Document:

EXHIBIT
      D

    

    FORM
      OF
      LOCK-UP AGREEMENT

    

    July
      __,
      2008

    

    Each
      Purchaser referenced below:

    

    
      	 	
              Re:

            	
              Securities
                Purchase Agreement, dated as of July __, 2008 (the “Purchase
                Agreement”),
                between GenSpera, Inc., a Delaware corporation (the “Company”)
                and the purchasers signatory thereto (each, a “Purchaser”
                and, collectively, the “Purchasers”)

            

    

     

    Ladies
      and Gentlemen:

     

    Defined
      terms not otherwise defined in this letter agreement (the “Letter
      Agreement”)
      shall
      have the meanings set forth in the Purchase Agreement. Pursuant to Section
      2.2(a) of the Purchase Agreement and in satisfaction of a condition of the
      Company’s obligations under the Purchase Agreement, the undersigned irrevocably
      agrees with the Company that, from the date hereof until the 12 month
      anniversary of the Effective Date (such period, the “Restriction
      Period”),
      the
      undersigned will not offer, sell, contract to sell, hypothecate, pledge or
      otherwise dispose of (or enter into any transaction which is designed to, or
      might reasonably be expected to, result in the disposition (whether by actual
      disposition or effective economic disposition due to cash settlement or
      otherwise) by the undersigned or any Affiliate of the undersigned or any person
      in privity with the undersigned or any Affiliate of the undersigned), directly
      or indirectly, including the filing (or participation in the filing) of a
      registration statement with the Commission in respect of, or establish or
      increase a put equivalent position or liquidate or decrease a call equivalent
      position within the meaning of Section 16 of the Exchange Act with respect
      to,
      any shares of Common Stock or Common Stock Equivalents beneficially owned,
      held
      or hereafter acquired by the undersigned (the “Securities”).
      Beneficial
      ownership shall be calculated in accordance with Section 13(d) of the Exchange
      Act. In order to enforce this covenant, at such time as the Company appoints
      a
      transfer agent for the securities of the Company, the Company shall notify
      such
      transfer agent to immediately impose irrevocable stop-transfer instructions
      preventing such transfer agent from effecting any actions in violation of this
      Letter Agreement.

    

    The
      undersigned acknowledges that the execution, delivery and performance of this
      Letter Agreement is a material inducement to each Purchaser to complete the
      transactions contemplated by the Purchase Agreement and that each Purchaser
      (which shall be a third party beneficiary of this Letter Agreement) and the
      Company shall be entitled to specific performance of the undersigned’s
      obligations hereunder. The undersigned hereby represents that the undersigned
      has the power and authority to execute, deliver and perform this Letter
      Agreement, that the undersigned has received adequate consideration therefor
      and
      that the undersigned will indirectly benefit from the closing of the
      transactions contemplated by the Purchase Agreement. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    This
      Letter Agreement may not be amended or otherwise modified in any respect without
      the written consent of each of the Company, each Purchaser and the undersigned.
      This Letter Agreement shall be construed and enforced in accordance with the
      laws of the State of New York without regard to the principles of conflict
      of
      laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction
      of the United States District Court sitting in the Southern District of New
      York
      and the courts of the State of New York located in Manhattan, for the purposes
      of any suit, action or proceeding arising out of or relating to this Letter
      Agreement, and hereby waives, and agrees not to assert in any such suit, action
      or proceeding, any claim that (i) it is not personally subject to the
      jurisdiction of such court, (ii) the suit, action or proceeding is brought
      in an
      inconvenient forum, or (iii) the venue of the suit, action or proceeding is
      improper. The undersigned hereby irrevocably waives personal service of process
      and consents to process being served in any such suit, action or proceeding
      by
      receiving a copy thereof sent to the Company at the address in effect for
      notices to it under the Purchase Agreement and agrees that such service shall
      constitute good and sufficient service of process and notice thereof. The
      undersigned hereby waives any right to a trial by jury. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law. The undersigned agrees and understands that this Letter
      Agreement does not intend to create any relationship between the undersigned
      and
      each Purchaser and that each Purchaser is not entitled to cast any votes on
      the
      matters herein contemplated and that no issuance or sale of the Securities
      is
      created or intended by virtue of this Letter Agreement.

     

    By
      its
      signature below, the Company hereby acknowledges and agrees that, reflecting
      this Letter Agreement, upon the appointment of a transfer agent for the Company,
      it shall immediately notify such transfer agent to place an irrevocable stop
      transfer instruction on all Securities beneficially owned by the undersigned
      until the end of the Restriction Period. This Letter Agreement shall be binding
      on successors and assigns of the undersigned with respect to the Securities
      and
      any such successor or assign shall enter into a similar agreement for the
      benefit of the Purchasers.

    

    ***
      SIGNATURE PAGE FOLLOWS***

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    This
      Letter Agreement may be executed in two or more counterparts, all of which
      when
      taken together may be considered one and the same agreement.

    

    
      	
               

            
	
              Signature

            
	 
	
               

            
	
              Print
                Name

            
	 
	
               

            
	
              Position
                in Company

            
	 
	
              Address
                for Notice:

            
	 
	 
	 
	 
	 
	 
	
              Number
                of shares of Common Stock

            

    

    

    _______________________________________________________________________________________________

    Number
      of
      shares of Common Stock underlying subject to warrants, options, debentures
      or
      other convertible securities

     

    By
      signing below, the Company agrees to enforce the restrictions on transfer set
      forth in this Letter Agreement.

    

    
      	
              GENSPERA,
                INC.

            
	 
	
              By:
                

            	 
	
              Craig
                A. Dionne, Ph.D.

            
	
              President
                and CEO

            

    

    

    
      
         

      

      
        3NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED
      IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    

    Original
      Issue Date: July ___, 2008

    Original
      Conversion Price (subject to adjustment herein): $1.00

    

    $163,600.00

     

    5%
      CONVERTIBLE DEBENTURE

    DUE
      JULY ___, 2009

    

    THIS
      5%
      CONVERTIBLE DEBENTURE is a duly authorized and validly issued 5% Convertible
      Debentures of GenSpera, Inc., a Delaware corporation, (the “Company”),
      having its principal place of business at 9901 I-10 West, Suite 800, San
      Antonio, TX 78230, designated as its 5% Convertible Debenture due July ___,
      2009
      (this debenture, the “Debenture”
and,
      collectively with the other debentures of such series, the “Debentures”).

    

    FOR
      VALUE
      RECEIVED, the Company promises to pay to T.R.
      Winston & Company LLC
      or its
      registered assigns (the “Holder”),
      or
      shall have paid pursuant to the terms hereunder, the principal sum of
$163,600.00
      on July
      ___, 2009 (the “Maturity
      Date”)
      or
      such earlier date as this Debenture is required or permitted to be repaid as
      provided hereunder, and to pay interest to the Holder on the aggregate
      unconverted and then outstanding principal amount of this Debenture in
      accordance with the provisions hereof. This Debenture is subject to the
      following additional provisions:

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

     

    “Business
      Day”
means
      any day except any Saturday, any Sunday, any day which shall be a federal legal
      holiday in the United States or any day on which banking institutions in the
      State of New York are authorized or required by law or other governmental action
      to close and, upon the Company becoming listed or quoted on a Trading Market,
      except any day that the Common Stock is not trading on the Trading
      Market.

    

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (a) an acquisition after the
      date
      hereof by an individual or legal entity or “group” (as described in Rule
      13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Company, by
      contract or otherwise) of in excess of 33% of the voting securities of the
      Company (other than by means of conversion or exercise of the Debentures and
      the
      Securities issued together with the Debentures), (b) the Company merges into
      or
      consolidates with any other Person, or any Person merges into or consolidates
      with the Company and, after giving effect to such transaction, the stockholders
      of the Company immediately prior to such transaction own less than 66% of the
      aggregate voting power of the Company or the successor entity of such
      transaction, or (c) the Company sells or transfers all or substantially all
      of
      its assets to another Person and the stockholders of the Company immediately
      prior to such transaction own less than 66% of the aggregate voting power of
      the
      acquiring entity immediately after the transaction, (d) a replacement at one
      time or within a one year period of more than one-half of the members of the
      Board of Directors which is not approved by a majority of those individuals
      who
      are members of the Board of Directors on the date hereof (or by those
      individuals who are serving as members of the Board of Directors on any date
      whose nomination to the Board of Directors was approved by a majority of the
      members of the Board of Directors who are members on the date hereof), or (e)
      the execution by the Company of an agreement to which the Company is a party
      or
      by which it is bound, providing for any of the events set forth in clauses
      (a)
      through (d) above.

    

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

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.0001 per share, and any other
      class of securities into which such securities may hereafter be reclassified
      or
      changed into. 

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including, without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exercisable or exchangeable for, or otherwise
      entitles the holder thereof to receive, Common Stock.

     

    “Conversion”
shall
      have the meaning ascribed to such term in Section 4. 

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Equity
      Conditions”
means,
      during the period in question, (a)
      the
      Company shall have duly honored all conversions and redemptions scheduled to
      occur or occurring by virtue of one or more Notices of Conversion of the Holder,
      if any, (b) the Company shall have paid all liquidated damages and other amounts
      owing to the Holder in respect of this Debenture, (c)(i)
      there is an effective registration statement pursuant to which the Holder is
      permitted to utilize the prospectus thereunder to resell all of the Conversion
      Shares (and the Company believes, in good faith, that such effectiveness will
      continue uninterrupted for the foreseeable future) or (ii) all of the Conversion
      Shares issuable may be resold pursuant to Rule 144 without volume or
      manner-of-sale restrictions or current public information requirements as
      determined by the counsel to the Company pursuant to a written opinion letter
      to
      such effect, addressed and acceptable to the Transfer Agent and the Holder,
      (d)
      there is a sufficient number of authorized but unissued and otherwise unreserved
      shares of Common Stock for the issuance of all of the Conversion Shares, (e)
      there is no existing Event of Default or no existing event which, with the
      passage of time or the giving of notice, would constitute an Event of Default,
      (f) the issuance of the shares in question (or, in the case of an Optional
      Redemption, the shares issuable upon conversion in full of the Optional
      Redemption Amount) to
      the
      Holder would not violate the limitations set forth in Section 4(c) herein,
      (h)
      there
      has been no public announcement of a pending or proposed Fundamental Transaction
      or Change of Control Transaction that has not been consummated, and (i) the
      Holder is not in possession of any information provided by the Company that
      constitutes, or may constitute, material non-public information.

    

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

    

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

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers,
      directors, or consultants of the Company pursuant to any stock or option plan
      duly adopted for such purpose, by a majority of the members of the Board of
      Directors or a majority of the members of a committee of directors established
      for such purpose (provided, however, any such issuances to consultants shall
      not
      exceed an aggregate of 100,000 shares, subject to adjustment for forward and
      reverse stock splits, stock dividends and similar transactions of the Common
      Stock that occur after the Closing Date, in any 12-month period), (b) securities
      upon the exercise or exchange of or conversion of any Securities issued
      hereunder and/or other securities exercisable or exchangeable for or convertible
      into shares of Common Stock issued and outstanding on the Original Issue Date,
      provided that such securities have not been amended since the Original Issue
      Date to increase the number of such securities or to decrease the exercise,
      exchange or conversion price of such securities, or (c) securities issued
      pursuant to acquisitions or strategic transactions approved by a majority of
      the
      disinterested directors of the Company, provided that any such issuance shall
      only be to a Person which is, itself or through its subsidiaries, an operating
      company in a business synergistic with the business of the Company and in which
      the Company receives benefits in addition to the investment of funds, but shall
      not include a transaction in which the Company is issuing securities primarily
      for the purpose of raising capital or to an entity whose primary business is
      investing in securities. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

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

    

    “Interest
      Conversion Shares”
means
      the shares of Common Stock issue in lieu of cash interest payments.

    

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

     

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

    

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

    

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction.

     

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

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Optional
      Redemption Notice”
shall
      have the meaning set forth in Section 6.

    

    “Optional
      Redemption Notice Date”
shall
      have the meaning set forth in Section 6.

    

    “Optional
      Redemption Period” shall
      have the meaning set forth in Section 6.

    

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

    

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

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule. 

     

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

    

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

    

    “Subsidiary”
means
      any direct or indirect subsidiary of the Company formed or acquired after the
      date hereof.

    

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question (or any successor market or exchange):
      the
      American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market,
      the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin
      Board.

    

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

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    Section
      2. Interest.

     

    a) Payment
      of Interest in Cash or Kind.
      The
      Company shall pay interest to the Holder on the aggregate unconverted and then
      outstanding principal amount of this Debenture at the rate of 5% per annum,
      payable in arrears, on each Conversion Date (as to that principal amount then
      being converted), on each Optional Redemption Date (as to that principal amount
      then being redeemed) and on the Maturity Date (each such date, an “Interest
      Payment Date”)
      (if
      any Interest Payment Date is not a Business Day, then the applicable payment
      shall be due on the next succeeding Business Day), in cash or, at the Company’s
      option, in duly authorized, validly issued, fully paid and non-assessable shares
      of Common Stock at the Interest Conversion Rate or a combination thereof;
provided,
      however,
      that
      payment in shares of Common Stock may only occur if all of the Equity Conditions
      have been met (unless waived by the Holder in writing) during the 20 Business
      Days immediately prior to the applicable Interest Payment Date (the
“Interest
      Notice Period”)
      and
      through and including the date such shares of Common Stock are actually issued
      to the Holder. 

     

    b) Company’s
      Election to Pay Interest in Cash or Shares of Common Stock.
      Subject
      to the terms and conditions herein, the decision whether to pay interest
      hereunder in cash, shares of Common Stock or a combination thereof shall be
      at
      the sole discretion of the Company. 

    

    c) Interest
      Calculations.
      Interest shall be calculated on the basis of a 360-day year, consisting of
      twelve 30 calendar day periods, and shall accrue daily commencing on the
      Original Issue Date until payment in full of the outstanding principal, together
      with all accrued and unpaid interest, liquidated damages and other amounts
      which
      may become due hereunder, has been made. Payment of interest in shares of Common
      Stock (other than the Interest Conversion Shares issued prior to an Interest
      Notice Period) shall otherwise occur pursuant to Section 4(d)(ii) herein and,
      solely for purposes of the payment of interest in shares, the Interest Payment
      Date shall be deemed the Conversion Date. Interest shall cease to accrue with
      respect to any principal amount converted, provided that, the Company actually
      delivers the Conversion Shares within the time period required by Section
      4(d)(ii) herein. Interest hereunder will be paid to the Person in whose name
      this Debenture is registered on the records of the Company regarding
      registration and transfers of this Debenture (the “Debenture
      Register”).
      

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    d) Late
      Fee.
      All
      overdue accrued and unpaid interest to be paid hereunder shall entail a late
      fee
      at an interest rate equal to the lesser of 18% per annum or the maximum rate
      permitted by applicable law (the “Late
      Fees”)
      which
      shall accrue daily from the date such interest is due hereunder through and
      including the date of actual payment in full. Notwithstanding anything to the
      contrary contained herein, if, on any Interest Payment Date the Company has
      elected to pay accrued interest in the form of Common Stock but the Company
      is
      not permitted to pay accrued interest in Common Stock because it fails to
      satisfy the conditions for payment in Common Stock set forth in Section 2(a)
      herein, then, at the option of the Holder, the
      Company, in lieu of delivering either
      shares
      of
      Common Stock pursuant to this Section 2 or
      paying
      the regularly scheduled interest payment in cash, shall deliver, within three
      (3) Business Days of each applicable Interest Payment Date, an amount in cash
      equal to the product of (x) the number of shares of Common Stock otherwise
      deliverable to the Holder in connection with the payment of interest due on
      such
      Interest Payment Date multiplied by (y) the highest VWAP during the period
      commencing on the Interest Payment Date and ending on the Business Day prior
      to
      the date such payment is actually made. 

     

    e) Prepayment.
      Except
      as otherwise set forth in this Debenture, the Company may not prepay any portion
      of the principal amount of this Debenture without the prior written consent
      of
      the Holder. 

    

    Section
      3. Registration
      of Transfers and Exchanges.
      

     

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

     

    b) Investment
      Representations.
      This
      Debenture may be transferred or exchanged only in compliance with the applicable
      federal and state securities laws and regulations. 

    

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

     

    
      
        
        

      

      
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    Section
      4. Conversion.

     

    a) Voluntary
      Conversion.
      At any
      time after the Original Issue Date until this Debenture is no longer
      outstanding, this Debenture shall be convertible, in whole or in part, into
      shares of Common Stock at the option of the Holder, at any time and from time
      to
      time (subject to the conversion limitations set forth in Section 4(c)
      hereof). The Holder shall effect conversions by delivering to the Company a
      Notice of Conversion, the form of which is attached hereto as Annex
      A
      (each, a
“Notice
      of Conversion”),
      specifying therein the principal amount of this Debenture to be converted and
      the date on which such conversion shall be effected (such date, the
“Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the date that such Notice of Conversion is deemed delivered hereunder.
      To effect conversions hereunder, the Holder shall not be required to physically
      surrender this Debenture to the Company unless the entire principal amount
      of
      this Debenture, plus all accrued and unpaid interest thereon, has been so
      converted. Conversions hereunder shall have the effect of lowering the
      outstanding principal amount of this Debenture in an amount equal to the
      applicable conversion. The Holder and the Company shall maintain records showing
      the principal amount(s) converted and the date of such conversion(s). The
      Company may deliver an objection to any Notice of Conversion within 1 Business
      Day of delivery of such Notice of Conversion. In the event of any dispute or
      discrepancy, the records of the Holder shall be controlling and determinative
      in
      the absence of manifest error. The
      Holder, and any assignee by acceptance of this Debenture, acknowledge and agree
      that, by reason of the provisions of this paragraph, following conversion of
      a
      portion of this Debenture, the unpaid and unconverted principal amount of this
      Debenture may be less than the amount stated on the face
      hereof.

     

    b) Conversion
      Price.
      The
      conversion price in effect on any Conversion Date shall be equal to $1.00,
      subject
      to adjustment herein (the “Conversion
      Price”).

     

    
      
        
        

      

      
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    c) Conversion
      Limitations.
      After
      such date that the Common Stock is registered under Section 12(b) or 12(g)
      of
      the Exchange Act, the Company shall not effect any conversion of this Debenture,
      and a Holder shall not have the right to convert any portion of this Debenture,
      to the extent that after giving effect to the conversion set forth on the
      applicable Notice of Conversion, the Holder (together with the Holder’s
      Affiliates, and any other person or entity acting as a group together with
      the
      Holder or any of the Holder’s Affiliates) would beneficially own in excess of
      the Beneficial Ownership Limitation (as defined below).  For purposes of
      the foregoing sentence, the number of shares of Common Stock beneficially owned
      by the Holder and its Affiliates shall include the number of shares of Common
      Stock issuable upon conversion of this Debenture with respect to which such
      determination is being made, but shall exclude the number of shares of Common
      Stock which are issuable upon (A) conversion of the remaining, unconverted
      principal amount of this Debenture beneficially owned by the Holder or any
      of
      its Affiliates and (B) exercise or conversion of the unexercised or unconverted
      portion of any other securities of the Company subject to a limitation on
      conversion or exercise analogous to the limitation contained herein (including,
      without limitation, any other Debentures or the Warrants) beneficially owned
      by
      the Holder or any of its Affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 4(c), beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder. To the extent that the limitation
      contained in this Section 4(c) applies, the determination of whether this
      Debenture is convertible (in relation to other securities owned by the Holder
      together with any Affiliates) and of which principal amount of this Debenture
      is
      convertible shall be in the sole discretion of the Holder, and the submission
      of
      a Notice of Conversion shall be deemed to be the Holder’s determination of
      whether this Debenture may be converted (in relation to other securities owned
      by the Holder together with any Affiliates) and which principal amount of this
      Debenture is convertible, in each case subject to the Beneficial Ownership
      Limitation. To ensure compliance with this restriction, the Holder will be
      deemed to represent to the Company each time it delivers a Notice of Conversion
      that such Notice of Conversion has not violated the restrictions set forth
      in
      this paragraph and the Company shall have no obligation to verify or confirm
      the
      accuracy of such determination. In
      addition, a determination as to any group status as contemplated above shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and
      the
      rules and regulations promulgated thereunder. For
      purposes of this Section 4(c), in determining the number of outstanding shares
      of Common Stock, the Holder may rely on the number of outstanding shares of
      Common Stock as stated in the most recent of the following: (A) the Company’s
      most recent periodic or annual report, as the case may be; (B) a more recent
      public announcement by the Company; or (C) a more recent notice by the Company
      or the Company’s transfer agent setting forth the number of shares of Common
      Stock outstanding.  Upon the written or oral request of a Holder, the
      Company shall within two Business Days confirm orally and in writing to the
      Holder the number of shares of Common Stock then outstanding.  In any case,
      the number of outstanding shares of Common Stock shall be determined after
      giving effect to the conversion or exercise of securities of the Company,
      including this Debenture, by the Holder or its Affiliates since the date as
      of
      which such number of outstanding shares of Common Stock was reported. The
“Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      conversion of this Debenture held by the Holder. The Holder, upon not less
      than
      61 days’ prior notice to the Company, may increase or decrease the Beneficial
      Ownership Limitation provisions of this Section 4(c), provided that the
      Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to the
      issuance of shares of Common Stock upon conversion of this Debenture held by
      the
      Holder and the Beneficial Ownership Limitation provisions of this Section 4(c)
      shall continue to apply. Any such increase or decrease will not be effective
      until the 61st
      day
      after such notice is delivered to the Company.  The
      Beneficial Ownership Limitation provisions of this paragraph shall be construed
      and implemented in a manner otherwise than in strict conformity with the terms
      of this Section 4(c) to correct this paragraph (or any portion hereof) which
      may
      be defective or inconsistent with the intended Beneficial Ownership Limitation
      contained herein or to make changes or supplements necessary or desirable to
      properly give effect to such limitation.
      The
      limitations contained in this paragraph shall apply to a successor holder of
      this
      Debenture.

     

    d) Mechanics
      of Conversion.

     

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

    
      
        
        

      

      
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    ii. Delivery
      of Certificate Upon Conversion.
      Not
      later than three Business Days after each Conversion Date (the “Share
      Delivery Date”),
      the
      Company shall deliver, or cause to be delivered, to the Holder (A) a certificate
      or certificates representing the Conversion Shares which, on or after the six
      month anniversary of the Original Issue Date, shall be free of restrictive
      legends and trading restrictions representing the number of Conversion Shares
      being acquired upon the conversion of this Debenture and (B) a bank check in
      the
      amount of accrued and unpaid interest (if the Company has elected or is required
      to pay accrued interest in cash). On or after the six month anniversary of
      the
      Original Issue Date, the Company shall use its best efforts to deliver any
      certificate or certificates required to be delivered by the Company under this
      Section 4(d) electronically through the Depository Trust Company or another
      established clearing corporation performing similar functions. 

     

    iii. Failure
      to Deliver Certificates.
      If in
      the case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the third Business
      Day
      after the Conversion Date, the Holder shall be entitled to elect by written
      notice to the Company at any time on or before its receipt of such certificate
      or certificates, to rescind such Conversion, in which event the Company shall
      promptly return to the Holder any original Debenture delivered to the Company
      and the Holder shall promptly return to the Company the Common Stock
      certificates representing the principal amount of this Debenture unsuccessfully
      tendered for conversion to the Company. 

     

    iv. Obligation
      Absolute.
      The
      Company’s obligations to issue and deliver the Conversion Shares upon conversion
      of this Debenture in accordance with the terms hereof are absolute and
      unconditional, irrespective of any action or inaction by the Holder to enforce
      the same, any waiver or consent with respect to any provision hereof, the
      recovery of any judgment against any Person or any action to enforce the same,
      or any setoff, counterclaim, recoupment, limitation or termination, or any
      breach or alleged breach by the Holder or any other Person of any obligation
      to
      the Company or any violation or alleged violation of law by the Holder or any
      other Person, and irrespective of any other circumstance which might otherwise
      limit such obligation of the Company to the Holder in connection with the
      issuance of such Conversion Shares; provided,
      however,
      that
      such delivery shall not operate as a waiver by the Company of any such action
      the Company may have against the Holder. In the event the Holder of this
      Debenture shall elect to convert any or all of the outstanding principal amount
      hereof, the Company may not refuse conversion based on any claim that the Holder
      or anyone associated or affiliated with the Holder has been engaged in any
      violation of law, agreement or for any other reason, unless an injunction from
      a
      court, on notice to Holder, restraining and or enjoining conversion of all
      or
      part of this Debenture shall have been sought and obtained, and the Company
      posts a surety bond for the benefit of the Holder in the amount of 150% of
      the
      outstanding principal amount of this Debenture, which is subject to the
      injunction, which bond shall remain in effect until the completion of
      arbitration/litigation of the underlying dispute and the proceeds of which
      shall
      be payable to the Holder to the extent it obtains judgment. In the absence
      of
      such injunction, the Company shall issue Conversion Shares or, if applicable,
      cash, upon a properly noticed conversion. 

     

    
      
        
        

      

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

     

    
      
        
        

      

      
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    vi. Reservation
      of Shares Issuable Upon Conversion.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock for the sole purpose of
      issuance upon conversion of this Debenture and payment of interest on this
      Debenture, each as herein provided, free from preemptive rights or any other
      actual contingent purchase rights of Persons other than the Holder, not less
      than such aggregate number of shares of the Common Stock as shall be issuable
      (taking into account the adjustments and restrictions of Section 5) upon the
      conversion of the outstanding principal amount of this Debenture and payment
      of
      interest hereunder. The Company covenants that all shares of Common Stock that
      shall be so issuable shall, upon issue, be duly authorized, validly issued,
      fully paid and nonassessable and, if subject to Section 7 hereof, shall be
      registered for public sale in accordance with such registration
      statement.

    

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

    

    viii. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Debenture shall be made without charge to the Holder hereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificates, provided that, the Company shall not be required to pay
      any tax that may be payable in respect of any transfer involved in the issuance
      and delivery of any such certificate upon conversion in a name other than that
      of the Holder of this Debenture so converted and the Company shall not be
      required to issue or deliver such certificates unless or until the person or
      persons requesting the issuance thereof shall have paid to the Company the
      amount of such tax or shall have established to the satisfaction of the Company
      that such tax has been paid.

    

    Section
      5. Certain
      Adjustments.

     

    a) Stock
      Dividends and Stock Splits.
      If the
      Company, at any time while this Debenture is outstanding: (i) pays a stock
      dividend or otherwise makes a distribution or distributions payable in shares
      of
      Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
      for avoidance of doubt, shall not include any shares of Common Stock issued
      by
      the Company upon conversion of, or payment of interest on, the Debentures),
      (ii)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (iii) combines (including by way of a reverse stock split) outstanding shares
      of
      Common Stock into a smaller number of shares or (iv) issues, in the event of
      a
      reclassification of shares of the Common Stock, any shares of capital stock
      of
      the Company, then the Conversion Price shall be multiplied by a fraction of
      which the numerator shall be the number of shares of Common Stock (excluding
      any
      treasury shares of the Company) outstanding immediately before such event and
      of
      which the denominator shall be the number of shares of Common Stock outstanding
      immediately after such event. Any adjustment made pursuant to this Section
      shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution and shall become
      effective immediately after the effective date in the case of a subdivision,
      combination or re-classification.

     

    
      
        
        

      

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

     

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

     

    
      
        
        

      

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

     

    e) Fundamental
      Transaction.
      If, at
      any time while this Debenture is outstanding, (i) the Company effects any merger
      or consolidation of the Company with or into another Person, (ii) the Company
      effects any sale of all or substantially all of its assets in one transaction
      or
      a series of related transactions, (iii) any tender offer or exchange offer
      (whether by the Company or another Person) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (iv) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (in any such case, a “Fundamental
      Transaction”),
      then,
      upon any subsequent conversion of this Debenture, the Holder shall have the
      right to receive, for each Conversion Share that would have been issuable upon
      such conversion immediately prior to the occurrence of such Fundamental
      Transaction, the same kind and amount of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of 1 share of Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of 1 share of Common
      Stock
      in such Fundamental Transaction, and the Company shall apportion the Conversion
      Price among the Alternate Consideration in a reasonable manner reflecting the
      relative value of any different components of the Alternate Consideration.
      If
      holders of Common Stock are given any choice as to the securities, cash or
      property to be received in a Fundamental Transaction, then the Holder shall
      be
      given the same choice as to the Alternate Consideration it receives upon any
      conversion of this Debenture following such Fundamental Transaction. To the
      extent necessary to effectuate the foregoing provisions, any successor to the
      Company or surviving entity in such Fundamental Transaction shall issue to
      the
      Holder a new debenture consistent with the foregoing provisions and evidencing
      the Holder’s right to convert such debenture into Alternate Consideration. The
      terms of any agreement pursuant to which a Fundamental Transaction is effected
      shall include terms requiring any such successor or surviving entity to comply
      with the provisions of this Section 5(e) and insuring that this Debenture (or
      any such replacement security) will be similarly adjusted upon any subsequent
      transaction analogous to a Fundamental Transaction.

     

    
      
        
        

      

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

    

    g) Notice
      to the Holder.

    

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

     

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

     

    
      
        
        

      

      
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    Section
      6. Optional
      Redemption at Election of Holder.
      Subject
      to the provisions of this Section 6, at any time after the Original Issue Date,
      if the Company consummates an offering of securities for proceeds equal to
      or
      greater than $3,000,000, the Holder may deliver a notice to the Company (an
      “Optional
      Redemption Notice”
and
      the
      date such notice is deemed delivered hereunder, the “Optional
      Redemption Notice Date”)
      of its
      irrevocable election to request the Company to redeem some or all of the then
      outstanding principal amount of this Debenture for cash in an amount equal
      to
      the Optional Redemption Amount on the 20th
      Business
      Day following the Optional Redemption Notice Date (such date, the “Optional
      Redemption Date”,
      such
      20 Business Day period, the “Optional
      Redemption Period”
and
      such redemption, the “Optional
      Redemption”).
      The
      Optional Redemption Amount is payable in full on the Optional Redemption Date.
      The Company covenants and agrees that it will honor all Notices of Conversion
      tendered from the time of delivery of the Optional Redemption Notice through
      the
      date all amounts owing thereon are due and paid in full. The
      payment of cash pursuant to an Optional Redemption shall be payable on the
      Optional Redemption Date. If any portion of the payment pursuant to an Optional
      Redemption shall not be paid by the Company by the applicable due date, interest
      shall accrue thereon at an interest rate equal to the lesser of 18% per annum
      or
      the maximum rate permitted by applicable law until such amount is paid in full.
      Notwithstanding anything herein contained to the contrary, if any portion of
      the
      Optional Redemption Amount remains unpaid after such date, the Holder may elect,
      by written notice to the Company given at any time thereafter,
      to invalidate such Optional Redemption, ab initio.
      The
      Holder may elect to convert the outstanding principal amount of the Debenture
      pursuant to Section 4 prior to actual payment in cash for any redemption under
      this Section 6 by the delivery of a Notice of Conversion to the
      Company.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    Section
      7. Piggyback
      Registration Rights.
      If, at
      any time while this Debenture is outstanding, there is not an effective
      registration statement covering all of the Conversion Shares and the Company
      shall determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with the Company’s stock option or other employee benefit plans, then
      the Company shall deliver to each Holder a written notice of such determination
      and, if within fifteen days after the date of the delivery of such notice,
      any
      such Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Conversion Shares such Holder
      requests to be registered; provided,
      however,
      that
      the Company shall not be required to register any Conversion Shares pursuant
      to
      this Section 7 that are eligible for resale pursuant to Rule 144 promulgated
      by
      the Commission pursuant to the Securities Act or that are the subject of a
      then
      effective registration statement.

    

    Section
      8. Events
      of Default.
      

    

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

    

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

     

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

    

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    b) Remedies
      Upon Event of Default.
      If any
      Event of Default occurs, the outstanding principal amount of this Debenture,
      plus accrued but unpaid interest, liquidated damages and other amounts owing
      in
      respect thereof through the date of acceleration, shall become, at the Holder’s
      election, immediately due and payable in cash at the Mandatory Default Amount.
      Commencing 5 days after the occurrence of any Event of Default that results
      in
      the eventual acceleration of this Debenture, the interest rate on this Debenture
      shall accrue at an interest rate equal to the lesser of 18% per annum or the
      maximum rate permitted under applicable law. Upon the payment in full of the
      Mandatory Default Amount, the Holder shall promptly surrender this Debenture
      to
      or as directed by the Company. In connection with such acceleration described
      herein, the Holder need not provide, and the Company hereby waives, any
      presentment, demand, protest or other notice of any kind, and the Holder may
      immediately and without expiration of any grace period enforce any and all
      of
      its rights and remedies hereunder and all other remedies available to it under
      applicable law. Such acceleration may be rescinded and annulled by Holder at
      any
      time prior to payment hereunder and the Holder shall have all rights as a holder
      of the Debenture until such time, if any, as the Holder receives full payment
      pursuant to this Section 8(b). No such rescission or annulment shall affect
      any
      subsequent Event of Default or impair any right consequent thereon.

     

    Section
      9. Miscellaneous.
      

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

     

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

    

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

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

     

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

     

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

    

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

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

    

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

     

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

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

     

    
      
        	 	
                GENSPERA,
                  INC.

              
	 	 
	 	
                By:

              	 

	 	 	
                Name:
                  Craig A. Dionne, Ph.D.

                Title:
                  President and CEO

              
	 	
                Facsimile
                  No. for delivery of Notices: (210)
                  477-8547

              

      

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    ANNEX
      A

    

    NOTICE
      OF CONVERSION

    

    The
      undersigned hereby elects to convert principal under the 5% Convertible
      Debenture due July ___, 2009, of GenSpera, Inc., a Delaware corporation (the
      “Company”),
      into
      shares of common stock (the “Common
      Stock”),
      of
      the Company according to the conditions hereof, as of the date written below.
      If
      shares of Common Stock are to be issued in the name of a person other than
      the
      undersigned, the undersigned will pay all transfer taxes payable with respect
      thereto and is delivering herewith such certificates and opinions as reasonably
      requested by the Company in accordance therewith. No fee will be charged to
      the
      holder for any conversion, except for such transfer taxes, if any.

    

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

    

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

    

    
      	
              Conversion
                calculations:

            	 
	 	 
	 	
              Date
                to Effect Conversion:

            
	 	 
	 	
              Principal
                Amount of Debenture to be Converted:

            
	 	 
	 	
              Payment
                of Interest in Common Stock __ yes __ no

            
	 	
              If
                yes, $_____ of Interest Accrued on Account of Conversion at
                Issue.

            
	 	 
	 	
              Number
                of shares of Common Stock to be issued:

            
	 	 
	 	
              Signature:

            
	 	 
	 	
              Name:

            
	 	 
	 	
              Address
                for Delivery of Common Stock Certificates:

            
	 	 
	 	
              Or

            
	 	 
	 	
              DWAC
                Instructions:

            
	 	 
	 	
              Broker
                No:                                            

            
	 	
              Account
                No:                                             

            

    

     

    
      
        
        

      

      
        24

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