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NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD 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.

GLOBAL ENERGY, INC.

AMENDED AND RESTATED SECURED CONVERTIBLE DEBENTURE

Issuance Date: July 10, 2007 Original Principal Amount:    $500,000 No. GEYI-1-1
 

                         FOR VALUE RECEIVED, GLOBAL ENERGY, INC., a Nevada
corporation (the "Company"), hereby promises to pay to the order of CORNELL
CAPITAL PARTNERS, L.P. or registered assigns (the "Holder") the amount set out
above as the Original Principal Amount (as reduced pursuant to the terms hereof
pursuant to redemption, conversion or otherwise, the "Principal") when due,
whether upon the Maturity Date (as defined below), on any Installment Date with
respect to the Installment Amount due on such Installment Date (each, as defined
herein), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest ("Interest") on any outstanding Principal
at the applicable Interest Rate from the date set out above as the Issuance Date
(the "Issuance Date") until the same becomes due and payable, whether upon an
Interest Date (as defined below), any Installment Date or the Maturity Date or
acceleration, conversion, redemption or otherwise (in each case in accordance
with the terms hereof). This Secured Convertible Debenture (including all
Secured Convertible Debentures issued in exchange, transfer or replacement
hereof, this "Debenture") is one of an issue of Secured Convertible Debentures
issued pursuant to the Securities Purchase Agreement (collectively, the
"Debentures" and such other Senior Convertible Debentures, the "Other
Debentures"). Certain capitalized terms used herein are defined in Section 17.

                    (1)      GENERAL TERMS

                              (a)      Payment of Principal. On each Installment
Date, the Company shall pay to the Holder an amount equal to the Installment
Amount due on such Installment Date in accordance with Section 3. On the
Maturity Date, the Company shall pay to the Holder an amount in cash
representing all outstanding Principal, accrued and unpaid Interest. The
"Maturity Date" shall be October 31, 2010, as may be extended at the option of
the Holder (i) in the event that, and for so long as, an Event of Default (as
defined below) shall have occurred and

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be continuing on the Maturity Date (as may be extended pursuant to this Section
1) or any event shall have occurred and be continuing on the Maturity Date (as
may be extended pursuant to this Section 1) that with the passage of time and
the failure to cure would result in an Event of Default. Other than as
specifically permitted by this Debenture, the Company may not prepay or redeem
any portion of the outstanding Principal without the prior written consent of
the Holder.

                              (b)      Interest. Interest shall accrue on the
outstanding principal balance hereof at an annual rate equal to ten percent
(10%) (“Interest Rate”). Interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed, to the extent permitted by
applicable law. Interest hereunder shall be paid on each Interest Payment Date
and on the Maturity Date (or sooner as provided herein) to the Holder or its
assignee in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of Debentures at the option of the
Company in cash, or, provided that the Equity Conditions are then satisfied
converted into Common Stock at the Company Conversion Price as of the date paid.

                              (c)      Security. The Debenture is secured by a
security interest in all of the assets of the Company as evidenced by the
security agreement of even date herewith (the “Security Agreement”).

                    (2)      EVENTS OF DEFAULT.

                              (a)      An “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)      the Company's failure to pay to
the Holder any amount of Principal, Interest, or other amounts when and as due
under this Debenture (including, without limitation, the Company's failure to
pay any redemption payments or amounts hereunder) or any other Transaction
Document;

                                        (ii)      The Company or any subsidiary
of the Company shall commence, or there shall be commenced against the Company
or any subsidiary of the Company under any applicable bankruptcy or insolvency
laws as now or hereafter in effect or any successor thereto, or the Company or
any subsidiary of 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 of the Company or
there is commenced against the Company or any subsidiary of the Company any such
bankruptcy, insolvency or other proceeding which remains undismissed for a
period of 61 days; or the Company or any subsidiary of the Company is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Company or any
subsidiary of the Company suffers any appointment of any custodian, private or
court appointed receiver or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of sixty one (61)
days; or the Company or any subsidiary of the Company makes a general assignment
for the benefit of creditors; or the Company or any subsidiary of the

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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 of the Company 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 of the Company 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 of the Company for the purpose of effecting any of the foregoing;

                                        (iii)      The Company or any subsidiary
of 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 or
any subsidiary 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;

                                        (iv)      If the Common Stock is quoted
or listed for trading on any of the following and it ceases to be so quoted or
listed for trading and shall not again be quoted or listed for trading on any
Primary Market within five (5) Trading Days of such delisting: (a) the American
Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d)
the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each,
a “Primary Market”);

                                        (v)      The Company or any subsidiary
of the Company shall be a party to any Change of Control Transaction (as defined
in Section 6) unless in connection with such Change of Control Transaction this
Debenture is retired;

                                        (vi)      The Company shall fail to file
the Underlying Shares Registration Statement with the Commission, or the
Underlying Shares Registration Statement shall not have been declared effective
by the Commission, in each case within thirty (30) days of the periods set forth
in the Registration Rights Agreement (“Registration Rights Agreement”) dated
July 6, 2007 among the Company and each Buyer listed on Schedule I attached
thereto, or, while the Underlying Shares Registration Statement is required to
be maintained effective pursuant to the terms of the Investor Registration
Rights Agreement, the effectiveness of the Underlying Shares Registration
Statement lapses for any reason (including, without limitation, the issuance of
a stop order) or is unavailable to the Holder for sale of all of the Holder’s
Registrable Securities (as defined in the Investor Registration Rights
Agreement) in accordance with the terms of the Investor Registration Rights
Agreement, and such lapse or unavailability continues for a period of more than
ten (10) consecutive Trading Days or for more than an aggregate of twenty (20)
days in any 365-day period (which need not be consecutive);

                                        (vii)      the Company's (A) failure to
cure a Conversion Failure by delivery of the required number of shares of Common
Stock within five (5) Business Days after the applicable Conversion Failure or
(B) notice, written or oral, to any holder of the Debentures, including by way
of public announcement, at any time, of its intention not to comply with a

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request for conversion of any Debentures into shares of Common Stock that is
tendered in accordance with the provisions of the Debentures, other than
pursuant to Section 4(c);

                                        (viii)      The Company shall fail for
any reason to deliver the payment in cash pursuant to a Buy-In (as defined
herein) within three (3) Business Days after such payment is due;

                                        (ix)      The Company shall fail to
observe or perform any other covenant, agreement or warranty contained in, or
otherwise commit any breach or default of any provision of this Debenture
(except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any
Transaction Document (as defined in Section 16) which is not cured within the
time prescribed.

                                        (x)      any Event of Default (as
defined in the Other Debentures) occurs with respect to any Other Debentures.

                              (b)      During the time that any portion of this
Debenture is outstanding, if any Event of Default has occurred, the full unpaid
Principal amount of this Debenture, together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become at the
Holder's election, immediately due and payable in cash; provided however, the
Holder may request (but shall have no obligation to request) payment of such
amounts in Common Stock of the Company. Furthermore, in addition to any other
remedies, the Holder shall have the right (but not the obligation) to convert
this Debenture at any time after (x) an Event of Default or (y) the Maturity
Date at the Company Conversion Price. The Holder need not provide and the
Company hereby waives any presentment, demand, protest or other notice of any
kind, (other than required notice of conversion) and the Holder may immediately
and without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable law.
Such declaration may be rescinded and annulled by Holder at any time prior to
payment hereunder. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

                    (3)      COMPANY INSTALLMENT CONVERSION OR REDEMPTION.

                              (a)      General. On each applicable Installment
Date, the Company shall pay to the Holder of this Debenture the Installment
Amount due on such date by converting such Installment Amount into shares of
Common Stock of the Company, provided that there is not then an Equity
Conditions Failure, in accordance with this Section 3 (a "Company Conversion");
provided, however, that the Company may, at its option following notice to the
Holder, redeem such Installment Amount (a "Company Redemption") or by any
combination of a Company Conversion and a Company Redemption so long as all of
the outstanding applicable Installment Amount shall be converted and/or redeemed
by the Company on the applicable Installment Date, subject to the provisions of
this Section 3. On or prior to the date which is the fifth (5th) Trading Day
prior to each Installment Date (each, an "Installment Notice Due Date"), the
Company shall deliver written notice (each, a "Company Installment Notice"), to
the Holder which Company Installment Notice shall (i) either (A) confirm that
the applicable Installment Amount of the Holder’s Debenture shall be converted
in whole pursuant to a Company Conversion or (B) (1) state that the Company
elects to redeem, or is required to redeem in accordance with the

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provisions of the Debenture, in whole or in part, the applicable Installment
Amount pursuant to a Company Redemption and (2) specify the portion (including
Interest) which the Company elects or is required to redeem pursuant to a
Company Redemption (such amount to be redeemed, the "Company Redemption Amount")
and the portion (including Interest), if any, that the Company elects to convert
pursuant to a Company Conversion (such amount a "Company Conversion Amount")
which amounts when added together, must equal the applicable Installment Amount
and (ii) if the Installment Amount is to be paid, in whole or in part, pursuant
to a Company Conversion, certify that there is not then an Equity Conditions
Failure as of the date of the Company Installment Notice. Each Company
Installment Notice shall be irrevocable. If the Company does not timely deliver
a Company Installment Notice in accordance with this Section 3, then the Company
shall be deemed to have delivered an irrevocable Company Installment Notice
confirming a Company Conversion and shall be deemed to have certified that there
is not then an Equity Conditions Failure in connection with any such conversion.
The Company Conversion Amount (whether set forth in the Company Installment
Notice or by operation of this Section 3) shall be converted in accordance with
Section 3(b) and the Company Redemption Amount shall be paid in accordance with
Section 3(c).

                              (b)      Mechanics of Company Conversion. Subject
to Section 3(d), if the Company delivers a Company Installment Notice and
elects, or is deemed to have elected, in whole or in part, a Company Conversion
in accordance with Section 3(a), then the applicable Company Conversion Amount,
if any, which remains outstanding as of the applicable Installment Date shall be
converted as of the applicable Installment Date by converting on such
Installment Date such Company Conversion Amount at the Company Conversion Price;
provided that the Equity Conditions are then satisfied (or waived in writing by
the Holder) on such Installment Date and that the Holder Pro Rata Amount of the
Installment Volume Limitation is not exceeded (unless waived in writing by the
Holder). If the Equity Conditions are not satisfied (or waived in writing by the
Holder) on such Installment Date or the Holder Pro Rata Amount of the
Installment Volume Limitation is exceeded, then at the option of the Holder
designated in writing to the Company, the Holder may require the Company to do
any one or more of the following: (i) the Company shall redeem all or any part
of the unconverted Company Conversion Amount designated by the Holder (such
designated amount is referred to as the "Unconverted Redemption Amount") and the
Company shall pay to the Holder within three (3) days of such Installment Date,
by wire transfer of immediately available funds, an amount in cash equal to such
Unconverted Redemption Amount, and/or (ii) the Company Conversion shall be null
and void with respect to all or any part of the unconverted Company Conversion
Amount designated by the Holder and the Holder shall be entitled to all the
rights of a holder of this Debenture with respect to such designated amount of
the Company Conversion Amount; provided, however, that the Conversion Price for
such unconverted Company Conversion Amount shall thereafter be adjusted to equal
the lesser of (A) the Company Conversion Price as in effect on the date on which
the Holder voided the Company Conversion and (B) the Company Conversion Price as
in effect on the date on which the Holder delivers a Conversion Notice relating
thereto. If the Company fails to redeem any Unconverted Redemption Amount by the
third (3rd) day following the applicable Installment Date, then the Holder shall
have all rights under this Debenture (including, without limitation, such
failure constituting an Event of Default). Notwithstanding anything to the
contrary in this Section 3(b), but subject to Section 4(c)(i), until the Company
delivers Common Stock representing the Company Conversion Amount to the Holder,
the Company Conversion Amount may be converted by the Holder into

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Common Stock pursuant to Section 4. In the event that the Holder elects to
convert the Company Conversion Amount prior to the applicable Installment Date
as set forth in the immediately preceding sentence, the Company Conversion
Amount so converted shall be deducted from the Installment Amounts relating to
the applicable Installment Dates as set forth in the applicable Conversion
Notice.

                              (c)      Mechanics of Company Redemption. If the
Company elects a Company Redemption in accordance with Section 3(a), then the
Company Redemption Amount, if any, which is to be paid to the Holder on the
applicable Installment Date shall be redeemed by the Company on such Installment
Date, and the Company shall pay to the Holder on such Installment Date, by wire
transfer of immediately available funds, in an amount in cash (the "Company
Installment Redemption Price") equal to the Principal portion of the Company
Redemption Amount plus accrued and unpaid Interest. If the Company fails to
redeem the Company Redemption Amount on the applicable Installment Date by
payment of the Company Installment Redemption Price on such date, then at the
option of the Holder designated in writing to the Company (any such designation,
"Conversion Notice" for purposes of this Debenture), the Holder may require the
Company to convert all or any part of the Company Redemption Amount into shares
of Common Stock of the Company at the Company Conversion Price. Conversions
required by this Section 3(c) shall be made in accordance with the provisions of
Section 4(b). Notwithstanding anything to the contrary in this Section 3(c), but
subject to Section 4(c)(i), until the Company Installment Redemption Price
(together with any interest thereon) is paid in full, the Company Redemption
Amount (together with any interest thereon) may be converted, in whole or in
part, by the Holder into Common Stock pursuant to Section 4. In the event the
Holder elects to convert all or any portion of the Company Redemption Amount
prior to the applicable Installment Date as set forth in the immediately
preceding sentence, the Company Redemption Amount so converted shall be deducted
from the Installment Amounts relating to the applicable Installment Dates as set
forth in the applicable Conversion Notice.

                              (d)      Deferred Installment Amount.
Notwithstanding any provision of this Section 3 to the contrary, the Holder may,
at its option and in its sole discretion, deliver a written notice to the
Company at least two (2) days prior to any Installment Notice Due Date electing
to have the payment of all or any portion of an Installment Amount payable on
the next Installment Date deferred to the Maturity Date. Any amount deferred to
the Maturity Date pursuant to this Section 3(d) shall continue to accrue
Interest through the Maturity Date.

                              (e)      Cancellation of Installment Amount.
Notwithstanding any provision of this Section 3 to the contrary, in the event
that the Volume Weighted Average Price of the Common Stock equals or exceeds the
applicable Conversion Price for each of the five (5) consecutive Trading Days
immediately preceding the Installment Notice Due Date and no Event of Default
has occurred then the Installment Amount payable on such Installment Date shall
be deferred to the Maturity Date. Any amount deferred to the Maturity Date
pursuant to this Section 3(e) shall continue to accrue Interest through the
Maturity Date.

                              (f)      Company’s Additional Cash Redemption. The
Company at its option shall have the right to redeem (“Optional Redemption”) a
portion or all amounts outstanding under this Debenture in addition to any
Installment Amount prior to the Maturity Date provided that as of the date of
the Holder’s receipt of a Redemption Notice (as defined

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herein) (i) the Closing Bid Price is less than the Conversion Price, (ii) the
Underlying Shares Registration Statement is effective, and (iii) no Event of
Default has occurred. The Company shall pay an amount equal to the principal
amount being redeemed plus a redemption premium (“Redemption Premium”) equal to
twenty percent (20%) of the Principal amount being redeemed, and accrued
Interest, (collectively referred to as the “Company Additional Redemption
Amount”). In order to make a redemption pursuant to this Section, the Company
shall first provide written notice to the Holder of its intention to make a
redemption (the “Redemption Notice”) setting forth the amount of Principal it
desires to redeem. After receipt of the Redemption Notice the Holder shall have
three (3) Business Days to elect to convert all or any portion of this
Debenture, subject to the limitations set forth in Section 4(b). On the fourth
(4th) Business Day after the Redemption Notice, the Company shall deliver to the
Holder the Company Additional Redemption Amount with respect to the Principal
amount redeemed after giving effect to conversions effected during the three (3)
Business Day period.

                    (4)      CONVERSION OF DEBENTURE. This Debenture shall be
convertible into shares of the Company's Common Stock, on the terms and
conditions set forth in this Section 4.

                              (a)      Conversion Right. Subject to the
provisions of Section 4(c), at any time or times on or after the Issuance Date,
the Holder shall be entitled to convert any portion of the outstanding and
unpaid Conversion Amount (as defined below) into fully paid and nonassessable
shares of Common Stock in accordance with Section 4(b), at the Conversion Rate
(as defined below). The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to this Section 4(a) shall be
determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(the "Conversion Rate"). The Company shall not issue any fraction of a share of
Common Stock upon any conversion. If the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such fraction
of a share of Common Stock up to the nearest whole share. The Company shall pay
any and all transfer, stamp and similar taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any Conversion
Amount.

                                        (i)      "Conversion Amount" means the
portion of the Principal and accrued Interest to be converted, redeemed or
otherwise with respect to which this determination is being made.

                                        (ii)      "Conversion Price" means, as
of any Conversion Date (as defined below) or other date of determination, $2.20,
subject to adjustment as provided herein.

                              (b)      Mechanics of Conversion.

                                        (i)      Optional Conversion. To convert
any Conversion Amount into shares of Common Stock on any date (a "Conversion
Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for
receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an
executed notice of conversion in the form attached hereto as Exhibit I (the
"Conversion Notice") to the Company and (B) if required by Section 4(b)(iv),
surrender this Debenture to a nationally recognized overnight delivery service
for delivery to the Company (or an indemnification undertaking reasonably
satisfactory to the Company with respect to this

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Debenture in the case of its loss, theft or destruction). On or before the third
Business Day following the date of receipt of a Conversion Notice (the "Share
Delivery Date"), the Company shall (X) if legends are not required to be placed
on certificates of Common Stock pursuant to the Securities Purchase Agreement
and provided that the Transfer Agent is participating in the Depository Trust
Company's ("DTC") Fast Automated Securities Transfer Program, credit such
aggregate number of shares of Common Stock to which the Holder shall be entitled
to the Holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number of shares
of Common Stock to which the Holder shall be entitled which certificates shall
not bear any restrictive legends unless required pursuant to Section 2(g) of the
Securities Purchase Agreement. If this Debenture is physically surrendered for
conversion and the outstanding Principal of this Debenture is greater than the
Principal portion of the Conversion Amount being converted, then the Company
shall as soon as practicable and in no event later than three (3) Business Days
after receipt of this Debenture and at its own expense, issue and deliver to the
holder a new Debenture representing the outstanding Principal not converted. The
Person or Persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Debenture shall be treated for all purposes as the record
holder or holders of such shares of Common Stock upon the transmission of a
Conversion Notice.

                                        (ii)      Company's Failure to Timely
Convert. If within three (3) Trading Days after the Company's receipt of the
facsimile copy of a Conversion Notice the Company shall fail to issue and
deliver a certificate to the Holder or credit the Holder's balance account with
DTC for the number of shares of Common Stock to which the Holder is entitled
upon such holder's conversion of any Conversion Amount (a "Conversion Failure"),
and if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by
the Holder of Common Stock issuable upon such conversion that the Holder
anticipated receiving from the Company (a "Buy-In"), then the Company shall,
within three (3) Business Days after the Holder's request and in the Holder's
discretion, either (i) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions and other out of pocket
expenses, if any) for the shares of Common Stock so purchased (the "Buy-In
Price"), at which point the Company's obligation to deliver such certificate
(and to issue such Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates representing
such Common Stock and pay cash to the Holder in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of shares of
Common Stock, times (B) the Closing Bid Price on the Conversion Date.

                                        (iii)      Book-Entry. Notwithstanding
anything to the contrary set forth herein, upon conversion of any portion of
this Debenture in accordance with the terms hereof, the Holder shall not be
required to physically surrender this Debenture to the Company unless (A) the
full Conversion Amount represented by this Debenture is being converted or (B)
the Holder has provided the Company with prior written notice (which notice may
be included in a Conversion Notice) requesting reissuance of this Debenture upon
physical surrender of this Debenture. The Holder and the Company shall maintain
records showing the Principal and Interest converted and the dates of such
conversions or shall use such other method, reasonably

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satisfactory to the Holder and the Company, so as not to require physical
surrender of this Debenture upon conversion.

                              (c)      Limitations on Conversions.

                                        (i)      Beneficial Ownership. The
Company shall not effect any conversions of this Debenture and the Holder shall
not have the right to convert any portion of this Debenture or receive shares of
Common Stock as payment of interest hereunder to the extent that after giving
effect to such conversion or receipt of such interest payment, the Holder,
together with any affiliate thereof, would beneficially own (as determined in
accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 4.99% of the number of shares of Common Stock
outstanding immediately after giving effect to such conversion or receipt of
shares as payment of interest. Since the Holder will not be obligated to report
to the Company the number of shares of Common Stock it may hold at the time of a
conversion hereunder, unless the conversion at issue would result in the
issuance of shares of Common Stock in excess of 4.99% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder shall have
the authority and obligation to determine whether the restriction contained in
this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of this
Debenture is convertible shall be the responsibility and obligation of the
Holder. If the Holder has delivered a Conversion Notice for a principal amount
of this Debenture that, without regard to any other shares that the Holder or
its affiliates may beneficially own, would result in the issuance in excess of
the permitted amount hereunder, the Company shall notify the Holder of this fact
and shall honor the conversion for the maximum principal amount permitted to be
converted on such Conversion Date in accordance with Section 4(a) and, any
principal amount tendered for conversion in excess of the permitted amount
hereunder shall remain outstanding under this Debenture. The provisions of this
Section may be waived by a Holder (but only as to itself and not to any other
Holder) upon not less than 65 days prior notice to the Company. Other Holders
shall be unaffected by any such waiver.

                              (d)      Other Provisions.

                                        (i)      The Company shall at all times
reserve and keep available out of its authorized Common Stock the full number of
shares of Common Stock issuable upon conversion of all outstanding amounts under
this Debenture; and within three (3) Business Days following the receipt by the
Company of a Holder's notice that such minimum number of Underlying Shares is
not so reserved, the Company shall promptly reserve a sufficient number of
shares of Common Stock to comply with such requirement.

                                        (ii)      All calculations under this
Section 4 shall be rounded to the nearest $0.0001 or whole share.

                                        (iii)      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
this Debenture and payment of interest on this Debenture, each as herein
provided, free from preemptive rights or any other actual contingent purchase
rights of

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persons other than the Holder, 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 this Debenture or in the Transaction
Documents) be issuable (taking into account the adjustments and restrictions set
forth herein) upon the conversion of the outstanding principal amount of this
Debenture and payment of interest hereunder. The Company covenants that all
shares of Common Stock that shall be so issuable shall, upon issue, be duly 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.

                                        (iv)      Nothing herein shall limit a
Holder's right to pursue actual damages or declare an Event of Default pursuant
to Section 2 herein for the Company 's failure to deliver certificates
representing shares of Common Stock upon conversion 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, in each case without the need to post a
bond or provide other security. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.

                    (5)      Adjustments to Conversion Price

                              (a)      Adjustment of Conversion Price upon
Issuance of Common Stock. If the Company, at any time while this Debenture is
outstanding, issues or sells, or in accordance with this Section 5(a) is deemed
to have issued or sold, any shares of Common Stock, excluding shares of Common
Stock deemed to have been issued or sold by the Company in connection with any
Excluded Securities, for a consideration per share (the “New Issuance Price”)
less than a price equal to the Conversion Price in effect immediately prior to
such issue or sale (such price the "Applicable Price") (the foregoing a
"Dilutive Issuance"), then immediately after such Dilutive Issuance the
Conversion Price then in effect shall be reduced to an amount equal to the New
Issuance Price. For purposes of determining the adjusted Conversion Price under
this Section 5(a), the following shall be applicable:

                                        (i)      Issuance of Options. If the
Company in any manner grants or sells any Options and the lowest price per share
for which one share of Common Stock is issuable upon the exercise of any such
Option or upon conversion or exchange or exercise of any Convertible Securities
issuable upon exercise of such Option is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the granting or sale of such
Option for such price per share. For purposes of this Section, the "lowest price
per share for which one share of Common Stock is issuable upon the exercise of
any such Option or upon conversion or exchange or exercise of any Convertible
Securities issuable upon exercise of such Option" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon granting or sale of
the Option, upon exercise of the Option and upon conversion or exchange or
exercise of any Convertible Security issuable upon exercise of such Option. No
further adjustment of the Conversion Price shall be made upon the actual
issuance of such share of Common Stock or of such Convertible Securities

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upon the exercise of such Options or upon the actual issuance of such Common
Stock upon conversion or exchange or exercise of such Convertible Securities.

                                        (ii)      Issuance of Convertible
Securities. If the Company in any manner issues or sells any Convertible
Securities and the lowest price per share for which one share of Common Stock is
issuable upon such conversion or exchange or exercise thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such Convertible Securities for such price per share. For
the purposes of this Section, the "lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange or exercise" shall be
equal to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon the
issuance or sale of the Convertible Security and upon the conversion or exchange
or exercise of such Convertible Security. No further adjustment of the
Conversion Price shall be made upon the actual issuance of such share of Common
Stock upon conversion or exchange or exercise of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustment of the Conversion Price had been or
are to be made pursuant to other provisions of this Section, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.

                                        (iii)      Change in Option Price or
Rate of Conversion. If the purchase price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exchange
or exercise of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable or exercisable for Common Stock
changes at any time, the Conversion Price in effect at the time of such change
shall be adjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities provided for such changed
purchase price, additional consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold. For purposes of this
Section, if the terms of any Option or Convertible Security that was outstanding
as of the Issuance Date are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change. No adjustment shall be
made if such adjustment would result in an increase of the Conversion Price then
in effect.

                                        (iv)      Calculation of Consideration
Received. In case any Option is issued in connection with the issue or sale of
other securities of the Company, together comprising one integrated transaction
in which no specific consideration is allocated to such Options by the parties
thereto, the Options will be deemed to have been issued for the difference of
(x) the aggregate fair market value of such Options and other securities issued
or sold in such integrated transaction, less (y) the fair market value of the
securities other than such Option, issued or sold in such transaction and the
other securities issued or sold in such integrated transaction will be deemed to
have been issued or sold for the balance of the consideration received by the
Company. If any Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the gross amount raised by the Company; provided,
however, that such gross amount is not greater than 110% of the net amount
received by the Company therefor. If any

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Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration, except
where such consideration consists of securities, in which case the amount of
consideration received by the Company will be the Closing Bid Price of such
securities on the date of receipt. If any Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such consideration will be
determined within five (5) Business Days after the tenth (10th) day following
the Valuation Event by an independent, reputable appraiser jointly selected by
the Company and the Holder. The determination of such appraiser shall be deemed
binding upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.

                                        (v)      Record Date. If the Company
takes a record of the holders of Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock, Options
or in Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date will be deemed to be
the date of the issue or sale of the Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

                              (b)      Adjustment of Conversion Price upon
Subdivision or Combination of Common Stock. If the Company, at any time while
this Debenture is outstanding, shall (a) 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
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.

                              (c)      Purchase Rights. If at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "Purchase Rights"), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete
conversion of this Debenture

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(without taking into account any limitations or restrictions on the
convertibility of this Debenture) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

                              (d)      Other Events. If any event occurs of the
type contemplated by the provisions of this Section 4 but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Debenture;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 5.

                              (e)      Other Corporate Events. In addition to
and not in substitution for any other rights hereunder, prior to the
consummation of any Fundamental Transaction pursuant to which holders of shares
of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a "Corporate Event"), the Company
shall make appropriate provision to insure that the Holder will thereafter have
the right to receive upon a conversion of this Debenture, at the Holder's
option, (i) in addition to the shares of Common Stock receivable upon such
conversion, such securities or other assets to which the Holder would have been
entitled with respect to such shares of Common Stock had such shares of Common
Stock been held by the Holder upon the consummation of such Corporate Event
(without taking into account any limitations or restrictions on the
convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Debenture initially been issued with
conversion rights for the form of such consideration (as opposed to shares of
Common Stock) at a conversion rate for such consideration commensurate with the
Conversion Rate. Provision made pursuant to the preceding sentence shall be in a
form and substance satisfactory to the Required Holders. The provisions of this
Section shall apply similarly and equally to successive Corporate Events and
shall be applied without regard to any limitations on the conversion or
redemption of this Debenture.

                              (f)      Whenever the Conversion Price is adjusted
pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a
notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.

                              (g)      In case of any (1) merger or
consolidation of the Company or any subsidiary of the Company with or into
another Person, or (2) sale by the Company or any subsidiary of the Company of
more than one-half of the assets of the Company in one or a series of related
transactions, a Holder shall have the right to (A) exercise any rights under
Section 2(b), (B) convert the aggregate amount of this Debenture then
outstanding into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and

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property as the shares of Common Stock into which such aggregate principal
amount of this Debenture could have been converted immediately prior to such
merger, consolidation or sales would have been entitled, or (C) in the case of a
merger or consolidation, require the surviving entity to issue to the Holder a
convertible Debenture with a principal amount equal to the aggregate principal
amount of this Debenture then held by such Holder, plus all accrued and unpaid
interest and other amounts owing thereon, which such newly issued convertible
Debenture shall have terms identical (including with respect to conversion) to
the terms of this Debenture, and shall be entitled to all of the rights and
privileges of the Holder of this Debenture set forth herein and the agreements
pursuant to which this Debentures were issued. In the case of clause (C), the
conversion price applicable for the newly issued shares of convertible preferred
stock or convertible Debentures shall be based upon the amount of securities,
cash and property that each share of Common Stock would receive in such
transaction and the Conversion Price in effect immediately prior to the
effectiveness or closing date for such transaction. The terms of any such
merger, sale or consolidation shall include such terms so as to continue to give
the Holder the right to receive the securities, cash and property set forth in
this Section upon any conversion or redemption following such event. This
provision shall similarly apply to successive such events.

                    (6)      REISSUANCE OF THIS DEBENTURE.

                              (a)      Transfer. If this Debenture is to be
transferred, the Holder shall surrender this Debenture to the Company, whereupon
the Company will, subject to the satisfaction of the transfer provisions of the
Securities Purchase Agreement, forthwith issue and deliver upon the order of the
Holder a new Debenture (in accordance with Section 6(d)), registered in the name
of the registered transferee or assignee, representing the outstanding Principal
being transferred by the Holder and, if less then the entire outstanding
Principal is being transferred, a new Debenture (in accordance with Section
6(d)) to the Holder representing the outstanding Principal not being
transferred. The Holder and any assignee, by acceptance of this Debenture,
acknowledge and agree that, by reason of the provisions of Section 4(b)(iii)
following conversion or redemption of any portion of this Debenture, the
outstanding Principal represented by this Debenture may be less than the
Principal stated on the face of this Debenture.

                              (b)      Lost, Stolen or Mutilated Debenture. Upon
receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Debenture, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the Holder to
the Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Debenture, the Company shall execute and deliver to the
Holder a new Debenture (in accordance with Section 6(d)) representing the
outstanding Principal.

                              (c)      Debenture Exchangeable for Different
Denominations. This Debenture is exchangeable, upon the surrender hereof by the
Holder at the principal office of the Company, for a new Debenture or Debentures
(in accordance with Section 6(d)) representing in the aggregate the outstanding
Principal of this Debenture, and each such new Debenture will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

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                              (d)      Issuance of New Debentures. Whenever the
Company is required to issue a new Debenture pursuant to the terms of this
Debenture, such new Debenture (i) shall be of like tenor with this Debenture,
(ii) shall represent, as indicated on the face of such new Debenture, the
Principal remaining outstanding (or in the case of a new Debenture being issued
pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder
which, when added to the principal represented by the other new Debentures
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Debenture immediately prior to such issuance of new
Debentures), (iii) shall have an issuance date, as indicated on the face of such
new Debenture, which is the same as the Issuance Date of this Debenture, (iv)
shall have the same rights and conditions as this Debenture, and (v) shall
represent accrued and unpaid Interest from the Issuance Date.

                    (7)      NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Trading Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

If to the Company, to: Migdal Aviv   7 Jabotinski Street   Ramat Gan, 52520  
Israel   Telephone:      011 972 3 5913952   Facsimile:         011 +972 9 955
0454     With a copy to: Clark Wilson LLP       800 – 885 West Georgia Street  
Vancouver, BC Canada   V6M 3R9   Attention: Bernard Pinsky  
Teephone:      604.687.5700   Facsimilie:       604.687.6314         If to the
Holder: Cornell Capital Partners, LP   101 Hudson Street, Suite 3700   Jersey
City, NJ 07303   Attention: Mark Angelo   Telephone:      (201) 985-8300

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With a copy to: David Gonzalez, Esq.   101 Hudson Street – Suite 3700   Jersey
City, NJ 07302   Telephone:      (201) 985-8300   Facsimile:        (201)
985-8266

          or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party three (3) Business Days prior to the
effectiveness of such change. Written confirmation of receipt (i) given by the
recipient of such notice, consent, waiver or other communication, (ii)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (iii) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

                    (8)      Except as expressly provided herein, no provision
of this Debenture shall alter or impair the obligations of the Company, which
are absolute and unconditional, to pay the principal of, interest and other
charges (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. As long as this Debenture is outstanding, the Company shall not and
shall cause their subsidiaries not to, without the consent of the Holder, (i)
amend its certificate of incorporation, bylaws or other charter documents so as
to adversely affect any rights of the Holder; (ii) 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 (iii) enter into any agreement
with respect to any of the foregoing.

                    (9)      This Debenture shall not entitle the Holder to any
of the rights of a stockholder of the Company, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive any
notice of, or to attend, meetings of stockholders or any other proceedings of
the Company, unless and to the extent converted into shares of Common Stock in
accordance with the terms hereof.

                    (10)      No indebtedness of the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. Without the Holder’s consent, the
Company will not and will not permit any of their 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
there from that is senior in any respect to the obligations of the Company under
this Debenture.

                    (11)      This Debenture shall be governed by and construed
in accordance with the laws of the State of New Jersey, without giving effect to
conflicts of laws thereof. Each of the parties consents to the jurisdiction of
the Superior Courts of the State of New Jersey sitting in

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Hudson County, New Jersey and the U.S. District Court for the District of New
Jersey sitting in Newark, New Jersey in connection with any dispute arising
under this Debenture and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens to the
bringing of any such proceeding in such jurisdictions.

                    (12)      If the Company fails to strictly comply with the
terms of this Debenture, then the Company shall reimburse the Holder promptly
for all fees, costs and expenses, including, without limitation, attorneys’ fees
and expenses incurred by the Holder in any action in connection with this
Debenture, including, without limitation, those incurred: (i) during any
workout, attempted workout, and/or in connection with the rendering of legal
advice as to the Holder’s rights, remedies and obligations, (ii) collecting any
sums which become due to the Holder, (iii) defending or prosecuting any
proceeding or any counterclaim to any proceeding or appeal; or (iv) the
protection, preservation or enforcement of any rights or remedies of the Holder.

                    (13)      Any waiver by 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 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.

                    (14)      If any provision of this Debenture is invalid,
illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. If it
shall be found that any interest or other amount deemed interest due hereunder
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 benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on this Debenture as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this indenture, and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefits or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or 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.

                    (15)      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.

                    (16)      THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION

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DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

                    (17)      CERTAIN DEFINITIONS For purposes of this
Debenture, the following terms shall have the following meanings:

                              (a) “Approved Stock Plan” means a stock option
plan that has been approved by the Board of Directors of the Company, pursuant
to which the Company’s securities may be issued only to any employee, officer,
or director for services provided to the Company.

                              (b)      "Bloomberg" means Bloomberg Financial
Markets.

                              (c)      “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 are authorized or required
by law or other government action to close.

                              (d)      “Change of Control Transaction” means the
occurrence of (a) an acquisition after the date hereof by an individual or legal
entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in
excess of fifty percent (50%) of the voting securities of the Company (except
that the acquisition of voting securities by the Holder or any other current
holder of convertible securities of the Company shall not constitute a Change of
Control Transaction for purposes hereof), (b) a replacement at one time or over
time of more than one-half of the members of the board of directors of the
Company which is not approved by a majority of those individuals who are members
of the board of directors on the date of such change (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 of such change), (c) the
merger, consolidation or sale of fifty percent (50%) or more of the assets of
the Company or any subsidiary of the Company in one or a series of related
transactions with or into another entity that is not a related entity to the
Company, provided however in the event the Company seeks to consummate a merger,
consolidation or sale of fifty percent (50%) or more of the assets of the
Company or any subsidiary of the Company in one or a series of related
transactions with or into another entity that is a related entity to the Company
the Company shall obtain the prior written consent of the Holder, or (d) 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 (a), (b)
or (c).

                              (e)      “Closing Bid Price” means the price per
share in the last reported trade of the Common Stock on a Primary Market or on
the exchange which the Common Stock is then listed as quoted by Bloomberg.

                              (f)      “Convertible Securities” means any stock
or securities (other than Options) directly or indirectly convertible into or
exercisable or exchangeable for Common Stock.

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                              (g)      “Commission” means the Securities and
Exchange Commission.

                              (h)      “Common Stock” means the common stock,
par value $.001, of the Company and stock of any other class into which such
shares may hereafter be changed or reclassified.

                              (i)      "Company Conversion Price" means, the
lower of (i) the applicable Conversion Price and (ii) that price which shall be
computed as ninety five percent (95%) of the lowest Volume Weighted Average
Price of the Common Stock during the fifteen (15) consecutive Trading Days
immediately preceding the applicable Installment Date. All such determinations
to be appropriately adjusted for any stock split, stock dividend, stock
combination or other similar transaction.

                              (j)      "Equity Conditions" means that each of
the following conditions is satisfied: (i) on each day during the period
beginning two (2) weeks prior to the applicable date of determination and ending
on and including the applicable date of determination (the "Equity Conditions
Measuring Period"), either (x) the Underlying Shares Registration Statement
filed pursuant to the Registration Rights Agreement shall be effective and
available for the resale of all applicable shares of Common Stock to be issued
in connection with the event requiring determination or (y) all applicable
shares of Common Stock to be issued in connection with the event requiring
determination shall be eligible for sale without restriction and without the
need for registration under any applicable federal or state securities laws;
(ii) on each day during the Equity Conditions Measuring Period, the Common Stock
is designated for quotation on the Principal Market and shall not have been
suspended from trading on such exchange or market nor shall delisting or
suspension by such exchange or market been threatened or pending either (A) in
writing by such exchange or market or (B) by falling below the then effective
minimum listing maintenance requirements of such exchange or market; (iii)
during the Equity Conditions Measuring Period, the Company shall have delivered
Conversion Shares upon conversion of the Debentures to the Holder on a timely
basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of
Common Stock to be issued in connection with the event requiring determination
may be issued in full without violating Section 4(c) hereof and the rules or
regulations of the Primary Market; (v) during the Equity Conditions Measuring
Period, there shall not have occurred either (A) an Event of Default or (B) an
event that with the passage of time or giving of notice would constitute an
Event of Default; and (vii) the Company shall have no knowledge of any fact that
would cause (x) the Registration Statements required pursuant to the
Registration Rights Agreement not to be effective and available for the resale
of all applicable shares of Common Stock to be issued in connection with the
event requiring determination or (y) any applicable shares of Common Stock to be
issued in connection with the event requiring determination not to be eligible
for sale without restriction and without the need for registration under any
applicable federal or state securities laws.

                              (k)      "Equity Conditions Failure" means that on
any applicable date the Equity Conditions have not been satisfied (or waived in
writing by the Holder).

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

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                              (m)      “Excluded Securities” means, (a) shares
issued or deemed to have been issued by the Company pursuant to an Approved
Stock Plan (b) shares of Common Stock issued or deemed to be issued by the
Company upon the conversion, exchange or exercise of any right, option,
obligation or security outstanding on the date prior to date of the Securities
Purchase Agreement, provided that the terms of such right, option, obligation or
security are not amended or otherwise modified on or after the date of the
Securities Purchase Agreement, and provided that the conversion price, exchange
price, exercise price or other purchase price is not reduced, adjusted or
otherwise modified and the number of shares of Common Stock issued or issuable
is not increased (whether by operation of, or in accordance with, the relevant
governing documents or otherwise) on or after the date of the Securities
Purchase Agreement, (c) shares issued in connection with any acquisition by the
Company, whether through an acquisition of stock or a merger of any business,
assets or technologies, leasing arrangement or any other transaction the primary
purpose of which is not to raise equity capital, and (d) the shares of Common
Stock issued or deemed to be issued by the Company upon conversion of this
Debenture.

                              (n)      "Holder Pro Rata Amount" means a fraction
(i) the numerator of which is the Original Principal Amount of this Debenture on
the Issuance Date and (ii) the denominator of which is the aggregate Purchase
Price (as defined in the Securities Purchase Agreement).

                              (o)      "Installment Amount" means with respect
to any Installment Date, the lesser of (A) the product of (i) $300,000,
multiplied by (ii) Holder Pro Rata Amount and (B) the Principal amount under
this Debenture as of such Installment Date, as any such Installment Amount may
be reduced pursuant to the terms of this Debenture, whether upon conversion,
redemption or otherwise, together with, in each case the sum of any accrued and
unpaid Interest with respect to such Principal amount. In the event the Holder
shall sell or otherwise transfer any portion of this Debenture, the transferee
shall be allocated a pro rata portion of the each unpaid Installment Amount
hereunder. In the event that the Holder is the holder of more than one Debenture
of this series of Secured Convertible Debentures issued pursuant to the
Securities Purchase Agreement, then the Holder shall have the right to allocate
the any Installment Amount due to it among the Debentures as it sees fit and
shall notify the Company of such allocation.

                              (p)      "Installment Date" means the first
Business Day on or after July 31, 2008, and continuing on the first Business Day
of each successive calendar month thereafter.

                              (q)      "Installment Volume Limitation" means 15%
of the aggregate dollar trading volume (as reported on Bloomberg) of the Common
Stock on the Principal Market over the forty (40) consecutive Trading Day period
ending on the Trading Day immediately preceding the applicable Installment
Notice Date.

                              (r)      “Interest Payment Date” shall mean the
first Business Day on or after each of: January 31, 2008, April 30, 2008, July
31, 2008, October 31, 2008, January 31, 2009, April 30, 2009, July 31, 2009,
October 31, 2009, January 31, 2010, and April 30, 2010.

                              (s)      “Options” means any rights, warrants or
options to subscribe for or purchase shares of Common Stock or Convertible
Securities.

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

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

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

                              (w)      “Securities Purchase Agreement” means the
Securities Purchase Agreement dated July 6, 2007 by and among the Company and
the Buyers listed on Schedule I attached thereto.

                              (x)      “Trading Day” means a day on which the
shares of Common Stock are quoted on the OTCBB or quoted or traded on such
Primary Market on which the shares of Common Stock are then quoted or listed;
provided, that in the event that the shares of Common Stock are not listed or
quoted, then Trading Day shall mean a Business Day.

                              (y)      “Transaction Documents” means the
Securities Purchase Agreement or any other agreement delivered in connection
with the Securities Purchase Agreement, including, without limitation, the
Security Agreement, the Irrevocable Transfer Agent Instructions, and the
Registration Rights Agreement.

                              (z)      “Underlying Shares” means the shares of
Common Stock issuable upon conversion of this Debenture or as payment of
interest in accordance with the terms hereof.

                              (aa)      “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.

                              (bb)      "Volume Weighted Average Price" means,
for any security as of any date, the daily dollar volume-weighted average price
for such security on the Primary Market as reported by Bloomberg through its
“Historical Prices – Px Table with Average Daily Volume” functions, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg,
the average of the highest closing bid price and the lowest closing ask price of
any of the market makers for such security as reported in the "pink sheets" by
Pink Sheets LLC.

                              (cc)      "Warrants" has the meaning ascribed to
such term in the Securities Purchase Agreement, and shall include all warrants
issued in exchange therefor or replacement thereof.

[Signature Page Follows]

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

[exhibit10-1x22x1.jpg]

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EXHIBIT I
CONVERSION NOTICE

(To be executed by the Holder in order to Convert the Debenture)

 

TO:

          The undersigned hereby irrevocably elects to convert $ of the
principal amount of Debenture No.GEYI-1-1 into Shares of Common Stock of GLOBAL
ENERGY, INC., according to the conditions stated therein, as of the Conversion
Date written below.

Conversion Date:       Conversion Amount to be   converted: $     Conversion
Price: $     Number of shares of Common   Stock to be issued:       Amount of
Debenture   Unconverted: $

 

Please issue the shares of Common Stock in the following name and to the
following address: Issue to:

 

Authorized Signature:       Name:       Title:       Broker DTC Participant
Code:       Account Number:  

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