Document:

THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND IS BEING
      OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
      OF
      THE SECURITIES ACT AND SUCH LAWS. THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED
      EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
      ACT
      OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
      THE
      SECURITIES ACT OR SUCH OTHER LAWS.

     

    7
      3⁄4 % CONVERTIBLE DEBENTURE

     

    

    Company:
      MultiCell Technologies, Inc.

    Company
      Address: 701
      George Washington Highway, Lincoln, Rhode Island 02865

    Closing
      Date: February
      28, 2007

    Maturity
      Date: February
      28, 2008

    Principal
      Amount:
      $1,000,000

    First
      Payment Due Date: April
      15,
      2007

     

    MultiCell
      Technologies, Inc., a Delaware corporation, and any successor or resulting
      corporation by way of merger, consolidation, sale or exchange of all or
      substantially all of the assets or otherwise (the “Company”),
      for
      value received, hereby promises to pay to the Holder (as such term is
      hereinafter defined), or such other Person (as such term is hereinafter defined)
      upon order of the Holder, on the Maturity Date, the Principal Amount (as such
      term is hereinafter defined), as such sum may be adjusted pursuant to Article
      3,
      and to pay interest thereon from the Closing Date, monthly in arrears, on the
      15th
      day of
      each month (each an “Interest
      Payment Due Date”
      and
      collectively, the “Interest
      Payment Due Dates”),
      commencing on the First Payment Due Date, at the rate of seven and three-quarter
      percent (7 3⁄4 %) per annum (the “Debenture
      Interest Rate”),
      until
      the Principal Amount of this Debenture has been paid in full or converted into
      Common Stock. All interest payable on the Principal Amount of this Debenture
      shall be calculated on the basis of a 360-day year for the actual number of
      days
      elapsed. Payment of interest on this Debenture shall be in cash or, at the
      option of the Holder, in shares of Common Stock of the Company valued at the
      then applicable Conversion Price (as defined herein). This Debenture may not
      be
      prepaid without the written consent of the Holder.

     

    ARTICLE
      1

     

    DEFINITIONS

     

    SECTION
      1.1 Definitions.
      The
      terms defined in this Article whenever used in this Debenture have the following
      respective meanings:

     

    (i) “Affiliate”
      has the
      meaning ascribed to such term in Rule 12b-2 under the Securities Exchange Act
      of
      1934, as amended.

     

    (ii) “Agreements”
      means
      the
      Debenture, Debenture Purchase Agreement, and Registration Rights
      Agreement.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (iii) “Bankruptcy
      Code”
      means
      the United States Bankruptcy Code of 1986, as amended (11 U.S.C. §§ 101
et.
      seq.).

     

    (iv) “Business
      Day”
      means a
      day other than Saturday, Sunday or any day on which banks located in the State
      of California are authorized or obligated to close.

     

    (v) “Capital
      Shares”
      means
      the Common Stock and any other shares of any other class or series of capital
      stock, whether now or hereafter authorized and however designated, which have
      the right to participate in the distribution of earnings and assets (upon
      dissolution, liquidation or winding-up) of the Company.

     

    (vi) “Common
      Shares”
      or
“Common
      Stock”
      means
      shares of the Company’s Common Stock.

     

    (vii) “Common
      Stock Issued at Conversion”,
      when
      used with reference to the securities deliverable upon conversion of this
      Debenture, means all Common Shares now or hereafter Outstanding and securities
      of any other class or series into which this Debenture hereafter shall have
      been
      changed or substituted, whether now or hereafter created and however
      designated.

     

    (viii) “Conversion”
      or“conversion”
      means
      the repayment by the Company of the Principal Amount of this Debenture (and,
      to
      the extent the Holder elects as permitted by Section 3.1, accrued and unpaid
      interest thereon) by the delivery of Common Stock on the terms provided in
      Section 3.2, and “convert,” “converted,” “convertible”
      and like
      words shall have a corresponding meaning.

     

    (ix) “Conversion
      Date”
      means
      any day on which all or any portion of the Principal Amount of this Debenture
      is
      converted in accordance with the provisions hereof.

     

    (x) “Conversion
      Notice”
      means a
      written notice of conversion substantially in the form annexed hereto as
Exhibit
      A.
      

     

    (xi) “Conversion
      Price”
      on any
      date of determination means the applicable price for the conversion of this
      Debenture into Common Shares on such day as set forth in Section
      3.1(a).

     

    (xii) “Current
      Market Price”
      on any
      date of determination means the closing price of a Common Share on such day
      as
      reported on the NASDAQ OTCBB Exchange; provided
      that,
      if
      such security is not listed or admitted to trading on the NASDAQ OTCBB, as
      reported on the principal national security exchange or quotation system on
      which such security is quoted or listed or admitted to trading, or, if not
      quoted or listed or admitted to trading on any national securities exchange
      or
      quotation system, the closing bid price of such security on the over-the-counter
      market on the day in question as reported by Bloomberg LP or a similar generally
      accepted reporting service, as the case may be.

     

    (xiii) “Deadline”
      means
      the date that is the 90th day from the Closing Date.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (xiv) “Debenture”
      or
      “Debentures”
      means
      this Convertible Debenture of the Company or such other convertible debenture(s)
      exchanged therefor as provided in Section 2.1.

     

    (xv) “Debenture
      Purchase Agreement”
      means
      that certain Debenture Purchase Agreement of even date herewith by and between
      the Company and Holder, as the same may be amended from time to
      time.

     

    (xvi) “Discount
      Multiplier”
has
      the
      meaning set forth in Section 3.1(a).

     

    (xvii) “Event
      of Default”
      has the
      meaning set forth in Section 6.1.

     

    (xviii) “Holder”
      means La
      Jolla Cove Investors, Inc., any successor thereto, or any Person to whom this
      Debenture is subsequently transferred in accordance with the provisions
      hereof.

     

    (xix) “Interest
      Payment Due Date”
      has the
      meaning set forth in the opening paragraph of this Debenture.

     

    (xx) “Market
      Disruption Event”
      means
      any event that results in a material suspension or limitation of trading of
      the
      Common Shares.

     

    (xxi) “Market
      Price”
      per
      Common Share means the lowest price of the Common Shares during any Trading
      Day
      as reported on the NASDAQ OTCBB; provided
      that, if
      such security is not listed or admitted to trading on the NASDAQ OTCBB, as
      reported on the principal national security exchange or quotation system on
      which such security is quoted or listed or admitted to trading, or, if not
      quoted or listed or admitted to trading on any national securities exchange
      or
      quotation system, the lowest price of the Common Shares during any Trading
      Day
      on the over-the-counter market as reported by Bloomberg LP or a similar
      generally accepted reporting service, as the case may be.

     

    (xxii) “Maximum
      Rate”
      has the
      meaning set forth in Section 6.4.

     

    (xxiii) “Outstanding”
      when
      used with reference to Common Shares or Capital Shares (collectively,
“Shares”)
      means,
      on any date of determination, all issued and outstanding Shares, and includes
      all such Shares issuable in respect of outstanding scrip or any certificates
      representing fractional interests in such Shares; provided,
      however,
      that
      any such Shares directly or indirectly owned or held by or for the account
      of
      the Company or any Subsidiary of the Company shall not be deemed “Outstanding”
      for
      purposes hereof.

     

    (xxiv) “Person”
      means an
      individual, a corporation, a partnership, an association, a limited liability
      company, an unincorporated business organization, a trust or other entity or
      organization, and any government or political subdivision or any agency or
      instrumentality thereof.

     

    (xxv) “Principal
      Amount”
      means,
      for any date of calculation, the principal sum set forth in the first paragraph
      of this Debenture (but only such principal amount as to which the Holder has
      (a)
      actually advanced pursuant to the Debenture Purchase Agreement, and (b) not
      theretofore furnished a Conversion Notice in compliance with Section
      3.2).

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (xxvi) “Registration
      Rights Agreement”
      means
      that certain Registration Rights Agreement of even date herewith by and between
      the Company and Holder, as the same may be amended from time to
      time.

     

    (xxvii) “Registrable
      Securities”
      means
      the Common Stock issued or issuable (i) upon conversion or redemption of
      the Debenture, (ii) pursuant to the terms and provisions of the Debenture
      or the Debenture Purchase Agreement, (iii) in connection with any
      distribution, recapitalization, stock-split, stock adjustment or reorganization
      of the Company; provided,
      however,
      a share
      of Common Stock shall cease to be a Registrable Security for purposes of this
      Agreement when it no longer is a Restricted Security.

     

    (xxviii) “Registration
      Statement”
      means a
      registration statement of the Company filed on an appropriate form under the
      Securities Act providing for the registration of, and the sale on a continuous
      or delayed basis by the holders of, all of the Registrable Securities pursuant
      to Rule 415 under the Securities Act, including the Prospectus contained therein
      and forming a part thereof, any amendments to such registration statement and
      supplements to such Prospectus, and all exhibits to and other material
      incorporated by reference in such registration statement and
      Prospectus.

     

    (xxix) “Restricted
      Security”
      means
      any share of Common Stock issued upon conversion or redemption of the Debenture
      except any such share that (i) has been registered pursuant to an effective
      registration statement under the Securities Act and sold in a manner
      contemplated by the prospectus included in such registration statement, (ii)
      has
      been transferred in compliance with the resale provisions of Rule 144 under
      the
      Securities Act (or any successor provision thereto) or is transferable pursuant
      to paragraph (k) of Rule 144 under the Securities Act (or any successor
      provision thereto) or (iii) otherwise has been transferred and a new share
      of
      Common Stock not subject to transfer restrictions under the Securities Act
      has
      been delivered by or on behalf of the Company.

    

    (xxx) “SEC”
      means
      the United States Securities and Exchange Commission.

     

    (xxxi) “Securities
      Act”
      means
      the Securities Act of 1933, as amended, and the rules and regulations of the
      SEC
      thereunder, all as in effect at the time.

     

    (xxxii) “Debenture
      Purchase Agreement”
      means
      that certain Debenture Purchase Agreement of even date herewith by and among
      the
      Company and Holder, as the same may be amended from time to time.

     

    (xxxiii) “Subsidiary”
      means
      any entity of which securities or other ownership interests having ordinary
      voting power to elect a majority of the board of directors or other persons
      performing similar functions are owned directly or indirectly by the
      Company.

     

    (xxxiv) “Trading
      Day”
      means
      any day on which (i) purchases and sales of securities on the principal national
      security exchange or quotation system on which the Common Shares are traded
      are
      reported thereon, or, if not quoted or listed or admitted to trading on any
      national securities exchange or quotation system, as reported by Bloomberg
      LP or
      a similar generally accepted reporting service, as the case may be, (ii) at
      least one bid for the trading of Common Shares is reported and (iii) no Market
      Disruption Event occurs.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (xxxv) “Volume
      Weighted Average Price” per
      Common Share means the volume weighted average price of the Common Shares during
      any Trading Day as reported on the NASDAQ OTCBB; provided
      that, if
      such security is not listed or admitted to trading on the NASDAQ OTCBB, as
      reported on the principal national security exchange or quotation system on
      which such security is quoted or listed or admitted to trading, or, if not
      quoted or listed or admitted to trading on any national securities exchange
      or
      quotation system, the volume weighted average price of the Common Shares during
      any Trading Day on the over-the-counter market as reported by Bloomberg LP
      or a
      similar generally accepted reporting service, as the case may be.

     

    All
      references to “cash” or “$” herein means currency of the United States of
      America.

     

    ARTICLE
      2

    EXCHANGES,
      TRANSFER AND REPAYMENT

     

    SECTION
      2.1 Registration
      of Transfer of Debentures.
      This
      Debenture, when presented for registration or transfer, shall (if so required
      by
      the Company) be duly endorsed, or be accompanied by a written instrument of
      transfer in form reasonably satisfactory to the Company duly executed, by the
      Holder duly authorized in writing.

     

    SECTION
      2.2 Loss,
      Theft, Destruction of Debenture.
      Upon
      receipt of evidence satisfactory to the Company of the loss, theft, destruction
      or mutilation of this Debenture and, in the case of any such loss, theft or
      destruction, upon receipt of indemnity or security reasonably satisfactory
      to
      the Company, or, in the case of any such mutilation, upon surrender and
      cancellation of this Debenture, the Company shall make, issue and deliver,
      in
      lieu of such lost, stolen, destroyed or mutilated Debenture, a new Debenture
      of
      like tenor and unpaid Principal Amount dated as of the date hereof (which shall
      accrue interest from the most recent Interest Payment Due Date on which an
      interest payment was made in full). This Debenture shall be held and owned
      upon
      the express condition that the provisions of this Section 2.2 are exclusive
      with
      respect to the replacement of a mutilated, destroyed, lost or stolen Debenture
      and shall preclude any and all other rights and remedies notwithstanding any
      law
      or statute existing or hereafter enacted to the contrary with respect to the
      replacement of negotiable instruments or other securities without the surrender
      thereof.

     

    SECTION
      2.3 Who
      Deemed Absolute Owner.
      The
      Company may deem the Person in whose name this Debenture shall be registered
      upon the registry books of the Company to be, and may treat it as, the absolute
      owner of this Debenture (whether or not this Debenture shall be overdue) for
      the
      purpose of receiving payment of or on account of the Principal Amount of this
      Debenture, for the conversion of this Debenture and for all other purposes,
      and
      the Company shall not be affected by any notice to the contrary. All such
      payments and such conversions shall be valid and effectual to satisfy and
      discharge the liability upon this Debenture to the extent of the sum or sums
      so
      paid or the conversion or conversions so made.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    SECTION
      2.4 Repayment
      at Maturity.
      At the
      Maturity Date, the Company shall repay the outstanding Principal Amount of
      this
      Debenture in whole in cash, together with all accrued and unpaid interest
      thereon, in cash, to the Maturity Date. 

     

    ARTICLE
      3

    CONVERSION
      OF DEBENTURE

     

    SECTION
      3.1 Conversion;
      Conversion Price; Valuation Event.
      

     

    (a)
      At
      the option of the Holder, this Debenture may be converted, either in whole
      or in
      part, up to the full Principal Amount hereof into Common Shares (calculated
      as
      to each such conversion to the nearest 1/100th of a share), at any time and
      from
      time to time on any Business Day, subject to compliance with Section 3.2. The
      number of Common Shares into which this Debenture may be converted is equal
      to
      the dollar amount of the Debenture being converted divided by the Conversion
      Price. The “Conversion
      Price”
      shall be
      equal to the lesser of (i) $1.00, or (ii) 80% of the average of the three lowest
      Volume Weighted Average Prices during the twenty (20) Trading Days prior to
      Holder’s election to convert (the percentage figure being a “Discount
      Multiplier”);
      provided,
      that in
      the event the Registration Statement has not been declared effective by the
      SEC
      by the Deadline then the applicable Discount Multiplier shall decrease by one
      and one-half percentage points for each month or partial month occurring after
      the Deadline that the Registration Statement is not effective (provided, that
      the Discount Multiplier shall not be so decreased if (i) the Company continues
      to use its commercially reasonable best efforts to obtain effectiveness of
      the
      Registration Statement, and (ii) if the Company is unable to obtain and sustain
      effectiveness of the Registration Statement due to changes in the Commission’s,
      or its staff’s, policy or interpretations with respect to the registration of
      transactions of the nature contemplated hereunder, the Company uses its
      commercially reasonable best efforts to obtain effectiveness of a registration
      statement of the Company filed on an appropriate form under the Securities
      Act
      providing for the registration of, and the sale on a continuous or delayed
      basis
      by the holders of, such maximum portion of the Registrable Securities that
      is
      acceptable to the Commission or the staff pursuant to Rule 415 under the
      Securities Act, including the Prospectus contained therein and forming a part
      thereof, any amendments to such registration statement and supplements to such
      Prospectus, and all exhibits to and other material incorporated by reference
      in
      such registration statement and Prospectus) or, if the Registration Statement
      has theretofore been declared effective but is not thereafter effective, then
      the applicable Discount Multiplier shall decrease by three percentage points
      for
      each week or partial week occurring after the Deadline that the Registration
      Statement is not effective. In addition, if the Registration Statement has
      theretofore been declared effective but is not thereafter effective, Holder,
      at
      its option, shall be entitled to the Conversion Price on the date that the
      Registration Statement is no longer effective, for a period beginning on the
      date that the Registration Statement is subsequently declared effective and
      continuing for the number of days that a Registration Statement was not
      effective. The Company reserves the right to increase the number of Trading
      Days
      in clause (ii) above, as it deems appropriate.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    Beginning
      in the first full calendar month after the Registration Statement is declared
      effective, Holder shall convert a minimum of at least 25% of the face value
      of
      the Debenture per calendar month into Common Shares of the Company, provided
      that the Common Shares are subject to an effective Registration Statement and
      validly authorized by the Company. If Holder converts more than 25% of the
      face
      value of the Debenture in any calendar month, the excess over 25% shall be
      credited against the next month’s minimum conversion amount. In the event Holder
      does not convert at least 25% of the Debenture in any particular calendar month
      into Common Stock, Holder shall nevertheless transfer the required amount of
      the
      remaining Principal Amount of the Debenture to the Company, and the Company
      shall pay interest thereon to Holder according to the terms and conditions
      set
      forth herein. In the event that (i) the Company is in breach of any material
      provision of the Agreements, (ii) the value of the Registrable Securities that
      are registered and free trading under the Registration Statement and that are
      held by the Escrow Agent and not yet transferred to the Holder is not at all
      times equal to at least two times (2x) Principal Amount remaining to be
      transferred from the Holder to the Company under the Debenture Purchase
      Agreement, or (iii) the Company has not honored any Conversion Notices submitted
      by Holder to the Company, Holder shall not be required to convert any of the
      remaining Principal Amount of this Debenture, nor shall Holder be required
      to
      transfer or pay any monies as set forth herein or in Section I.B. of the
      Debenture Purchase Agreement until such time as Company cures said breach.
      The
      preceding sentence shall not limit or waive any other remedy that Holder may
      have for any breach by the Company under any of the Agreements.

     

    If
      the
      Holder elects to convert a portion of the Debenture and, on the day that the
      election is made the Volume Weighted Average Price is below $0.16, the Company
      shall have the right to prepay that portion of the Debenture that Holder elected
      to convert, plus any accrued and unpaid interest, at 150% of such amount. In
      the
      event that the Company elects to prepay that portion of the Debenture, Holder
      shall have the right to withdraw its Conversion Notice. 

     

    (b) Notwithstanding
      the provisions of Section 3.1(a), if the Registration Statement has theretofore
      been declared effective but is not thereafter effective, the following will
      also
      apply in addition to any damages incurred by the Holder as a result
      thereof:

     

    (i) The
      Holder may demand repayment of one hundred and fifty percent (150%) of the
      Principal Amount of the Debenture, together with all accrued and unpaid interest
      thereon, in cash, at any time during the period that the Company’s Registration
      Statement is not effective, such repayment to be made within three (3) business
      days of such demand. In the event that the Debenture is so accelerated, in
      addition to the repayment of one hundred and fifty percent (150%) of the
      Principal Amount together with accrued interest as aforesaid, the Company shall
      immediately issue and pay, as the case may be, to the Holder 50,000 Shares
      of
      Common Stock and $15,000 for each thirty (30) day period, or portion thereof,
      during which the Principal Amount, including interest thereon, remains unpaid,
      with the monthly payment amount to increase to $20,000 for each thirty (30)
      day
      period, or portion thereof, after the first ninety (90) day period;

     

    (ii) If
      the
      Holder does not elect to accelerate the Debenture, the Company shall immediately
      issue or pay, as the case may be, to Holder 50,000 Shares of Common Stock and
      $15,000 for each thirty (30) day period, or portion thereof, that the
      Registration Statement is not effective, with the monthly payment amount to
      increase to $20,000 for each thirty (30) day period, or portion thereof, after
      the first ninety (90) day period.

     

    (iii) If
      the
      SEC indicates that the Company’s Registration Statement will be declared
      effective upon request by the Company, and the Company does not, within 3
      business days of the SEC indication, request that the Registration Statement
      become effective, the amounts set forth in subsections (ii) and (iii) above
      shall double.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Provided
      however, Section 3.1(b) shall not apply if the Company has used its
      commercially reasonable best efforts to timely obtain effectiveness of the
      Registration Statement and failure to timely obtain effectiveness and sustain
      effectiveness is due to changes in the Commission’s, or its staff’s, policy or
      interpretations with respect to the registration of transactions of the nature
      contemplated hereunder, and provided further that (i) the Company continues
      to
      use its commercially reasonable best efforts to obtain effectiveness of the
      Registration Statement, and (ii) if the Company is unable to obtain and sustain
      effectiveness of the Registration Statement due to changes in the Commission’s,
      or its staff’s, policy or interpretations with respect to the registration of
      transactions of the nature contemplated hereunder, the Company uses its
      commercially reasonable best efforts to obtain effectiveness of a registration
      statement of the Company filed on an appropriate form under the Securities
      Act
      providing for the registration of, and the sale on a continuous or delayed
      basis
      by the holders of, such maximum portion of the Registrable Securities that
      is
      acceptable to the Commission or the staff pursuant to Rule 415 under the
      Securities Act, including the Prospectus contained therein and forming a part
      thereof, any amendments to such registration statement and supplements to such
      Prospectus, and all exhibits to and other material incorporated by reference
      in
      such registration statement and Prospectus.

     

    SECTION
      3.2 Exercise
      of Conversion Privilege.
      (a)
      Conversion of this Debenture may be exercised on any Business Day by the Holder
      by telecopying an executed and completed Conversion Notice to the Company.
      Each
      date on which a Conversion Notice is telecopied to the Company in accordance
      with the provisions of this Section 3.2 shall constitute a Conversion Date.
      The
      Company shall convert this Debenture and issue the Common Stock Issued at
      Conversion in the manner provided below in this Section 3.2, and all voting
      and
      other rights associated with the beneficial ownership of the Common Stock Issued
      at Conversion shall vest with the Holder, effective as of the Conversion Date
      at
      the time specified in the Conversion Notice. The Conversion Notice also shall
      state the name or names (with addresses) of the persons who are to become the
      holders of the Common Stock Issued at Conversion in connection with such
      conversion. As promptly as practicable after the receipt of the Conversion
      Notice as aforesaid, but in any event not more than two (2) Business Days after
      the Company’s receipt of such Conversion Notice, the Company shall (i) issue the
      Common Stock Issued at Conversion in accordance with the provisions of this
      Article 3 and (ii) cause to be mailed for delivery by overnight courier, or
      if a
      Registration Statement covering the Common Stock has been declared effective
      by
      the SEC cause to be electronically transferred, to Holder (x) a certificate
      or
      certificate(s) representing the number of Common Shares to which the Holder
      is
      entitled by virtue of such conversion, (y) cash, as provided in Section 3.3,
      in
      respect of any fraction of a Common Share deliverable upon such conversion
      and
      (z) cash or shares of Common Stock, as applicable, representing the amount
      of
      accrued and unpaid interest on this Debenture as of the Conversion Date. Such
      conversion shall be deemed to have been effected at the time at which the
      Conversion Notice indicates, and at such time the rights of the Holder of this
      Debenture, as such (except if and to the extent that any Principal Amount
      thereof remains unconverted), shall cease and the Person and Persons in whose
      name or names the Common Stock Issued at Conversion shall be issuable shall
      be
      deemed to have become the holder or holders of record of the Common Shares
      represented thereby, and all voting and other rights associated with the
      beneficial ownership of such Common Shares shall at such time vest with such
      Person or Persons. The Conversion Notice shall constitute a contract between
      the
      Holder and the Company, whereby the Holder shall be deemed to subscribe for
      the
      number of Common Shares which it will be entitled to receive upon such
      conversion and, in payment and satisfaction of such subscription (and for any
      cash adjustment to which it is entitled pursuant to Section 3.4), to surrender
      this Debenture and to release the Company from all liability thereon (except
      if
      and to the extent that any Principal Amount thereof remains unconverted). No
      cash payment aggregating less than $1.00 shall be required to be given unless
      specifically requested by the Holder.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (b) If,
      at
      any time after the date of this Debenture, (i) the Company challenges, disputes
      or denies the right of the Holder hereof to effect the conversion of this
      Debenture into Common Shares or otherwise dishonors or rejects any Conversion
      Notice delivered in accordance with this Section 3.2, for reasons other than
      enforcing the terms of the Agreements, then the Holder shall have the right,
      but
      not the obligation, by written notice to the Company, to require the Company
      to
      promptly redeem such portion of this Debenture represented by such challenged,
      disputed, denied, dishonored or otherwise rejected Conversion Notice (the
“Challenged
      Amount”)
      for
      cash at one hundred and fifty percent (150%) of the Challenged Amount, together
      with all accrued and unpaid interest thereon to the date of redemption. In
      the
      event that the Company challenges, disputes or denies the right of the Holder
      hereof to effect the conversion of this Debenture into Common Shares or
      otherwise dishonors or rejects any Conversion Notice delivered in accordance
      with this Section 3.2, for reasons in connection with the terms of the
      Agreements, then the Holder shall have the right, but not the obligation, by
      written notice to the Company, to require the Company to promptly redeem this
      Debenture for cash at one hundred percent (100%) of the Principal Amount
      thereof, together with all accrued and unpaid interest thereon to the date
      of
      redemption. Under any of the circumstances set forth above, the Company shall
      be
      responsible for the payment of all costs and expenses of the Holder, including
      reasonable legal fees and expenses, as and when incurred in defending itself
      in
      any such action or pursuing its rights hereunder (in addition to any other
      rights of the Holder).

     

    (c) The
      Holder shall be entitled to exercise its conversion privilege notwithstanding
      the commencement of any case under the Bankruptcy Code. In the event the Company
      is a debtor under the Bankruptcy Code, the Company hereby waives to the fullest
      extent permitted any rights to relief it may have under 11 U.S.C. § 362 in
      respect of the Holder’s conversion privilege. The Company hereby waives to the
      fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362
      in respect of the conversion of this Debenture. The Company agrees, without
      cost
      or expense to the Holder, to take or consent to any and all action necessary
      to
      effectuate relief under 11 U.S.C. § 362.

     

    SECTION
      3.3 Fractional
      Shares.
      No
      fractional Common Shares or scrip representing fractional Common Shares shall
      be
      delivered upon conversion of this Debenture. Instead of any fractional Common
      Shares which otherwise would be delivered upon conversion of this Debenture,
      the
      Company shall pay a cash adjustment in respect of such fraction in an amount
      equal to the same fraction multiplied by the Current Market Price on the
      Conversion Date. No cash payment of less than $1.00 shall be required to be
      given unless specifically requested by the Holder.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    SECTION
      3.4 Adjustments.
      The
      Conversion Price and the number of shares deliverable upon conversion of this
      Debenture are subject to adjustment from time to time as follows:

     

    (i) Reclassification,
      Etc.
      In case
      the Company shall reorganize its capital, reclassify its capital stock,
      consolidate or merge with or into another Person (where the Company is not
      the
      survivor or where there is a change in or distribution with respect to the
      Common Stock of the Company), sell, convey, transfer or otherwise dispose of
      all
      or substantially all its property, assets or business to another Person, or
      effectuate a transaction or series of related transactions in which more than
      fifty percent (50%) of the voting power of the Company is disposed of (each,
      a
“Fundamental
      Corporate Change”)
      and,
      pursuant to the terms of such Fundamental Corporate Change, shares of common
      stock of the successor or acquiring corporation, or any cash, shares of stock
      or
      other securities or property of any nature whatsoever (including warrants or
      other subscription or purchase rights) in addition to or in lieu of common
      stock
      of the successor or acquiring corporation (“Other
      Property”)
      are to
      be received by or distributed to the holders of Common Stock of the Company,
      then the Holder of this Debenture shall have the right thereafter, at its sole
      option, to: (x) require the Company to prepay that portion of this Debenture
      not
      previously converted into shares of the Company’s Common Stock for cash at one
      hundred and fifty percent (150%) of the Principal Amount thereof, together
      with
      all accrued and unpaid interest thereon to the date of prepayment,
      (y) receive the number of shares of common stock of the successor or
      acquiring corporation or of the Company, if it is the surviving corporation,
      and
      Other Property as is receivable upon or as a result of such
      Fundamental Corporate Change by a holder of the number of shares of Common
      Stock
      into which the outstanding portion of this Debenture may be converted at the
      Conversion Price applicable immediately prior to such Fundamental Corporate
      Change, or (z) require the Company, or such successor, resulting or
      purchasing corporation, as the case may be, to, without benefit of any
      additional consideration therefor, execute and deliver to the Holder a debenture
      with substantial identical rights, privileges, powers, restrictions and other
      terms as this Debenture in an amount equal to the amount outstanding under
      this
      Debenture immediately prior to such Fundamental Corporate Change. For purposes
      hereof, “common
      stock of the successor or acquiring corporation”
      shall
      include stock of such corporation of any class which is not preferred as to
      dividends or assets over any other class of stock of such corporation and which
      is not subject to prepayment and shall also include any evidences of
      indebtedness, shares of stock or other securities which are convertible into
      or
      exchangeable for any such stock, either immediately or upon the arrival of
      a
      specified date or the happening of a specified event and any warrants or other
      rights to subscribe for or purchase any such stock. The foregoing provisions
      shall similarly apply to successive Fundamental Corporate Changes. 

     

    SECTION
      3.5 Certain
      Conversion Limits.

     

    For
      a
      period of one year after the Closing Date, if and to the extent that, on any
      date, the holding by the Holder of this Debenture would result in the Holder’s
      being deemed the beneficial owner of
      more
      than 9.99% of the then Outstanding shares of Common Stock, then the Holder
      shall
      not have the right, and the Company shall not have the obligation, to convert
      any portion of this Debenture as shall cause such Holder to be deemed the
      beneficial owner of more than 9.99% of the then Outstanding shares of Common
      Stock. If any court of competent jurisdiction shall determine that the foregoing
      limitation is ineffective to prevent a Holder from being deemed the beneficial
      owner of more than 9.99% of the then Outstanding shares of Common Stock, then
      the Company shall prepay such portion of this Debenture as shall cause such
      Holder not to be deemed the beneficial owner of more than 9.99% of the then
      Outstanding shares of Common Stock. Upon such determination by a court of
      competent jurisdiction, the Holder shall have no interest in or rights under
      such portion of the Debenture. Any and all interest paid on or prior to the
      date
      of such determination shall be deemed interest paid on the remaining portion
      of
      this Debenture held by the Holder.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    SECTION
      3.6 Surrender
      of Debentures.
      Upon
      any redemption of this Debenture pursuant to Sections 3.2, 3.5 or 6.2, or upon
      maturity pursuant to Section 2.4, the Holder shall either deliver this Debenture
      by hand to the Company at its principal executive offices or surrender the
      same
      to the Company at such address by nationally recognized overnight courier.
      Payment of the redemption price or the amount due on maturity specified in
      Section 2.4, shall be made by the Company to the Holder against receipt of
      this
      Debenture (as provided in this Section 3.5) by wire transfer of immediately
      available funds to such account(s) as the Holder shall specify by written notice
      to the Company. If payment of such redemption price is not made in full by
      the
      redemption date, or the amount due on maturity is not paid in full by the
      Maturity Date, the Holder shall again have the right to convert this Debenture
      as provided in Article 3 hereof or to declare an Event of Default.

     

    ARTICLE
      4

    STATUS;
      RESTRICTIONS ON TRANSFER

     

    SECTION
      4.1 Status
      of Debenture.
      This
      Debenture constitutes a legal, valid and binding obligation of the Company,
      enforceable in accordance with its terms subject, as to enforceability, to
      general principles of equity and to principles of bankruptcy, insolvency,
      reorganization and other similar laws of general applicability relating to
      or
      affecting creditors’ rights and remedies generally.

     

    SECTION
      4.2 Restrictions
      on Transfer.
      This
      Debenture, and any Common Shares deliverable upon the conversion hereof, have
      not been registered under the Securities Act. The Holder by accepting this
      Debenture agrees that this Debenture and the shares of Common Stock to be
      acquired as interest on and upon conversion of this Debenture may not be
      assigned or otherwise transferred unless and until (i) the Company has received
      the opinion of counsel from the Holder that this Debenture or the Common Stock
      issued at Conversion may be sold pursuant to an exemption from registration
      under the Securities Act or (ii) a registration statement relating to this
      Debenture or the Common Stock issued at Conversion has been filed by the Company
      and declared effective by the SEC. 

     

    Each
      certificate for shares of Common Stock deliverable hereunder shall bear a legend
      as follows unless and until such securities have been sold pursuant to an
      effective registration statement under the Securities Act:

     

    “The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended (the “Securities Act”). The securities may
      not be offered for sale, sold or otherwise transferred except (i) pursuant
      to an
      effective registration statement under the Securities Act or (ii) pursuant
      to an
      exemption from registration under the Securities Act in respect of which the
      issuer of this certificate has received an opinion of counsel satisfactory
      to
      the issuer of this certificate to such effect. Copies of the agreement covering
      both the purchase of the securities and restrictions on their transfer may
      be
      obtained at no cost by written request made by the holder of record of this
      certificate to the Secretary of the issuer of this certificate at the principal
      executive offices of the issuer of this certificate.”

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    ARTICLE
      5

    COVENANTS

     

    SECTION
      5.1 Conversion.
      The
      Company shall cause the transfer agent, not later than two (2) Business Days
      after the Company’s receipt of a Conversion Notice, to issue and deliver to the
      Holder the requisite shares of Common Stock Issued at Conversion. Such delivery
      shall be by electronic transfer if a Registration Statement covering the Common
      Stock has been declared effective by the SEC.

     

    SECTION
      5.2 Notice
      of Default.
      If any
      one or more events occur which constitute or which, with notice, lapse of time,
      or both, would constitute an Event of Default, the Company shall forthwith
      give
      notice to the Holder, specifying the nature and status of the Event of Default
      or such other event(s), as the case may be.

     

    SECTION
      5.3 Payment
      of Obligations.
      So long
      as this Debenture shall be outstanding, the Company shall pay, extend, or
      discharge at or before maturity, all its respective material obligations and
      liabilities, including, without limitation, tax liabilities, except where the
      same may be contested in good faith by appropriate proceedings.

     

    SECTION
      5.4 Compliance
      with Laws.
      So long
      as this Debenture shall be outstanding, the Company shall comply with all
      applicable laws, ordinances, rules, regulations and requirements of governmental
      authorities, except for such noncompliance which would not have a material
      adverse effect on the business, properties, prospects, condition (financial
      or
      otherwise) or results of operations of the Company and the
      Subsidiaries.

     

    SECTION
      5.5 Inspection
      of Property, Books and Records.
      So long
      as this Debenture shall be outstanding, the Company shall keep proper books
      of
      record and account in which full, true and correct entries shall be made of
      all
      material dealings and transactions in relation to its business and activities
      and shall permit representatives of the Holder at the Holder’s expense to visit
      and inspect any of its respective properties, to examine and make abstracts
      from
      any of its respective books and records, not reasonably deemed confidential
      by
      the Company, and to discuss its respective affairs, finances and accounts with
      its respective officers and independent public accountants, all at such
      reasonable times and as often as may reasonably be desired.

     

    ARTICLE
      6

    EVENTS
      OF DEFAULT; REMEDIES

     

    SECTION
      6.1 Events
      of Default.
      “Event
      of Default”
      wherever
      used herein means any one of the following events:

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (i) the
      Company shall default in the payment of principal of or interest on this
      Debenture as and when the same shall be due and payable and, in the case of
      an
      interest payment default, such default shall continue for five (5) Business
      Days
      after the date such interest payment was due, or the Company shall fail to
      perform or observe any other covenant, agreement, term, provision, undertaking
      or commitment under this Debenture, the Debenture Purchase Agreement or the
      Registration Rights Agreement and such default shall continue for a period
      of
      ten (10) Business Days after the delivery to the Company of written notice
      that
      the Company is in default hereunder or thereunder; 

     

    (ii) any
      of
      the representations or warranties made by the Company herein, in the Debenture
      Purchase Agreement, the Registration Rights Agreement or in any certificate
      or
      financial or other written statements heretofore or hereafter furnished by
      or on
      behalf of the Company in connection with the execution and delivery of this
      Debenture, the Debenture Purchase Agreement or the Registration Rights Agreement
      shall be false or misleading in a material respect on the Closing Date;

     

    (iii) under
      the
      laws of any jurisdiction not otherwise covered by clauses (iv) and (v) below,
      the Company or any Subsidiary (A) becomes insolvent or generally not able to
      pay
      its debts as they become due, (B) admits in writing its inability to pay its
      debts generally or makes a general assignment for the benefit of creditors,
      (C)
      institutes or has instituted against it any proceeding seeking (x) to adjudicate
      it a bankrupt or insolvent, (y) liquidation, winding-up, reorganization,
      arrangement, adjustment, protection, relief or composition of it or its debts
      under any law relating to bankruptcy, insolvency, reorganization or relief
      of
      debtors including any plan of compromise or arrangement or other corporate
      proceeding involving or affecting its creditors or (z) the entry of an order
      for
      relief or the appointment of a receiver, trustee or other similar person for
      it
      or for any substantial part of its properties and assets, and in the case of
      any
      such official proceeding instituted against it (but not instituted by it),
      either the proceeding remains undismissed or unstayed for a period of sixty
      (60)
      calendar days, or any of the actions sought in such proceeding (including the
      entry of an order for relief against it or the appointment of a receiver,
      trustee, custodian or other similar official for it or for any substantial
      part
      of its properties and assets) occurs or (D) takes any corporate action to
      authorize any of the above actions; 

     

    (iv) the
      entry
      of a decree or order by a court having jurisdiction in the premises adjudging
      the Company or any Subsidiary a bankrupt or insolvent, or approving as properly
      filed a petition seeking reorganization, arrangement, adjustment or composition
      of or in respect of the Company under the Bankruptcy Code or any other
      applicable Federal or state law, or appointing a receiver, liquidator, assignee,
      trustee or sequestrator (or other similar official) of the Company or of any
      substantial part of its property, or ordering the winding-up or liquidation
      of
      its affairs, and any such decree or order continues and is unstayed and in
      effect for a period of sixty (60) calendar days;

     

    (v) the
      institution by the Company or any Subsidiary of proceedings to be adjudicated
      a
      bankrupt or insolvent, or the consent by it to the institution of bankruptcy
      or
      insolvency proceedings against it, or the filing by it of a petition or answer
      or consent seeking reorganization or relief under the Bankruptcy Code or any
      other applicable federal or state law, or the consent by it to the filing of
      any
      such petition or to the appointment of a receiver, liquidator, assignee, trustee
      or sequestrator (or other similar official) of the Company or of any substantial
      part of its property, or the making by it of an assignment for the benefit
      of
      creditors, or the admission by it in writing of its inability to pay its debts
      generally as and when they become due, or the taking of corporate action by
      the
      Company in furtherance of any such action; 

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (vi) a
      final
      judgment or final judgments for the payment of money shall have been entered
      by
      any court or courts of competent jurisdiction against the Company and remains
      undischarged for a period (during which execution shall be effectively stayed)
      of thirty (30) days, provided
      that the
      aggregate amount of all such judgments at any time outstanding (to the extent
      not paid or to be paid, as evidenced by a written communication to that effect
      from the applicable insurer, by insurance) exceeds One Hundred Thousand Dollars
      ($100,000);

     

    (vii) it
      becomes unlawful for the Company to perform or comply with its obligations
      under
      this Debenture, the Debenture Purchase Agreement or the Registration Rights
      Agreement in any respect;

     

    (viii) the
      Common Shares shall be delisted from the NASDAQ OTCBB (the “Trading
      Market”
      or, to
      the extent the Company becomes eligible to list its Common Stock on any other
      national security exchange or quotation system, upon official notice of listing
      on any such exchange or system, as the case may be, it shall be the “Trading
      Market”)
      or
      suspended from trading on the Trading Market, and shall not be reinstated,
      relisted or such suspension lifted, as the case may be, within five (5) days;
      or

     

    (ix) the
      Company shall default (giving effect to any applicable grace period) in the
      payment of principal or interest as and when the same shall become due and
      payable, under any indebtedness, individually or in the aggregate, of more
      than
      One Hundred Thousand Dollars ($100,000).

     

    SECTION
      6.2 Acceleration
      of Maturity; Rescission and Annulment.
      If an
      Event of Default occurs and is continuing, then and in every such case the
      Holder may, by a notice in writing to the Company, rescind any outstanding
      Conversion Notice and declare that all amounts owing or otherwise outstanding
      under this Debenture are immediately due and payable and upon any such
      declaration this Debenture shall become immediately due and payable in cash
      at a
      price of one hundred and fifty percent (150%) of the Principal Amount thereof,
      together with all accrued and unpaid interest thereon to the date of payment;
      provided,
      however,
      in the
      case of any Event of Default described in clauses (iii), (iv), (v) or (vii)
      of
      Section 6.1, such amount automatically shall become immediately due and payable
      without the necessity of any notice or declaration as aforesaid.

     

    SECTION
      6.3 Late
      Payment Penalty.
      If any
      portion of the principal of or interest on this Debenture shall not be paid
      within ten (10) days of when it is due, the Discount Multiplier under this
      Debenture shall decrease by one percentage point (1%) for all conversions of
      this Debenture thereafter.

     

    SECTION
      6.4 Maximum
      Interest Rate. Notwithstanding
      anything herein to the contrary, if at any time the applicable interest rate
      as
      provided for herein shall exceed the maximum lawful rate which may be contracted
      for, charged, taken or received by the Holder in accordance with any applicable
      law (the “Maximum
      Rate”),
      the
      rate of interest applicable to this Debenture shall be limited to the Maximum
      Rate. To the greatest extent permitted under applicable law, the Company hereby
      waives and agrees not to allege or claim that any provisions of this Note could
      give rise to or result in any actual or potential violation of any applicable
      usury laws.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    SECTION
      6.5 Remedies
      Not Waived.
      No
      course of dealing between the Company and the Holder or any delay in exercising
      any rights hereunder shall operate as a waiver by the Holder.

     

    SECTION
      6.6 Remedies. The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to the Holder, by vitiating the intent and purpose of the
      transaction contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Debenture will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Debenture, that the Holder shall be entitled
      to all other available remedies at law or in equity, and in addition to the
      penalties assessable herein, to an injunction or injunctions restraining,
      preventing or curing any breach of this Debenture and to enforce specifically
      the terms and provisions thereof, without the necessity of showing economic
      loss
      and without any bond or other security being required. 

     

    SECTION
      6.7 Payment
      of Certain Amounts. Whenever
      pursuant to this Debenture the Company is required to pay an amount in excess
      of
      the Principal Amount plus accrued and unpaid interest, the Company and the
      Holder agree that the actual damages to the Holder from the receipt of cash
      payment on this Debenture may be difficult to determine and the amount to be
      so
      paid by the Company represents stipulated damages and not a penalty and is
      intended to compensate the Holder in part for loss of the opportunity to convert
      this Debenture and to earn a return from the sale of shares of Common Stock
      acquired upon conversion of this Debenture at a price in excess of that price
      paid for such shares pursuant to this Debenture. The Company and the Holder
      hereby agree that such amount of stipulated damages is not disproportionate
      to
      the possible loss to the Holder from the receipt of a cash payment without
      the
      opportunity to convert this Debenture into shares of Common Stock.

     

    ARTICLE
      7

    MISCELLANEOUS

     

    SECTION
      7.1 Notice
      of Certain Events.
      In the
      case of the occurrence of any event described in Section 3.4 of this Debenture,
      the Company shall cause to be mailed to the Holder of this Debenture at its
      last
      address as it appears in the Company’s security registry, at least twenty (20)
      days prior to the applicable record, effective or expiration date hereinafter
      specified (or, if such twenty (20) days’ notice is not possible, at the earliest
      possible date prior to any such record, effective or expiration date), a notice
      thereof, including, if applicable, a statement of (y) the date on which a record
      is to be taken for the purpose of such dividend, distribution, issuance or
      granting of rights, options or warrants, or if a record is not to be taken,
      the
      date as of which the holders of record of Common Stock to be entitled to such
      dividend, distribution, issuance or granting of rights, options or warrants
      are
      to be determined or (z) the date on which such reclassification, consolidation,
      merger, sale, transfer, dissolution, liquidation or winding-up is expected
      to
      become effective, and the date as of which it is expected that holders of record
      of Common Stock will be entitled to exchange their shares for securities, cash
      or other property deliverable upon such reclassification, consolidation, merger,
      sale transfer, dissolution, liquidation or winding-up.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    SECTION
      7.2 Register.
      The
      Company shall keep at its principal office a register in which the Company
      shall
      provide for the registration of this Debenture. Upon any transfer of this
      Debenture in accordance with Articles 2 and 4 hereof, the Company shall register
      such transfer on the Debenture register.

     

    SECTION
      7.3 Withholding.
      To the
      extent required by applicable law, the Company may withhold amounts for or
      on
      account of any taxes imposed or levied by or on behalf of any taxing authority
      in the United States having jurisdiction over the Company from any payments
      made
      pursuant to this Debenture.

     

    SECTION
      7.4 Transmittal
      of Notices.
      Except
      as may be otherwise provided herein, any notice or other communication or
      delivery required or permitted hereunder shall be in writing and shall be
      delivered personally, or sent by telecopier machine or by a nationally
      recognized overnight courier service, and shall be deemed given when so
      delivered personally, or by telecopier machine or overnight courier service
      as
      follows:

     

    
      	
            	(1)	
              If
                to the Company, to:

            

    

    

    MultiCell
      Technologies, Inc.

    701
      George Washington Highway

    Lincoln,
      Rhode Island 02865

    Telephone:  
      401-333-0610

    Facsimile:     
      401-333-0659

     

    

    
      	
            	(2)	
              If
                to the Holder, to:

            

    

     

    La
      Jolla
      Cove Investors, Inc.

    7817
      Herschel Avenue, Suite 200

    La
      Jolla,
      California 92037

    Telephone:   
      858-551-8789

    Facsimile:      
      858-551-8779

     

    Each
      of
      the Holder or the Company may change the foregoing address by notice given
      pursuant to this Section 7.4.

     

    SECTION
      7.5 Attorneys’
      Fees.
      Should
      any party hereto employ an attorney for the purpose of enforcing or construing
      this Debenture, or any judgment based on this Debenture, in any legal proceeding
      whatsoever, including insolvency, bankruptcy, arbitration, declaratory relief
      or
      other litigation, the prevailing party shall be entitled to receive from the
      other party or parties thereto reimbursement for all reasonable attorneys'
      fees
      and all reasonable costs, including but not limited to service of process,
      filing fees, court and court reporter costs, investigative costs, expert witness
      fees, and the cost of any bonds, whether taxable or not, and that such
      reimbursement shall be included in any judgment or final order issued in that
      proceeding. The "prevailing party" means the party determined by the court
      to
      most nearly prevail and not necessarily the one in whose favor a judgment is
      rendered. 

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    SECTION
      7.6 Governing
      Law.
      This
      Debenture shall be governed by, and construed in accordance with, the laws
      of
      the State of California (without giving effect to conflicts of laws principles).
      With respect to any suit, action or proceedings relating to this Debenture,
      the
      Company irrevocably submits to the exclusive jurisdiction of the courts of
      the
      State of California sitting in San Diego and the United States District Court
      located in the City of San Diego and hereby waives, to the fullest extent
      permitted by applicable law, any claim that any such suit, action or proceeding
      has been brought in an inconvenient forum. Subject to applicable law, the
      Company agrees that final judgment against it in any legal action or proceeding
      arising out of or relating to this Debenture shall be conclusive and may be
      enforced in any other jurisdiction within or outside the United States by suit
      on the judgment, a certified copy of which judgment shall be conclusive evidence
      thereof and the amount of its indebtedness, or by such other means provided
      by
      law.

     

    SECTION
      7.7 Waiver
      of Jury Trial.
      To the
      fullest extent permitted by law, each of the parties hereto hereby knowingly,
      voluntarily and intentionally waives its respective rights to a jury trial
      of
      any claim or cause of action based upon or arising out of this Debenture or
      any
      other document or any dealings between them relating to the subject matter
      of
      this Debenture and other documents. Each party hereto (i) certifies that neither
      of their respective representatives, agents or attorneys has represented,
      expressly or otherwise, that such party would not, in the event of litigation,
      seek to enforce the foregoing waivers and (ii) acknowledges that it has been
      induced to enter into this Debenture by, among other things, the mutual waivers
      and certifications herein.

     

    SECTION
      7.8 Headings.
      The
      headings of the Articles and Sections of this Debenture are inserted for
      convenience only and do not constitute a part of this Debenture.

     

    SECTION
      7.9 Payment
      Dates.
      Whenever any payment hereunder shall be due on a day other than a Business
      Day,
      such payment shall be made on the next succeeding Business Day.

     

    SECTION
      7.10 Binding
      Effect.
      Each
      Holder by accepting this Debenture agrees to be bound by and comply with the
      terms and provisions of this Debenture.

     

    SECTION
      7.11 No
      Stockholder Rights.
      Except
      as otherwise provided herein, 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.

     

    SECTION
      7.12 Facsimile
      Execution.
      Facsimile execution shall be deemed originals.

    
      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Debenture to be signed by its
      duly
      authorized officer on the date of this Debenture.

     

    
      	 	
              MultiCell
                Technologies, Inc.

               

               

              By:
                /s/Stephen
                MW Chang

               

               

              Title:
                President
                & CEO

            

    

    

      
         

        
          
            	
                    ___________________

                    Initials

                  	 	
                     ____________________

                    Initials

                  

          

        

      

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    EXHIBIT A

     

    DEBENTURE
      CONVERSION NOTICE

     

    TO: MultiCell
      Technologies, Inc.

     

    The
      undersigned owner of this Convertible Debenture due February 28, 2008 (the
“Debenture”)
      issued
      by MultiCell Technologies, Inc. (the “Company”)
      hereby
      irrevocably exercises its option to convert $__________ Principal Amount of
      the
      Debenture into shares of Common Stock in accordance with the terms of the
      Debenture. The undersigned hereby instructs the Company to convert the portion
      of the Debenture specified above into shares of Common Stock Issued at
      Conversion in accordance with the provisions of Article 3 of the Debenture.
      The
      undersigned directs that the Common Stock and certificates therefor deliverable
      upon conversion, the Debenture reissued in the Principal Amount not being
      surrendered for conversion hereby, [the check or shares of Common Stock in
      payment of the accrued and unpaid interest thereon to the date of this Notice,]
      together with any check in payment for fractional Common Stock, be registered
      in
      the name of and/or delivered to the undersigned unless a different name has
      been
      indicated below. All capitalized terms used and not defined herein have the
      respective meanings assigned to them in the Debenture. The conversion pursuant
      hereto shall be deemed to have been effected at the date and time specified
      below, and at such time the rights of the undersigned as a Holder of the
      Principal Amount of the Debenture set forth above shall cease and the Person
      or
      Persons in whose name or names the Common Stock Issued at Conversion shall
      be
      registered shall be deemed to have become the holder or holders of record of
      the
      Common Shares represented thereby and all voting and other rights associated
      with the beneficial ownership of such Common Shares shall at such time vest
      with
      such Person or Persons.

     

    Date
      and
      time: __________________

     

    

     

    ______________________________

     

    By:
      ___________________________

     

    Title:
      _________________________

     

    Fill
      in
      for registration of Debenture:

     

    Please
      print name and address

     

    (including
      ZIP code number):

    
      ______________________________

       

    

    ______________________________

     

    
      ______________________________

    

    
       

      
        
          
          

        

        
          A-1February
      28, 2007

    

    

    Dr.
      Stephen Chang

    President
      & CEO

    MultiCell
      Technologies, Inc.

    701
      George Washington Highway

    Lincoln,
      RI 02865

    

    Re:
      Escrow Common Shares

    

    Dear
      Stephen:

    

    Reference
      is made to the 7 3⁄4 % Convertible Debenture dated February 28, 2007 (the
“Convertible Debenture”) issued by MultiCell Technologies, Inc. (“Company”) to
      La Jolla Cove Investors, Inc. (“Holder”). Capitalized terms used herein and not
      otherwise defined herein shall have the definitions set forth in the Convertible
      Debenture.

    

    Upon
      notification and verification that the Registration Statement for the Conversion
      Shares has been declared effective by the SEC (such date, the “Effective Date”),
      and such shares can legally be issued to Holder, the Company shall immediately
      deliver that number of the Company’s registered Common Shares (in 50
      certificates of equal amount) equal to $1,000,000 divided by the average of
      the
      closing prices of the Company’s Common Shares for the five Trading Days prior to
      the Effective Date according to the following schedule: (i) $187,500 worth
      of
      Common Shares three (3) days after the Effective Date; (ii) $187,500 worth
      of
      Common Shares thirty (30) days after the Effective Date; and (iii) $375,000
      worth of Common Shares sixty (60) days after the Effective Date. All such Common
      Shares shall be registered in the name of La Jolla Cove Investors, Inc., and
      transferred to Merrill Lynch (“Escrow Agent”) by DWAC, who shall hold the shares
      in trust as a joint escrow agent for the Company and Holder. The delivery of
      such shares shall occur as prescribed above, and prior to or concurrently with
      the funding by Holder to the Escrow Agent of the remainder of the Purchase
      Price. Such shares may only be released by the Escrow Agent pursuant to valid
      Debenture conversions notices submitted by Holder. Any shares not released
      to
      Holder for Debenture conversions shall be returned to the Company. It is
      understood that Holder shall not be considered the owner of the Common Shares
      held in escrow, and Holder agrees that it will not vote the shares in escrow
      or
      exercise any control whatsoever over such shares until such times as the shares
      are released to Holder by the Escrow Agent.

    

    Sincerely,

    

    /s/T.W.
      Huff

    

    Travis
      W.
      Huff

    Portfolio
      Manager

    

    

    ACKNOWLEDGED
      AND AGREED:

    

    MultiCell
      Technologies, Inc.

    

    By:
      /s/Stephen
      MW Chang

    

    Title:
      Portfolio
      Manager

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]