Document:

Unassociated Document

    STOCK
PURCHASE AGREEMENT

     

    This
Stock Purchase Agreement (the “Agreement”) dated as of July
22, 2010, by and among American Scientific Resources, Incorporated, a
Nevada  corporation, with headquarters located at 1112 Weston Road,
Unit 278, Weston Florida 33326 (the “Company”), and the purchasers
identified on the signature page hereto (including their successors and assigns
(the “Purchasers”)).

     

    WHEREAS,
the Purchasers desire to purchase from the Company convertible debentures in the
aggregate amount of up to $100,000 in substantially the form attached hereto as
Exhibit A (the “Debentures”);

     

    WHEREAS,
in connection with the purchase of the Debentures, the Company will also issue
Purchasers warrants to purchase up to 5,000,000shares of the Company’s common
stock at $.0075 per share (“Warrants”) in substantially the form attached hereto
as Exhibit B;

     

    WHEREAS,
the Debentures and Warrants are collectively referred to as the
“Securities”;

     

    WHEREAS,
the Company desires that Purchasers purchase the Securities; and

     

    NOW,
THEREFORE, in consideration of the foregoing and on the basis of the respective
representations, warranties, covenants, agreements, undertakings and obligations
set forth herein, and intending to be legally bound hereby, the parties agree as
follows:

     

    ARTICLE
1

     

    PURCHASE
AND SALE OF THE DEBENTURES AND THE WARRANTS

    

    1.1           Purchase
and Sale of Securities.  Upon the terms and subject to the
conditions set forth in this Agreement, the Company agrees to sell, assign,
transfer and deliver to each Purchaser, and each Purchaser hereby agrees to
purchase at the Closing (as defined in Section 2) and accept delivery from the
Company, a Debenture in the principal amount designated on the signature page
hereto, free of all liens, pledges, mortgages, security interests, charges,
restrictions, adverse claims or other encumbrances of any kind or nature
whatsoever, for the consideration specified herein.

     

    ARTICLE
2

     

    CLOSING

     

    2.1           Closing.  As
used herein the Closing Date shall mean the day when all conditions precedent to
(i) the Purchasers’ obligations to purchase the Debentures and (ii) the
Company’s obligations to issue the Debentures and Warrants have been satisfied
or waived.  Onthe Closing Date, upon the terms and subject to the
conditions set forth herein, the Company agrees to sell to each Purchaser
andeachPurchaser agrees to purchase a Debenture in the principal amount
designated on the signature page hereto. The closing of the purchase and sale of
Debentures is referred to herein as the “Closing”.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    The Closing Date shall occur on the
date of this Agreement at the offices of Sichenzia Ross Friedman Ference LLP,
New York, New York 10066, at 10:00 a.m., or at such other time and place as the
parties may agree.

     

    2.2 Deliveries.

     

    (a) On or
prior to the Closing Date, the Company shall deliver or cause to be delivered to
each Purchaser:

     

    (i)   this Agreement
duly executed by the Company;

     

    (ii)  a Debenture in the
principal amount designated on the signature page hereto; and

     

    (iii) a Warrant registered in the name
of Purchaser to purchase up to the number of shares of common stock designated
on the signature page hereto, at an exercise price of $.01 per
share.

     

    (b)  On
or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company:

     

    (i)  this
Agreement duly executed by the Purchaser; and

     

    (ii)  theprincipal
amount of the Debenture designated on the signature page hereto by wire to the
account specified in writing by the Company.

     

    2.3   Closing
Conditions

     

    (a) The
obligations of the Company hereunder in connection with each Closing are subject
to the following conditions being met:

     

    (i)  the accuracy in all
material respects on each Closing Date of the representations and warranties of
the Purchasers contained herein;

     

    (ii)   the delivery by
the Purchasers of the items set forth in Section 2.2 (b).

     

     (b)  The
obligations of each Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:

     

    (i)  the
accuracy in all material respects when made and on each Closing Date of the
representations and warranties of the Company contained herein;

     

    (ii)  all
obligations, covenants and agreements of the Company required to be performed at
or prior to the relevant Closing Date shall been performed;

     

    (iii)  the
delivery by the Company of the items set forth in Section 2.2 (a).

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    ARTICLE
3

     

    REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

     

    3.           Representations
and Warranties of the Company.  The Company represents and
warrants to each Purchaser as follows:

     

    (a)           The
Company is a corporation duly organized,
validly existing, and in good standing under the laws of Nevada, and is
qualified in no other state.

    

    (b)           This
Agreement has been duly executed and delivered by Company and constitutes the
valid, binding and enforceable obligation of Company, subject to the applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and rights of stockholders.

    

    (c)         The
authorized capital stock of the Companyconsists of 2,500,000,000 shares of common
stock, 1,925,894,716of which are validly issued and outstanding, fully paid and
non-assessable and 1,000,000 shares of
blank check preferred stock of which 500,000 have been designated as Series A
Preferred Stock of which 0 are issued and outstanding and 500,000 have been
designated as Series B Preferred Stock of which 0 are issued and
outstanding.  The Common Stock issuable upon the conversion of the
Debentures and exercise of the Warrants will be when issued in accordance with
the Debenture and or the Warrant validly issued, are fully paid and
non-assessable.  The Company has the unqualified right to sell,
assign, and deliver the Securities, and, upon consummation of the transactions
contemplated by this Agreement, the Purchaser will acquire good and valid title
to the Securities, free and clear of all liens, claims, options, charges, and
encumbrances of whatsoever nature.  The Company’s subsidiaries are set
forth on Schedule 2.3 (c) (such subsidiaries and any direct or indirect
subsidiary of the Company formed or acquired after the date hereof shall be
referred as a “Subsidiary”).

     

    (d)           Other
than as set forth on the financial statements for the year ended December 21,
2009, attached hereto as Exhibit “C” (the “Financial Statements”), the Company
is not a party to or bound by any unexpired, undischarged or unsatisfied written
or oral contract, agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by Purchaser according to the
terms of this Agreement will be a default or an event of acceleration, or
grounds for termination, or whereby timely performance by Purchaser according to
the terms of this Agreement may be prohibited, prevented or
delayed.

    

    (e)           The
Company has full power and authority to sell and transfer the Securities to
Purchaser without obtaining the waiver, consent, order or approval of (i) any
state or federal governmental authority or (ii) any third party or other
person.  The Companyhas the
corporate power, authority and capacity to carry on its business as
presently conducted.

    

    (f)           Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default under
any term or provision of the Certificate of Incorporation or By-Laws of the
Companyor of any contract, commitment,
indenture, other agreement or restriction of any kind or character to which the
Company is a party to or by which the Company is bound.  

    

    (g)           As of December 31, 2009, the Company has no
outstanding liabilities or obligations to any party except as reflected on the
Financial Statements.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    (h)           The Company has the
corporate power to own its properties and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a material adverse effect on the Company.  The Company is not in
violation of any of the provisions of its certificate of incorporation or
by-laws.  No consent, approval or agreement of any individual or
entity is required to be obtained by the Company in
connection with this Agreement.  

    

    (i)           There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the Company’s best
knowledge, threatened against the Company or any of
its properties or any of its officers or directors (in their capacities as
such).  There is no judgment, decree or order against the Company that could
prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement.  

    

    (j)           Other
than as disclosed in the Company’s financialstatements, there are no
material claims, actions, suits, proceedings, inquiries, labor disputes or
investigations (whether or not purportedly on behalf of the Company) pending
or, to the Company’s  knowledge, threatened against the Company or any of
its assets, at law or in equity or by or before any governmental entity or in
arbitration or mediation.  No bankruptcy, receivership or debtor
relief proceedings are pending or, to the best of the Company’s
knowledge, threatened against the Company.

    

    (k)           Other
than with respect to the filing of tax returns, the Company has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign laws, judgment,
decree, injunction or order, applicable to it, the conduct of its business, or
the ownership or operation of its business.    References in
this Agreement to “Laws” shall refer to any laws, rules or regulations of any federal, state or local
government or any governmental or quasi-governmental agency, bureau, commission,
instrumentality or judicial body
(including, without limitation, any federal or state securities law, regulation,
rule or administrative order).

    

    (l)           All representations, covenants and warranties of the
Company contained in this Agreement shall be true and correct
on and as of the Closing date with the same effect as though the same had been
made on and as of such date.

    

    (m)           The Company has the
corporate power, authority and capacity to carry on its business as presently
conducted.

     

    ARTICLE
4

     

    REPRESENTATIONS
AND WARRANTIES OF BUYER

     

    4.           Representations
and Warranties of Buyer.  Each Purchaser hereby represents and
warrants to the Company only as to such Purchaser as follows:

     

    (a)  Organization;
Authority.  Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by this
Agreement   and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and performance by
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part of
Purchaser.  This Agreement has been duly executed by Purchaser, and
when delivered by Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of Purchaser, enforceable against it in
accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (b)  Own
Account.  Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act of
1933, as amended (the “Securities Act”) or any applicable state securities law
and is acquiring the Securities as principal for its own account and not with a
view to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities (this representation and warranty
not limiting Purchaser’s right to sell the Securities pursuant to an effective
registration statement  or otherwise in compliance with applicable
federal and state securities laws) in violation of the Securities Act or any
applicable state securities law.

     

    (c)  Purchaser
Status.  At the time Purchaser was offered the Securities, it
was, as of the date hereof it is, as of the date of each Closing and when it
converts any portion of the Debentures or when it exercises any portion of the
Warrant it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act.  Purchaser is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act.  Purchaser has (i) a preexisting
personal or business relationship with the Company or one or more of its
directors, officers or control persons or (ii) by reason of Purchaser’s business
or financial experience Purchaser is capable of evaluating the risks and merits
of this investment and of protecting Purchaser’s own interests in connection
with an investment in the Securities.

     

    (d)  Experience of
Purchaser.  Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

     

    (e)  General
Solicitation.  Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

     

    (f)  Receipt of
Information. Purchaser believes it has received all the information it
considers necessary or appropriate for deciding whether to purchase the
Securities.  Purchaser further represents that through its
representatives it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Securities and the business, properties and financial condition of the Company
and to obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access.  The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 3 of this Agreement or
the right of Purchaser to rely thereon.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    ARTICLE
5

     

    MISCELLANEOUS

     

    5.1Adjustment
of Conversion Price.The notwithstanding anything to the contrary therein,
the Conversion Price of the Debentures set forth on Schedule 5.1 attached hereto
shall be $.004 subject to adjustment as provided in such
Debentures.

     

    5.2Further
Assurances.  By its signature hereto, each party consents and
agrees to all of the transactions contemplated hereby.  Each party
hereto shall execute, deliver, file and record any and all instruments,
certificates, agreements and other documents, and take any and all other
actions, as reasonably requested by any other party hereto in order to
consummate the transactions contemplated hereby and, in the case of the Company,
to ensure that each Purchaser receive in full the benefits of the equity
interests to which it is entitled hereby.

     

    5.3Notices.  All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given or made if (i) sent by
registered or certified mail, return receipt requested, postage prepaid, (ii)
hand delivered, (iii) sent by prepaid overnight carrier, with a record of
receipt or (iv) sent by facsimile (with confirmation of receipt), to the parties
at the following address (or at such other addresses as shall be specified by
the parties by like notice):

     

    
      	
            	
              (i) 

            	
              To the
      Company:

            

    

    American Scientific Resources,
Incorporated

    1112 Weston Road, Unit 278

    Weston, Florida, 33326

    Fax: (954) 659-3412

    Attention:  Christopher
Tirotta

    

    With a copy to:

    Sichenzia Ross Friedman Ference
LLP

    61 Broadway

    New York 10006

    Fax:  (212)
930-9725

    Attention:  David B. Manno,
Esq.

    

    
      	
            	
              (ii) 

            	
              To each
      Purchaser:

            

    

    Granite
Financial Group, LLC

    135
Liverpool Drive, Suite 200

    Cardiff,
California 92007

    Attention:
Daniel Schreiber

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    Each
notice or other communication shall be deemed to have been given on the date
received.

     

    5.4           Entire
Agreement.  This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.

    

    5.5           Headings.  The
section and other headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
affect the meaning or interpretation of this Agreement.

    

    5.6           Counterparts.  This
Agreement may be executed in any number of counterparts, each of which, when
executed, shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.

    

    5.7           Governing
Law and Jurisdiction.  This Agreement shall be construed as to
both validity and performance and enforced in accordance with and governed by
the laws of the State of New York, without giving effect to the conflicts of law
principles thereof. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the civil or state courts of New York or in the federal courts located in the
State of New York.  The parties executing this Agreement and other
agreements referred to herein or delivered in connection herewith on behalf of
the Company agree to submit to the jurisdiction of such courts.

    

    5.8           Severability.  If
any term or provision of this Agreement shall to any extent be invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby,
and each term and provision of the Agreement shall be valid and enforced to the
fullest extent permitted by law.

    

    5.9           Amendments.  This
Agreement may not be modified or changed except by an instrument or instruments
in writing executed by the parties hereto.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the date first written above

     

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 	      
                                        THE
COMPANY:

                                         

                                        AMERICAN
      SCIENTIFIC RESOURCES, INCORPORATED

                                      	 
	 	 	 	 
	
                                         

                                      	
                                        By:
      

                                      	 	 
	 	Name:  	Christopher
      F. Tirotta, MD, MBA	 
	 	Title:  	CEO	 
	 	 	 	 
	 	 	 	 
	 	      
                                        PURCHASERS:

                                        

                                        GRANITE
      FINANCIAL GROUP, LLC

                                      	 
	 	 	 	 
	 	By:     	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 
	 	      
                                        Amount
      of Debenture: $100,000

                                        Amount
      of Warrants: 5,000,000

                                      	 
	 	 	 	 

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
       

      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
              AMERICAN
      SCIENTIFIC RESOURCES, INCORPORATED’S

              WIRE
      INFORMATION

            	 
      	 
      
	 
      	 
      	 
      

    

     

     

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    EXHIBIT
A FORM OF DEBENTURE

     

     

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    EXHIBIT
B FORM OF WARRANT

     

     

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    EXHIBIT
C FINANCIAL STATEMENTS

     

     

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    Schedule
2.3 C (Subsidiaries)

    

    Kidz-Med,
Inc., Florida corporation

    Heartsmart,
Inc., Nevada corporation

    Ulster
Scientific, New York corporation

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    Schedule
5.1

    
      
        
          
            	
                    Original
      Principal Amount of Debenture

                  	
                    Debenture
      Issued to and Date of Debenture

                  
	
                    $200,000

                  	
                    December
      2, 2009, Granite Financial Group, LLC

                  
	
                    $100,000

                  	
                    February
      16, 2010, Granite Financial Group, LLC

                  
	
                    $100,000

                  	
                    March
      16, 2010, Granite Financial Group, LLC

                  
	
                    $101,000

                  	
                    May
      13, 2010, Granite Financial Group, LLC

                  
	
                    $49,000

                  	
                    May
      13, 2010, Daniel Schreiber SEP
IRA

                  

          

        

      

    

     

    
      
         

      

      
        6Unassociated Document

    

    NEITHERTHIS
SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITYISCONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

    

    Original
Issue Date:July 22, 2010

    

    $100,000

    

    

    12%
CONVERTIBLE DEBENTURE

    DUE
July 22, 2012

    

    THIS12% CONVERTIBLE DEBENTURE is one of
a series of duly authorized and validly issued 12% Convertible Debentures of
AMERICAN SCIENTIFIC RESOURCES, INCORPORATED,a Nevada corporation, (the “Company”), having its
principal place of business at 1112 Weston Road, Unit 278 Weston, FL 33326,
designated as its 12% Convertible Debenture due July 22, 2012 (this debenture,
the “Debenture”
and, collectively with the other debentures of such series, the “Debentures”).

    

    FOR VALUE
RECEIVED, the Company promises to pay to Granite Financial Group, LLC or its
registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $100,000 on July
22, 2012 (the “Maturity Date”)or
such earlier date as this Debenture is required or permitted to be repaid as
provided hereunder, and to pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Debenture in
accordance with the provisions hereof.  This Debenture is subject to
the following additional provisions:

    

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    “Change of Control
Transaction” means the occurrence after the date hereof of any of (a) an
acquisition after the date hereof by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company (other than by means of conversion or exercise
of the Debentures and the Securities issued together with the Debentures), (b)
the Company merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to such
transaction own less than 66% of the aggregate voting power of the Company or
the successor entity of such transaction, or (c) the Company sells or transfers
all or substantially all of its assets to another Person and the stockholders of
the Company immediately prior to such transaction own less than 66% of the
aggregate voting power of the acquiring entity immediately after the
transaction, (d) a replacement at one time or within a three year period of more
than one-half of the members of theBoard of Directors which is not approved by a
majority of those individuals who are members of the Board of Directors on the
date hereof (or by those individuals who are serving as members of the Board of
Directors on any date whose nomination to the Board of Directors was approved by
a majority of the members of the Board of Directors who are members on the date
hereof), or (e) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth in clauses (a) through (d) above. Notwithstanding anything to the contrary
herein, a Change of Control Transaction shall not occur if Christopher F.
Tirotta continues to be the Company’s Chief Executive Officer.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

    “Conversion Schedule”
means the Conversion Schedule in the form of Schedule 1 attached
hereto.

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of the Debentures or Warrants issued
pursuant to the Stock Purchase Agreement between the Company
and  Granite Financial Group LLC dated February 16, 2010, March 16,
2010, May13, 2010and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date
hereof, provided that such securities have not been amended since the date
hereof to increase the number of such securities or to decrease the exercise,
exchange or conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

    

    

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

    

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

    

    “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $100,000
(other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP.  

    

    “Interest Conversion
Rate”  shall equal the Conversion Price.

    

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

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

     

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

    

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

    

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

    

    “Stock Purchase
Agreement”  means the Stock Purchase Agreement between the
Company and the Holder dated July 22, 2010.

    

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

    

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

    

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Section
2.            Interest.

    

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

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

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

    

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

     

    d)         Prepayment.  The
Company may prepay any portion of the principal amount of this Debenture without
the prior written consent of the Holder.

    

    Section 3.            Registration of Transfers
and Exchanges.

    

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

    

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

    

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    Section 4.            Conversion.

    

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

    

    b)           Conversion
Price.   The term “Conversion Price” as used herein shall
be equal to $.004 pershare(the “Conversion
Price”).

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    
      d)           
Mechanics of
Conversion.

    

    

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

    

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

    

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

    

    iv.           Obligation Absolute; Partial
Liquidated Damages.  The Company’s obligations to issue and
deliver the Conversion Shares upon conversion of this Debenture in accordance
with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to
the Holder in connection with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by the Company of any such action the
Company may have against the Holder.  In the event the Holder of this
Debenture shall elect to convert any or all of the outstanding principal amount
hereof, the Company may not refuse conversion based on any claim that the Holder
or anyone associated or affiliated with the Holder has been engaged in any
violation of law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and or enjoining conversion of all or
part of this Debenture shall have been sought and obtained, and the Company
posts a surety bond for the benefit of the Holder in the amount of 150% of the
outstanding principal amount of this Debenture, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds of which shall
be payable to the Holder to the extent it obtains judgment.  In the
absence of such injunction, the Company shall issue Conversion Shares or, if
applicable, cash, upon a properly noticed conversion.If the Company fails for
any reason to deliver to the Holder such certificate or certificates pursuant to
Section 4(d)(ii) by the third Trading Day after the Conversion Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of principal amount being converted, $10 per Trading Day
(increasing to $20 per Trading Day on the fifth (5th) Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such third
(3th)
Trading Day until such certificates are delivered.  Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of
Default pursuant to Section 9 hereof for the Company’s failure to deliver
Conversion Shares within the period specified herein and the Holder shall have
the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.  The exercise of any such rights shall not prohibit
the Holder from seeking to enforce damages pursuant to any other Section hereof
or under applicable law.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    vi.           Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock for the sole purpose of issuance upon conversion of this Debenture and
payment of interest on this Debenture, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of Persons
other than the Holder (and the other holders of the Debentures), not less than
such aggregate number of shares of the Common Stock as shall (subject to the
terms and conditions set forth in the Purchase Agreement) be issuable (taking
into account the adjustments and restrictions of Section 5) upon the conversion
of the outstanding principal amount of this Debenture.  The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and
non-assessable.

    

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

    

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

    

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    Section
5.            Certain
Adjustments.

    

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

    

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    f)           RESERVED.

    

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

    

    h)           Notice to the
Holder.

    

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

    

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    Section
6.            Reserved.

    

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

    

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

    

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

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

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

    

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

     

    Section
9.            Events of
Default.

    

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

    

    i.           any
default in the payment of (A) the principal amount of any Debenture or (B)
interest, liquidated damages and other amounts owing to a Holder on any
Debenture, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default, solely in the case of an interest payment or other default under
clauses (A) and (B) above, is not cured within 7 days;

    

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

    

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

    

    iv.           any
representation or warranty made in this Debenture or the Subscription Agreement,
any written statement pursuant hereto or thereto or any other report, financial
statement or certificate made or delivered to the Holder or any other Holder
shall be untrue or incorrect in any material respect as of the date when made or
deemed made;

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    v.           the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w)
of Regulation S-X) shall be subject to a Bankruptcy Event; or

    

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

     

    b)           Remedies Upon Event of
Default. If any Event of Default occurs, the outstanding principal amount
of this Debenture, plus accrued but unpaid interest, liquidated damages and
other amounts owing in respect thereof through the date of acceleration, shall
become, at the Holder’s election, immediately due and payable in cash at the
Mandatory Default Amount.  Commencing 5 days after the occurrence of
any Event of Default that results in the eventual acceleration of this
Debenture, the interest rate on this Debenture shall accrue at an interest rate
equal to the lesser of 17% per annum or the maximum rate permitted under
applicable law.  Upon the payment in full of the Mandatory Default
Amount, the Holder shall promptly surrender this Debenture to or as directed by
the Company.  In connection with such acceleration described herein,
the Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and
without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable
law.  Such acceleration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a holder
of the Debenture until such time, if any, as the Holder receives full payment
pursuant to this Section 9(b).  No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent
thereon.

    

    Section
10.            Miscellaneous.

    

    a)           Notices.  Any
and all notices or other communications or deliveries to be provided by the
Holder hereunder, including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other facsimile number or address as the Company may
specify for such purpose by notice to the Holder delivered in accordance with
this Section 10(a).  Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of
the Holder appearing on the books of the Company, or if no such facsimile number
or address appears, at the principal place of business of the
Holder.  Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified on the signature page prior to 5:30 p.m. (New York
City time), (ii) the date immediately following the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the signature page between 5:30 p.m. (New York City time) and 11:59
p.m. (New York City time) on any date, (iii) the second Business Day following
the date of mailing, if sent by nationally recognized overnight courier service
or (iv) upon actual receipt by the party to whom such notice is required to be
given.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    b)           Absolute Obligation.
Except as expressly provided herein, no provision of this Debenture shall alter
or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, liquidated damages and accrued interest, as applicable, on
this Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed.  This Debenture is a direct debt obligation of the
Company.

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

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

    

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

    

    i)           Assumption.  Any
successor to the Company or any surviving entity in a Fundamental Transaction
shall (i) assume, prior to such Fundamental Transaction, all of the obligations
of the Company under this Debenture and the Subscription Agreement pursuant to
written agreements in form and substance satisfactory to the Holder (such
approval not to be unreasonably withheld or delayed) and (ii) issue to the
Holder a new debenture of such successor entity evidenced by a written
instrument substantially similar in form and substance to this Debenture,
including, without limitation, having a principal amount and interest rate equal
to the principal amount and the interest rate of this Debenture and having
similar ranking to this Debenture, which shall be satisfactory to the Holder
(any such approval not to be unreasonably withheld or delayed).  The
provisions of this Section 10(i) shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations
of this Debenture.

    

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

    

    

     

    (Signature
Pages Follow)

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

    

    
      	
              AMERICAN
      SCIENTIFIC RESOURCES, INC.

               

               

            
	
              By:__________________________________________

                   Name:
      Christopher F. Tirotta

                   Title:
      President

               

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    ANNEX
A

    

    NOTICE
OF CONVERSION

     

    The undersigned hereby elects to
convert principal under the12% Convertible Debenture due May 13, 2012 of
American Scientific Resources Incorporated, a Nevada corporation (the “Company”),into shares
of common stock (the “Common Stock”), of
the Company according to the conditions hereof, as of the date written
below.  If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance
therewith.  No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.

    

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

    

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

    

    Conversion
calculations:

    
    

     

    
      	 	

              Date
      to Effect Conversion:

              

              Principal
      Amount of Debenture to be Converted:

              

              Number
      of shares of Common Stock to be issued:

              

              

              Signature:

              

              Name:

              

              Address
      for Delivery of Common Stock Certificates:

              

              Or

              

              DWAC
      Instructions:

              

              Broker
      No:   __________                                                   

              Account
      No: 
  _________      

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Schedule
1

    

    CONVERSION
SCHEDULE

    

    The 12%
Convertible Debentures due on July 22, 2012 in the aggregate principal amount of
$____________ are issued by American Scientific Resources Inc. a Nevada
corporation.  This Conversion Schedule reflects conversions made under
Section 4 of the above referenced Debenture.

    

    Dated:

     

    
      
        
          	
                   

                  Date
      of Conversion

                  (or
      for first entry, Original Issue Date)

                	
                   

                  Amount
      of Conversion

                	
                   

                  Aggregate
      Principal Amount Remaining Subsequent to Conversion

                  (or
      original Principal Amount)

                	
                   

                  Company
      Attest

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

        

      

    

     

    
      
        
        

      

      
        23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]