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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.

 

SECURED CONVERTIBLE DEBENTURE

Issuance Date: December __, 2007 Original Principal Amount:        $1,000,000
No. GEYI-1-3  

          FOR VALUE RECEIVED, GLOBAL ENERGY, INC., a Nevada corporation (the
"Company"), hereby promises to pay to the order of YA GLOBAL INVESTMENTS, L.P.
(FORMERLY, 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

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the event that, and for so long as, an Event of Default (as defined below) shall
have occurred and 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 dated July 6, 2007 (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

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general assignment for the benefit of creditors; or the Company or any
subsidiary of 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 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,

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including by way of public announcement, at any time, of its intention not to
comply with a 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)

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state that the Company elects to redeem, or is required to redeem in accordance
with the 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. 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 (unless waived in
writing by the Holder), 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

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Amount to the Holder, the Company Conversion Amount may be converted by the
Holder into 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

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Date provided that as of the date of the Holder’s receipt of a Redemption Notice
(as defined 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

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an indemnification undertaking reasonably satisfactory to the Company with
respect to this 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

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Interest converted and the dates of such conversions or shall use such other
method, reasonably 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

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herein provided, free from preemptive rights or any other actual contingent
purchase rights of 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 Abba Hilel Street   Ramat Gan, 52520  
Israel   Telephone:      011 972 77 202 5444   Facsimile:         011 972 77 202
5445     With a copy to: Clark Wilson LLP   800 – 885 West Georgia Street  
Vancouver, BC Canada   V6M 3R9   Attention: Bernard Pinsky  
Telephone:      604.687.5700   Facsimile:         604.687.6314         If to the
Holder: YA Global Investments, L.P.   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.

20

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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.

[exhibit10-8x22x1.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-1-3 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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