Price of the Common Stock is
      less than the Fixed Conversion Price, then the Company may redeem any amounts
      provided that as of the Redemption Notice Date (i) the Equity Conditions have
      been satisfied, (ii) no Event of Default has occurred, and (iii) the Company
      pays the Redemption Amount on the Redemption Date, which in the case of an
      Optional Redemption pursuant to this Section 3(b) shall be four business days
      after the Redemption Notice Date.  The Redemption Premium shall be
      equal to twenty percent (20%) of the Principal amount being redeemed for an
      Option Redemption made in accordance with this Section 3(b).  After
      receipt of the Redemption Notice the Holder shall have right to elect to convert
      all or any portion of this Debenture, subject to the limitations set forth
      in
      Section 4(b) during the period from the Redemption Notice Date until the
      Redemption Date.  On the Redemption Date, the Company shall deliver to
      the Holder the Redemption Amount with respect to the Principal amount redeemed
      after giving effect to any conversions effected during the period between the
      Redemption Notice Date and the Redemption Date.

     

    (c) Redemption
      Above the Fixed
      Conversion Price.  If on the date
      of        delivery of a Redemption
      Notice (a “Redemption Notice Date”) the Closing Bid Price of the Common Stock
      greater than the Fixed Conversion Price, then the Company may redeem any amounts
      provided that as of the Redemption Notice Date (i) the Equity Conditions have
      been satisfied, (ii) no Event of Default has occurred, (iii) the Volume Weighted
      Average Price is greater than 130% of the Fixed Conversion Price for at least
      20
      out of the 30 Trading Days immediately prior to the Redemption Notice Date,
      and
      (iv) the Company pays the Redemption Amount on the Redemption Date, which in
      the
      case of an Optional Redemption pursuant to this Section 3(c) shall be at least
      30 but no more than 60 days after the Redemption Notice Date.  There
      shall be no Redemption Premium for an Optional Redemption made in accordance
      with this Section 3(c).  After receipt of the Redemption Notice the
      Holder shall have right to elect to convert all or any portion of this
      Debenture, subject to the limitations set forth in Section 4(b) during the
      period from the Redemption Notice Date until the Redemption Date. On the
      Redemption Date the Company shall deliver to the Holder the Redemption Amount
      with respect to the Principal amount redeemed after giving effect to any
      conversions effected during the period between the Redemption Notice Date and
      the Redemption Date.

     

    (d) Redemption
      Upon
Acquisition.  In the event that the Company is acquired by an
      Industry Partner within 12 months of the date hereof and the acquisition is
      at a
      value per share greater than 120% of the Fixed Conversion Price, then the Holder
      shall waive any otherwise applicable Redemption Premium.

     

    (e) Company
      Call Option.
      The Company shall have the option to force the Holder to convert this Debenture
      (a “Company
      Call”) prior to the Maturity Date by delivering to the Holder a written
      notice (“Company Call
      Notice”) provided that the following conditions have been satisfied: (i)
      the Equity Conditions have been satisfied, (ii) the number of shares underlying
      the particular Company Call does not exceed the Volume Limitation, (iii) The
      effective date of the Company Call is at least 5 Trading Days following the
      date
      of the Company Call Notice, (iv) at least 40 Business Days have elapsed since
      the last Company Call, and (v) the Volume Weighted Average Price of the Common
      Stock shall have exceeded 150% of the Fixed Conversion Price for at least 20
      trading days of the 30 trading days immediately prior to the date of the Company
      Call Notice, and (vi) the Closing Bid Price of the Common Stock shall have
      exceeded 150% of the Fixed Conversion Price on the last Trading Day immediately
      preceding the Company Call date. The Principal amount of any Company Call shall
      be up to (i) 50% of the total Principal amount outstanding under the Debenture
      if the Volume Weighted Average Price of the Common Stock exceeds 150% of the
      Fixed Conversion Price for at least 20 trading days of the 30 trading days
      immediately prior to the date of the Company Call Notice and (ii) 100% of the
      total Principal amount outstanding under the Debenture if the Volume Weighted
      Average Price of the Common Stock exceeds 175% of the Fixed Conversion Price
      for
      at least 20 trading days of the 30 trading days immediately prior to the date
      of
      the Company Call Notice.

     

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

     

    (a) Conversion
      Right.  Subject to the provisions of Section 4(c), at any time
      or times on or after the Issuance Date, the Holder shall be entitled to convert
      any portion of the outstanding and unpaid Conversion Amount (as defined below)
      into fully paid and nonassessable shares of Common Stock in accordance with
      Section 4(b), at the Conversion Rate (as defined below).  The number
      of shares of Common Stock issuable upon conversion of any Conversion Amount
      pursuant to this Section 4(a) shall be determined by dividing (x) such
      Conversion Amount by (y) the Conversion Price (the "Conversion
      Rate").  The Company shall not issue any fraction of a share of
      Common Stock upon any conversion.  If the issuance would result in the
      issuance of a fraction of a share of Common Stock, the Company shall round
      such
      fraction of a share of Common Stock up to the nearest whole
      share.  The Company shall pay any and all transfer, stamp and similar
      taxes that may be payable with respect to the issuance and delivery of Common
      Stock upon conversion of any Conversion Amount.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (ii) "Conversion
      Price"
      means, as of any Conversion Date (as defined below) before the occurrence of
      any
      Triggering Event, $0.20, subject to adjustment as provided herein (the “Fixed Conversion
      Price”), and as of any Conversion Date following the occurrence of any
      Triggering Event, the lower of (a) the Fixed Conversion Price or (b) eighty
      percent (80%) of the lowest daily Volume Weighted Average Price during the
      five (5) Trading Days immediately preceding the Conversion Date (the “Market Conversion
      Price”).

     

    (b) Mechanics
      of
      Conversion.

     

    (i) Optional
      Conversion.  To convert any Conversion Amount into shares of
      Common Stock on any date (a "Conversion Date"),
      the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed
      notice of conversion in the form attached hereto as Exhibit I (the "Conversion
      Notice")
      to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture
      to a nationally recognized overnight delivery service for delivery to the
      Company (or an indemnification undertaking reasonably satisfactory to the
      Company with respect to this Debenture in the case of its loss, theft or
      destruction).  On or before the third Business Day following the date
      of receipt of a Conversion Notice (the "Share Delivery
      Date"), the Company shall (X) if legends are not required to be placed on
      certificates of Common Stock pursuant to the Securities Purchase Agreement
      and
      provided that the Transfer Agent is participating in the Depository Trust
      Company's ("DTC") Fast Automated
      Securities Transfer Program, credit such aggregate number of shares of Common
      Stock to which the Holder shall be entitled to the Holder's or its designee's
      balance account with DTC through its Deposit Withdrawal Agent Commission system
      or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
      Securities Transfer Program, issue and deliver to the address as specified
      in
      the Conversion Notice, a certificate, registered in the name of the Holder
      or
      its designee, for the number of shares of Common Stock to which the Holder
      shall
      be entitled which certificates shall not bear any restrictive legends unless
      required pursuant to Section 2(g) of the Securities Purchase
      Agreement.  If this Debenture is physically surrendered for conversion
      and the outstanding Principal of this Debenture is greater than the Principal
      portion of the Conversion Amount being converted, then the Company shall as
      soon
      as practicable and in no event later than three (3) Business Days after receipt
      of this Debenture and at its own expense, issue and deliver to the holder a
      new
      Debenture representing the outstanding Principal not converted.  The
      Person or Persons entitled to receive the shares of Common Stock issuable upon
      a
      conversion of this Debenture shall be treated for all purposes as the record
      holder or holders of such shares of Common Stock upon the transmission of a
      Conversion Notice.

     

    (ii) Company's
      Failure to Timely Convert. The Company understands that a delay in the delivery
      of the certificates representing the Common Stock issuable upon conversion
      of
      this Debenture could result in economic loss to the Holder. In addition to
      any
      other rights of the Holder, as compensation to the Holder for such late delivery
      of Common Stock upon conversion of this Debenture the amount of $100 per
      Business Day for each $10,000 of Common Stock (measured by the relevant
      Conversion Price as of the Conversion Date and prorated for amounts other than
      $10,000) after the third Trading Day after the Company’s receipt of a facsimile
      copy of a Conversion Notice  (the “Share Delivery Due
      Date”) and continuing until the date on which the certificate
      representing such Common Stock is delivered to the Holder.  The
      Company shall pay any payments incurred under this paragraph in immediately
      available funds upon demand.  If after the Share Delivery Due Date the
      Company has failed to issue and deliver a certificate to the Holder or credit
      the Holder's balance account with DTC for the number of shares of Common Stock
      to which the Holder is entitled upon such holder's conversion of any Conversion
      Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder
      purchases (in an open market transaction or otherwise) Common Stock to deliver
      in satisfaction of a sale by the Holder of Common Stock issuable upon such
      conversion that the Holder anticipated receiving from the Company (a "Buy-In"),
      then the Company shall, within three (3) Business Days after the Holder's
      request and in the Holder's discretion, either (i) pay cash to the Holder in
      an
      amount equal to the Holder's total purchase price (including brokerage
      commissions and other out of pocket expenses, if any) for the shares of Common
      Stock so purchased (the "Buy-In Price"), at which point the Company's obligation
      to deliver such certificate (and to issue such Common Stock) shall terminate,
      or
      (ii) promptly honor its obligation to deliver to the Holder a certificate or
      certificates representing such Common Stock and pay cash to the Holder in an
      amount equal to the excess (if any) of the Buy-In Price over the product of
      (A)
      such number of shares of Common Stock, times (B) the Closing Bid Price on the
      Conversion Date.

     

     

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

     

    (c) Limitations
      on
      Conversions.

     

    (i) Beneficial
      Ownership.  The Company shall not effect any conversions of
      this Debenture and the Holder shall not have the right to convert any portion
      of
      this Debenture or receive shares of Common Stock as payment of interest
      hereunder to the extent that after giving effect to such conversion or receipt
      of such interest payment, the Holder, together with any affiliate thereof,
      would
      beneficially own (as determined in accordance with Section 13(d) of the Exchange
      Act and the rules promulgated thereunder) in excess of 9.99% of the number
      of
      shares of Common Stock outstanding immediately after giving effect to such
      conversion or receipt of shares as payment of
      interest.    Since the Holder will not be obligated to
      report to the Company the number of shares of Common Stock it may hold at the
      time of a conversion hereunder, unless the conversion at issue would result
      in
      the issuance of shares of Common Stock in excess of 9.99% of the then
      outstanding shares of Common Stock without regard to any other shares which
      may
      be beneficially owned by the Holder or an affiliate thereof, the Holder shall
      have the authority and obligation to determine whether the restriction contained
      in this Section will limit any particular conversion hereunder and to the extent
      that the Holder determines that the limitation contained in this Section
      applies, the determination of which portion of the principal amount of this
      Debenture is convertible shall be the responsibility and obligation of the
      Holder.  If the Holder has delivered a Conversion Notice for a
      principal amount of this Debenture that, without regard to any other shares
      that
      the Holder or its affiliates may beneficially own, would result in the issuance
      in excess of the permitted amount hereunder, the Company shall notify the Holder
      of this fact and shall honor the conversion for the maximum principal amount
      permitted to be converted on such Conversion Date in accordance with Section
      4(a) and, any principal amount tendered for conversion in excess of the
      permitted amount hereunder shall remain outstanding under this Debenture. The
      provisions of this Section may be waived by a Holder (but only as to itself
      and
      not to any other Holder) upon not less than 65 days prior notice to the Company.
      Other Holders shall be unaffected by any such waiver.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) Other
      Provisions.

     

    (i) The
      Company shall at all times reserve and keep available out of its authorized
      Common Stock the full number of shares of Common Stock issuable upon conversion
      of all outstanding amounts under this Debenture; and within three (3) Business
      Days following the receipt by the Company of a Holder's notice that such minimum
      number of Underlying Shares is not so reserved, the Company shall promptly
      reserve a sufficient number of shares of Common Stock to comply with such
      requirement.

     

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

     

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

     

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

     

    (5) Adjustments
      to Conversion
      Price

     

    (a) Adjustment
      of Conversion
      Price upon Issuance of Common Stock.  If the Company, at any
      time while this Debenture is outstanding, issues or sells, or in accordance
      with
      this Section 5(a) is deemed to have issued or sold, any shares of Common Stock,
      excluding shares of Common Stock, Convertible Securities or  Options
      deemed to have been issued or sold by the Company in connection with any
      Excluded Securities, for a consideration per share (the “New Issuance Price”)
      less than a price equal to the Conversion Price in effect immediately prior
      to
      such issue or sale (such price the "Applicable Price")
      (the foregoing a "Dilutive Issuance"),
      then immediately after such Dilutive Issuance the Conversion Price then in
      effect shall be reduced to an amount equal to the product of (A) the Conversion
      Price in effect immediately prior to such Dilutive Issuance and (B) the quotient
      determined by dividing (1) the sum of (I) the product derived by multiplying
      the
      Conversion Price in effect immediately prior to such Dilutive Issuance and
      the
      number of shares of Common Stock Deemed Outstanding immediately prior to such
      Dilutive Issuance plus (II) the consideration, if any, received by the Company
      upon such Dilutive Issuance, by (2) the product derived by multiplying (I)
      the
      Conversion Price in effect immediately prior to such Dilutive Issuance by (II)
      the number of shares of Common Stock Deemed Outstanding immediately after such
      Dilutive Issuance.  For purposes of determining the adjusted
      Conversion Price under this Section 5(a), the following shall be
      applicable:

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii) Issuance
      of Convertible
      Securities.  If the Company in any manner issues or sells any
      Convertible Securities and the lowest price per share for which one share of
      Common Stock is issuable upon such conversion or exchange or exercise thereof
      is
      less than the Applicable Price, then such share of Common Stock shall be deemed
      to be outstanding and to have been issued and sold by the Company at the time
      of
      the issuance or sale of such Convertible Securities for such price per
      share.  For the purposes of this Section, the "lowest price per share
      for which one share of Common Stock is issuable upon such conversion or exchange
      or exercise" shall be equal to the sum of the lowest amounts of consideration
      (if any) received or receivable by the Company with respect to any one share
      of
      Common Stock upon the issuance or sale of the Convertible Security and upon
      the
      conversion or exchange or exercise of such Convertible Security.  No
      further adjustment of the Conversion Price shall be made upon the actual
      issuance of such share of Common Stock upon conversion or exchange or exercise
      of such Convertible Securities, and if any such issue or sale of such
      Convertible Securities is made upon exercise of any Options for which adjustment
      of the Conversion Price had been or are to be made pursuant to other provisions
      of this Section, no further adjustment of the Conversion Price shall be made
      by
      reason of such issue or sale.

     

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

     

    (iv) Calculation
      of Consideration
      Received.  In case any Option is issued in connection with the
      issue or sale of other securities of the Company, together comprising one
      integrated transaction in which no specific consideration is allocated to such
      Options by the parties thereto, the Options will be deemed to have been issued
      for the difference of (x) the aggregate fair market value of such Options and
      other securities issued or sold in such integrated transaction, less (y) the
      fair market value of the securities other than such Option, issued or sold
      in
      such transaction and the other securities issued or sold in such integrated
      transaction will be deemed to have been issued or sold for the balance of the
      consideration received by the Company.  If any Common Stock, Options
      or Convertible Securities are issued or sold or deemed to have been issued
      or
      sold for cash, the consideration received therefor will be deemed to be the
      gross amount raised by the Company; provided, however, that such gross amount
      is
      not greater than 110% of the net amount received by the Company
      therefor.  If any Common Stock, Options or Convertible Securities are
      issued or sold for a consideration other than cash, the amount of the
      consideration other than cash received by the Company will be the fair value
      of
      such consideration, except where such consideration consists of securities,
      in
      which case the amount of consideration received by the Company will be the
      Closing Bid Price of such securities on the date of receipt.  If any
      Common Stock, Options or Convertible Securities are issued to the owners of
      the
      non-surviving entity in connection with any merger in which the Company is
      the
      surviving entity, the amount of consideration therefor will be deemed to be
      the
      fair value of such portion of the net assets and business of the non-surviving
      entity as is attributable to such Common Stock, Options or Convertible
      Securities, as the case may be.  The fair value of any consideration
      other than cash or securities will be determined jointly by the Company and
      the
      Holder.  If such parties are unable to reach agreement within ten (10)
      days after the occurrence of an event requiring valuation (the "Valuation Event"),
      the fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Holder.  The determination of such
      appraiser shall be deemed binding upon all parties absent manifest error and
      the
      fees and expenses of such appraiser shall be borne by the Company.

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (g) Rights
      Upon Fundamental
      Transaction.  If at any time while this Debenture is
      outstanding, (1) the Company effects any merger or consolidation of the Company
      or any subsidiary of the Company with or into another Person where the Company
      is not the surviving party, (2) the Company or any subsidiary of the Company
      effects any sale of more than one-half of the assets of the Company in one
      or a
      series of related transactions, or (3) 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 (collectively, a “Fundamental
      Transaction”), the Holder shall have the right to (A) require the
      redemption of all amounts owed under this Debenture, including Principal,
      accrued and unpaid Interest, and any other charges, (B) convert the aggregate
      amount of this Debenture then outstanding into the shares of stock and other
      securities, cash and property receivable upon or deemed to be held by holders
      of
      Common Stock following such Fundamental Transaction, and such Holder shall
      be
      entitled upon such event or series of related events to receive such amount
      of
      securities, cash and property as the shares of Common Stock into which such
      aggregate amount of this Debenture could have been converted immediately prior
      to such Fundamental Transaction would have been entitled, or (C) in the case
      of
      a merger or consolidation, require the surviving entity to issue to the Holder
      a
      convertible debenture with a principal amount equal to the aggregate principal
      amount of this Debenture then held by such Holder, plus all accrued and unpaid
      interest and other amounts owing thereon, which such newly issued convertible
      Debenture shall have terms identical (including with respect to conversion)
      to
      the terms of this Debenture, and shall be entitled to all of the rights and
      privileges of the Holder of this Debenture set forth herein and the agreements
      pursuant to which this Debentures were issued. In the case of clause (C), the
      conversion price applicable for the newly issued convertible debenture shall
      be
      based upon the amount of securities, cash and property that each share of Common
      Stock would receive in such transaction and the Conversion Price in effect
      immediately prior to the effectiveness or closing date for such transaction.
      The
      terms of any Acquisition Transaction shall include such terms so as to continue
      to give the Holder the right to receive the securities, cash and property set
      forth in this Section upon any conversion or redemption following such event.
      This provision shall similarly apply to successive such events.  In
      the event that the Holder chooses to require the redemption of the Debenture
      pursuant to clause (A) of this section and the valuation of the Company for
      the
      purposes of the Fundamental Transaction is less than $0.35 per share, then
      the
      exercise price of the Warrants shall be adjusted downward to a price equal
      to a
      forty percent discount to the per share valuation of the Fundamental
      Transaction.

     

    (6) REISSUANCE
      OF THIS
      DEBENTURE.

     

    (a) Transfer.  If
      this Debenture is to be transferred, the Holder shall surrender this Debenture
      to the Company, whereupon the Company will, subject to the satisfaction of
      the
      transfer provisions of the Securities Purchase Agreement, forthwith issue and
      deliver upon the order of the Holder a new Debenture (in accordance with Section
      6(d)), registered in the name of the registered transferee or assignee,
      representing the outstanding Principal being transferred by the Holder and,
      if
      less then the entire outstanding Principal is being transferred, a new Debenture
      (in accordance with Section 6(d)) to the Holder representing the outstanding
      Principal not being transferred.  The Holder and any assignee, by
      acceptance of this Debenture, acknowledge and agree that, by reason of the
      provisions of Section 4(b)(iii) following conversion or redemption of any
      portion of this Debenture, the outstanding Principal represented by this
      Debenture may be less than the Principal stated on the face of this
      Debenture.

     

    (b) Lost,
      Stolen or Mutilated
      Debenture.  Upon receipt by the Company of evidence reasonably
      satisfactory to the Company of the loss, theft, destruction or mutilation of
      this Debenture, and, in the case of loss, theft or destruction, of any
      indemnification undertaking by the Holder to the Company in customary form
      and,
      in the case of mutilation, upon surrender and cancellation of this Debenture,
      the Company shall execute and deliver to the Holder a new Debenture (in
      accordance with Section 6(d)) representing the outstanding
      Principal.

     

    (c) Debenture
      Exchangeable for
      Different Denominations.  This Debenture is exchangeable, upon
      the surrender hereof by the Holder at the principal office of the Company,
      for a
      new Debenture or Debentures (in accordance with Section 6(d)) representing
      in
      the aggregate the outstanding Principal of this Debenture, and each such new
      Debenture will represent such portion of such outstanding Principal as is
      designated by the Holder at the time of such surrender.

     

    (d) Issuance
      of New
      Debentures.  Whenever the Company is required to issue a new
      Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall
      be of like tenor with this Debenture, (ii) shall represent, as indicated on
      the
      face of such new Debenture, the Principal remaining outstanding (or in the
      case
      of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the
      Principal designated by the Holder which, when added to the principal
      represented by the other new Debentures issued in connection with such issuance,
      does not exceed the Principal remaining outstanding under this Debenture
      immediately prior to such issuance of new Debentures), (iii) shall have an
      issuance date, as indicated on the face of such new Debenture, which is the
      same
      as the Issuance Date of this Debenture, (iv) shall have the same rights and
      conditions as this Debenture, and (v) shall represent accrued and unpaid
      Interest from the Issuance Date.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              If
                to the Company, to:

            	
              IR
                Biosciences Holdings, Inc.

            
	 	
              8767
                E. Via De Ventura, Suite 190

            
	 	
              Scottsdale,
                AZ 85258

            
	 	
              Attention:  Chief
                Executive Officer

            
	 	
              Telephone:
                (480) 922-4781

            
	 	
              Facsimile:    (602)
                684-2677

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Preston Gates Ellis, LLP

            
	 	
              10100
                Santa Monica Blvd., 7th
                Floor

            
	 	
              Los
                Angeles, CA 90067

            
	 	
              Attention:   Thomas
                J. Poletti

            
	 	
              Telephone:  (310)
                552-5045

            
	 	
              Facsimile:     (310)
                552-5001

            

    

    

    
      	
              If
                to the Holder:

            	
              YA
                Global Investments, LP

            
	 	
              101
                Hudson Street, Suite 3700

            
	 	
              Jersey
                City, NJ  07303

            
	 	
              Attention:    Mark
                Angelo

            
	 	
              Telephone:   (201)
                985-8300

            
	 	 
	
              With
                a copy to:

            	
              Troy
                Rillo, Esq.

            
	 	
              101
                Hudson Street – Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Telephone:   (201)
                985-8300

            
	 	
              Facsimile:      (201)
                985-8266

            
	 	 

    

    
 

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (9) This
      Debenture shall not entitle the Holder to any of the rights of a stockholder
      of
      the Company, including without limitation, the right to vote, to receive
      dividends and other distributions, or to receive any notice of, or to attend,
      meetings of stockholders or any other proceedings of the Company, unless and
      to
      the extent converted into shares of Common Stock in accordance with the terms
      hereof.

     

    (10) RESERVED.

     

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

     

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

     

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

     

    (14) If
      any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any person or circumstance, it shall nevertheless remain applicable to all
      other
      persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder shall violate applicable laws governing
      usury, the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum permitted rate of interest. The Company covenants
      (to the extent that it may lawfully do so) that it shall not at any time insist
      upon, plead, or in any manner whatsoever claim or take the benefit or advantage
      of, any stay, extension or usury law or other law which would prohibit or
      forgive the Company from paying all or any portion of the principal of or
      interest on this Debenture as contemplated herein, wherever enacted, now or
      at
      any time hereafter in force, or which may affect the covenants or the
      performance of this indenture, and the Company (to the extent it may lawfully
      do
      so) hereby expressly waives all benefits or advantage of any such law, and
      covenants that it will not, by resort to any such law, hinder, delay or impeded
      the execution of any power herein granted to the Holder, but will suffer and
      permit the execution of every such as though no such law has been
      enacted.

     

    (15) 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.

     

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

     

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

     

    (a) “Approved
      Stock Plan”
means a stock option plan that has been approved by the Board of Directors
      of
      the Company,

     

    (b) "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i) "Equity
      Conditions"
      means each of the following conditions: (i) on each day during the period
      beginning two (2) weeks prior to the applicable date of determination and ending
      on and including the applicable date of determination (the "Equity Conditions
      Measuring Period"), either (x) the Underling Shares shall be subject to an
      Underlying Shares Registration Statement which is effective and available for
      the resale of all applicable shares of Common Stock to be issued in connection
      with the event requiring determination or (y) all applicable shares of Common
      Stock to be issued in connection with the event requiring determination shall
      be
      eligible for sale without restriction and without the need for registration
      under any applicable federal or state securities laws; (ii) on each day during
      the Equity Conditions Measuring Period, the Common Stock is designated for
      quotation on the Principal Market and shall not have been suspended from trading
      on such exchange or market nor shall delisting or suspension by such exchange
      or
      market been threatened or pending either (A) in writing by such exchange or
      market or (B) by falling below the then effective minimum listing maintenance
      requirements of such exchange or market; (iii) during the Equity Conditions
      Measuring Period, the Company shall have delivered Conversion Shares upon
      conversion of the Debentures to the Holder on a timely basis as set forth in
      Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued
      in connection with the event requiring determination may be issued in full
      without violating Section 4(c) hereof; (v) during the Equity Conditions
      Measuring Period, there shall not have occurred either (A) an Event of Default
      or (B) an event that with the passage of time or giving of notice would
      constitute an Event of Default; and (vii) the Company shall have no knowledge
      of
      any fact that would cause any applicable shares of Common Stock to be issued
      in
      connection with the event requiring determination not to be eligible for sale
      without restriction for at least the next 45 days. 

     

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

     

    (k) “Excluded
      Securities”
means, (a) shares or options issued or deemed to have been issued by
      the Company
      pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed
      to be issued by the Company upon the conversion, exchange or exercise of any
      right, option, obligation or security outstanding on the date prior to date
      of
      the Securities Purchase Agreement, provided that the terms of such right,
      option, obligation or security are not amended or otherwise modified on or
      after
      the date of the Securities Purchase Agreement, and provided that the conversion
      price, exchange price, exercise price or other purchase price is not reduced,
      adjusted or otherwise modified and the number of shares of Common Stock issued
      or issuable is not increased (whether by operation of, or in accordance with,
      the relevant governing documents or otherwise) on or after the date of the
      Securities Purchase Agreement, (c) shares issued in connection with any
      acquisition by the Company, whether through an acquisition of stock or a merger
      of any business, assets or technologies, leasing arrangement or any other
      transaction the primary purpose of which is not to raise equity capital, and
      (d) the shares of Common Stock issued or deemed to be issued by the Company
      upon conversion of this Debenture.

     

    (l) "Holder
      Pro Rata
      Amount" means a fraction (i) the numerator of which is the Original
      Principal Amount of this Debenture on the Issuance Date and (ii) the denominator
      of which is the aggregate Purchase Price (as defined in the Securities Purchase
      Agreement).

     

    (m) "Interest
      Conversion
      Price" means that price which shall be computed as ninety percent (90%)
      of the average Volume Weighted Average Prices of the Common Stock during the
      ten
      (10) consecutive Trading Days immediately preceding the applicable date of
      determination.  All such determinations to be appropriately adjusted
      for any stock split, stock dividend, stock combination or other similar
      transaction.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (n) “Interest
      Payment
      Date” shall mean the last day of each calendar quarter beginning on March
      31, 2008.

     

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

     

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

     

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

     

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

     

    (s) “Securities
      Purchase
      Agreement” means the Securities Purchase Agreement dated January 3, 2008
      by and among the Company and the Buyers listed on Schedule I attached
      thereto.

     

    (t) “Security
      Documents”
means collectively, the Security Agreement, the Patent Security Agreement,
      and
      the Guaranty.

     

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

     

    (v) “Transaction
      Documents” means the Securities Purchase Agreement or any other agreement
      delivered in connection with the Securities Purchase Agreement, including,
      without limitation, the Security Documents, the Irrevocable Transfer Agent
      Instructions.

     

    (w) Triggering
      Event”
means the occurrence of any of the following: (i) December 31, 2009,
      or (ii) a
      failure by the Company’s to achieve any of the Triggering
      Milestones.

     

    (x) “Triggering
      Milestones” means each of

     

    (i) successful
      completion of preclinical studies of Homspera in stem cells designed to
      show evidence of biological activity (defined as a response by the stem cells,
      either by molecular or cellular markers or other cellular characterization,
      including, for example, proliferation and colony forming activity) on this
      cell type by June 30, 2008,

     

    (ii) completion
      of preclinical H5N1 challenge study in ferrets, which studies shall including
      evaluating whole animal and immunological responses to Homspera treatment
      following H5N1 infection and which would suggest and/or support therapeutic
      activity by December 31, 2008, or

     

    (iii) submission
      of  a complete Investigational New Drug Application (“IND”) for the
      use of
      Homspera in humans which IND shall be submitted to the FDA for at least one
      clinical trial (Phase I) in humans by June 30, 2009.

     

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

     

    (z) "Volume
      Limitation"
      means 25% of the aggregate dollar trading volume (as reported on Bloomberg)
      of
      the Common Stock on the Principal Market over the thirty (30) consecutive
      Trading Day period ending on the Trading Day immediately preceding the
      applicable date of determination.

     

    (aa) "Volume
      Weighted Average
      Price" means, for any security as of any date, the daily dollar
      volume-weighted average price for such security on the Primary Market as
      reported by Bloomberg through its “Historical Prices – Px Table with Average
      Daily Volume” functions, or, if no dollar volume-weighted average price is
      reported for such security by Bloomberg, the average of the highest closing
      bid
      price and the lowest closing ask price of any of the market makers for such
      security as reported in the "pink sheets" by Pink Sheets LLC.

     

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

     

    [Signature
      Page Follows]

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    

    
      	 	
              COMPANY:

            
	 	
              IR
                BIOSCIENCES HOLDINGS, INC.

            
	 	 
	 	
              By: /s/
                Michael
                Wilhelm                                     

            
	 	
              Name: 
                Michael Wilhelm  

            
	 	
              Title:   
                President and Chief Executive Officer

            
	 	 

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

     

     

    CONVERSION
      NOTICE

     

     

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

     

    

    
      	
              
              

              TO:

              
              

            

    

    

    The
      undersigned hereby irrevocably elects to convert $                                                         of
      the principal amount of Debenture No.IRBO-1-1 into Shares of Common Stock of
      IR BIOSCIENCES HOLDINGS,
      INC., according to the conditions stated therein, as of the Conversion
      Date written below.

     

    
      	
              
              

              Conversion
                Date:  

            	 
                                                                                                                                                                   
              
	
              
              

              Conversion
                Amount to be converted:  

            	
              
              

              $                                                                               
                                                                                     
                

              
              

            
	
              
              

              Conversion
                Price:  

            	
              
              

              $                                                                                                                                                     
                

              
              

            
	
              
              

              Number
                of shares of Common Stock to be issued:

              
              

            	 
                                                                                                                                                                   
              
	
              
              

              Amount
                of Debenture Unconverted:

              
              

            	
              
              

              $                                                                                                                                                     
                

              
              

            
	 	
              
              

               

              
              

            
	 	 
	
              
              

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

              
              

            
	
              
              

              Issue
                to:

              
              

            	 
	 	 
	
              
              

              Authorized
                Signature:

              
              

            	                                                                                                                                                     
              
	
              
              

              Name:

              
              

            	                                                                                
	
              
              

              Title:

              
              

            	                                                                                
	
              
              

              Broker
                DTC Participant Code:

              
              

            	 
	
              
              

              Account
                Number:

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