Document:

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                                                                   EXHIBIT 10.80

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "AGREEMENT") is dated as of
June 27, 2003, among Viragen, Inc., a Delaware corporation (the "COMPANY"), and
the purchasers identified on the signature pages hereto (each, including its
successors and assigns, a "PURCHASER" and collectively the "PURCHASERS").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT") and Rule 506 promulgated thereunder, the Company desires
to issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company, securities of the Company as more
fully described in this Agreement.

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debenture (as defined herein), and (b) the
following terms have the meanings indicated in this Section 1.1:

                  "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 144 under the Securities Act.

                  "CAPITAL SHARES" means the Common Stock and any shares of any
         other class of common stock whether now or hereafter authorized, having
         the right to participate in the distribution of earnings and assets of
         the Company.

                  "CAPITAL SHARES EQUIVALENTS" means any securities, rights, or
         obligations that are convertible into or exchangeable for or give any
         right to subscribe for or purchase, directly or indirectly, any Capital
         Shares of the Company or any warrants, options or other rights to
         subscribe for or purchase, directly or indirectly, Capital Shares or
         any such convertible or exchangeable securities.

                  "CLOSING" means the closing of the purchase and sale of the
         Securities pursuant to SECTION 2.1.

                  "CLOSING BID PRICE" means on any particular date (a) the
         closing bid price per share of Common Stock on such date on the
         Principal Market or the OTC Bulletin Board (as reported by Bloomberg
         L.P. at 4:15 PM (New York time), or (b) if there is no such price on
         such date, then the closing bid price on the Principal Market or the
         OTC Bulletin Board on the date nearest preceding such date (as reported
         by Bloomberg L.P. at 4:15 PM (New York time) for the closing bid price
         for regular session trading on such day), or (c) if the shares of

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         Common Stock are not then reported on the Principal Market or the OTC
         Bulletin Board, then the average of the "Pink Sheet" quotes for the
         relevant conversion period, as determined in good faith by the
         Purchasers, or (c) if the shares of Common Stock are not then publicly
         traded the fair market value of a share of Common Stock as determined
         by an appraiser selected in good faith by the Purchasers of a majority
         in interest of the principal amount of Debentures then outstanding.

                  "CLOSING DATE" means the date of the Closing.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the common stock of the Company, par
         value $0.01 per share, and any securities into which such common stock
         may hereinafter been reclassified into.

                  "COMPANY COUNSEL" means Schneider Weinberger LLP, outside
         counsel to the Company.

                  "DEBENTURES" means the Secured Convertible Debentures due
         September 1, 2005, unless otherwise set forth therein, issued by the
         Company to the Purchasers hereunder, in the form of EXHIBIT A.

                  "DISCLOSURE SCHEDULES" shall have the meaning ascribed to such
term in Section 3.1.

                  "EFFECTIVE DATE" means the date that the Registration
         Statement is first declared effective by the Commission.

                  "ESCROW AGENT" shall have the meaning set forth in the Escrow
         Agreement.

                  "ESCROW AGREEMENT" shall mean the Escrow Agreement in
         substantially the form of EXHIBIT F hereto executed and delivered
         contemporaneously with this Agreement.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
         amended.

                  "FINANCING STATEMENTS" means any and all filings, whether
         domestic or foreign, including but not limited to, UCC-1s, as are
         required in order to provide the Purchasers with a first priority
         security interest in all of the assets of the Company and all of the
         Subsidiaries.

                  "FW" means Feldman Weinstein LLP with offices at 420 Lexington
         Avenue, New York, New York 10170.

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                  "GAAP" shall have the meaning ascribed to such term in Section
         3.1(h).

                  "INTERCREDITOR AGREEMENT" shall mean the Intercreditor
         Agreement, in the form of EXHIBIT I attached hereto, entered into by
         and among the Purchasers.

                  "LIENS" shall have the meaning ascribed to such term in
         Section 3.1(a).

                  "LOSSES" means any and all losses, claims, damages,
         liabilities, settlement costs and expenses, including without
         limitation costs of preparation and reasonable attorneys' fees.

                  "MATERIAL ADVERSE EFFECT" shall have the meaning assigned to
         such term in Section 3.1(b).

                  "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.

                  "PRINCIPAL AMOUNT" shall mean, as to each Purchaser, the
         amount set forth below such Purchaser's name on the signature page of
         this Agreement, in United States Dollars.

                  "PRINCIPAL MARKET" shall initially mean the American Stock
         Exchange, and shall include the New York Stock Exchange, the NASDAQ
         National Market, the OTC Bulletin Board or the NASDAQ Small-Cap Market,
         whichever is at the time the principal trading exchange or market for
         the Common Stock, based upon share volume.

                  "PROCEEDING" means an action, claim, suit, investigation or
         proceeding (including, without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
         Agreement, dated the Closing Date, among the Company and the
         Purchasers, in the form of EXHIBIT B.

                  "REQUIRED APPROVALS" shall have the meaning ascribed to such
         term in Section 3.1(e).

                  "REQUIRED MINIMUM" means, as of any date, the maximum
         aggregate number of shares of Common Stock then issued or potentially
         issuable in the future pursuant to the Transaction Documents, including
         any Underlying Shares issuable upon exercise or conversion in full of
         all Warrants and Debentures, ignoring any conversion or exercise limits
         set forth therein, and assuming that the Set Price in the Debentures is
         75% of the Closing Bid Price on the date of determination.

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

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                  "SEC REPORTS" shall have the meaning ascribed to such term in
         Section 3.1(h).

                  "SECURITIES" means the Debentures, the Warrants and the
         Underlying Shares.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SECURITY AGREEMENTS AMENDMENT" means the Security Agreements
         Amendment, dated the date hereof, in the form of Exhibit G attached
         hereto.

                  "STANDARD LIQUIDATED DAMAGES" shall have the meaning set forth
         in Section 4.15.

                  "SUBSCRIPTION AMOUNT" shall mean, as to each Purchaser, the
         amount to be paid for Debentures purchased hereunder as specified below
         such Purchaser's name on the signature page of this Agreement, in
         United States Dollars.

                  "SUBSIDIARY" means any subsidiary of the Company that is
         required to be listed in SCHEDULE 3.1(A).

                  "SUBSIDIARY GUARANTEE" shall mean the guarantee from each of
         the Subsidiaries guarantying the Company's obligations under the
         Debentures, in the Form of EXHIBIT H attached hereto.

                  "TRADING DAY" shall mean any day during which the Principal
         Market shall be open for business.

                  "TRANSACTION DOCUMENTS" means this Agreement, the Debentures,
         the Warrants, the Escrow Agreement, the Registration Rights Agreement,
         the Security Agreements Amendments and any other agreements reasonably
         requested by the Purchasers in connection therewith, the Subsidiary
         Guarantee and the Instructions to Transfer Agent and any other
         documents or agreements executed in connection with the transactions
         contemplated hereunder.

                  "UNDERLYING SHARES" means the shares of Common Stock issuable
         upon conversion of the Debentures and upon exercise of the Warrants.

                  "UNDERLYING SHARES REGISTRATION STATEMENT" OR "REGISTRATION
         STATEMENT" means a registration statement meeting the requirements set
         forth in the Registration Rights Agreement and covering the resale of
         the Underlying Shares by the Purchasers.

                  "WARRANTS" means collectively the Common Stock purchase
         warrants, in the form of EXHIBIT C delivered to the Purchasers at the
         Closing, the terms of each Warrant which are set forth in Section
         2.2(a)(ii).

                                   ARTICLE II
                                PURCHASE AND SALE

         2.1 CLOSING. Within 5 Trading Days of the date hereof, upon the terms
and subject to the conditions set forth herein, the Company agrees to sell, and

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each Purchaser agrees to purchase, severally and not jointly, the Debentures.
Each Purchaser shall deliver to the Escrow Agent via wire transfer or a
certified check immediately available funds equal to their Subscription Amount
and the Company shall deliver to the Escrow Agent the Debentures evidencing a
principal amount equal to such Purchaser's Principal Amount and the other items
set forth in Section 2.2 issuable at the Closing. Upon satisfaction of the
conditions set forth in Section 2.2, the Closing shall occur at the offices of
the Escrow Agent, or such other location as the parties shall mutually agree.

         2.2 CONDITIONS TO CLOSING.

                  (a) At or prior to the Closing, the Company shall deliver or
         cause to be delivered to the Escrow Agent the following:

                           (i) a Debenture with a principal amount equal to such
                  Purchaser's Principal Amount, registered in the name of each
                  Purchaser;

                           (ii) a Warrant registered in the name of each
                  Purchaser to purchase up to a number of shares of Common Stock
                  equal to 60% of such Purchaser's Principal Amount divided by
                  the average of the 10 Closing Bid Prices immediately prior to
                  the date hereof, with a term of 5 years and an exercise price
                  equal to 70% of the average of the 10 Closing Bid Prices
                  immediately prior to the date hereof, subject to adjustment
                  therein;

                           (iii) the legal opinion of Company Counsel, in the
                  form of EXHIBIT D attached hereto, addressed to the
                  Purchasers;

                           (iv) the Escrow Agreement duly executed by the
                  Company;

                           (v) the Registration Rights Agreement duly executed
                  by the Company;

                           (vi) this Agreement duly executed by the Company;

                           (vii) a Security Agreements Amendment duly executed
                  by each of the Company, the Subsidiaries and the Purchasers
                  and any other agreements reasonably required by the Purchasers
                  to obtain and maintain a first priority security interest in
                  all of the assets of the Company;

                           (viii) the Subsidiary Guarantee duly executed by the
                  Company and all of the Subsidiaries for the benefit of the
                  Purchasers; and

                           (ix) the Transfer Agent Instructions executed by the
                  Company and delivered to and acknowledged by the Company's
                  transfer agent in the form annexed hereto as EXHIBIT E.

                  (b) At or prior to the Closing, each Purchaser shall deliver
         or cause to be delivered to the Escrow Agent the following:

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                           (i) such Purchaser's Subscription Amount by wire
                  transfer;

                           (ii) the Escrow Agreement duly executed by such
                  Purchaser;

                           (iii) this Agreement duly executed by the Company;

                           (iv) the Intercreditor Agreement, duly executed by
                  such Purchaser;

                           (v) the Security Agreements Amendment, duly executed
                  by such Purchaser; and

                           (vi) the Registration Rights Agreement duly executed
                  by such Purchaser.

                  (c) All representations and warranties of the other party
         contained herein shall remain true and correct as of the Closing Date
         and all covenants of the other party shall have been performed if due
         prior to such date.

                  (d) There shall have been no Material Adverse Effect (as
         defined in Section 3.1(b)) with respect to the Company since the date
         hereof.

                  (e) From the date hereof to the Closing Date, trading in the
         Common Stock shall not have been suspended by the Commission (except
         for any suspension of trading of limited duration agreed to by the
         Company, which suspension shall be terminated prior to the Closing),
         and, at any time prior to the Closing Date, trading in securities
         generally as reported by Bloomberg Financial Markets shall not have
         been suspended or limited, or minimum prices shall not have been
         established on securities whose trades are reported by such service, or
         on the Principal Market, nor shall a banking moratorium have been
         declared either by the United States or New York State authorities, nor
         shall there have occurred any material outbreak or escalation of
         hostilities or other national or international calamity of such
         magnitude in its effect on, or any material adverse change in, any
         financial market which, in each case, in the reasonable judgment of the
         Purchasers, makes it impracticable or inadvisable to purchase the
         Debentures at the Closing.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
under the corresponding section of the disclosure schedules attached hereto (the
"DISCLOSURE SCHEDULES"), the Company hereby makes the following representations
and warranties to each Purchaser:

                  (a) SUBSIDIARIES. The Company has no direct or indirect
         subsidiaries. The Company owns, directly or indirectly, all of the
         capital stock or other equity interests of each Subsidiary free and
         clear of any lien, charge, security interest, encumbrance, right of
         first refusal or other restriction (collectively, "LIENS"), and all the

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         issued and outstanding shares of capital stock of each Subsidiary are
         validly issued and are fully paid, non-assessable and free of
         preemptive and similar rights.

                  (b) ORGANIZATION AND QUALIFICATION. Each of the Company and
         the Subsidiaries is an entity duly incorporated or otherwise organized,
         validly existing and in good standing under the laws of the
         jurisdiction of its incorporation or organization (as applicable), with
         the requisite power and authority to own and use its properties and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any Subsidiary is in violation of any of the provisions of
         its respective certificate or articles of incorporation, bylaws or
         other organizational or charter documents. Each of the Company and the
         Subsidiaries is duly qualified to do business and is in good standing
         as a foreign corporation or other entity in each jurisdiction in which
         the nature of the business conducted or property owned by it makes such
         qualification necessary, except where the failure to be so qualified or
         in good standing, as the case may be, could not, individually or in the
         aggregate: (i) adversely affect the legality, validity or
         enforceability of any Transaction Document, (ii) have or result in or
         be reasonably likely to have or result in a material adverse effect on
         the results of operations, assets, prospects, business or condition
         (financial or otherwise) of the Company and the Subsidiaries, taken as
         a whole, or (iii) adversely impair the Company's ability to perform
         fully on a timely basis its obligations under any of the Transaction
         Documents (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").

                  (c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
         corporate power and authority to enter into and to consummate the
         transactions contemplated by each of the Transaction Documents and
         otherwise to carry out its obligations hereunder or thereunder. The
         execution and delivery of each of the Transaction Documents by the
         Company and the consummation by it of the transactions contemplated
         hereby or thereby have been duly authorized by all necessary action on
         the part of the Company and no further consent or action is required by
         the Company. Each of the Transaction Documents has been (or upon
         delivery will be) duly executed by the Company and, when delivered in
         accordance with the terms hereof, will constitute the valid and binding
         obligation of the Company enforceable against the Company in accordance
         with its terms, subject to applicable bankruptcy, insolvency,
         fraudulent conveyance, reorganization, moratorium and similar laws
         affecting creditors' rights and remedies generally and general
         principles of equity. Neither the Company nor any Subsidiary is in
         violation of any of the provisions of its respective certificate or
         articles of incorporation, by-laws or other organizational or charter
         documents.

                  (d) NO CONFLICTS. The execution, delivery and performance of
         the Transaction Documents by the Company and the consummation by the
         Company of the transactions contemplated thereby do not and will not:
         (i) conflict with or violate any provision of the Company's or any
         Subsidiary's certificate or articles of incorporation, bylaws or other
         organizational or charter documents, or (ii) subject to obtaining the
         Required Approvals (as defined below), conflict with, or constitute a

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         default (or an event that with notice or lapse of time or both would
         become a default) under, or give to others any rights of termination,
         amendment, acceleration or cancellation (with or without notice, lapse
         of time or both) of, any agreement, credit facility, debt or other
         instrument (evidencing a Company or Subsidiary debt or otherwise) or
         other understanding to which the Company or any Subsidiary is a party
         or by which any property or asset of the Company or any Subsidiary is
         bound or affected, or (iii) result in a violation of any law, rule,
         regulation, order, judgment, injunction, decree or other restriction of
         any court or governmental authority to which the Company or a
         Subsidiary is subject (including federal and state securities laws and
         regulations), or by which any property or asset of the Company or a
         Subsidiary is bound or affected; except in the case of each of clauses
         (ii) and (iii), such as could not, individually or in the aggregate,
         have or result in a Material Adverse Effect.

                  (e) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor
         any Subsidiary is required to obtain any consent, waiver, authorization
         or order of, give any notice to, or make any filing or registration
         with, any court or other federal, state, local or other governmental
         authority or other Person in connection with the execution, delivery
         and performance by the Company of the Transaction Documents, other than
         (i) the filings required under SECTION 4.7, (ii) the filing with the
         Commission of the Underlying Shares Registration Statement, (iii) the
         application(s) to each applicable Principal Market for the listing of
         the Underlying Shares and shares issauble at the Closing for trading
         thereon in the time and manner required thereby, and (iv) applicable
         Blue Sky filings (collectively, the "REQUIRED APPROVALS").

                  (f) ISSUANCE OF THE SECURITIES. The Securities are duly
         authorized and, when issued and paid for in accordance with the
         applicable Transaction Documents, will be duly and validly issued,
         fully paid and non assessable, free and clear of all Liens. The Company
         has reserved from its duly authorized capital stock a number of shares
         of Common Stock for issuance of the Underlying Shares and shares of
         Common Stock issuable at the Closing at least equal to the Required
         Minimum on the date hereof. The Company acknowledges and agrees that
         the Purchasers are acquiring the Debentures for an original issue
         discount to the principal amount of the Debentures.

                  (g) CAPITALIZATION. The number of shares and type of all
         authorized, issued and outstanding capital stock of the Company is set
         forth in the Disclosure Schedules attached hereto. No securities of the
         Company are entitled to preemptive or similar rights, and no Person has
         any right of first refusal, preemptive right, right of participation,
         or any similar right to participate in the transactions contemplated by
         the Transaction Documents. Except as a result of the purchase and sale
         of the Securities, there are no outstanding options, warrants, script
         rights to subscribe to, calls or commitments of any character
         whatsoever relating to, or securities, rights or obligations
         convertible into or exchangeable for, or giving any Person any right to
         subscribe for or acquire, any shares of Common Stock, or contracts,
         commitments, understandings or arrangements by which the Company or any
         Subsidiary is or may become bound to issue additional shares of Common
         Stock, or securities or rights convertible or exchangeable into shares
         of Common Stock. The issuance and sale of the Securities will not
         obligate the Company to issue shares of Common Stock or other
         securities to any Person (other than the Purchasers) and will not
         result in a right of any holder of Company securities to adjust the
         exercise, conversion, exchange or reset price under such securities.

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                  (h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
         all reports required to be filed by it under the Securities Act and the
         Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
         the two years preceding the date hereof (or such shorter period as the
         Company was required by law to file such material) (the foregoing
         materials being collectively referred to herein as the "SEC REPORTS")
         on a timely basis or has received a valid extension of such time of
         filing and has filed any such SEC Reports prior to the expiration of
         any such extension. The Company has delivered to the Purchasers a copy
         of all SEC Reports filed within the 10 days preceding the date hereof.
         As of their respective dates, the SEC Reports complied in all material
         respects with the requirements of the Securities Act and the Exchange
         Act and the rules and regulations of the Commission promulgated
         thereunder, and none of the SEC Reports, when filed, contained any
         untrue statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading. The financial statements of the Company included
         in the SEC Reports comply in all material respects with applicable
         accounting requirements and the rules and regulations of the Commission
         with respect thereto as in effect at the time of filing. Such financial
         statements have been prepared in accordance with generally accepted
         accounting principles applied on a consistent basis during the periods
         involved ("GAAP"), except as may be otherwise specified in such
         financial statements or the notes thereto, and fairly present in all
         material respects the financial position of the Company and its
         consolidated subsidiaries as of and for the dates thereof and the
         results of operations and cash flows for the periods then ended,
         subject, in the case of unaudited statements, to normal, immaterial,
         year-end audit adjustments.

                  (i) MATERIAL CHANGES. Since the date of the latest audited
         financial statements included within the SEC Reports, except as
         specifically disclosed in the SEC Reports: (i) there has been no event,
         occurrence or development that has had or that could result in a
         Material Adverse Effect, (ii) the Company has not incurred any
         liabilities (contingent or otherwise) other than (A) trade payables and
         accrued expenses incurred in the ordinary course of business consistent
         with past practice and (B) liabilities not required to be reflected in
         the Company's financial statements pursuant to GAAP or required to be
         disclosed in filings made with the Commission, (iii) the Company has
         not altered its method of accounting or the identity of its auditors,
         (iv) the Company has not declared or made any dividend or distribution
         of cash or other property to its stockholders or purchased, redeemed or
         made any agreements to purchase or redeem any shares of its capital
         stock, and (v) the Company has not issued any equity securities to any
         officer, director or Affiliate, except pursuant to existing Company
         stock option or similar plans.

                  (j) LITIGATION. There is no action, suit, inquiry, notice of
         violation, proceeding or investigation pending or, to the knowledge of
         the Company, threatened against or affecting the Company, any
         Subsidiary or any of their respective properties before or by any
         court, arbitrator, governmental or administrative agency or regulatory
         authority (federal, state, county, local or foreign) (collectively, an
         "ACTION") which: (i) adversely affects or challenges the legality,
         validity or enforceability of any of the Transaction Documents or the
         Securities or (ii) could, if there were an unfavorable decision,
         individually or in the aggregate, have or reasonably be expected to
         result in a Material Adverse Effect. Neither the Company nor any

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         Subsidiary, nor any director or officer thereof, is or has been the
         subject of any Action involving a claim of violation of or liability
         under federal or state securities laws or a claim of breach of
         fiduciary duty. The Company does not have pending before the Commission
         any request for confidential treatment of information. There has not
         been, and to the knowledge of the Company, there is not pending or
         contemplated, any investigation by the Commission involving the Company
         or any current or former director or officer of the Company. The
         Commission has not issued any stop order or other order suspending the
         effectiveness of any registration statement filed by the Company or any
         Subsidiary under the Exchange Act or the Securities Act.

                  (k) COMPLIANCE. Neither the Company nor any Subsidiary: (i) is
         in default under or in violation of (and no event has occurred that has
         not been waived that, with notice or lapse of time or both, would
         result in a default by the Company or any Subsidiary under), nor has
         the Company or any Subsidiary received notice of a claim that it is in
         default under or that it is in violation of, any indenture, loan or
         credit agreement or any other agreement or instrument to which it is a
         party or by which it or any of its properties is bound (whether or not
         such default or violation has been waived), (ii) is in violation of any
         order of any court, arbitrator or governmental body, or (iii) is or has
         been in violation of any statute, rule or regulation of any
         governmental authority, except in each case as could not, individually
         or in the aggregate, have or result in a Material Adverse Effect.

                  (l) LABOR RELATIONS. No material labor dispute exists or, to
         the knowledge of the Company, is imminent with respect to any of the
         employees of the Company.

                  (m) REGULATORY PERMITS. The Company and the Subsidiaries
         possess all certificates, authorizations and permits issued by the
         appropriate federal, state, local or foreign regulatory authorities
         necessary to conduct their respective businesses as described in the
         SEC Reports, except where the failure to possess such permits could
         not, individually or in the aggregate, have or reasonably be expected
         to result in a Material Adverse Effect ("MATERIAL PERMITS"), and
         neither the Company nor any Subsidiary has received any notice of
         proceedings relating to the revocation or modification of any Material
         Permit.

                  (n) TITLE TO ASSETS. The Company and the Subsidiaries have
         good and marketable title in fee simple to all real property owned by
         them that is material to the business of the Company and the
         Subsidiaries and good and marketable title in all personal property
         owned by them that is material to the business of the Company and the
         Subsidiaries, in each case free and clear of all Liens, except for
         Liens as do not materially affect the value of such property and do not
         materially interfere with the use made and proposed to be made of such
         property by the Company and the Subsidiaries. Any real property and
         facilities held under lease by the Company and the Subsidiaries are
         held by them under valid, subsisting and enforceable leases of which
         the Company and the Subsidiaries are in compliance.

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                  (o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries
         have, or have rights to use, all patents, patent applications,
         trademarks, trademark applications, service marks, trade names,
         copyrights, licenses and other similar rights that are necessary or
         material for use in connection with their respective businesses as
         described in the SEC Reports and which the failure to so have could
         have a Material Adverse Effect (collectively, the "INTELLECTUAL
         PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has received
         a written notice that the Intellectual Property Rights used by the
         Company or any Subsidiary violates or infringes upon the rights of any
         Person. To the knowledge of the Company, all such Intellectual Property
         Rights are enforceable and there is no existing infringement by another
         Person of any of the Intellectual Property Rights.

                  (p) INSURANCE. The Company and the Subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks and in such amounts as are prudent and customary in the
         businesses in which the Company and the Subsidiaries are engaged. A
         list of the Company's insurance contracts and policies are set forth on
         the Disclosure Schedules. The Company has delivered to the Purchasers,
         prior to the Closing, such contracts and policies. To the best of
         Company's knowledge, such insurance contracts and policies are accurate
         and complete. Neither the Company nor any Subsidiary has any reason to
         believe that it will not be able to renew its existing insurance
         coverage as and when such coverage expires or to obtain similar
         coverage from similar insurers as may be necessary to continue its
         business without a significant increase in cost.

                  (q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. None of the
         officers or directors of the Company and, to the knowledge of the
         Company, none of the employees of the Company is presently a party to
         any transaction with the Company or any Subsidiary (other than for
         services as employees, officers and directors), including any contract,
         agreement or other arrangement providing for the furnishing of services
         to or by, providing for rental of real or personal property to or from,
         or otherwise requiring payments to or from any officer, director or
         such employee or, to the knowledge of the Company, any entity in which
         any officer, director, or any such employee has a substantial interest
         or is an officer, director, trustee or partner.

                  (r) INTERNAL ACCOUNTING CONTROLS. The Company and the
         Subsidiaries maintain a system of internal accounting controls
         sufficient to provide reasonable assurance that (i) transactions are
         executed in accordance with management's general or specific
         authorizations, (ii) transactions are recorded as necessary to permit
         preparation of financial statements in conformity with generally
         accepted accounting principles and to maintain asset accountability,
         (iii) access to assets is permitted only in accordance with
         management's general or specific authorization, and (iv) the recorded
         accountability for assets is compared with the existing assets at
         reasonable intervals and appropriate action is taken with respect to
         any differences. The Company has established disclosure controls and
         procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
         Company and designed such disclosures controls and procedures to ensure
         that material information relating to the Company, including its
         subsidiaries, is made known to the certifying officers by others within

                                      -11-
<PAGE>

         those entities, particularly during the period in which the Company's
         Form 10-K or 10-Q, as the case may be, is being prepared. The Company's
         certifying officers have evaluated the effectiveness of the Company's
         controls and procedures as of a date within 90 days prior to the filing
         date of the Form 10-K for the year quarter ended March 31, 2002 (such
         date, the "EVALUATION DATE"). The Company presented in the Form 10-Q
         for the quarter ended March 31, 2003 the conclusions of the certifying
         officers about the effectiveness of the disclosure controls and
         procedures based on their evaluations as of the Evaluation Date. Since
         the Evaluation Date, there have been no significant changes in the
         Company's internal controls (as such term is defined in Item 307(b) of
         Regulation S-K under the Exchange Act) or, the Company's knowledge, in
         other factors that could significantly affect the Company's internal
         controls.

                  (s) SOLVENCY/INDEBTEDNESS. Based on the financial condition of
         the Company as of the Closing Date: (i) the Company's fair saleable
         value of its assets exceeds the amount that will be required to be paid
         on or in respect of the Company's existing debts and other liabilities
         (including known contingent liabilities) as they mature; (ii) the
         Company's assets do not constitute unreasonably small capital to carry
         on its business for the current fiscal year as now conducted and as
         proposed to be conducted including its capital needs taking into
         account the particular capital requirements of the business conducted
         by the Company, and projected capital requirements and capital
         availability thereof; and (iii) the current cash flow of the Company,
         together with the proceeds the Company would receive, were it to
         liquidate all of its assets, after taking into account all anticipated
         uses of the cash, would be sufficient to pay all amounts on or in
         respect of its debt when such amounts are required to be paid. The
         Company does not intend to incur debts beyond its ability to pay such
         debts as they mature (taking into account the timing and amounts of
         cash to be payable on or in respect of its debt). The Company has no
         knowledge of any facts or circumstances which lead it to believe that
         it will file for reorganization or liquidation under the bankruptcy or
         reorganization laws of any jurisdiction within one year from the
         Closing Date. The SEC Reports and Schedule 3.1(s) attached hereto set
         forth as of the date hereof all outstanding secured and unsecured
         Indebtedness of the Company or any Subsidiary, or for which the Company
         or any Subsidiary has commitments. For the purposes of this Agreement,
         "INDEBTEDNESS" shall mean (a) any liabilities for borrowed money or
         amounts owed in excess of $25,000 (other than trade accounts payable
         incurred in the ordinary course of business), (b) 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 (c) the present value of any lease payments in excess of $25,000
         due under leases required to be capitalized in accordance with GAAP.
         Neither the Company nor any Subsidiary is in default with respect to
         any Indebtedness.

                  (t) CERTAIN FEES. No brokerage or finder's fees or commissions
         are or will be payable by the Company to any broker, financial advisor
         or consultant, finder, placement agent, investment banker, bank or
         other Person with respect to the transactions contemplated by this

                                      -12-
<PAGE>

         Agreement, and the Company has not taken any action that would cause
         any Purchaser to be liable for any such fees or commissions. The
         Company agrees that the Purchasers shall have no obligation with
         respect to any fees or with respect to any claims made by or on behalf
         of any Person for fees of the type contemplated by this Section with
         the transactions contemplated by this Agreement.

                  (u) PRIVATE PLACEMENT. Assuming the accuracy of the
         representations and warranties of the Purchasers set forth in Sections
         3.2(b)-(f), the offer, issuance and sale of the Securities to the
         Purchasers as contemplated hereby are exempt from the registration
         requirements of the Securities Act. The issuance and sale of the
         Securities hereunder does not contravene the rules and regulations of
         the Principal Market and no shareholder approval is required for the
         Company to fulfill its obligations under the Transaction Documents.

                  (v) LISTING AND MAINTENANCE REQUIREMENTS. The Company has not,
         in the 12 months preceding the date hereof, received notice from any
         Principal Market on which the Common Stock is or has been listed or
         quoted to the effect that the Company is not in compliance with the
         listing or maintenance requirements of such Principal Market. The
         Company is, and has no reason to believe that it will not in the
         foreseeable future continue to be, in compliance with all such listing
         and maintenance requirements.

                  (w) REGISTRATION RIGHTS. The Company has not granted or agreed
         to grant to any Person any rights (including "piggy-back" registration
         rights) to have any securities of the Company registered with the
         Commission or any other governmental authority that have not been
         satisfied.

                  (x) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
         Board of Directors have taken all necessary action, if any, in order to
         render inapplicable any control share acquisition, business
         combination, poison pill (including any distribution under a rights
         agreement) or other similar anti-takeover provision under the Company's
         Certificate of Incorporation (or similar charter documents) or the laws
         of its state of incorporation that is or could become applicable to the
         Purchasers as a result of the Purchasers and the Company fulfilling
         their obligations or exercising their rights under the Transaction
         Documents, including without limitation as a result of the Company's
         issuance of the Securities and the Purchasers' ownership of the
         Securities.

                  (y) SENIORITY. As of the date of this Agreement, no
         indebtedness of the Company is senior to the Debentures in right of
         payment, whether upon liquidation or dissolution, or otherwise, other
         than indebtedness secured by purchase money security interests (which
         is senior only as to underlying assets covered thereby) and capital
         lease obligations (which is senior only as to the property covered
         thereby).

                  (z) DISCLOSURE. The Company confirms that neither it nor any
         other Person acting on its behalf has provided any of the Purchasers or
         their agents or counsel with any information that constitutes or might
         constitute material, nonpublic information. The Company understands and
         confirms that the Purchasers will rely on the foregoing representations
         in effecting transactions in securities of the Company. All disclosure

                                      -13-
<PAGE>

         provided to the Purchasers regarding the Company, its business and the
         transactions contemplated hereby, including the Schedules to this
         Agreement, furnished by or on behalf of the Company with respect to the
         representations and warranties made herein are true and correct with
         respect to such representations and warranties and do not contain any
         untrue statement of a material fact or omit to state any material fact
         necessary in order to make the statements made therein, in light of the
         circumstances under which they were made, not misleading. The Company
         acknowledges and agrees that no Purchaser makes or has made any
         representations or warranties with respect to the transactions
         contemplated hereby.

                  (aa) TAX STATUS. The Company and each of its Subsidiaries has
         made or filed all federal, state and foreign income and all other tax
         returns, reports and declarations required by any jurisdiction to which
         it is subject (unless and only to the extent that the Company and each
         of its Subsidiaries has set aside on its books provisions reasonably
         adequate for the payment of all unpaid and unreported taxes) and has
         paid all taxes and other governmental assessments and charges that are
         material in amount, shown or determined to be due on such returns,
         reports and declarations, except those being contested in good faith
         and has set aside on its books provisions reasonably adequate for the
         payment of all taxes for periods subsequent to the periods to which
         such returns, reports or declarations apply. There are no unpaid taxes
         in any material amount claimed to be due by the taxing authority of any
         jurisdiction, and the officers of the Company know of no basis for any
         such claim. The Company has not executed a waiver with respect to the
         statute of limitations relating to the assessment or collection of any
         foreign, federal, statue or local tax. None of the Company's tax
         returns is presently being audited by any taxing authority.

                  (bb) ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF
         SECURITIES. The Company acknowledges and agrees that the Purchasers are
         acting solely in the capacity of arm's length purchasers with respect
         to this Agreement and the transactions contemplated hereby. The Company
         further acknowledges that no Purchaser is acting as a financial advisor
         or fiduciary of the Company (or in any similar capacity) with respect
         to this Agreement and the transactions contemplated hereby and any
         statement made by any Purchaser or any of their respective
         representatives or agents in connection with this Agreement and the
         transactions contemplated hereby is not advice or a recommendation and
         is merely incidental to the Purchasers' purchase of the Securities. The
         Company further represents to each Purchaser that the Company's
         decision to enter into this Agreement has been based solely on the
         independent evaluation of the Company and its representatives.

                  (cc) NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
         TRANSACTION. Neither the Company nor, to the knowledge of the Company,
         any of its directors or officers (i) has conducted or will conduct any
         general solicitation (as that term is used in Rule 502(c) of Regulation
         D) or general advertising with respect to the sale of the Debentures or
         the Warrants, or (ii) made any offers or sales of any security or
         solicited any offers to buy any security under any circumstances that
         would require registration of the Debentures, the Underlying Shares or

                                      -14-
<PAGE>

         the Warrants under the Securities Act or made any "directed selling
         efforts" as defined in Rule 902 of Regulation S.

                  (dd) NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS. There are
         no disagreements of any kind presently existing, or reasonably
         anticipated by the Company to arise, between the accountants and
         lawyers formerly or presently employed by the Company and the Company
         is current with respect to any fees owed to its accountants and
         lawyers.

                  (ee) SECURITY INTEREST. The Company hereby grants to each
         Purchaser, and acknowledges and agrees that the Debentures are secured
         by, a first priority security interest in all of the assets of the
         Company and the Subsidiaries pursuant to those certain Security
         Agreements, dated April 16, 2003, as amended, between the Company and
         each of the Subsidiaries and the Purchasers and that the Debentures
         guaranteed by each of the Subsidiaries pursuant to that certain
         Subsidiary Guarantee dated the date hereof. All the necessary filings
         have been made to perfect each Purchaser's security interest in such
         assets. If such agreements can be construed not to include the
         Debentures, they are hereby amended to include the Debentures.

         3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:

                  (a) ORGANIZATION; AUTHORITY. Such Purchaser is an entity duly
         organized, validly existing and in good standing under the laws of the
         jurisdiction of its organization with the requisite corporate or
         partnership power and authority to enter into and to consummate the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its obligations thereunder. The purchase by such Purchaser of
         the Securities hereunder has been duly authorized by all necessary
         action on the part of such Purchaser. Each of this Agreement, and the
         Registration Rights Agreement has been duly executed by such Purchaser,
         and when delivered by such Purchaser in accordance with the terms
         hereof, will constitute the valid and legally binding obligation of
         such Purchaser, enforceable against it in accordance with its terms.

                  (b) INVESTMENT INTENT. Such Purchaser is acquiring the
         Securities as principal for its own account for investment purposes
         only and not with a view to or for distributing or reselling such
         Securities or any part thereof, without prejudice, however, to such
         Purchaser's right, subject to the provisions of this Agreement, at all
         times to sell or otherwise dispose of all or any part of such
         Securities pursuant to an effective registration statement under the
         Securities Act or under an exemption from such registration and in
         compliance with applicable federal and state securities laws. Nothing
         contained herein shall be deemed a representation or warranty by such
         Purchaser to hold Securities for any period of time. Such Purchaser is
         acquiring the Securities hereunder in the ordinary course of its
         business. Such Purchaser does not have any agreement or understanding,
         directly or indirectly, with any Person to distribute any of the
         Securities.

                  (c) PURCHASER STATUS. At the time such Purchaser was offered
         the Securities, it was, and at the date hereof it is, and on each date

                                      -15-
<PAGE>

         on which it exercises any Warrants or converts any Debentures, it will
         be an "accredited investor" as defined in Rule 501(a) under the
         Securities Act. Such Purchaser has not been formed solely for the
         purpose of acquiring the Securities. Such Purchaser is not a registered
         broker-dealer under Section 15 of the Exchange Act.

                  (d) EXPERIENCE OF SUCH PURCHASER. Such 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. Such 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. Such 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) RELIANCE. Such Purchaser understands and acknowledges
         that: (i) the Securities are being offered and sold to it without
         registration under the Securities Act in a private placement that is
         exempt from the registration provisions of the Securities Act and (ii)
         the availability of such exemption depends in part on, and the Company
         will rely upon the accuracy and truthfulness of, the foregoing
         representations and such Purchaser hereby consents to such reliance.

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 TRANSFER RESTRICTIONS.

                  (a) The Securities may only be disposed of in compliance with
         state and federal securities laws. In connection with any transfer of
         Securities other than pursuant to an effective registration statement,
         to the Company, to an Affiliate of a Purchaser, to an entity managed by
         a Purchaser or in connection with a pledge as contemplated in Section
         4.1(b), the Company may require the transferor thereof to provide to
         the Company an opinion of counsel selected by the transferor, the form
         and substance of which opinion shall be reasonably satisfactory to the
         Company, to the effect that such transfer does not require registration
         of such transferred Securities under the Securities Act. As a condition
         of transfer, any such transferee shall agree in writing to be bound by
         the terms of this Agreement and shall have the rights of a Purchaser
         under this Agreement and the Registration Rights Agreement.

                  (b) Each Purchaser agrees to the imprinting, so long as is
         required by this SECTION 4.1(B), of the following legend on any
         certificate evidencing Securities:

                                      -16-
<PAGE>

         [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
         SECURITIES ARE [EXERCISABLE] [CONVERTIBLE]] HAVE NOT 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. THESE SECURITIES AND THE
         SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
         CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
         SUCH SECURITIES.

                  The Company acknowledges and agrees that a Purchaser may from
         time to time pledge pursuant to a bona fide margin agreement or grant a
         security interest in some or all of the Securities and, if required
         under the terms of such arrangement, such Purchaser may transfer
         pledged or secured Securities to the pledgees or secured parties. Such
         a pledge or transfer would not be subject to approval of the Company
         and no legal opinion of the pledgee, secured party or pledgor shall be
         required in connection therewith. Further, no notice shall be required
         of such pledge. At the appropriate Purchaser's expense, the Company
         will execute and deliver such reasonable documentation as a pledgee or
         secured party of Securities may reasonably request in connection with a
         pledge or transfer of the Securities, including the preparation and
         filing of any required prospectus supplement under Rule 424(b)(3) of
         the Securities Act or other applicable provision of the Securities Act
         to appropriately amend the list of Selling Stockholders thereunder.

                  (c) Certificates evidencing Underlying Shares shall not
         contain any legend (including the legend set forth in Section 4.1(b)):
         (i) while a registration statement (including the Underlying Shares
         Registration Statement) covering the resale of such security is
         effective under the Securities Act, or (ii) following any sale of such
         Underlying Shares pursuant to Rule 144, or (iii) if such Underlying
         Shares are eligible for sale under Rule 144(k), or (iv) if such legend
         is not required under applicable requirements of the Securities Act
         (including judicial interpretations and pronouncements issued by the
         staff of the Commission). If all or any portion of a Debenture or
         Warrant is converted or exercised (as applicable) at a time when there
         is an effective registration statement to cover the resale of the
         Underlying Shares, or if such Underlying Shares may be sold under Rule
         144(k) or if such legend is not otherwise required under applicable
         requirements of the Securities Act (including judicial interpretations

                                      -17-
<PAGE>

         thereof) then such Underlying Shares shall be issued free of all
         legends. The Company agrees that following the Effective Date or at
         such time as such legend is no longer required under this Section
         4.1(c), it will, no later than three Trading Days following the
         delivery by a Purchaser to the Company or the Company's transfer agent
         of a certificate representing Underlying Shares issued with a
         restrictive legend, deliver or cause to be delivered to such Purchaser
         a certificate representing such shares that is free from all
         restrictive and other legends. The Company may not make any notation on
         its records or give instructions to any transfer agent of the Company
         that enlarge the restrictions on transfer set forth in this Section.

                  (d) In addition to such Purchaser's other available remedies,
         the Company shall pay to a Purchaser, in cash, as liquidated damages
         and not as a penalty, for each $1,000 of Underlying Shares (based on
         the Closing Bid Price of the Common Stock on the date such Securities
         are submitted to the Company's transfer agent) subject to this Section
         4.1(c), $20 per Trading Day (increasing to $40 per Trading Day 3
         Trading Days after such damages have begun to accrue) for each Trading
         Day after such third Trading Day until such certificate is delivered.

         4.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim that the Company may
have against any Purchaser and regardless of the dilutive effect that such
issuance may have on the ownership of the other stockholders of the Company.

         4.3 FURNISHING OF INFORMATION. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any Purchaser, the Company shall deliver to
such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to each Purchaser and make publicly available
in accordance with Rule 144(c) such information as is required for each
Purchaser to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

         4.4 INTEGRATION. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to each Purchaser, or
that would be integrated with the offer or sale of the Securities for purposes
of the rules and regulations of any Principal Market.

                                      -18-
<PAGE>

         4.5 RESERVATION AND LISTING OF SECURITIES.

                  (a) At all times the Company shall maintain a reserve from its
         duly authorized shares of Common Stock for issuance pursuant to the
         Transaction Documents in an amount equal to the Required Minimum. In
         order to ensure that the Company has authorized a sufficient amount of
         shares to meet the Required Minimum at all times, the Company must
         deliver to the Purchaser at the end of every month a list detailing (1)
         the current amount of shares authorized by the Company and reserved for
         the Purchaser; and (2) amount of shares issuable upon conversion of the
         Debentures and upon exercise of the Warrants. If the Company fails to
         provide such list within five (5) business days of the end of each
         month, the Company shall pay the Standard Liquidated Damages Amount in
         cash.

                  (b) If on any date the number of authorized but unissued (and
         otherwise unreserved) shares of Common Stock is less than the Required
         Minimum, then the Board of Directors of the Company shall use its best
         efforts to amend the Company's certificate or articles of incorporation
         to increase the number of authorized but unissued shares of Common
         Stock to at least the Required Minimum at such time as soon as possible
         and in any event not later than the 60th day after such date; provided
         that the Company will not be required at any time to authorize a number
         of shares of Common Stock greater than the maximum remaining number of
         shares of Common Stock that could possibly be issued after such time
         pursuant to the Transaction Documents.

                  (c) The Company shall: (i) in the time and manner required by
         each Principal Market, prepare and file with such Principal Market an
         additional shares listing application covering a number of shares of
         Common Stock at least equal to the greater of (A) the Required Minimum
         on the Closing Date and (B) the Required Minimum on the date of such
         application, (ii) take all steps necessary to cause such shares of
         Common Stock to be approved for listing on each Principal Market as
         soon as possible thereafter, (iii) provide to each Purchaser evidence
         of such listing, and (iv) maintain the listing of such Common Stock on
         each such Principal Market or another Principal Market.

                  (d) If, on any date, the number of shares of Common Stock
         previously listed on a Principal Market is less than the Required
         Minimum on such date, then the Company shall take the necessary actions
         to list on such Principal Market, as soon as reasonably possible, a
         number of shares of Common Stock at least equal to the Required Minimum
         on such date; provided that the Company will not be required at any
         time to list a number of shares of Common Stock greater than the
         maximum number of shares of Common Stock that could possibly be issued
         pursuant to the Transaction Documents.

                  (e) The Company shall not effectuate a reverse split of the
         Common Stock without the prior written consent of each Purchaser.

         4.6 CONVERSION AND EXERCISE PROCEDURES. The form of Election to
Purchase included in the Warrants and the form of Conversion Notice included in
the Debentures set forth the totality of the procedures required in order to
exercise the Warrants or convert the Debentures. No additional legal opinion or
other information or instructions shall be necessary to enable each Purchaser to

                                      -19-
<PAGE>

exercise their Warrants or convert their Debentures. The Company shall honor
exercises of the Warrants and conversions of the Debentures and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents. Attached hereto as ANNEX A is a list of the
shares available to each Purchaser in light of the limitation on conversion and
exercise set forth in Section 4(a)(iii) (subject to adjustment therein) of the
Debenture prior to Shareholder Approval (as defined in the Debenture). The
Company agrees and acknowledges that prior to Shareholder Approval and pursuant
to Section 4(a)(iii) of the Debenture, that the aggregate Issuable Maximum (as
defined in the Debenture) is 30,000,000.

         4.7 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, within 1
Trading Day after the Closing Date, issue a press release or file a Current
Report on Form 8-K reasonably acceptable to each Purchaser disclosing all
material terms of the transactions contemplated hereby. The Company and the each
Purchaser shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby. Notwithstanding the foregoing,
other than in any registration statement filed pursuant to the Registration
Rights Agreement and filings related thereto, the Company shall not publicly
disclose the name of any Purchaser or the terms of the Agreement, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Principal Market, without the prior written consent of such Purchaser, except
to the extent such disclosure is required by law or Principal Market
regulations, in which case the Company shall provide each Purchaser with prior
notice of such disclosure.

         4.8 NON-PUBLIC INFORMATION. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.

         4.9 USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables, capital lease obligations, and accrued expenses in the ordinary course
of the Company's business and prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.

         4.10 REIMBURSEMENT. If any Purchaser becomes involved in any capacity
in any Proceeding by or against any Person who is a stockholder of the Company,
solely as a result of such Purchaser's acquisition of the Securities under this
Agreement and without causation by any other activity, obligation, condition or
liability pertaining to such Purchaser and not to the transactions contemplated
by this Agreement, the Company will reimburse such Purchaser for its reasonable
legal and other expenses (including the cost of any investigation preparation
and travel in connection therewith) incurred in connection therewith, as such
expenses are incurred. The reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of the
Purchasers who are actually named in such action, proceeding or investigation,

                                      -20-
<PAGE>

and partners, directors, agents, employees and controlling persons (if any), as
the case may be, of the Purchasers and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.

         4.11 INDEMNIFICATION OF PURCHASERS. The Company will indemnify and hold
each Purchaser and their directors, officers, shareholders, partners, employees
and agents (each, a "PURCHASER PARTY") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to: (a) any misrepresentation, breach
or inaccuracy, or any allegation by a third party that, if true, would
constitute a breach or inaccuracy, of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents; or (b) any cause of action, suit or claim brought or made
against such Purchaser Party and arising solely out of or solely resulting from
the execution, delivery, performance or enforcement of this Agreement or any of
the other Transaction Documents and without causation by any other activity,
obligation, condition or liability pertaining to such Purchaser and not to the
transactions contemplated by this Agreement. The Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred.

         4.12 SHAREHOLDERS RIGHTS PLAN. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the Company
or any other Person that any Purchaser is an "Acquiring Person" under the plan
or in any way could be deemed to trigger the provisions of such plan by virtue
of receiving Securities under the Transaction Documents.

         4.13 PARTICIPATION IN FUTURE FINANCING. From the date hereof until the
later of (a) the date a Purchaser no longer holds any Securities and (b)
September 1, 2005, the Company shall not effect a financing of its Capital
Shares or Capital Shares Equivalents (a "SUBSEQUENT FINANCING") unless (i) the
Company delivers to each of such Purchasers, at least three (3) Trading Days
prior to the Closing of such Subsequent Financing, a written notice (the
"SUBSEQUENT FINANCING NOTICE") of its intention to effect such Subsequent
Financing, which Subsequent Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Financing is
proposed to be effected, and attached to which shall be a term sheet or similar
document relating thereto and (ii) such Purchaser shall not have notified the
Company by 6:30 p.m. (New York City time) on the third (3rd) Trading Day after
its receipt of the Subsequent Financing Notice of its willingness to provide (or
to cause its designee to provide), subject to completion of mutually acceptable
documentation, all or part of such Purchaser's pro-rata portion of such
financing to the Company on the same terms set forth in the Subsequent Financing
Notice. If one or more Purchasers shall fail to so notify the Company of their

                                      -21-
<PAGE>

willingness to participate in the Subsequent Financing, the Company may effect
the remaining portion of such Subsequent Financing on the terms and to the
Persons set forth in the Subsequent Financing Notice; provided that the Company
must provide the Purchasers with a second Subsequent Financing Notice, and the
Purchasers will again have the right of first refusal set forth above in this
Section 4.13, if the Subsequent Financing subject to the initial Subsequent
Financing Notice is not consummated for any reason on the terms set forth in
such Subsequent Financing Notice within 60 Trading Days after the date of the
initial Subsequent Financing Notice with the Person identified in the Subsequent
Financing Notice. In the event the Company receives responses to Subsequent
Financing Notices from Purchasers seeking to purchase more than the financing
sought by the Company in the Subsequent Financing such Purchasers shall have the
right to purchase their Pro Rata Portion (as defined below) of the Capital
Shares or Capital Shares Equivalents to be issued in such Subsequent Financing.
"PRO RATA PORTION" is the ratio of (x) the principal amount of Debentures
purchased by a Purchaser and (y) the sum of the aggregate principal amount of
Debentures issued hereunder. If any Purchaser no longer holds any Debentures,
then the Pro Rata Portions shall be re-allocated among the remaining Purchasers.
Notwithstanding anything to the contrary herein, this Section 4.13 shall not
apply to the following (a) the granting of options to employees, officers and
directors of the Company pursuant to any stock option plan duly adopted by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non-employee directors established
for such purpose, or (b) the exercise of any security issued by the Company in
connection with the offer and sale of this Company's securities pursuant to this
Agreement, or (c) the exercise of or conversion of any convertible securities,
options or warrants issued and outstanding on the date hereof, provided such
securities have not been amended since the date hereof, or (d) acquisitions or
strategic investments, the primary purpose of which is not to raise capital.
Each Purchaser hereby agrees to amend the notice and exercise period to three
(3) Trading Days with respect to any rights of participation or first refusal in
future financings by the Company such Purchaser may have had with respect to any
future issuances of Capital Shares or Capital Shares Equivalents, including but
not limited to, any rights such Purchaser may have had, if applicable, pursuant
to those certain Securities Purchase Agreements dated November 8, 2002, January
31, 2003 and April 16, 2003 by and among the Company and the purchasers
signatory thereto.

         4.14 FUTURE FINANCINGS. From the date hereof until after the Effective
Date, other than as contemplated by this Agreement, neither the Company nor any
Subsidiary shall (i) incur, issue, create, guarantee, assume or otherwise become
liable on account of any indebtedness or (ii) increase any amounts owing or to
which such Person is liable under any existing obligations or (iii) issue or
sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything
to the contrary herein, this Section 4.14 shall not apply to the following (a)
the granting of options to employees, officers and directors of the Company
pursuant to any stock option plan duly adopted by a majority of the non-employee
members of the Board of Directors of the Company or a majority of the members of
a committee of non-employee directors established for such purpose, or (b) the
exercise of any security issued by the Company in connection with the offer and
sale of this Company's securities pursuant to this Agreement, or (c) the
exercise of or conversion of any convertible securities, options or warrants
issued and outstanding on the date hereof, provided such securities have not
been amended since the date hereof, or (d) acquisitions or strategic
investments, the primary purpose of which is not to raise capital.

                                      -22-
<PAGE>

         4.15 BREACH OF REPRESENTATIONS AND WARRANTIES AND COVENANTS BY THE
COMPANY. If the Company breaches any of the representations, warranties or
covenants set forth in Articles III and IV, and in addition to any other
remedies available to the Purchasers pursuant to this Agreement, the Company
shall pay to each Purchaser liquidated damages of three percent (3%) of the
outstanding amount of the Debentures held by such Purchaser per month, prorated
for partial months, in cash ("STANDARD LIQUIDATED DAMAGES AMOUNT"), until such
breach is cured.

         4.16 SECURITY AGREEMENTS. The Company hereby agrees to use its best
efforts to take any action reasonably requested by any Purchaser to grant and
maintain each Purchaser's perfected first priority security interest in all of
the assets of the Company and the Subsidiaries, including entering into any
other agreements or making any filings that any Purchaser may reasonably deem
necessary to effect such perfected first priority security interest securing the
Company's obligations under the Debentures.

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1 TERMINATION. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the fifth business day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

         5.2 FEES AND EXPENSES. The Company has agreed to reimburse $25,000 to
HPC Capital Management as reimbursement for its legal fees and expenses incurred
in connection with the preparation and negotiation of the Transaction documents.
Except as expressly set forth in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the issuance of any Securities.

         5.3 ENTIRE AGREEMENT. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         5.4 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (c) three Trading Days following the date of

                                      -23-
<PAGE>

mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The addresses for such notices and communications are those set forth on the
signature pages hereof, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.

         5.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

         5.6 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

         5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities.

         5.8 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Sections 4.8.

         5.9 GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such

                                      -24-
<PAGE>

service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

         5.10 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Securities, as applicable.

         5.11 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

         5.12 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         5.13 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.

         5.14 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

         5.15 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in

                                      -25-
<PAGE>

any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

         5.16 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

         5.17 USURY. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "MAXIMUM Rate"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate of interest
applicable to the Transaction Documents from the effective date forward, unless
such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser's election.

         5.18 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of

                                      -26-
<PAGE>

the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser was introduced to the Company by HPC Capital Management,
which has acted solely as agent for the Company and not for any Purchaser. Each
Purchaser has been represented by its own separate legal counsel in their review
and negotiation of the Transaction Documents. For reasons of administrative
convenience only, Purchasers and their respective counsel have chosen to
communicate with the Company through FW. FW does not represent all of the
Purchasers but only HPC Capital Management. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for the convenience
of the Company and not because it was required or requested to do so by the
Purchasers.

         5.19 LIQUIDATED DAMAGES. The Company's obligations to pay any
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such liquidated damages or
other amounts are due and payable shall have been canceled.

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

                                      -27-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                         VIRAGEN, INC.

                                         By: /s/ DENNIS W. HEALEY
                                             ----------------------------------
                                                Dennis W. Healey, Executive
                                                Vice President & CFO

                                         ADDRESS FOR NOTICE:
                                         ------------------

                                         865 SW 78th Avenue, Suite 100
                                         Plantation, Florida 33324
                                         Attn: Dennis Healey
                                         Tel: (954) 233-8746
                                         Fax: (954) 233-1416

With a copy to:
(which shall not constitute notice)      James M. Schneider, Esq.
                                         Schneider Weinberger
                                         Glades-St. Andrews Professional Center
                                         2499 Glades Road, Suite 108
                                         Boca Raton, Florida 33431-7260

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -28-
<PAGE>

                           PURCHASER'S SIGNATURE PAGE

         IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

PALISADES EQUITY FUND L.P.                  ADDRESS FOR NOTICE:
                                            ------------------
                                            C/o PEF Advisors, LLC
                                            200 Mansell Court East
By: /s/ PAUL T. MANNION, JR.                Ste 550
    -------------------------------         Roswell Ga 30076
         Name: Paul T. Mannion, Jr.         Attn: Paul T. Mannion, Jr.
         Title:

Subscription Amount: $1,761,860
Principal Amount: $2,000,000
Warrant Shares: 4,879,049

WITH A COPY TO:
--------------
(which shall not constitute notice)         Feldman Weinstein LLP
                                            420 Lexington Avenue
                                            New York, New York 10170
                                            Attn:  Robert F. Charron
                                            Tel: (212) 869-7000
                                            Fax: (212) 401-4741

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -29-
<PAGE>

                           PURCHASER'S SIGNATURE PAGE

CRESCENT INTERNATIONAL LTD.             ADDRESS FOR NOTICE:
                                        ------------------
                                        c/o GreenLight (Switzerland) SA
                                        84, Avenue Louis-Casai
                                        CH 1216 Cointrin, Geneva
By: /s/ MAXI BREZZI/MEL CRAW            Switzerland
    --------------------------------    Attention: Mel Craw/Maxi Brezzi
      Name: Maxi Brezzi/Mel Craw        Tel.: + 41 22 791 7170/+41 22 791 7256
      Title: Authorized Signatories     Fax : +41 22 929 5394

Subscription Amount: $ 880,929
Principal Amount: $ 1,000,000
Warrant Shares: 2,439,024

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -30-
<PAGE>

                           PURCHASER'S SIGNATURE PAGE

ALPHA CAPITAL AG                            ADDRESS FOR NOTICE:
                                            ------------------
                                            Lettstrasse 32
                                            Furstentum 9490
By:  /s/ KONRAD ACKERMAN                    Vaduz, Liechtenstein
     ------------------------------         Fax: 011-423 232 3196
        Name: Konrad Ackermann              Attn: Director
        Title: Director

Subscription Amount: $ 1,000,000
Principal Amount: $ 1,135,165
Warrant Shares: 2,768,695

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -31-
<PAGE>

                           PURCHASER'S SIGNATURE PAGE

BRISTOL INVESTMENT FUND, LTD.               ADDRESS FOR NOTICE:
                                            ------------------
                                            c/o Bristol DLP, LLC
                                            6363 Sunset Boulevard, 5th Floor
                                            Hollywood, California 90028
By: /s/ PAUL KESSLER                        Attn: Amy Wang, Esq.
    --------------------------              Fax: (323) 468-8307
       Name: Paul Kessler
       Title:

Subscription Amount: $ 750,000
Principal Amount: $ 851,374
Warrant Shares: 2,076,522

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -32-
<PAGE>

                           PURCHASER'S SIGNATURE PAGE

GRYPHON MASTER FUND, LP

By:
   -----------------------------
         Name:
         Title:

Subscription Amount: $500,000
Principal Amount: $ 567,583
Warrant Shares: 1,384,349

ADDRESS FOR NOTICE:
------------------

500 Crescent Court, Suite #270
Dallas, Texas 75201
Tel: (214) 871-6783
Fax: (214) 871-6909
Attn: Ryan Wolters

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -33-
<PAGE>

                                     ANNEX A

Palisades Equity Fund LP
   Principal Amount of Debenture issued:  $ 2,000,000
   Subscription Amount: $ 1,761,860
   Warrant Shares issuable under Warrant: 4,878,049
   Issuable Maximum pursuant to Section 4(a)(iii) of the Debenture: 18,596,919

Crescent International Ltd.
   Principal Amount of Debentures issued:  $ 1,000,000
   Subscription Amount: $ 880,929
   Warrant Shares issuable under Warrant: 2,439,024
   Issuable Maximum pursuant to Section 4(a)(iii) of the Debenture: 10,331,621

Alpha Capital AG
   Principal Amount of Debenture issued:  $ 1,135,165
   Subscription Amount: $ 1,000,000
   Warrant Shares issuable under Warrant:  2,768,695
   Issuable Maximum pursuant to Section 4(a)(iii) of the Debenture: 9,298,459

Bristol Investment Fund, Ltd.
   Principal Amount of Debenture issued:  $ 851,374
   Subscription Amount: $ 750,000
   Warrant Shares issuable under Warrant: 2,076,522
   Issuable Maximum pursuant to Section 4(a)(iii) of the Debenture: 7,748,716

Gryphon Master Fund, LP
   Principal Amount of Debenture issued:  $ 567,583
   Subscription Amount: $ 500,000
   Warrant Shares issuable under Warrant: 1,384,349
   Issuable Maximum pursuant to Section 4(a)(iii) of the Debenture: 5,165,811

                                      -34-<PAGE>
                                                                   EXHIBIT 10.81

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

                                                 Date of Issuance: June 27, 2003

                                                                       $____,000

                          SECURED CONVERTIBLE DEBENTURE
                              DUE SEPTEMBER 1, 2005

THIS DEBENTURE is one of a series of duly authorized and issued debentures of
Viragen, Inc., a Delaware corporation, having a principal place of business at
865 S.W. 78th Avenue, Suite 100, Plantation, Florida 33324 (the "COMPANY"),
designated as its Secured Convertible Debentures, due September 1, 2005 in the
aggregate principal amount of up to $6,000,000 (the "DEBENTURES").

         FOR VALUE RECEIVED, the Company promises to pay to
_____________________________ or its registered assigns (the "HOLDER"), the
principal sum of $_____________ on September 1, 2005 or such earlier date as the
Debentures are required or permitted to be repaid as provided hereunder (the
"MATURITY DATE"). The Company may not prepay any portion of the principal amount
of this Debenture without the prior written consent of the Holder, other than as
provided herein.

         This Debenture is subject to the following additional provisions:

         SECTION 1. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

<PAGE>

         SECTION 2. This Debenture has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement (as
defined in Section 6) and may be transferred or exchanged only in compliance
with the Purchase Agreement. Prior to due presentment to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat
the Person (as defined in Section 6) in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

         SECTION 3. EVENTS OF DEFAULT.

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

                           (i) upon 1 Trading Day's notice from the Holder, any
                  default in the payment of the principal of, or liquidated
                  damages, including but not limited to, the Standard Liquidated
                  Damages Amount due under the Purchase Agreement, in respect
                  of, any Debentures, free of any claim of subordination, as and
                  when the same shall become due and payable (whether on a
                  Conversion Date or the Maturity Date or by acceleration or
                  otherwise);

                           (ii) upon 1 Trading Day's notice from the Holder, the
                  Company shall fail to observe or perform any other covenant,
                  agreement or warranty contained in, or otherwise commit any
                  breach of any of the Transaction Documents (as defined in
                  Section 6) or the Company shall have failed to amend the
                  Company's certificate or articles of incorporation to increase
                  the number of authorized but unissued shares of Common Stock
                  to at least the Required Minimum on or prior to July 1, 2003;

                           (iii) the Company or any of its subsidiaries shall
                  commence, or there shall be commenced against the Company or
                  any such subsidiary a case under any applicable bankruptcy or
                  insolvency laws as now or hereafter in effect or any successor
                  thereto, or the Company commences any other proceeding under
                  any reorganization, arrangement, adjustment of debt, relief of
                  debtors, dissolution, insolvency or liquidation or similar law
                  of any jurisdiction whether now or hereafter in effect
                  relating to the Company or any subsidiary thereof or there is
                  commenced against the Company or any subsidiary thereof any
                  such bankruptcy, insolvency or other proceeding which remains
                  undismissed for a period of 60 days; or the Company or any
                  subsidiary thereof is adjudicated insolvent or bankrupt; or
                  any order of relief or other order approving any such case or

                                      -2-
<PAGE>

                  proceeding is entered; or the Company or any subsidiary
                  thereof suffers any appointment of any custodian or the like
                  for it or any substantial part of its property which continues
                  undischarged or unstayed for a period of 60 days; or the
                  Company or any subsidiary thereof makes a general assignment
                  for the benefit of creditors; or the Company shall fail to
                  pay, or shall state that it is unable to pay, or shall be
                  unable to pay, its debts generally as they become due; or the
                  Company or any subsidiary thereof shall call a meeting of its
                  creditors with a view to arranging a composition, adjustment
                  or restructuring of its debts; or the Company or any
                  subsidiary thereof shall by any act or failure to act
                  expressly indicate its consent to, approval of or acquiescence
                  in any of the foregoing; or any corporate or other action is
                  taken by the Company or any subsidiary thereof for the purpose
                  of effecting any of the foregoing;

                           (iv) the Company shall default in any of its
                  obligations under any other Debenture or any mortgage, credit
                  agreement or other facility, indenture agreement, factoring
                  agreement or other instrument under which there may be issued,
                  or by which there may be secured or evidenced any indebtedness
                  for borrowed money or money due under any long term leasing or
                  factoring arrangement of the Company in an amount exceeding
                  $100,000, whether such indebtedness now exists or shall
                  hereafter be created and such default shall result in such
                  indebtedness becoming or being declared due and payable prior
                  to the date on which it would otherwise become due and payable
                  or the Company shall have failed to file, within 20 days of
                  the Original Issue Date, a registration statement registering
                  for resale the shares of Common Stock issuable pursuant that
                  Common Stock Purchase Agreement entered into between the
                  Company and Talisman Management Limited or shall have failed
                  to use reasonable best efforts to cause such registration
                  statement to be declared effective within 120 days of the
                  Original Issue Date;

                           (v) the Common Stock shall not be listed for trading
                  on the American Stock Exchange, or Nasdaq SmallCap Market, the
                  New York Stock Exchange, the Nasdaq National Market or the OTC
                  Bulletin Board (each, a "PRINCIPAL MARKET") and shall not
                  again be eligible for and quoted or listed for trading thereon
                  within five Trading Days;

                           (vi) the Company shall be a party to any Change of
                  Control Transaction (as defined in Section 6), shall agree to
                  sell or dispose all or in excess of 33% of its assets in one
                  or more transactions (whether or not such sale would
                  constitute a Change of Control Transaction), or shall redeem
                  or repurchase more than a de minimis number of shares of
                  Common Stock or other equity securities of the Company (other
                  than redemptions of Underlying Shares (as defined in Section
                  6)); PROVIDED, HOWEVER, where the Company is the surviving
                  corporation in a Change of Control Transaction, provided the
                  Holder provides the Company with prior written consent of such

                                      -3-
<PAGE>

                  transaction, which consent shall not be unreasonably withheld,
                  such a Transaction shall entitle the Holder to the same
                  remedies as if an Event of Default shall have occurred however
                  such an event shall not be deemed an "Event of Default" under
                  this Debenture;

                           (vii) an Underlying Shares Registration Statement (as
                  defined in Section 6) shall not have been declared effective
                  by the Commission (as defined in Section 6) on or prior to the
                  150th calendar day after the Original Issue Date;

                           (viii) if, during the Effectiveness Period (as
                  defined in the Registration Rights Agreement (as defined in
                  Section 6)), the effectiveness of the Underlying Shares
                  Registration Statement lapses for any reason or the Holder
                  shall not be permitted to resell Registrable Securities (as
                  defined in the Registration Rights Agreement) under the
                  Underlying Shares Registration Statement, in either case, for
                  more than 10 consecutive Trading Days or 20 non-consecutive
                  Trading Days during any 12 month period;

                           (ix) an Event (as defined in the Registration Rights
                  Agreement) shall not have been cured to the satisfaction of
                  the Holder prior to the expiration of thirty days from the
                  Event Date (as defined in the Registration Rights Agreement)
                  relating thereto (other than an Event resulting from a failure
                  of an Underlying Shares Registration Statement to be declared
                  effective by the Commission on or prior to the 150th calendar
                  day after the Original Issue Date, which shall be covered by
                  Section 3(a)(vii));

                           (x) the Company shall fail for any reason to deliver
                  certificates to a Holder prior to the fifth Trading Day after
                  a Conversion Date pursuant to and in accordance with Section
                  4(b) or the Company shall provide notice to the Holder,
                  including by way of public announcement, at any time, of its
                  intention not to comply with requests for conversions of any
                  Debentures in accordance with the terms hereof; or

                           (xi) upon 1 Trading Day's notice, the Company shall
                  fail for any reason to deliver the payment in cash pursuant to
                  a Buy-In (as defined herein) within five days after notice
                  thereof is delivered hereunder.

                  (b) If any Event of Default occurs and is continuing, the full
principal amount of this Debenture (and, at the Holder's option, all other
Debentures then held by such Holder) to the date of acceleration shall become at
the Holder's election, immediately due and payable in cash. The aggregate amount
payable upon an Event of Default shall be equal to the sum of: (i) the Mandatory
Prepayment Amount (as defined in Section 6) plus (ii) the product of (A) the
number of Underlying Shares issued in respect of conversions hereunder within
thirty days of the date of a declaration of an Event of Default and then held by
the Holder and (B) the Closing Bid Price (as defined in Section 6) on the date
prepayment is due or the date the full prepayment price is paid, whichever is
greater. All Debentures and Underlying Shares for which the full prepayment
price hereunder shall have been paid in accordance herewith shall promptly be
surrendered to or as directed by the Company. The Holder need not provide and

                                      -4-
<PAGE>

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; PROVIDED, HOWEVER, the Holder
shall have the right to waive any Event of Default which has occurred and such
waivers shall be retroactive to the date such Event of Default occurred. Such
declaration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a Debenture holder until such
time, if any, as the full payment under this Section shall have been received by
it. No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon.

         SECTION 4. CONVERSION.

                  (a) (i) At any time after the Closing Date, this Debenture
                  shall be convertible into shares of Common Stock at the option
                  of the Holder, in whole or in part at any time and from time
                  to time (subject to the limitations on conversion set forth in
                  Section 4(a)(ii) hereof). The Holder shall effect conversions
                  by delivering to the Company the form of conversion notice
                  attached hereto as ANNEX A (a "CONVERSION NOTICE"), specifying
                  therein the principal amount of Debentures to be converted and
                  the date on which such conversion is to be effected (a
                  "CONVERSION DATE"). If no Conversion Date is specified in a
                  Conversion Notice, the Conversion Date shall be the date that
                  such Conversion Notice is provided hereunder. To effect
                  conversions hereunder, the Holder shall not be required to
                  physically surrender Debentures to the Company unless the
                  entire principal amount of this Debenture has been so
                  converted. Conversions hereunder shall have the effect of
                  lowering the outstanding principal amount of this Debenture in
                  an amount equal to the applicable conversion. The Holder and
                  the Company shall maintain records showing the principal
                  amount converted and the date of such conversions, in a form
                  substantially similar to Schedule 1 attached hereto. 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.

                           (ii) The Company shall not effect any conversion of
                  this Debenture, and the Holder shall not have the right to
                  convert any portion of this Debenture, pursuant to Section
                  4(a)(i), Section 5(b) or otherwise, to the extent that after
                  giving effect to such conversion, the Holder (together with
                  the Holder's Affiliates), as set forth on the applicable
                  Conversion Notice, would beneficially own in excess of 4.99%
                  of the number of shares of the Common Stock outstanding
                  immediately after giving effect to such conversion. For
                  purposes of the foregoing sentence, the number of shares of
                  Common Stock beneficially owned by the Holder and its
                  Affiliates shall include the number of shares of Common Stock
                  issuable upon conversion of this Debenture with respect to

                                      -5-
<PAGE>

                  which the determination of such sentence is being made, but
                  shall exclude the number of shares of Common Stock which would
                  be issuable upon (A) conversion of the remaining, nonconverted
                  portion of this Debenture beneficially owned by the Holder or
                  any of its Affiliates and (B) exercise or conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the Company (including, without limitation, any other
                  Debentures or the Warrants) subject to a limitation on
                  conversion or exercise analogous to the limitation contained
                  herein beneficially owned by the Holder or any of its
                  Affiliates. Except as set forth in the preceding sentence, for
                  purposes of this Section 4(a)(ii), beneficial ownership shall
                  be calculated in accordance with Section 13(d) of the Exchange
                  Act. For purposes of this Section 4(a)(i), in determining the
                  number of outstanding shares of Common Stock, the Holder may
                  rely on the number of outstanding shares of Common Stock as
                  reflected in (x) the Company's most recent Form 10-Q or Form
                  10-K, as the case may be, (y) a more recent public
                  announcement by the Company or (z) any other notice by the
                  Company or the Company's Transfer Agent setting forth the
                  number of shares of Common Stock outstanding. Upon the written
                  or oral request of the Holder, the Company shall within two
                  Trading Days confirm orally and in writing to the Holder the
                  number of shares of Common Stock then outstanding. In any
                  case, the number of outstanding shares of Company 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 provisions of this Section 4(a)(ii) may be
                  waived by the Holder upon, at the election of the Holder, not
                  less than 61 days' prior notice to the Company, and the
                  provisions of this Section 4(a)(ii) shall continue to apply
                  until such 61st day (or such later date, as determined by the
                  Holder, as may be specified in such notice of waiver).

                           (iii) If the Company has not obtained Shareholder
                  Approval, then the Company may not issue, pursuant to the
                  Transaction Documents, in the aggregate, in excess of 19.999%
                  of the number of shares of Common Stock outstanding on the
                  Original Issue Date (such number of shares, the "ISSUABLE
                  MAXIMUM"). Each Holder shall be entitled to a portion of the
                  Issuable Maximum equal to the quotient obtained by dividing
                  (x) the aggregate principal amount of the Debenture(s) issued
                  and sold to such Holder on the Original Issue Date by (y) the
                  aggregate principal amount of all Debentures issued and sold
                  by the Company on the Original Issue Date. If any Holder shall
                  no longer hold the Debenture(s), then such Holder's remaining
                  portion of the Issuable Maximum shall be allocated pro-rata
                  among the remaining Holders. As promptly as reasonably
                  possible, the Company shall obtain the vote of shareholders
                  (the "SHAREHOLDER APPROVAL") as may be required by the
                  applicable rules and regulations of the Principal Market (or
                  any successor entity) applicable to approve the issuance of

                                      -6-
<PAGE>

                  shares of Common Stock in excess of the Issuable Maximum
                  pursuant to the Transaction Documents. If the Company shall
                  have not obtained the Shareholder Approval, then the Company
                  shall issue to the Holder, upon conversion of this Debenture,
                  a number of shares of Common Stock equal to such Holder's
                  pro-rata portion (as set forth in the Purchase Agreement) of
                  the Issuable Maximum and, with respect to the remainder of the
                  aggregate principal amount of the Debentures for which a
                  conversion in accordance with the applicable conversion price
                  would result in an issuance of shares of Common Stock in
                  excess of such Holder's pro-rata portion of the Issuable
                  Maximum (the "EXCESS PRINCIPAL"), the Company shall, by the
                  fifth Trading Day following such conversion, pay cash to the
                  converting Holder in an amount equal to the Mandatory
                  Prepayment Amount with respect to such Excess Principal. If
                  the Company fails to pay the Mandatory Prepayment Amount for
                  the Excess Principal in full pursuant to this Section after
                  the date payable, the Company will pay interest thereon at a
                  rate of 18% per annum or such lesser maximum amount that is
                  permitted to be paid by applicable law, to the converting
                  Holder, accruing daily from the date such payment is due until
                  such amount, plus all such interest thereon, is paid in full.
                  The Company and the Holder understand and agree that shares of
                  Common Stock issued to and then held by the Holder as a result
                  of conversions of Debentures shall not be entitled to cast
                  votes on any resolution to obtain Shareholder Approval
                  pursuant hereto.

                           (iv) UNDERLYING SHARES ISSUABLE UPON CONVERSION.

                                    (A) The number of shares of Common Stock
                           issuable upon a conversion hereunder shall be the
                           quotient obtained by dividing (x) the outstanding
                           principal amount of this Debenture to be converted by
                           (y) the Set Price.

                                    (B) Notwithstanding anything to the contrary
                           contained herein, if on any Conversion Date:

                                          (1) the number of shares of Common
                                    Stock at the time authorized, unissued and
                                    unreserved for all purposes, or held as
                                    treasury stock, is insufficient;

                                          (2) the Common Stock shall fail to be
                                    listed or quoted for trading on a Principal
                                    Market; or

                                          (3) the conversion would otherwise
                                    violate Section 4(a)(iii).

                                    then, at the option of the Holder, the
                           Company, in lieu of delivering shares of Common Stock
                           pursuant to this Section 4, shall deliver, within
                           three Trading Days of each applicable Conversion

                                      -7-
<PAGE>

                           Date, an amount in cash equal to the product of the
                           number of shares of Common Stock otherwise
                           deliverable to the Holder in connection with such
                           Conversion Date and the highest Closing Bid Price
                           during the period commencing on the Conversion Date
                           and ending on the Trading Day prior to the date such
                           payment is made.

                  (c) (i) Not later than three Trading Days after any Conversion
                  Date, the Company will deliver to the Holder the number of
                  shares of Common Stock being acquired upon conversion of the
                  Debenture (the "CONVERSION SHARES") in the form of a
                  certificate or certificates which shall be free of restrictive
                  legends and trading restrictions (other than those required by
                  the Purchase Agreement) representing the number of shares of
                  Common Stock being acquired upon the conversion of Debentures.
                  Provided the Registration Statement is then effective, the
                  Company shall, upon request of the Holder, if available,
                  deliver any certificate or certificates required to be
                  delivered by the Company under this Section electronically
                  through the Depository Trust Corporation or another
                  established clearing corporation performing similar functions.
                  If in the case of any Conversion Notice such Conversion Shares
                  are not delivered to or as directed by the applicable Holder
                  by the third Trading Day after a Conversion Date, the Holder
                  shall be entitled by written notice to the Company at any time
                  on or before its receipt of such Conversion Shares, to rescind
                  such conversion, in which event the Company shall, if
                  applicable, immediately return the certificates representing
                  the principal amount of Debentures tendered for conversion.

                  (ii) If the Company fails for any reason to deliver to the
                  Holder the Conversion Shares pursuant to Section 4(b)(i) by
                  the third Trading Day after the Conversion Date, the Company
                  shall pay to such Holder, in cash, as liquidated damages and
                  not as a penalty, for each $5,000 of principal amount being
                  converted, $50 per Trading Day (increasing to $100 per Trading
                  Day after 3 Trading Days and increasing to $200 per Trading
                  Day 6 Trading Days after such damages begin to accrue) for
                  each Trading Day after such third Trading Day until such
                  Conversion Shares are delivered. In the event a Holder of this
                  Debenture shall elect to convert any or all of the outstanding
                  principal amount hereof, the Company may not refuse conversion
                  based on any claim that the Holder or any one associated or
                  affiliated with the Holder of has been engaged in any
                  violation of law, agreement or for any other reason, unless,
                  an injunction from a court, on notice, restraining and or
                  enjoining conversion of all or part of this Debenture shall
                  have been sought and obtained and the Company posts a surety
                  bond for the benefit of the Holder in the amount of 150% of
                  the principal amount of this Debenture outstanding, which is
                  subject to the injunction, which bond shall remain in effect
                  until the completion of arbitration/litigation of the dispute
                  and the proceeds of which shall be payable to such Holder to
                  the extent it obtains judgment. In the absence of an
                  injunction precluding the same, the Company shall issue
                  Conversion Shares or, if applicable, cash, upon a properly

                                      -8-
<PAGE>

                  noticed conversion. Nothing herein shall limit a Holder's
                  right to pursue actual damages or declare an Event of Default
                  pursuant to Section 3 herein for the Company's failure to
                  deliver Conversion Shares within the period specified herein
                  and such Holder shall have the right to pursue all remedies
                  available to it at law or in equity including, without
                  limitation, a decree of specific performance and/or injunctive
                  relief. The exercise of any such rights shall not prohibit the
                  Holders from seeking to enforce damages pursuant to any other
                  Section hereof or under applicable law.

                  (iii) 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 pursuant to Section 4(b)(i)
                  by the fifth Trading Day after the Conversion Date, and if
                  after such third Trading Day the Holder purchases (in an open
                  market transaction or otherwise) Common Stock to deliver in
                  satisfaction of a sale by such Holder of the Underlying Shares
                  which the Holder anticipated receiving upon such conversion (a
                  "BUY-IN"), then the Company shall (A) pay in cash to the
                  Holder (in addition to any remedies available to or elected by
                  the Holder) the amount by which (x) the Holder's total
                  purchase price (including brokerage commissions, if any) for
                  the Common Stock so purchased exceeds (y) the product of (1)
                  the aggregate number of shares of Common Stock that such
                  Holder anticipated receiving from the conversion at issue
                  multiplied by (2) the market price of the Common Stock at the
                  time of the sale giving rise to such purchase obligation and
                  (B) at the option of the Holder, either reissue Debentures in
                  principal amount equal to the principal amount of the
                  attempted conversion or deliver to the Holder the number of
                  shares of Common Stock that would have been issued had the
                  Company timely complied with its delivery requirements under
                  Section 4(b)(i). For example, if the Holder purchases Common
                  Stock having a total purchase price of $11,000 to cover a
                  Buy-In with respect to an attempted conversion of Debentures
                  with respect to which the market price of the Underlying
                  Shares on the date of conversion was a total of $10,000 under
                  clause (A) of the immediately preceding sentence, the Company
                  shall be required to pay the Holder $1,000. The Holder shall
                  provide the Company written notice indicating the amounts
                  payable to the Holder in respect of the Buy-In.
                  Notwithstanding anything contained herein to the contrary, if
                  a Holder requires the Company to make payment in respect of a
                  Buy-In for the failure to timely deliver Conversion Shares
                  hereunder and the Company timely pays in full such payment,
                  the Company shall not be required to pay such Holder
                  liquidated damages under Section 4(b)(ii) in respect of the
                  Conversion Shares resulting in such Buy-In.

                  (d) (i) The conversion price in effect on any Conversion Date
                  shall be equal to $0.3173(1) (subject to adjustment
                  herein)(the "SET PRICE").

--------
(1)  125% of the average of the 10 consecutive VWAPs immediately prior to the
     date of the Purchase Agreement.

                                      -9-
<PAGE>

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

                  (iii) If the Company, at any time while Debentures are
                  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 less than the Closing Bid Price at the record date
                  mentioned below, then the Set Price shall be multiplied by a
                  fraction, of which the denominator shall be the number of
                  shares of the Common Stock (excluding treasury shares, if any)
                  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 (excluding
                  treasury shares, if any) 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 would purchase at such Closing Bid Price. 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.

                  (iv) If the Company or any subsidiary thereof, as applicable,
                  at any time while Debentures are outstanding, shall offer,
                  sell, grant any option to purchase or offer, sell or grant any
                  right to reprice its securities, or otherwise dispose of or
                  issue (or announce any offer, sale, grant or any option to
                  purchase or other disposition) any Common Stock or any equity
                  or equity equivalent securities (including any equity, debt or
                  other instrument that is at any time over the life thereof
                  convertible into or exchangeable for Common Stock)
                  (collectively, "COMMON STOCK EQUIVALENTS") entitling any
                  Person to acquire shares of Common Stock, at a price per share
                  less than the Set Price (if the holder of the Common Stock or
                  Common Stock Equivalent so issued shall at any time, whether

                                      -10-
<PAGE>

                  by operation of purchase price adjustments, reset provisions,
                  floating conversion, exercise or exchange prices or otherwise,
                  or due to warrants, options or rights per share which is
                  issued in connection with such issuance, be entitled to
                  receive shares of Common Stock at a price per share which is
                  less than the Set Price, such issuance shall be deemed to have
                  occurred for less than the Set Price), then, the Set Price
                  shall be adjusted for such conversions as Holders shall
                  indicate in its Conversion Notices to equal the conversion,
                  exchange or purchase price for such Common Stock or Common
                  Stock Equivalents (including any reset provisions thereof) at
                  issue. Such adjustment shall be made whenever such Common
                  Stock or Common Stock Equivalents are issued. The Company
                  shall notify the Holder in writing, no later than the business
                  day following the issuance of any Common Stock or Common Stock
                  Equivalent subject to this section, indicating therein the
                  applicable issuance price, or of applicable reset price,
                  exchange price, conversion price and other pricing terms.

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

                  (vi) In case of any reclassification of the Common Stock or
                  any compulsory share exchange pursuant to which the Common
                  Stock is converted into other securities, cash or property,
                  the Holders shall have the right thereafter to, at their
                  option, (A) convert the then outstanding principal amount and
                  any other amounts then owing hereunder in respect of this
                  Debenture only into the shares of stock and other securities,
                  cash and property receivable upon or deemed to be held by
                  holders of the Common Stock following such reclassification or
                  share exchange, and the Holders of the Debentures shall be
                  entitled upon such event to receive such amount of securities,
                  cash or property as the shares of the Common Stock of the
                  Company into which the then outstanding principal amount and
                  any other amounts then owing hereunder in respect of this
                  Debenture could have been converted immediately prior to such
                  reclassification or share exchange would have been entitled or
                  (B) require the Company to prepay the aggregate of its
                  outstanding principal amount of Debentures and other amounts

                                      -11-
<PAGE>

                  due and payable thereon, at a price determined in accordance
                  with Section 3(b). The entire prepayment price shall be paid
                  in cash. This provision shall similarly apply to successive
                  reclassifications or share exchanges.

                  (vii) All calculations under this Section 4 shall be made to
                  the nearest cent or the nearest 1/100th of a share, as the
                  case may be.

                  (viii) Whenever the Set Price is adjusted pursuant to any of
                  Section 4(c)(ii) - (v), the Company shall promptly mail to
                  each Holder a notice setting forth the Set Price after such
                  adjustment and setting forth a brief statement of the facts
                  requiring such adjustment.

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

                                      -12-
<PAGE>

                  (x) If, at any time while this Debenture is outstanding, (A)
                  the Company effects any merger or consolidation of the Company
                  with or into another Person, (B) the Company effects any sale
                  of all or substantially all of its assets in one or a series
                  of related transactions, (C) any tender offer or exchange
                  offer (whether by the Company or another Person) is completed
                  pursuant to which holders of Common Stock are permitted to
                  tender or exchange their shares for other securities, cash or
                  property, or (D) the Company effects any reclassification of
                  the Common Stock or any compulsory share exchange pursuant to
                  which the Common Stock is effectively converted into or
                  exchanged for other securities, cash or property (in any such
                  case, a "FUNDAMENTAL TRANSACTION"), then upon any subsequent
                  conversion of this Debenture, the Holder shall have the right
                  to receive, for each Underlying Share that would have been
                  issuable upon such conversion absent such Fundamental
                  Transaction, the same kind and amount of securities, cash or
                  property as it would have been entitled to receive upon the
                  occurrence of such Fundamental Transaction if it had been,
                  immediately prior to such Fundamental Transaction, the holder
                  of one share of Common Stock (the "ALTERNATE CONSIDERATION").
                  For purposes of any such conversion, the determination of the
                  Set Price shall be appropriately adjusted to apply to such
                  Alternate Consideration based on the amount of Alternate
                  Consideration issuable in respect of one share of Common Stock
                  in such Fundamental Transaction, and the Company shall
                  apportion the Set Price among the Alternate Consideration in a
                  reasonable manner reflecting the relative value of any
                  different components of the Alternate Consideration. If
                  holders of Common Stock are given any choice as to the
                  securities, cash or property to be received in a Fundamental
                  Transaction, then the Holder shall be given the same choice as
                  to the Alternate Consideration it receives upon any conversion
                  of this Debenture following such Fundamental Transaction. To
                  the extent necessary to effectuate the foregoing provisions,
                  any successor to the Company or surviving entity in such
                  Fundamental Transaction shall issue to the Holder a new
                  debenture consistent with the foregoing provisions and
                  evidencing the Holder's right to convert such debenture into
                  Alternate Consideration. The terms of any agreement pursuant
                  to which a Fundamental Transaction is effected shall include
                  terms requiring any such successor or surviving entity to
                  comply with the provisions of this paragraph (c) and insuring
                  that this Debenture (or any such replacement security) will be
                  similarly adjusted upon any subsequent transaction analogous
                  to a Fundamental Transaction. If any Fundamental Transaction
                  constitutes or results in a Change of Control Transaction,
                  then at the request of the Holder delivered before the 90th
                  day after such Fundamental Transaction, the Company (or any
                  such successor or surviving entity) will purchase the
                  Debenture from the Holder for a purchase price, payable in
                  cash within five Trading Days after such request (or, if
                  later, on the effective date of the Fundamental Transaction),
                  equal to the Black-Scholes value of the remaining unconverted
                  portion of this Debenture on the date of such request, which
                  value shall in no event exceed 150% of the principal amount
                  outstanding of this Debenture.

                                      -13-
<PAGE>

                  (e) The Company covenants that it will at all times reserve
         and keep available out of its authorized and unissued shares of Common
         Stock solely for the purpose of issuance upon conversion of the
         Debentures free from preemptive rights or any other actual contingent
         purchase rights of persons other than the Holders, not less than such
         number of shares of the Common Stock as shall (subject to any
         additional requirements of the Company as to reservation of such shares
         set forth in the Purchase Agreement) be issuable (taking into account
         the adjustments and restrictions of Section 4(b)) upon the conversion
         of the outstanding principal amount of the Debentures. The Company
         covenants that all shares of Common Stock that shall be so issuable
         shall, upon issue, be duly and validly authorized, issued and fully
         paid, nonassessable and, if the Underlying Shares Registration
         Statement has been declared effective under the Securities Act,
         registered for public sale in accordance with such Underlying Shares
         Registration Statement.

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

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

                  (h) Any and all notices or other communications or deliveries
         to be provided by the Holders hereunder, including, without limitation,
         any Conversion Notice, shall be in writing and delivered personally, by
         facsimile, sent by a nationally recognized overnight courier service,
         addressed to the Company, at the address set forth above, facsimile
         number (954) 233-1416, ATTN: DENNIS W. HEALEY or such other address or
         facsimile number as the Company may specify for such purposes by notice
         to the Holders delivered in accordance with this Section. Any and all
         notices or other communications or deliveries to be provided by the
         Company hereunder shall be in writing and delivered personally, by
         facsimile, sent by a nationally recognized overnight courier service,
         addressed to each Holder at the facsimile telephone number or address
         of such Holder appearing on the books of the Company, or if no such

                                      -14-
<PAGE>

         facsimile telephone number or address appears, at the principal place
         of business of the Holder. Any notice or other communication or
         deliveries hereunder shall be deemed given and effective on the
         earliest of (i) the date of transmission, if such notice or
         communication is delivered via facsimile at the facsimile telephone
         number specified in this Section prior to 5:30 p.m. (New York City
         time), (ii) the date after the date of transmission, if such notice or
         communication is delivered via facsimile at the facsimile telephone
         number specified in this Section later than 5:30 p.m. (New York City
         time) on any date and earlier than 11:59 p.m. (New York City time) on
         such date, (iii) the second Business Day following the date of mailing,
         if sent by nationally recognized overnight courier service, or (iv)
         upon actual receipt by the party to whom such notice is required to be
         given.

         SECTION 5. REDEMPTION.

                  (a) OPTIONAL REDEMPTION. Subject to the provisions of this
         Section 5, the Company may, at any time, deliver a notice to the
         Holders (an "OPTIONAL REDEMPTION NOTICE" and the date such notice is
         deemed delivered hereunder, the "OPTIONAL REDEMPTION NOTICE DATE") of
         its irrevocable election to redeem all, but not less than all, of the
         then outstanding Debentures, for an amount, in cash, equal to the
         Optional Redemption Amount on the 30th Trading Day following the
         Optional Redemption Notice Date (such date, the "OPTIONAL REDEMPTION
         DATE" and such redemption, the "OPTIONAL REDEMPTION"). The Optional
         Redemption Amount is due in full on the Optional Redemption Date. The
         Company may only effect an Optional Redemption if from the Optional
         Redemption Notice Date through to the Optional Redemption Date, each of
         the following shall be true: (i) the Company shall have duly honored
         all conversions and redemptions scheduled to occur or occurring by
         virtue of one or more Conversion Notices prior to the Optional
         Redemption Date, (ii) there is an effective Underlying Shares
         Registration Statement pursuant to which the Holders are permitted to
         utilize the prospectus thereunder to resell all of the Underlying
         Shares issued to the Holders and all of the Underlying Shares as are
         issuable to the Holders upon conversion in full of the Debentures
         subject to the Optional Redemption (and the Company believes, in good
         faith, that such effectiveness will continue uninterrupted for the
         foreseeable future), (iii) the Common Stock is listed for trading on
         the Principal Market (and the Company believes, in good faith, that
         trading of the Common Stock on the Principal Market will continue
         uninterrupted for the foreseeable future), (iv) all liquidated damages
         and other amounts owing in respect of the Debentures shall have been
         paid or will, concurrently with the issuance of the Underlying Shares,
         be paid in cash; (v) there is a sufficient number of authorized but
         unissued and otherwise unreserved shares of Common Stock for the
         issuance of all the Underlying Shares as are issuable to the Holder
         upon conversion in full of the Debentures subject to the Optional
         Redemption; (vi) no Event of Default has occurred and is continuing;
         (vii) an issuance of all of the Underlying Share upon conversion
         hereunder would be permitted in full without violating the limitations
         set forth in Section 4(a)(ii)(A) or (B); and (viii) no public
         announcement of a pending or proposed Fundamental Transaction or
         acquisition transaction has occurred that has not been consummated. If
         any of the foregoing conditions shall cease to be satisfied at any time

                                      -15-
<PAGE>

         during the required period, then the Holder may elect to nullify the
         Optional Redemption Notice in which case the Option Redemption Notice
         shall be null and void, ab initio. The Holders may convert, pursuant to
         Section 4(a)(i) hereof, any shares of Debentures subject to an Optional
         Redemption at any time prior to the date that the Optional Redemption
         Amount and all amounts owing thereon are due and paid in full. The
         Company covenants and agrees that it will honor all Conversion Notices
         tendered from the time of delivery of the Optional Redemption Notice
         through the date all amounts owing thereon are due and paid in full.

                  (b) MONTHLY REDEMPTION. On each Monthly Redemption Date, the
         Company shall redeem each Holder's Pro Rata Portion of the Monthly
         Redemption Amount, the sum of all liquidated damages and any other
         amounts then owing to such Holder in respect of the Debenture. For
         purposes of this Section 5(b) only, "PRO RATA PORTION" is the ration of
         (x) the principal amount of this Debenture on the Original Issue Date
         and (y) the sum of the aggregate original principal amounts of the
         Debentures issued to all Holders on the Closing Date. If any Holder
         shall no longer holds Debentures or if a Holder's outstanding principal
         amount is less than their Pro Rata Portion of the Monthly Redemption
         Amount, then such Holder's Monthly Redemption Amount shall be such
         lesser amount and the Pro Rata Portion shall be recalculated to exclude
         such Holder's principal amount (or portion thereof no longer
         outstanding) from clause (y) above and the Monthly Redemption Amount
         shall be allocated pro-rata among the remaining Holders. The Monthly
         Redemption Amount due on each Monthly Redemption Date shall, except as
         provided in this Section, be paid in cash. As to any Monthly Redemption
         and upon 20 Trading Days' prior written irrevocable notice, in lieu of
         a cash redemption payment the Company may elect to pay all or part, as
         set forth in the notice, of a Monthly Redemption in Underlying Shares
         based on a conversion price equal to the Set Price; PROVIDED, HOWEVER,
         that the Company may not pay the Monthly Redemption Amount in
         Underlying Shares unless, on the applicable Monthly Redemption Date and
         during the 20 Trading Day period immediately prior thereto, (i) there
         is an effective Registration Statement pursuant to which the Holder is
         permitted to utilize the prospectus thereunder to resell all of the
         Underlying Shares issued to the Holder and all of the Underlying Shares
         as are issuable to the Holder upon conversion in full of the Debenture
         subject to such Monthly Redemption (and the Company believes, in good
         faith, that such effectiveness will continue uninterrupted for the
         foreseeable future), (ii) the Common Stock is listed for trading on a
         Principal Market (and the Company believes, in good faith, that trading
         of the Common Stock on the Principal Market will continue uninterrupted
         for the foreseeable future), (iii) on or prior to the 20th Trading Day
         prior to such Monthly Redemption Date, the Company irrevocably notifies
         the Holder that it will issue Underlying Shares in lieu of cash; (iv)
         all liquidated damages and other amounts owing in respect of the
         Debenture shall have been paid or will, concurrently with the issuance
         of the Underlying Shares, be paid in cash; (v) there is a sufficient
         number of authorized but unissued and otherwise unreserved shares of
         Common Stock for such issuance; (vi) such issuance would be permitted
         in full without violating the limitations set forth in Section
         4(a)(ii)(A) or (B); (vii) no Event of Default nor any event that with
         the passage of time would constitute an Event of Default has occurred
         and is continuing; (viii) no public announcement of a pending or
         proposed Change of Control Transaction or Fundamental Transaction has
         occurred that has not been consummated and (ix) THE AVERAGE OF THE 10
         CLOSING BID PRICES IMMEDIATELY PRIOR TO THE 20TH TRADING DAY PRIOR TO

                                      -16-
<PAGE>

         SUCH MONTHLY REDEMPTION DATE AND THE AVERAGE OF THE 10 CLOSING BID
         PRICES IMMEDIATELY PRIOR TO SUCH MONTHLY REDEMPTION DATE EXCEEDS
         $0.4220(2) (SUBJECT TO ADJUSTMENT FOR REVERSE AND FORWARD STOCK SPLITS,
         STOCK DIVIDENDS, STOCK COMBINATIONS AND OTHER SIMILAR TRANSACTIONS OF
         THE COMMON STOCK THAT OCCUR AFTER THE DATE OF THE PURCHASE AGREEMENT).
         The Holders may convert, pursuant to Section 4(a)(i), any principal
         amount of the Debenture subject to a Monthly Redemption at any time
         prior to the date that the Monthly Redemption Amount and all amounts
         owing thereon are due and paid in full. The Company covenants and
         agrees that it will honor all Conversion Notices tendered up until such
         amounts are paid in full.

                  (c) REDEMPTION PROCEDURE. The payment of cash and/or issuance
         of Common Stock, as the case may be, pursuant to a Monthly Redemption
         shall be made on the Monthly Redemption Date and the payment of cash
         pursuant to an Optional Redemption shall be made on the Optional
         Redemption Date. If any portion of the cash payment for a Monthly
         Redemption or Optional Redemption shall not be paid by the Company by
         the respective due date, interest shall accrue thereon at the rate of
         18% per annum (or the maximum rate permitted by applicable law,
         whichever is less) until the payment of the Monthly Redemption Amount
         or Optional Redemption Amount, as applicable, plus all amounts owing
         thereon is paid in full. In addition, if any portion of the Monthly
         Redemption Amount or Optional Redemption Amount, as applicable, remains
         unpaid after such date, the Holders subject to such redemption may
         elect, by written notice to the Company given at any time thereafter,
         to invalidate AB INITIO such redemption, notwithstanding anything
         herein contained to the contrary. Notwithstanding anything to the
         contrary in this Section 5, the Company's determination to redeem in
         cash or shares of Common Stock shall be applied ratably among the
         Holders based upon the principal amount of Debentures initially
         purchased by each Holder, adjusted upward ratably in the event all of
         the shares of Debentures of any Holder are no longer outstanding.

         SECTION 6. DEFINITIONS. Capitalized terms not defined in this Section 6
or elsewhere in this Debenture shall have the meanings ascribed to them in the
Purchase Agreement. For the purposes hereof, the following terms shall have the
following meanings:

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

                  "CHANGE OF CONTROL TRANSACTION" means the occurrence of any of
         (i) an acquisition after the date hereof by an individual or legal
         entity or "group" (as described in Rule 13d-5(b)(1) promulgated under
         the Exchange Act) of effective control (whether through legal or
         beneficial ownership of capital stock of the Company, by contract or
         otherwise) of in excess of 33% of the voting securities of the Company,
         (ii) a replacement at one time or over time of more than one-half of
         the members of the Company's board of directors which is not approved

--------
(2)  133% of the Set Price.

                                      -17-
<PAGE>

         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), (iii) the
         merger of the Company with or into another entity that is not
         wholly-owned by the Company, consolidation or sale of 50% or more of
         the assets of the Company in one or a series of related transactions,
         or (iv) the execution by the Company of an agreement to which the
         Company is a party or by which it is bound, providing for any of the
         events set forth above in (i), (ii) or (iii).

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the common stock, $0.01 par value per
         share, of the Company and stock of any other class into which such
         shares may hereafter have been reclassified or changed.

                  "CONVERSION DATE" shall have the meaning set forth in Section
         4(a)(i).

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
         amended.

                  "ISSUABLE MAXIMUM" shall have the meaning set forth in Section
         4(a)(iii).

                  "MANDATORY PREPAYMENT AMOUNT" for any Debentures shall equal
         the sum of (i) the greater of: (A) 135% of the principal amount of
         Debentures to be prepaid, plus all other accrued and unpaid amounts due
         hereunder, and (B) the principal amount of Debentures to be prepaid,
         plus all other accrued and unpaid amounts due hereunder, divided by the
         Set Price on (x) the date the Mandatory Prepayment Amount is demanded
         or otherwise due or (y) the date the Mandatory Prepayment Amount is
         paid in full, whichever is less, multiplied by the Closing Bid Price on
         (x) the date the Mandatory Prepayment Amount is demanded or otherwise
         due or (y) the date the Mandatory Prepayment Amount is paid in full,
         whichever is greater, and (ii) all other amounts, costs, expenses and
         liquidated damages due in respect of such Debentures.

                  "MONTHLY REDEMPTION" shall mean the redemption of the
         Debenture pursuant to Section 5(a) hereof.

                  "MONTHLY REDEMPTION AMOUNT" shall mean, as to a Monthly
         Redemption, $______________(3) in the aggregate among all Holders, or
         such lesser principal amount of the Debentures as is outstanding in the
         aggregate on the Monthly Redemption Date.

--------
(3)  1/24 of the original aggregate principal amount issued pursuant to the
     Purchase Agreement.

                                      -18-
<PAGE>

                  "MONTHLY REDEMPTION DATE" means the 1st of each month,
         commencing on the earlier of the first such date after the Effective
         date and September 1, 2003 and ending upon the full redemption of this
         Debenture.

                  "OPTIONAL REDEMPTION AMOUNT" shall mean the sum of (i) 120% of
         the principal amount of the Debenture then outstanding and (ii) all
         liquidated damages and other amounts due in respect of the Debentures.

                  "OPTIONAL REDEMPTION DATE" shall have the meaning set forth in
         Section 5(a).

                  "ORIGINAL ISSUE DATE" shall mean the date of the first
         issuance of the Debentures regardless of the number of transfers of any
         Debenture and regardless of the number of instruments which may be
         issued to evidence such Debenture.

                  "PERSON" means a corporation, an association, a partnership,
         organization, a business, an individual, a government or political
         subdivision thereof or a governmental agency.

                  "PRINCIPAL MARKET" shall have the meaning set forth in Section
         3(a)(v).

                  "PURCHASE AGREEMENT" means the Securities Purchase Agreement,
         dated as of the Original Issue Date, to which the Company and the
         original Holder are parties, as amended, modified or supplemented from
         time to time in accordance with its terms.

                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
         Agreement, dated as of the Original Issue Date, to which the Company
         and the original Holder are parties, as amended, modified or
         supplemented from time to time in accordance with its terms.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.

                  "SET PRICE" shall have the meaning set forth in Section
         4(c)(i).

                  "SHAREHOLDER APPROVAL" shall have the meaning set forth in
         Section 4(a)(iii).

                  "TRADING DAY" means (a) a day on which the shares of Common
         Stock are traded on a Principal Market on which the shares of Common
         Stock are then listed or quoted, or (b) if the shares of Common Stock
         are not quoted on a Principal Market, a day on which the shares of
         Common Stock are quoted in the over-the-counter market as reported by
         the National Quotation Bureau Incorporated (or any similar organization
         or agency succeeding its functions of reporting prices); PROVIDED, that
         in the event that the shares of Common Stock are not listed or quoted
         as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
         Business Day.

                                      -19-
<PAGE>

                  "TRANSACTION DOCUMENTS" shall have the meaning set forth in
         the Purchase Agreement.

                  "UNDERLYING SHARES" means the shares of Common Stock issuable
         upon conversion of Debentures.

                  "UNDERLYING SHARES REGISTRATION STATEMENT" means a
         registration statement meeting the requirements set forth in the
         Registration Rights Agreement, covering among other things the resale
         of the Underlying Shares and naming the Holder as a "selling
         stockholder" thereunder.

      SECTION 7. 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, and liquidated damages (if any) on,
this Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. THIS DEBENTURE IS A DIRECT OBLIGATION OF THE COMPANY AND IS SECURED
BY A FIRST PRIORITY SECURITY INTEREST IN ALL OF THE ASSETS OF THE COMPANY AND
ITS SUBSIDIARIES AS SET FORTH IN THOSE CERTAIN SECURITY AGREEMENTS, DATED AS OF
APRIL 16, 2003, AMONG THE ORIGINAL PURCHASERS SIGNATORY THERETO AND EACH OF THE
COMPANY AND THE SUBSIDIARIES AND, WITH RESPECT TO VIRAGEN (SCOTLAND) LTD., A
FLOATING CHARGE IN ALL OF THE ASSETS OF VIRAGEN (SCOTLAND) LTD. AS SET FORTH IN
THAT CERTAIN BOND AND FLOATING CHARGE, DATED AS OF JANUARY 31, 2003. This
Debenture ranks PARI PASSU with all other Debentures now or hereafter issued
under the terms set forth herein. As long as there are Debentures outstanding,
the Company shall not and shall cause it subsidiaries not to, without the
consent of the Holders, (a) amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the Holders; (b)
repay, repurchase or offer to repay, repurchase or otherwise acquire shares of
its Common Stock or other equity securities other than as to the Underlying
Shares to the extent permitted or required under the Transaction Documents; or
(c) enter into any agreement with respect to any of the foregoing.

      SECTION 8. If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Debenture, or in lieu of or in
substitution for a lost, stolen or destroyed Debenture, a new Debenture for the
principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such
Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

      SECTION 9. The Company will not and will not permit any of its
subsidiaries to, directly or indirectly, enter into, create, incur, assume or
suffer to exist any indebtedness of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom that is senior in any respect to the Company's
obligations under the Debentures.

                                      -20-
<PAGE>

      SECTION 10. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "NEW
YORK COURTS"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

      SECTION 11. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

      SECTION 12. 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 amount deemed interest due hereunder shall violate applicable laws
governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the

                                      -21-
<PAGE>

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 deemed interest on the Debentures as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

      SECTION 13. 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.

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

                                      -22-
<PAGE>

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

                          VIRAGEN, INC.

                          By:
                              ------------------------------------------------
                              Dennis W. Healey, Executive Vice President & CFO

                                      -23-
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

The undersigned hereby elects to convert principal of the Convertible Debenture
of Viragen, Inc., (the "Company") due on September 1, 2005, into shares of
common stock, $0.01 par value per share (the "Common Stock"), of the Company
according to the conditions hereof, as of the date written below. If shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.

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

Conversion calculations:
                                Date to Effect Conversion:

                                Principal Amount of Debentures to be Converted

                                Number of shares of Common Stock to be Issued:

                                Applicable Set Price:

                                Signature:

                                Name:

                                Address:

                                      -24-
<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

Convertible Secured Debentures due on September 1, 2005, in the aggregate
principal amount of $____________ issued by Viragen, Inc. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

                                     Dated:

<TABLE>
<CAPTION>
======================== ====================== ====================== ====================== ======================
                                                 Aggregate Principal
                                                  Amount Remaining
  Date of Conversion                                Subsequent to
 (or for first entry,                                Conversion
 Original Issue Date)    Amount of Conversion       (or original          Company Attest
                                                  Principal Amount)
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                       <C>                   <C>                     <C>                    <C>

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

------------------------ ---------------------- ---------------------- ---------------------- ----------------------
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

======================== ====================== ====================== ====================== ======================

</TABLE>

                                      -25-

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