Document:

Exhibit
      4.26

     

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE 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 EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    To
      Purchase n
      Shares
      of Common Stock of

     

    GENEREX
      BIOTECHNOLOGY CORPORATION

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, n
      (the
“Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the 181st
      day
      after the date hereof (the “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the fifth (5th)
      anniversary of the Initial Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Generex Biotechnology
      Corporation, a Delaware corporation (the “Company”),
      up to
n
      shares
      (the “Warrant
      Shares”)
      of
      Common Stock, par value $0.001 per share, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 2(b). 

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      November 10, 2004, as amended, among the Company and the purchasers signatory
      thereto.

     

    Section
      2. Exercise.

     

    a)  Exercise
      of Warrant.
      Subject
      to the terms hereof, exercise of the purchase rights represented by this Warrant
      may be made at any time or times on or after the Initial Exercise Date and
      on or
      before the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise Form annexed hereto (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company); provided,
      however,
      within
      5 Trading Days of the date said Notice of Exercise is delivered to the Company,
      the Holder shall have surrendered this Warrant to the Company and the Company
      shall have received payment of the aggregate Exercise Price of the shares
      thereby purchased in cash or by wire transfer of immediately available funds.
      

     

    
      
        
        

      

      
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    b)  Exercise
      Price.
      The
      exercise price of the Common Stock under this Warrant shall be $3.00,
      subject
      to adjustment hereunder (the “Exercise
      Price”).

     

    c)  Cashless
      Exercise.
      If at
      any time after one year from the date of issuance of this Warrant there is
      no
      effective Registration Statement registering the resale of the Warrant Shares
      by
      the Holder, then this Warrant may also be exercised at such time by means of
      a
“cashless exercise” in which the Holder shall be entitled to receive a
      certificate for the number of Warrant Shares equal to the quotient obtained
      by
      dividing [(A-B) (X)] by (A), where:

     

    (A)
      = the
      VWAP on the Trading Day immediately preceding the date of such
      election;

    

    (B)
      = the
      Exercise Price of this Warrant, as adjusted; and 

    

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

    

    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      2(c).

    

    d)  Exercise
      Limitations.
      The
      Holder shall not have the right to exercise any portion of this Warrant,
      pursuant to Section 2(c) or otherwise, to the extent that after giving effect
      to
      such issuance after exercise, the Holder (together with the Holder’s
      affiliates), as set forth on the applicable Notice of Exercise, would
      beneficially own in excess of 4.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to such issuance.  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 exercise of this Warrant with respect to which the
      determination of such sentence is being made, but shall exclude the number
      of
      shares of Common Stock which would be issuable upon (A) exercise of the
      remaining, nonexercised portion of this Warrant beneficially owned by the Holder
      or any of its affiliates and (B) exercise or conversion of the unexercised
      or
      nonconverted portion of any other securities of the Company (including, without
      limitation, any other Debentures or Warrants) subject to a limitation on
      conversion or exercise analogous to the limitation contained herein beneficially
      owned by the Holder or any of its affiliates.  Except as set forth in the
      preceding sentence, for purposes of this Section 2(d), beneficial ownership
      shall be calculated in accordance with Section 13(d) of the Exchange Act, it
      being acknowledged by Holder that the Company is not representing to Holder
      that
      such calculation is in compliance with Section 13(d) of the Exchange Act and
      Holder is solely responsible for any schedules required to be filed in
      accordance therewith. To the extent that the limitation contained in this
      Section 2(d) applies, the determination of whether this Warrant is exercisable
      (in relation to other securities owned by the Holder) and of which a portion
      of
      this Warrant is exercisable shall be in the sole discretion of such Holder,
      and
      the submission of a Notice of Exercise shall be deemed to be such Holder’s
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by such Holder) and of which portion of this Warrant is
      exercisable, in each case subject to such aggregate percentage limitation,
      and
      the Company shall have no obligation to verify or confirm the accuracy of such
      determination. For purposes of this Section 2(d), in determining the number
      of
      outstanding shares of Common Stock, the Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (x) the Company’s most recent
      Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other 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 the Holder, the Company
      shall within two Trading Days confirm orally and in writing to the Holder the
      number of shares of Common Stock then outstanding.  In any case, the number
      of outstanding shares of Common Stock shall be determined after giving effect
      to
      the conversion or exercise of securities of the Company, including this Warrant,
      by the Holder or its affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported. 

     

    
      
        
        

      

      
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    e)  Mechanics
      of Exercise.
      

     

    i.  Authorization
      of Warrant Shares.
      The
      Company covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof (other than taxes in respect of any transfer
      occurring contemporaneously with such issue). The Company covenants that during
      the period the Warrant is outstanding, it will reserve from its authorized
      and
      unissued Common Stock a sufficient number of shares to provide for the issuance
      of the Warrant Shares upon the exercise of any purchase rights under this
      Warrant. The Company further covenants that its issuance of this Warrant shall
      constitute full authority to its officers who are charged with the duty of
      executing stock certificates to execute and issue the necessary certificates
      for
      the Warrant Shares upon the exercise of the purchase rights under this Warrant.
      The Company will take all such reasonable action as may be necessary to assure
      that such Warrant Shares may be issued as provided herein without violation
      of
      any applicable law or regulation, or of any requirements of the Trading Market
      upon which the Common Stock may be listed.

     

    ii.  Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission (“DWAC”)
      system
      if the Company is a participant in such system, and otherwise by physical
      delivery to the address specified by the Holder in the Notice of Exercise within
      3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
      surrender of this Warrant and payment of the aggregate Exercise Price as set
      forth above (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Company. The Warrant Shares shall be deemed to have been issued,
      and Holder or any other person so designated to be named therein shall be deemed
      to have become a holder of record of such shares for all purposes, as of the
      date the Warrant has been exercised by payment to the Company of the Exercise
      Price and all taxes required to be paid by the Holder, if any, pursuant to
      Section 2(e)(vii) prior to the issuance of such shares, have been paid.

     

    
      
        
        

      

      
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    iii.  Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the time of
      delivery of the certificate or certificates representing Warrant Shares, deliver
      to Holder a new Warrant evidencing the rights of Holder to purchase the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
      in all other respects be identical with this Warrant.

     

    iv.  Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have
      the right to rescind such exercise; provided that if as a result of the
      limitations set forth in Section 2(d) hereof, such failure by the Company is
      for
      a portion of the Warrant Shares for which a Notice of Exercise has been
      delivered, the Holder shall be permitted to rescind solely that portion not
      so
      exercised.

     

    v.  Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the Warrant
      Share Delivery Date, and if after such date the Holder is required by its broker
      to purchase (in an open market transaction or otherwise) shares of Common Stock
      to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
      the Holder anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Shares for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. 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 exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) 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, together with applicable
      confirmations and other evidence reasonably requested by the Company. 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
      exercise of the Warrant as required pursuant to the terms hereof.

     

    
      
        
        

      

      
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    vi.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price.

     

    vii.  Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    viii.  Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    
      
        
        

      

      
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    Section
      3. Certain Adjustments.

     

    a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company pursuant to this Warrant), (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding before such event and of which the denominator
      shall
      be the number of shares of Common Stock outstanding after such event and the
      number of shares issuable upon exercise of this Warrant shall be proportionately
      adjusted. Any adjustment made pursuant to this Section 3(a) shall become
      effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution and shall become
      effective immediately after the effective date in the case of a subdivision,
      combination or re-classification.

     

    b)  Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall offer, sell, grant any option to purchase or offer, sell
      or grant any right to reprice its securities, or otherwise dispose of or issue
      (or announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any Person
      to acquire shares of Common Stock, at an effective price per share less than
      the
      then Exercise Price (such lower price, the “Base
      Share Price”
and
      such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (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 is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Exercise Price, such
      issuance shall be deemed to have occurred for less than the Exercise Price),
      then, the Exercise Price shall be reduced to equal the Base Share Price and
      the
      number of Warrant Shares issuable hereunder shall be increased such that the
      aggregate Exercise Price payable hereunder, after taking into account the
      decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
      prior to such adjustment. Such adjustment shall be made whenever such Common
      Stock or Common Stock Equivalents are issued. The Company shall notify the
      Holder in writing, no later than the Trading Day following the issuance of
      any
      Common Stock or Common Stock Equivalents subject to this section, indicating
      therein the applicable issuance price, or of applicable reset price, exchange
      price, conversion price and other pricing terms (such notice the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Warrant Shares based upon the Base Share Price
      regardless of whether the Holder accurately refers to the Base Share Price
      in
      the Notice of Exercise. Notwithstanding
      the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt
      Issuance other
      than an Exempt Issuance that involves an MFN Transaction or a Variable Rate
      Transaction for which the adjustment provisions of Section 3(b) shall be
      applicable or (ii) issuances of up to, in the aggregate, the first 1,500,000
      shares of Common Stock or Common Stock Equivalents (subject to adjustment for
      reverse and forward stock splits, stock dividends, stock combinations and other
      similar transactions of the Common Stock that occur after the date of this
      Agreement) to consultants of the Company in any 12 month period pursuant to
      a
      resolution duly adopted by a majority of the non-employee members of the Board
      of Directors of the Company or a majority of the members of a committee of
      non-employee directors established for such purpose.

     

    
      
        
        

      

      
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    c)  Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets or rights or warrants to subscribe for or purchase any
      security other than the Common Stock (which shall be subject to Section 3(b)),
      then in each such case the Exercise Price shall be adjusted by multiplying
      the
      Exercise 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 per share fair market value at such record date of
      the
      portion of such assets or evidence of indebtedness so distributed applicable
      to
      one outstanding share of the Common Stock as determined by the Board of
      Directors in good faith. In either case the adjustments shall be described
      in a
      statement provided to the Holders of the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one 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.

     

    d)  Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) 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 (D) 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 Warrant, the Holder shall have the right
      to receive, for each Warrant Share that would have been issuable upon such
      exercise absent such Fundamental Transaction, at the option of the Holder,
      (a)
      upon exercise of this Warrant, the number of shares of Common Stock of the
      successor or acquiring corporation or of the Company, if it is the surviving
      corporation, and Alternate Consideration receivable upon or as a result of
      such
      reorganization, reclassification, merger, consolidation or disposition of assets
      by a Holder of the number of shares of Common Stock for which this Warrant
      is
      exercisable immediately prior to such event or (b) if the Company is acquired
      in
      an all cash transaction, cash equal to the value of this Warrant as determined
      in accordance with the Black-Scholes option pricing formula (the “Alternate
      Consideration”).
      For
      purposes of any such exercise, the determination of the Exercise Price shall
      be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise 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 exercise of this Warrant 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 warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant 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 3(d) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    
      
        
        

      

      
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    e)  Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. The number of shares of Common
      Stock outstanding at any given time shall not includes shares of Common Stock
      owned or held by or for the account of the Company, and the description of
      any
      such shares of Common Stock shall be considered on issue or sale of Common
      Stock. For purposes of this Section 3, 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 treasury shares, if any) issued
      and
      outstanding.

     

    f)  Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    g)  Notice
      to Holders.
      

     

    i.  Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. If the Company issues a variable rate security, despite the
      prohibition thereon in the Purchase Agreement, the Company shall be deemed
      to
      have issued Common Stock or Common Stock Equivalents at the lowest possible
      conversion or exercise price at which such securities may be converted or
      exercised in the case of a Variable Rate Transaction (as defined in the Purchase
      Agreement), or the lowest possible adjustment price in the case of an MFN
      Transaction (as defined in the Purchase Agreement.

     

    
      
        
        

      

      
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    ii.  Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) 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 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; (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
      mailed to the Holder at its last addresses as it shall appear upon the Warrant
      Register of the Company, at least 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 mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      20-day period commencing the date of such notice to the effective date of the
      event triggering such notice.

     

    Section
      4. Transfer
      of Warrant.

     

    a)  Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the
      Purchase Agreement, this Warrant and all rights hereunder are transferable,
      in
      whole or in part, upon surrender of this Warrant at the principal office of
      the
      Company, together with a written assignment of this Warrant substantially in
      the
      form attached hereto duly executed by the Holder or its agent or attorney and
      funds sufficient to pay any transfer taxes payable upon the making of such
      transfer. Upon such surrender and, if required, such payment, the Company shall
      execute and deliver a new Warrant or Warrants in the name of the assignee or
      assignees and in the denomination or denominations specified in such instrument
      of assignment, and shall issue to the assignor a new Warrant evidencing the
      portion of this Warrant not so assigned, and this Warrant shall promptly be
      cancelled. A Warrant, if properly assigned, may be exercised by a new holder
      for
      the purchase of Warrant Shares without having a new Warrant issued.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    b)  New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

     

    c)  Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d)  Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company a written opinion of counsel
      (which opinion shall be in form, substance and scope customary for opinions
      of
      counsel in comparable transactions) to the effect that such transfer may be
      made
      without
      registration under
      the
      Securities Act and under applicable state securities or blue sky laws, (ii)
      that
      the holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company and (iii) that the transferee
      be
      an “accredited
      investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities Act.

     

    Section
      5. Miscellaneous.

     

    a)  Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 4 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

     

    b)  No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price (or by means of
      a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be
      issued to such Holder as the record owner of such shares as of the close of
      business on the later of the date of such surrender or payment.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    c)  Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    d)  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

     

    e)  Authorized
      Shares.
      

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    f)  Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Purchase Agreement.

     

    g)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    h)  Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

    i)  Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    j)  Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    k)  Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive the defense in any action
      for specific performance that a remedy at law would be adequate.

     

    l)  Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    m)  Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    n)  Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    o)  Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

    

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

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

    Dated:
      February 27, 2006

    
      	 	 	 
	 	GENEREX
              BIOTECHNOLOGY CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Mark A. Fletcher
	 	
              Title:
                Executive Vice-President, General
                Counsel

            

    

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF EXERCISE

    BY
      n

    OF
      $3.00 WARRANT DATED FEB 27 06

    

    TO: GENEREX
      BIOTECHNOLOGY CORPORATION

    

    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

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

     

    o
      in lawful money of the
      United States; or

     

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

     

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

     

    _______________________________

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

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

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    
      
        	 	 	 
	 	
                Holder’s
                  Signature:

              	
                _____________________________

              
	 	 	 
	 	
                Holder’s
                  Address:

              	
                _____________________________

              
	 	 	 
	 	
                 

              	
                _____________________________

              

      

    

    

    
      Signature
        Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.Exhibit
      4.31

    

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

    

    Original
      Issue Date: February 28, 2006

    Original
      Conversion Price (subject to adjustment herein): $1.25

    

    $1,000,000

    

    6%
      SECURED CONVERTIBLE DEBENTURE

    DUE
      MAY 28, 2007

    

    THIS
      DEBENTURE of Generex Biotechnology Company, a Delaware corporation, having
      a
      principal place of business at 33 Harbour Square, Suite 202, Toronto, Ontario
      Canada M5J2G2 (the “Company”),
      is
      designated as its 6% Convertible Debenture, due May 28, 2007 (the “Debenture”).

    

    FOR
      VALUE
      RECEIVED, the Company promises to pay to n
      or its
      registered assigns (the “Holder”),
      the
      principal sum of $1,000,000 on May 28, 2007 or such earlier date as the
      Debentures are required or permitted to be repaid as provided hereunder (the
      “Maturity
      Date”),
      and
      to pay interest to the Holder on the aggregate unconverted and then outstanding
      principal amount of this Debenture in accordance with the provisions hereof.
      This Debenture is subject to the following additional provisions:

    

    Section
      1. Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this Debenture:
      (a) capitalized terms not otherwise defined herein have the meanings given
      to
      such terms in the Purchase Agreement Amendments, or if not found therein, the
      Purchase Agreement and (b) the following terms shall have the following
      meanings:

    

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

    

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

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

    

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

    

    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (i) 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, or (ii) a replacement at one time or within a three year period of
      more
      than one-half of the members of the Company’s 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 (iii) the execution by the Company of an
      agreement to which the Company is a party or by which it is bound, providing
      for
      any of the events set forth above in (i) or (ii).

    

    “Common
      Stock”
means
      the common stock, par value $0.001 per share, of the Company and stock of any
      other class into which such shares may hereafter have been reclassified or
      changed.

    

    “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
      the shares of Common Stock issuable upon conversion of Debentures or as payment
      of interest in accordance with the terms.

    

    “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).

    

    “Effectiveness
      Period”
shall
      have the meaning given to such term in the Registration Rights Agreement and
      the
      Purchase Agreement Amendments. 

    

    “Equity
      Conditions”
shall
      mean, during the period in question, (i)
      the
      Company shall have duly honored all conversions and redemptions scheduled to
      occur or occurring by virtue of one or more Notice of Conversions, if any,
      (ii)
      all liquidated damages and other amounts owing in respect of the Debentures
      shall have been paid; (iii)
      there is an effective Registration Statement pursuant to which the Holder is
      permitted to utilize the prospectus thereunder to resell all of the shares
      issuable pursuant to the Transaction Documents (and the Company believes, in
      good faith, that such effectiveness will continue uninterrupted for the
      foreseeable future), (iv) the Common Stock is trading on the Trading Market
      and
      all of the shares issuable pursuant to the Transaction Documents are listed
      for
      trading on a Trading Market (and the Company believes, in good faith, that
      trading of the Common Stock on a Trading Market will continue uninterrupted
      for
      the foreseeable future), (v) there is a sufficient number of authorized but
      unissued and otherwise unreserved shares of Common Stock for the issuance of
      all
      of the shares issuable pursuant to the Transaction Documents, (vi) there is
      then
      existing no Event of Default or event which, with the passage of time or the
      giving of notice, would constitute an Event of Default, (vii) all of the shares
      issued or issuable pursuant to the transaction proposed would not violate the
      limitations set forth in Section 4(c), (viii)
      no
      public announcement of a pending or proposed Fundamental Transaction, Change
      of
      Control Transaction or acquisition transaction has occurred that has not been
      consummated, and (ix) the Holder is not then in possession of what could be
      deemed material, non-public information, in the reasonable determination of
      the
      Holder.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

    “Interest
      Conversion Rate”
means
      the
      lesser of (a) the Conversion Price and (b) 90%
      of
      the average of the 20 VWAPs immediately prior to the applicable Interest Payment
      Date.

    

    “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).

    

    “Mandatory
      Prepayment Amount”
for
      any
      Debentures shall equal the sum of (i) the greater of: (A) 130% of the principal
      amount of Debentures to be prepaid, plus all accrued and unpaid interest
      thereon, or (B) the principal amount of Debentures to be prepaid, plus all
      other
      accrued and unpaid interest hereon, divided by the Conversion Price on (x)
      the
      date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the
      date the Mandatory Prepayment Amount is paid in full, whichever is less,
      multiplied by the VWAP on (x) the date the Mandatory Prepayment Amount is
      demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is
      paid in full, whichever is greater, and (ii) all other amounts, costs, expenses
      and liquidated damages due in respect of such Debentures.

    

    “Monthly
      Redemption”
shall
      mean the redemption of this Debenture pursuant to Section 6(a)
      hereof.

    

    “Monthly
      Redemption Amount”
shall
      mean, as to a Monthly Redemption, $76,923.081,
      or such
      lesser principal amount of this Debenture then outstanding.

     

    
      
        

      

    

    
      	
              1

            	
              the
                original principal amount of this Debenture divided by
                13.

            

    

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Monthly
      Redemption Date”
means
      the first Trading Day of every month, commencing on May 1, 2006 and ending
      on
      the date when there is no principal amount of this Debenture
      outstanding.

    

    “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).

    

    “Original
      Issue Date”
shall
      mean February 28, 2006 regardless of the number of transfers of the Debenture
      and regardless of the number of instruments which may be issued to evidence
      the
      Debenture.

    

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

     

    “Purchase
      Agreement”
means
      the Securities Purchase Agreement, dated as of November 10, 2004, to which
      the
      Company and the original Holder are parties, as amended, modified or
      supplemented from time to time in accordance with its terms.

    

    “Purchase
      Agreement Amendments”
means,
      collectively, Amendment No. 1 to the Securities Purchase Agreement and
      Registration Rights Agreement dated June 17, 2005, Amendment No. 2 to the
      Securities Purchase Agreement and Registration Rights Agreement dated September
      8, 2005, Amendment No. 3 to the Securities Purchase Agreement and Registration
      Rights Agreement dated December 4, 2005, and Amendment No. 4 to the Securities
      Purchase Agreement and Registration Rights Agreement dated January 19, 2006
      to
      which, in each case, the Company and the original Holder are parties, as
      amended, modified or supplemented from time to time in accordance with their
      terms.

    

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated as of the date of the Purchase
      Agreement, to which the Company and the original Holder are parties, as amended,
      modified or supplemented from time to time in accordance with its
      terms.

    

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement, covering among other things the resale of the Conversion
      Shares and naming the Holder as a “selling stockholder” thereunder.

    

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

    

    “Subsidiary”
shall
      have the meaning given to such term in the Purchase Agreement.

    

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq Capital Market, the American
      Stock Exchange, the New York Stock Exchange or the Nasdaq National
      Market.

    

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

    

    “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 as reported by Bloomberg Financial L.P. (based on a
      Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)  if
      the Common Stock is not then listed or quoted on a Trading Market and if prices
      for the Common Stock are then quoted on the OTC Bulletin Board, 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
      listed or quoted on the OTC Bulletin Board and if prices for the Common Stock
      are then reported in the “Pink Sheets” published by the National Quotation
      Bureau Incorporated (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 Holders and reasonably acceptable to the Company.

    

    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 6% per annum,
      payable quarterly on March 31, June 30, September 30 and December 31, beginning
      on the first such date after the Original Issue Date and on each Conversion
      Date
      (as to that principal amount then being converted) and on the Maturity Date
      (except that, if any such date is not a Business Day, then such payment shall
      be
      due on the next succeeding Business Day) (each such date, an “Interest
      Payment Date”),
      in
      cash or shares of Common Stock in an amount equal to the amount of interest
      then
      due and owing divided by the Interest Conversion Rate, or a combination thereof;
      provided,
      however,
      payment
      in shares of Common Stock may only occur if during the 20 Trading Days
      immediately prior to the applicable Interest Payment Date all of the Equity
      Conditions have been met and the Company shall have given the Holder notice
      in
      accordance with the notice requirements set forth below. 

     

    b)  Company’s
      Election to Pay Interest in Kind.
      Subject
      to the terms and conditions herein, the decision whether to pay interest
      hereunder in shares of Common Stock or cash shall be at the discretion of the
      Company. Not less than 20 Trading Days prior to each Interest Payment Date,
      the
      Company shall provide the Holder with written notice of its election to pay
      interest hereunder either in cash or shares of Common Stock (the Company may
      indicate in such notice that the election contained in such notice shall
      continue for later periods until revised). Within 20 Trading Days prior to
      an
      Interest Payment Date, the Company’s election (whether specific to an Interest
      Payment Date or continuous) shall be irrevocable as to such Interest Payment
      Date. Subject to the aforementioned conditions, failure to timely provide such
      written notice shall be deemed an election by the Company to pay the interest
      on
      such Interest Payment Date in cash. 

     

    
      
        
        

      

      
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    c)  Interest
      Calculations.
      Interest shall be calculated on the basis of a 360-day year and shall accrue
      daily commencing on the Original Issue Date until payment in full of the
      principal sum, together with all accrued and unpaid interest and other amounts
      which may become due hereunder, has been made. Payment of interest in shares
      of
      Common Stock shall otherwise occur pursuant to Section 4(d)(ii) and only 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 in fact delivers
      the
      Conversion Shares within the time period required by Section 4(d)(ii). 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 Debentures
      (the “Debenture
      Register”).
      Except as otherwise provided herein, if at any time the Company pays interest
      partially in cash and partially in shares of Common Stock, then such payment
      shall be distributed ratably among the Holders based upon the principal amount
      of Debentures held by each Holder. 

     

    d)  Late
      Fee.
      All
      overdue accrued and unpaid interest to be paid hereunder shall entail a late
      fee
      at the rate of 18% per annum (or such lower maximum amount of interest permitted
      to be charged under applicable law) (“Late
      Fees”)
      which
      will accrue daily, from the date such interest is due hereunder through and
      including the date of payment. Notwithstanding anything to the contrary
      contained herein, if on any Interest Payment Date the Company has elected to
      pay
      interest in Common Stock and is not able to pay accrued interest in the form
      of
      Common Stock because it does not then satisfy the conditions for payment in
      the
      form of Common Stock set forth above, 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 cash interest payment, shall deliver, within three
      Trading Days of each applicable Interest Payment Date, an amount in cash equal
      to the product of 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 and the highest VWAP during the period commencing on the Interest
      Payment Date and ending on the Trading Day prior to the date such payment is
      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 made for such registration of transfer
      or
      exchange.

     

    
      
        
        

      

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

    

    c)  Reliance
      on Debenture Register.
      Prior
      to due presentment to the Company for transfer 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.

    

    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 into shares of Common Stock
      at
      the option of the Holder, in whole or in part at any time and from time to
      time
      (subject to the limitations on conversion set forth in Section 4(c)
      hereof). The Holder shall effect conversions by delivering to the Company the
      form of Notice of Conversion attached hereto as Annex
      A
      (a
“Notice
      of Conversion”),
      specifying therein the principal amount of Debentures to be converted and the
      date on which such conversion is to be effected (a “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 provided hereunder. To
      effect conversions hereunder, the Holder shall not be required to physically
      surrender Debentures 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 converted and the date of such conversions. The Company shall
      deliver any objection to any Notice of Conversion within 2 Business Days of
      receipt of such notice. 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 $1.25
      (subject
      to adjustment herein) (the “Conversion
      Price”).

    

    c)  Holder’s
      Restriction on Conversion.
      The
      Company shall not effect any conversion of this Debenture, and the Holder shall
      not have the right to convert any portion of this Debenture, pursuant to Section
      4(a) or otherwise, to the extent that after giving effect to such conversion,
      the Holder (together with the Holder’s affiliates), as set forth on the
      applicable Notice of Conversion, would beneficially own in excess of 4.99%
      of
      the number of shares of the Common Stock outstanding immediately after giving
      effect to such conversion.  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 the determination of such
      sentence is being made, but shall exclude the number of shares of Common Stock
      which would be issuable upon (A) conversion of the remaining, nonconverted
      portion of this Debenture beneficially owned by the Holder or any of its
      affiliates and (B) exercise or conversion of the unexercised or nonconverted
      portion of any other securities of the Company (including, without limitation,
      any other Debentures or the Warrants) subject to a limitation on conversion
      or
      exercise analogous to the limitation contained herein beneficially owned by
      the
      Holder or any of its affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 4(c), beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Exchange Act. To the extent
      that the limitation contained in this section applies, the determination of
      whether this Debenture is convertible (in relation to other securities owned
      by
      the Holder) and of which a portion of this Debenture is convertible shall be
      in
      the sole discretion of such Holder. 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. 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 reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the
      case may be, (y) a more recent public announcement by the Company or (z) any
      other 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 the Holder, the Company shall within two Trading Days confirm orally
      and in writing to the Holder the number of shares of Common Stock then
      outstanding.  In any case, the number of outstanding shares of Common Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company, including this Debenture, by the Holder or its
      affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported.

     

    
      
        
        

      

      
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    d)   Mechanics
      of Conversion

     

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

    

    ii.  Delivery
      of Certificate Upon Conversion.
      Not
      later than three Trading Days after any Conversion Date, the Company will
      deliver to the Holder (A) a certificate or certificates representing the
      Conversion Shares which shall be free of restrictive legends and trading
      restrictions (other than those required by the Purchase Agreement) representing
      the number of shares of Common Stock being acquired upon the conversion of
      Debentures (including, if so timely elected by the Company, shares of Common
      Stock representing the payment of accrued interest) and (B) a bank check in
      the
      amount of accrued and unpaid interest (if the Company is required to pay accrued
      interest in cash). The Company shall, if available and if allowed under
      applicable securities laws, use its commercially reasonable efforts to deliver
      any certificate or certificates required to be delivered by the Company under
      this Section electronically through the Depository Trust Corporation or another
      established clearing corporation performing similar functions. 

     

    
      
        
        

      

      
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    iii.  Failure
      to Deliver Certificates.
      If in
      the case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the third Trading Day
      after a Conversion Date, the Holder shall be entitled by written notice to
      the
      Company at any time on or before its receipt of such certificate or certificates
      thereafter, to rescind such conversion, in which event the Company shall
      immediately return the certificates representing the principal amount of
      Debentures tendered for conversion; provided that if as a result of the
      limitations set forth in Section 4(c) hereof, such failure by the Company is
      for
      a portion of the Securities for which a Notice of Conversion has been delivered,
      the Holder shall be permitted to rescind solely that portion not so converted.
      

     

    iv.  Obligation
      Absolute; Partial Liquidated Damages.
      Subject
      to the limitations set forth in Section 4(c) hereof, if the Company fails for
      any reason to deliver to the Holder such certificate or certificates pursuant
      to
      Section 4(d)(ii) by the third Trading Day after the Conversion Date, the Company
      shall pay to such Holder, in cash, as liquidated damages and not as a penalty,
      for each $1000 of principal amount being converted, $10 per Trading Day
      (increasing to $20 per Trading Day after 5 Trading Days after such damages
      begin
      to accrue) for each Trading Day after such third Trading Day until such
      certificates are delivered. 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,
      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 a 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
      any
      one associated or affiliated with the Holder of has been engaged in any
      violation of law, agreement or for any other reason, unless, an injunction
      from
      a court, on notice, 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 principal
      amount of this Debenture outstanding, which is subject to the injunction, which
      bond shall remain in effect until the completion of arbitration/litigation
      of
      the dispute and the proceeds of which shall be payable to such Holder to the
      extent it obtains judgment. In the absence of an injunction precluding the
      same,
      the Company shall issue Conversion Shares or, if applicable, cash, upon a
      properly noticed conversion. Nothing herein shall limit a Holder’s right to
      pursue actual damages or declare an Event of Default pursuant to Section 8
      herein for the Company’s failure to deliver Conversion Shares within the period
      specified herein and such Holder shall have the right to pursue all remedies
      available to it at law or in equity including, without limitation, a decree
      of
      specific performance and/or injunctive relief. The exercise of any such rights
      shall not prohibit the Holders from seeking to enforce damages pursuant to
      any
      other Section hereof or under applicable law.

     

    
      
        
        

      

      
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    v.  Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      In
      addition to any other rights available to the Holder, if the Company fails
      for
      any reason, other than as a result of the limitations set forth in Section
      4(c)
      hereof, to deliver to the Holder such certificate or certificates pursuant
      to
      Section 4(d)(ii) by the third Trading Day after the Conversion Date, and if
      after such third Trading Day the Holder is required by its brokerage firm to
      purchase (in an open market transaction or otherwise) Common Stock to deliver
      in
      satisfaction of a sale by such Holder of the Conversion Shares which the Holder
      anticipated receiving upon such conversion (a “Buy-In”),
      then
      the Company shall (A) pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (x) the Holder’s
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
      of Common Stock that such Holder anticipated receiving from the conversion
      at
      issue multiplied by (2) the actual sale price of the Common Stock at the time
      of
      the sale (including brokerage commissions, if any) giving rise to such purchase
      obligation and (B) at the option of the Holder, either reissue Debentures in
      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 had the Company 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 Debentures with respect to which the actual sale price of the
      Conversion Shares at the time of the sale (including brokerage commissions,
      if
      any) 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.
      Notwithstanding anything contained herein to the contrary, if a Holder requires
      the Company to make payment in respect of a Buy-In for the failure to timely
      deliver certificates hereunder and the Company timely pays in full such payment,
      the Company shall not be required to pay such Holder liquidated damages under
      Section 4(d)(iv) in respect of the certificates resulting in such
      Buy-In.

     

    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 solely for the purpose of
      issuance upon conversion of the Debentures and payment of interest on the
      Debenture, each as herein provided, free from preemptive rights or any other
      actual contingent purchase rights of persons other than the Holders, not less
      than such number of shares of the Common Stock as shall (subject to any
      additional requirements of the Company as to reservation of such shares set
      forth in the Purchase Agreement) be issuable (taking into account the
      adjustments and restrictions of Section 5) upon the conversion of the
      outstanding principal amount of the Debentures and payment of interest
      hereunder. The Company covenants that all shares of Common Stock that shall
      be
      so issuable shall, upon issue, be duly and validly authorized, issued and fully
      paid, nonassessable and, if the Registration Statement is then effective under
      the Securities Act, registered for public sale in accordance with such
      Registration Statement.

     

    
      
        
        

      

      
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    vii.  Fractional
      Shares.
      Upon a
      conversion hereunder the Company shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock, but may
      if
      otherwise permitted, make a cash payment in respect of any final fraction of
      a
      share based on the VWAP at such time. If the Company elects not, or is unable,
      to make such a cash payment, the Holder shall be entitled to receive, in lieu
      of
      the final fraction of a share, one whole share of Common Stock.

    

    viii.  Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of the
      Debentures shall be made without charge to the Holders thereof for any
      documentary stamp or similar taxes that may be payable in respect of the issue
      or delivery of such certificate, 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 such Debentures 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 the Debentures are outstanding: (A) shall pay a
      stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company pursuant to this Debenture,
      including as interest thereon), (B) subdivide outstanding shares of Common
      Stock
      into a larger number of shares, (C) combine (including by way of reverse stock
      split) outstanding shares of Common Stock into a smaller number of shares,
      or
      (D) issue by reclassification of shares of the Common Stock any shares of
      capital stock of the Company, then the Conversion Price shall be multiplied
      by a
      fraction of which the numerator shall be the number of shares of Common Stock
      (excluding treasury shares, if any) outstanding before such event and of which
      the denominator shall be the number of shares of Common Stock outstanding after
      such event. Any adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution and shall become effective immediately
      after the effective date in the case of a subdivision, combination or
      re-classification.

     

    
      
        
        

      

      
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    b)  Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while Debentures
      are outstanding, shall offer, sell, grant any option to purchase or offer,
      sell
      or grant any right to reprice its securities, or otherwise dispose of or issue
      (or announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any Person
      to acquire shares of Common Stock, at an effective price per share less than
      the
      then Conversion Price (such lower price, the “Base
      Conversion Price”
and
      such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (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 is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Conversion Price, such
      issuance shall be deemed to have occurred for less than the Conversion Price),
      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. The Company shall notify the Holder in writing, no
      later
      than the Business Day following the issuance of any Common Stock or Common
      Stock
      Equivalents subject to this section, indicating therein the applicable issuance
      price, or of 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, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Conversion Shares based upon the Base Conversion
      Price regardless of whether the Holder accurately refers to the Base Conversion
      Price in the Notice of Conversion. Notwithstanding
      the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt
      Issuance other
      than an Exempt Issuance that involves an MFN Transaction or a Variable Rate
      Transaction for which the adjustment provisions of Section 5 shall be
      applicable, or (ii) issuances of up to, in the aggregate, the first 1,500,000
      shares of Common Stock or Common Stock Equivalents (subject to adjustment for
      reverse and forward stock splits, stock dividends, stock combinations and other
      similar transactions of the Common Stock that occur after the date of this
      Agreement) to consultants of the Company in any 12 month period pursuant to
      any
      resolution duly adopted by a majority of the non-employee members of the Board
      of Directors of the Company or a majority of the members of a committee of
      non-employee directors established for such purpose.

     

    c)  Pro
      Rata Distributions.
      If the
      Company, at any time while Debentures are outstanding, shall distribute to
      all
      holders of Common Stock (and not to Holders) evidences of its indebtedness
      or
      assets or rights or warrants to subscribe for or purchase any security, then
      in
      each such case the Conversion Price shall be determined 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 one
      outstanding share of the Common Stock as determined by the Board of Directors
      in
      good faith. In either case the adjustments shall be described in a statement
      provided to the Holders of the portion of assets or evidences of indebtedness
      so
      distributed or such subscription rights applicable to one share of Common Stock.
      Such adjustment shall be made whenever any such distribution is made and shall
      become effective immediately after the record date mentioned above.

     

    
      
        
        

      

      
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    d)  Fundamental
      Transaction.
      If, at
      any time while this Debenture is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of its assets in one or a series of related transactions,
      (C)
      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 (D) 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 absent 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 one 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 one 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 paragraph
      (c) and insuring that this Debenture (or any such replacement security) will
      be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    e)  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. The number of shares of Common
      Stock outstanding at any given time shall not include shares of Common Stock
      owned or held by or for the account of the Company, and the description of
      any
      such shares of Common Stock shall be considered on issue or sale of Common
      Stock. 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 treasury shares, if any) issued
      and
      outstanding.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    f)  Notice
      to Holders.

    

    i.  Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any of this Section 5,
      the
      Company shall promptly mail 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. If the Company issues a variable rate security,
      despite the prohibition thereon in the Purchase Agreement, the Company shall
      be
      deemed to have issued Common Stock or Common Stock Equivalents at the lowest
      possible conversion or exercise price at which such securities may be converted
      or exercised in the case of a Variable Rate Transaction (as defined in the
      Purchase Agreement), or the lowest possible adjustment price in the case of
      an
      MFN Transaction (as defined in the Purchase Agreement).

     

    ii.  Notice
      to Allow Conversion by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) 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 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; (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 the Debentures, and shall cause to be mailed
      to
      the Holders at their last addresses as they shall appear upon the stock
      books of
      the
      Company, at least 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 mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. Holders are entitled to convert Debentures during the 20-day
      period commencing the date of such notice to the effective date of the event
      triggering such notice. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      6.
       Monthly
      Redemptions.

    

    a)  Monthly
      Redemption.
      On each
      Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount
      plus accrued but unpaid interest, the sum of all liquidated damages and any
      other amounts then owing to the Holder in respect of this Debenture. The Monthly
      Redemption Amount due on each Monthly Redemption Date shall, except as provided
      in this Section, be paid in cash. As to any Monthly Redemption and upon 20
      Trading Days’ prior written irrevocable notice, in lieu of a cash redemption
      payment the Company may elect to pay 100% of a Monthly Redemption in Conversion
      Shares based on a conversion price equal to the lesser of (i) 90% of the average
      of the 20 VWAPs immediately prior to the applicable Monthly Redemption Date
      (subject to adjustment for any stock dividend, stock split, stock combination
      or
      other similar event affecting the Common Stock during such 20 Trading Day
      period), and (ii) the Conversion Price. The Holders may convert, pursuant to
      Section 4(a), any principal amount of this Debenture subject to a Monthly
      Redemption at any time prior to the date that the Monthly Redemption Amount
      and
      all amounts owing thereon are due and paid in full. Unless otherwise directed
      by
      the Holder in the applicable Notice of Conversion, any portion of this Debenture
      converted during any 20 day period until the date the Monthly Redemption Amount
      is paid shall be first applied to the principal amount of Debenture subject
      to
      the Monthly Redemption and such Holder’s cash payment of the Monthly Redemption
      Amount on such Monthly Redemption Date shall be reduced accordingly. The Company
      covenants and agrees that it will honor all Notice of Conversions tendered
      up
      until such amounts are paid in full.

    

    b)  Redemption
      Procedure.
      The
      payment of cash and/or issuance of Common Stock, as the case may be, pursuant
      to
      a Monthly Redemption shall be made on the Monthly Redemption Date. If any
      portion of the cash payment for a Monthly Redemption shall not be paid by the
      Company by the respective due date, interest shall accrue thereon at the rate
      of
      18% per annum (or the maximum rate permitted by applicable law, whichever is
      less) until the payment of the Monthly Redemption Amount plus all amounts owing
      thereon is paid in full. Alternatively, if any portion of the Monthly Redemption
      Amount remains unpaid after such date, the Holders subject to such redemption
      may elect, by written notice to the Company given at any time thereafter,
      to invalidate ab initio such redemption, notwithstanding anything herein
      contained to the contrary. Notwithstanding anything to the contrary in this
      Section 6, the Company’s determination to redeem in cash or shares of Common
      Stock shall be applied ratably among the Holders of Debentures based upon the
      principal amount of Debentures initially purchased by each Holder, adjusted
      upward ratably in the event all of the principal amount of any Holder are no
      longer outstanding.
      The
      Holder may elect to convert the outstanding principal amount of this Debenture
      pursuant to Section 4 prior to actual payment in cash for any redemption under
      this Section 6 by fax delivery of a Notice of Conversion to the
      Company.

    

    Section
      7. Negative
      Covenants.
      So long
      as any portion of this Debenture is outstanding, the Company will not and will
      not permit any of its Subsidiaries to directly or indirectly:

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    a)  enter
      into, create, incur, assume or suffer to exist any indebtedness or liens of
      any
      kind, on or with respect to any of its property or assets (including, without
      limitation, in respect to any of the Secured Proceeds as that terms is defined
      in the Custodial Agreement) now owned or hereafter acquired or any interest
      therein or any income or profits therefrom that is
      senior
      to, or pari passu
      with, in
      any respect, the Company’s obligations under the Debentures;

    

    b)  amend
      its
      certificate of incorporation, bylaws or to the charter documents so as to
      adversely affect any rights of the Holder;

    

    c)  other
      than redemption payments with respect to the Company's Special Voting Rights
      Preferred Stock not to exceed $5,000 in the aggregate and repurchases of the
      Company's Series A Convertible Preferred Stock to the extent that the cash
      payments in respect of any such repurchases does not exceed, in the aggregate,
      $50,000, repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a
de
      minimis
      number
      of shares of its Common Stock or other equity or debt securities other than
      as
      to the Conversion Shares to the extent permitted or required under the
      Transaction Documents or as otherwise permitted by the Transaction Documents;
      or

    

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

     

    Section
      8. Events
      of Default.
      

    

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

    

    i.  any
      default in the payment of (A) the principal amount of any Debenture, or (B)
      interest (including Late Fees) on, or liquidated damages in respect of, any
      Debenture, in each case free of any claim of subordination, 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
      Trading Days;

     

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

    

    iii.  a
      default
      or event of default (subject to any grace or cure period provided for in the
      applicable agreement, document or instrument) shall occur under (A) any of
      the
      Transaction Documents other than the Debentures, or (B) any other material
      agreement, lease, document or instrument to which the Company or any Subsidiary
      is bound;

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    iv.  any
      representation or warranty made herein,
      in any
      other Transaction Documents, in any written statement pursuant hereto or
      thereto, or in any other report, financial statement or certificate made or
      delivered to the Holder or any other holder of Debentures shall
      be
      untrue or incorrect in any material respect as of the date when made or deemed
      made;

    

    v.  (i)
      the
      Company or any of its Subsidiaries shall commence, or there shall be commenced
      against the Company or any such Subsidiary, a case under any applicable
      bankruptcy or insolvency laws as now or hereafter in effect or any successor
      thereto, or the Company or any Subsidiary commences any other proceeding under
      any reorganization, arrangement, adjustment of debt, relief of debtors,
      dissolution, insolvency or liquidation or similar law of any jurisdiction
      whether now or hereafter in effect relating to the Company or any Subsidiary
      thereof or (ii) there is commenced against the Company or any Subsidiary thereof
      any such bankruptcy, insolvency or other proceeding which remains undismissed
      for a period of 60 days; or (iii) the Company or any Subsidiary thereof is
      adjudicated by a court of competent jurisdiction insolvent or bankrupt; or
      any
      order of relief or other order approving any such case or proceeding is entered;
      or (iv) the Company or any Subsidiary thereof suffers any appointment of any
      custodian or the like for it or any substantial part of its property which
      continues undischarged or unstayed for a period of 60 days; or (v) the Company
      or any Subsidiary thereof makes a general assignment for the benefit of
      creditors; or (vi) the Company shall fail to pay, or shall state that it is
      unable to pay, or shall be unable to pay, its debts generally as they become
      due; or (vii) the Company or any Subsidiary thereof shall call a meeting of
      its
      creditors with a view to arranging a composition, adjustment or restructuring
      of
      its debts; or (viii) the Company or any Subsidiary thereof shall by any act
      or
      failure to act expressly indicate its consent to, approval of or acquiescence
      in
      any of the foregoing; or (ix) any corporate or other action is taken by the
      Company or any Subsidiary thereof for the purpose of effecting any of the
      foregoing;

     

    vi.  the
      Company or any Subsidiary shall default in any of its obligations under any
      mortgage, credit agreement or other facility, indenture agreement, factoring
      agreement or other instrument under which there may be issued, or by which
      there
      may be secured or evidenced any indebtedness for borrowed money or money due
      under any long term leasing or factoring arrangement of the Company in an amount
      exceeding $150,000, whether such indebtedness now exists or shall hereafter
      be
      created and such default shall result in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable; 

    

    vii.  the
      Common Stock shall not be eligible for quotation on or quoted for trading on
      a
      Trading Market and shall not again be eligible for and quoted or listed for
      trading thereon within five Trading Days;

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    viii.  the
      Company shall be a party to any Change of Control Transaction or Fundamental
      Transaction, shall agree to sell or dispose of all or in excess of 33% of its
      assets in one or more transactions (whether or not such sale would constitute
      a
      Change of Control Transaction) or shall redeem or repurchase more than a de
      minimis number of its outstanding shares of Common Stock or other equity
      securities of the Company (other than redemption
      payments with respect to the Company's Special Voting Rights Preferred Stock
      not
      to exceed $5,000 in the aggregate during
      the term of this Debenture);

    

    ix.  a
      Registration Statement shall not have been declared effective by the Commission
      on or prior to the 180th calendar
      day after the Closing Date;

    

    x.  if,
      during the Effectiveness Period (as defined in the Registration Rights
      Agreement), the effectiveness of the Registration Statement lapses for any
      reason or the Holder shall not be permitted to resell Registrable Securities
      (as
      defined in the Registration Rights Agreement) under the Registration Statement,
      in either case, for more than 30 consecutive Trading Days or 60 non-consecutive
      Trading Days during any 12 month period; provided,
      however,
      that in
      the event that the Company
      is negotiating a merger, consolidation, acquisition or sale of all or
      substantially all of its assets or a similar transaction and in the written
      opinion of counsel to the Company, the Registration Statement, would be required
      to be amended to include information concerning such transactions or the parties
      thereto that is not available or may not be publicly disclosed at the time,
      the
      Company shall be permitted an additional 10 consecutive Trading during any
      12
      month period relating to such an event;

    

    xi.  an
      Event
      (as defined in the Registration Rights Agreement) shall not have been cured
      to
      the satisfaction of the Holder prior to the expiration of thirty days from
      the
      Event Date (as defined in the Registration Rights Agreement) relating thereto
      (other than an Event resulting from a failure of an Registration Statement
      to be
      declared effective by the Commission on or prior to the Effectiveness Date
      (as
      defined in the Registration Rights Agreement), which shall be covered by Section
      8(a)(ix); 

    

    xii.  the
      Company shall fail for any reason, other than as a result of the limitations
      set
      forth in Section 4(c) hereof, to deliver certificates to a Holder prior to
      the
      fifth Trading Day after a Conversion Date pursuant to and in accordance with
      Section 4(d) or the Company shall provide notice to the Holder, including by
      way
      of public announcement, at any time, of its intention not to comply with
      requests for conversions of any Debentures in accordance with the terms
      hereof;

    

    xiii.  the
      Company shall fail for any reason to pay in full the amount of cash due pursuant
      to a Buy-In within 5 Trading Days after notice therefor is delivered hereunder
      or shall fail to pay all amounts owed on account of an Event of Default within
      five days of the date due;

    

    xiv.  any
      Person shall breach the agreements delivered to the initial Holders pursuant
      to
      Section 2.2(a)(iv) of the Purchase Agreement.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    b)  Remedies
      Upon Event of Default.
      If any
      Event of Default occurs, the full principal amount of this Debenture, together
      with interest and other amounts owing in respect thereof, to the date of
      acceleration shall become, at the Holder’s election, immediately due and payable
      in cash. The aggregate amount payable upon an Event of Default shall be equal
      to
      the Mandatory Prepayment 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 the rate of 18% per annum,
      or such lower maximum amount of interest permitted to be charged under
      applicable law. All Debentures for which the full Mandatory Prepayment Amount
      hereunder shall have been paid in accordance herewith shall promptly be
      surrendered to or as directed by the Company. 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 declaration may be rescinded
      and annulled by Holder at any time prior to payment hereunder and the Holder
      shall have all rights as a Debenture holder until such time, if any, as the
      full
      payment under this Section shall have been received by it. 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 Holders
      hereunder, including, without limitation, any Notice of Conversion, shall be
      in
      writing and delivered personally, by facsimile, sent by a nationally recognized
      overnight courier service, addressed to the Company, at the address set forth
      above, facsimile number 416-364-9363,
      Attn: Anna E. Gluskin, President, or
      such
      other address or facsimile number as the Company may specify for such purposes
      by notice to the Holders delivered in accordance with this Section. 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, sent
      by a
      nationally recognized overnight courier service addressed to each Holder at
      the
      facsimile telephone number or address of such Holder appearing on the books
      of
      the Company, or if no such facsimile telephone 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 telephone number specified in this Section prior
      to
      5:00 p.m. (New York City time), (ii) the date after the date of transmission,
      if
      such notice or communication is delivered via facsimile at the facsimile
      telephone number specified in this Section later than 5:00 p.m. (New York City
      time) on any date and earlier than 11:59 p.m. (New York City time) on such
      date,
      (iii) the second Business Day following the date of mailing, if sent by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given.

     

    b)  Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Debenture shall alter or
      impair the obligation of the Company, which is absolute and unconditional,
      to
      pay the principal of, interest and liquidated damages (if any) 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 and,
      pursuant to the Cusotdial Agreement dated the date hereof by and between the
      Company and the Purchasers (as defined therein), is secured by a first priority
      security interest in certain Secured Proceeds (as defined in the Custodial
      Agreement) for the benefit of the Holder. This Debenture ranks pari passu
      with all
      other Debentures now or hereafter issued under the terms set forth
      herein. 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    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,
      and indemnity, if requested, all 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 conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by any of the Transaction Documents (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
      (including with respect to the enforcement of any of the Transaction Documents),
      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
      any such court, 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 manner permitted by 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 with the
      investigation, preparation and prosecution of such action or
      proceeding.

     

    e)  Waiver.
      Any
      waiver by the Company or the Holder of a breach of any provision of this
      Debenture shall not operate as or be construed to be a waiver of any other
      breach of such provision or of 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
      must be in writing.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

    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.

    

    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.

    

    
      	 	 	 
	 	GENEREX
              BIOTECHNOLOGY CORPORTION
	 
 	 
 	 
 
	
            	By:  	 
	 	
              

              Name:
                Mark A. Fletcher

            
	 	Title:
              Executive Vice-President, General Counsel

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A

    

    NOTICE
      OF CONVERSION

    DEBENTURE
      ISSUED FEB 28 06, DUE MAY 28 06

     

    

    The
      undersigned hereby elects to convert principal under the 6% Convertible
      Debenture of Generex Biotechnology Company, a Delaware corporation (the
“Company”),
      due
      on May 28, 2007, into shares of common stock, par value $0.001 per share (the
      “Common
      Stock”),
      of
      the Company according to the conditions hereof, as of the date written below.
      If
      shares 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
      determined in accordance with Section 13(d) of the Exchange Act, specified
      under
      Section 4 of this Debenture.

    

    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 Debentures to be Converted:

    

    Payment
      of Interest in Common Stock __ yes __ no

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

    

    Is
      conversion to be applied against next Monthly Redemption Payment and if so,
      what
      portion?  (note
      failure to answer deemed entire portion to be applied) $_________

     

    Number
      of
      shares of Common Stock to be issued:

     

    Signature:

     

    Name:

     

    Address:

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    Schedule
      1

    

    CONVERSION
      SCHEDULE

    

    The
      6%
      Convertible Debentures due on May 28, 2007, in the aggregate principal amount
      of
      $____________ issued by Generex Biotechnology Company. This Conversion Schedule
      reflects conversions made under Section 4 of the above referenced
      Debenture.

    

    Dated:
      

     

    
      	
               

              Date
                of Conversion

              (or
                for first entry, Original Issue Date)

            	 	
               

              Amount
                of Conversion

            	 	
              Aggregate
                Principal Amount Remaining Subsequent to Conversion

              (or
                original Principal Amount)

            	 	
               

              Company
                Attest

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
               

            	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        23

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