exhibit_10-1.htm


    Exhibit
      10.1

    


    THIS
      NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THIS NOTE
      AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT
      REQUIRED

    


     

    Principal
      Amount: $250,000                                                                             Issue
      Date:  August 6, 2007

     

    CONVERTIBLE
      NOTE

     

    FOR
      VALUE
      RECEIVED, Accountabilities, Inc., a Delaware corporation (hereinafter called
      "Borrower"), hereby promises to pay to the order of North Atlantic Resources
      LTD
      (the "Holder") with an address at 425 Broad Hollow Road, Melville, New York
      11747, without demand, the sum of Two Hundred Fifty Thousand Dollars ($250,000)
      with simple interest accruing thereon, on the earlier of (i) February 16, 2008
      or (ii) the date that is five (5) days after the Borrower has received gross
      proceeds of $1,500,000 or more from a private placement of securities (the
      "Maturity Date").

     

    ARTICLE
      I

    


    GENERAL
      PROVISIONS

     

    1.1           Maturity.  Principal
      and accrued interest under this Note shall become due and payable on the
      Maturity Date.  Borrower may prepay this note upon not less than ten
      (10) days prior written notice to the Holder; provided, however, that Holder
      shall have the right to exercise the conversion rights set forth in Article
      II
      during such notice period.

     

    1.2           Conversion
      Privileges.  The conversion rights set forth in Article II shall
      remain in full force and effect immediately from the date hereof and until
      the
      Note is paid in full regardless of the occurrence of an Event of
      Default.  The Note shall be payable in full on the Maturity Date,
      unless previously converted into Common Stock in accordance with Article II
      hereof.

     

    1.3           Interest
      Rate.  Simple interest payable on this Note shall accrue at the
      annual rate of ten percent (10%) and be payable at the request of the Holder
      upon or after each conversion of principal pursuant to Article II, and on the
      Maturity Date, accelerated or otherwise, when the principal and remaining
      accrued but unpaid interest shall be due and payable, or sooner as described
      below.

     


    
      
        
        

      

      
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    ARTICLE
      II

     

    CONVERSION
      RIGHTS

     

    The
      Holder shall have the right to convert the principal due under this Note into
      Shares of the Borrower's Common Stock (“Common Stock”) as set forth
      below.

     

    2.1.           Conversion
      into the Borrower's Common Stock.

     

    (a)           The
      Holder shall have the right from and after the issuance of this Note and then
      at
      any time until this Note is fully paid, to convert any outstanding and unpaid
      principal portion of this Note, at the election of the Holder (the date of
      giving of such notice of conversion being a "Conversion Date") into fully paid
      and nonassessable shares of Common Stock, or any shares of capital stock of
      Borrower into which such Common Stock shall hereafter be changed or
      reclassified, at the conversion price as defined in Section 2.1(b) hereof (the
      "Conversion Price"), determined as provided herein.  Upon delivery to
      the Borrower of a completed Notice of Conversion, a form of which is annexed
      hereto, Borrower shall issue and deliver to the Holder within three (3) business
      days after the Conversion Date (such third day being the “Delivery Date”) that
      number of shares of Common Stock for the portion of the Note converted in
      accordance with the foregoing.  The number of shares of Common Stock
      to be issued upon each conversion of this Note shall be determined by dividing
      that portion of the principal of the Note to be converted by the Conversion
      Price.

     

    (b)           Subject
      to adjustment as provided in Section 2.1(e) hereof, the Conversion Price per
      share shall be equal to the greater of (i) 75% of the per share Market Price
      (as
      defined below) of the Common Stock on the trading day immediately preceding
      the
      applicable Conversion Date or (ii) the Per Share Enterprise Value (as defined
      below) as of the last day of the fiscal quarter which has been completed more
      than forty-five (45) days before the Conversion Date.

     

    (c)           For
      purposes of this Note, the term “Market Price” of the Common Stock means
      the average of the closing prices of such security’s sales on the principal
      securities exchanges on which such security may at the time be listed, or,
      if
      there has been no sales on any such exchange on any day, the average of the
      highest bid and lowest asked prices on all such exchanges at the end of such
      day, or, if on any day such security is not so listed, the average of the
      representative bid and asked prices quoted by the Nasdaq Stock Market as of
      4:00
      P.M., New York time, or, if on any day such security is not quoted by the Nasdaq
      Stock Market, the average of the highest bid and lowest asked prices on such
      day
      in the domestic over-the-counter market as reported by the NASD OTC Bulletin
      Board, or any similar successor organization, or in the pink sheets, in each
      such case averaged over a period of five days consisting of the day prior to
      the
      day as of which Market Price is being determined and the four consecutive
      business days prior to such day.  If at any time such security is not
      listed on any securities exchange or quoted by the Nasdaq Stock Market or the
      over-the-counter market, the Market Price shall be the fair value thereof
      determined in good faith by the Corporation’s Board of Directors.

     


    
      
        
        

      

      
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    (d)           For
      purposes of this Note, the term “Per Share Enterprise Value” means the
      amount determined by dividing (A) the sum of (i) the aggregate Market Price
      of
      all of the Borrower’s Common Stock outstanding immediately prior to the
      Conversion Date and (ii) the Company’s aggregate outstanding indebtedness
      immediately prior to the Conversion Date (the sum of (i) and (ii) to be referred
      to herein as the “Enterprise Value”), by the total number of shares of Common
      Stock outstanding immediately prior to the Conversion Date ; provided, however,
      that in no event shall the Enterprise Value be less than
      $18,000,000.

     

    (e)           The
      Conversion Price and number and kind of shares or other securities to be issued
      upon conversion determined pursuant to Section 2.1(a), shall be subject to
      adjustment from time to time upon the happening of certain events while this
      conversion right remains outstanding, as follows:

     

    A.           Merger,
      Sale of Assets, etc.  If the Borrower at any time shall consolidate
      with or merge into or sell or convey all or substantially all its assets to
      any
      other corporation, this Note, as to the unpaid principal portion thereof, shall
      thereafter be deemed to evidence the right to acquire upon conversion such
      number and kind of shares or other securities and property as would have been
      issuable or distributable on account of such consolidation, merger, sale or
      conveyance, upon or with respect to the securities subject to the conversion
      or
      purchase right immediately prior to such consolidation, merger, sale or
      conveyance.  The foregoing provision shall similarly apply to
      successive transactions of a similar nature by any such successor or
      purchaser.  Without limiting the generality of the foregoing, the
      provisions of this Section shall apply to such securities of such successor
      or
      purchaser after any such consolidation, merger, sale or conveyance.

     

    B.           Reclassification,
      etc.  If the Borrower at any time shall, by reclassification or
      otherwise, change the Common Stock into the same or a different number of
      securities of any class or classes that may be issued or outstanding, this
      Note,
      as to the unpaid principal portion thereof, shall thereafter be deemed to
      evidence the right to acquire upon conversion an adjusted number of such
      securities and kind of securities as would have been issuable as the result
      of
      such change with respect to the Common Stock immediately prior to such
      reclassification or other change.

     

    (f)           Whenever
      the Conversion Price and/or the number or kind of shares or other securities
      to
      be issued upon conversion are adjusted pursuant to Section 2.1(e) above, the
      Borrower shall promptly mail to the Holder a notice describing such adjustment
      and setting forth a statement of the facts requiring such
      adjustment.

     

    (g)           Borrower
      will reserve from its authorized and unissued Common Stock the number of shares
      of Common Stock as shall be sufficient to convert the full amount of this
      Note.  Borrower represents that upon issuance, such shares will be
      duly and validly issued, fully paid and non-assessable.  Borrower
      agrees that its issuance of this Note shall constitute full authority to its
      officers, agents, and transfer agents who are charged with the duty of executing
      and issuing stock certificates to execute and issue the necessary certificates
      for shares of Common Stock upon the conversion of this Note.

     


    
      
        
        

      

      
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    2.2           Method
      of Conversion.  This Note may be converted by the Holder in whole
      or in part as described in Section 2.1(a) hereof.  Upon partial
      conversion of this Note, a new Note containing the same date and provisions
      of
      this Note shall, at the request of the Holder, be issued by the Borrower to
      the
      Holder for the principal balance of this Note and interest which shall not
      have
      been converted or paid.

     

    ARTICLE
      III

     

    EVENT
      OF DEFAULT

     

    The
      occurrence of any of the following events of default ("Event of Default") shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below:

     

    3.1           Failure
      to Pay Principal or Interest.  The Borrower fails to pay any
      installment of principal, interest or other sum due under this Note when due
      and
      such failure continues for a period of ten (10) business days after the due
      date.

     

    3.2           Receiver
      or Trustee.  The Borrower shall make an assignment for the benefit
      of creditors, or apply for or consent to the appointment of a receiver or
      trustee for it or for a substantial part of its property or business; or such
      a
      receiver or trustee shall otherwise be appointed without the consent of the
      Borrower is not dismissed within sixty (60) days of appointment.

     

    3.3           Bankruptcy.  Bankruptcy,
      insolvency, reorganization or liquidation proceedings or other proceedings
      or
      relief under any bankruptcy law or any law, or the issuance of any notice in
      relation to such event, for the relief of debtors shall be instituted by or
      against the Borrower and if instituted against Borrower are not dismissed within
      forty-five (45) days of initiation.

     

    3.4           Failure
      to Deliver Common Stock or Replacement Note.  Borrower's failure
      to timely deliver Common Stock to the Holder pursuant to and in the form
      required by this Note, or, if required, a replacement Note for ten business
      days
      beyond the required delivery date or any stated cure period, whichever is
      later.

     

    ARTICLE
      IV

     

    SUBORDINATION

     

    4.1           Subordinate
      Right of Payment. Borrower hereby agrees, and the
      Holder of this Note by its acceptance hereof agrees, that the payment of the
      principal of and interest on this Note is hereby expressly made subordinate
      in
      right of payment, to the extent set forth in the following paragraphs (a) and
      (b), to the prior payment in full of the “Senior Debt” of
      Borrower.  “Senior Debt” means all bank debt and indebtedness now or
      hereafter outstanding under any

     


    
      
        
        

      

      
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    factoring
      agreements or accounts receivable sale agreement existing on the date of this
      Note, and any renewals or replacements thereof.

     

    (a)  In
      the event of insolvency or
      bankruptcy proceedings, or any receivership, liquidation, reorganization or
      other similar proceedings in connection therewith, relative to Borrower or
      to
      any of the property of Borrower, or in the event of any proceedings for
      voluntary liquidation, dissolution, or other winding-up of Borrower, whether
      or
      not involving insolvency or bankruptcy, then the holders of the Senior Debt
      shall be entitled to receive payment in full of all principal of, and premium,
      if any, and interest on the Senior Debt before the Holder of this Note shall
      be
      entitled to receive any payment on account of principal or interest on this
      Note, and to that end the holders of the Senior Debt shall be entitled to
      receive for application in payment thereof any payment or distribution of any
      kind or character, whether in cash or property or securities, which may be
      payable or deliverable in any such proceedings in respect of this
      Note.

     

    (b)  In
      the event that the Holder of this
      Note shall have received written notice that the Senior Debt has been declared
      due and payable prior to its stated maturity, by reason of the occurrence of
      an
      event of default thereunder (under circumstances in which the provisions of
      the
      foregoing paragraph (a) are not applicable), then all principal of and premium,
      if any, and interest on the Senior Debt outstanding at the time of such
      declaration shall first be paid in full, before any payment on account of
      principal or interest is made upon this Note.

     

    4.2           Borrower
      Obligation Unconditional and Absolute.  The provisions of this
      Article IV are for the purpose of defining the relative rights of the holders
      of
      the Senior Debt on the one hand and the Holder of this Note on the other hand,
      against Borrower and its property; and nothing herein shall impair, as between
      Borrower and the Holder, the obligation of Borrower, which is unconditional
      and
      absolute, to pay to the Holder hereof the principal hereof and interest hereon
      in accordance with the terms and the provisions hereof; nor shall anything
      herein prevent the holder of this Note from exercising all remedies otherwise
      permitted by applicable law or hereunder upon default under this Note, subject
      to the rights, if any, under this Article 4 of the holders of the Senior Debt
      to
      receive cash, property, stock or obligations otherwise payable or deliverable
      to
      the Holder of this Note.

     

    ARTICLE
      V

     

    MISCELLANEOUS

     

    5.1           Failure
      or Indulgence Not Waiver.  No failure or delay on the part of
      Holder hereof in the exercise of any power, right or privilege hereunder shall
      operate as a waiver thereof, nor shall any single or partial exercise of any
      such power, right or privilege preclude other or further exercise thereof or
      of
      any other right, power or privilege.  All rights and remedies existing
      hereunder are cumulative to, and not exclusive of, any rights or remedies
      otherwise available.

     

    5.2           Notices.  All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice.  Any notice or other communication required or
      permitted to be given hereunder shall be deemed effective (a) upon hand delivery
      or delivery by facsimile, with accurate confirmation generated by the
      transmitting facsimile machine, at the address or number designated below (if
      delivered on a business day during normal business hours where such notice
      is to
      be received), or the first business day following such delivery (if delivered
      other than on a business day during normal business hours where such notice
      is
      to be received) or (b) on the second business day following the date of mailing
      by express courier service, fully prepaid, addressed to such address, or upon
      actual receipt of such mailing, whichever shall first occur.  The
      addresses for such communications shall be: (i) if to the Borrower to:
      Accountabilities, Inc., 500 Craig Road, Suite 201, Manalapan, New Jersey
      07726,facsimilie: (732) 294-1133, Attention: Stephen DelVecchia; (ii) if to
      the
      Holder, to the name and address set forth on the front page of this Note,
      facsimilie: (631) 396-3969.

     

    5.3           Amendment
      Provision.  The term "Note" and all reference thereto, as used
      throughout this instrument, shall mean this instrument as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

     

    5.4           Assignability.  This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and
      assigns.

     

    5.5           Cost
      of Collection.  If default is made in the payment of this Note,
      Borrower shall pay the Holder hereof reasonable costs of collection, including
      reasonable attorneys' fees.

     

    5.6           Governing
      Law.  This Note shall be governed by and construed in accordance
      with the laws of the State of New Jersey.  Any action brought by
      either party against the other concerning the transactions contemplated by
      this
      Agreement shall be brought only in the civil or state courts of New Jersey
      or in
      the federal courts located in New Jersey.  Both parties and the
      individual signing this Agreement on behalf of the Borrower agree to submit
      to
      the jurisdiction of such courts.  The prevailing party shall be
      entitled to recover from the other party its reasonable attorney's fees and
      costs.

     

    5.7           Maximum
      Payments.  Nothing contained herein shall be deemed to establish
      or require the payment of a rate of interest or other charges in excess of
      the
      maximum permitted by applicable law.  In the event that the rate of
      interest required to be paid or other charges hereunder exceed the maximum
      permitted by such law, any payments in excess of such maximum shall be credited
      against amounts owed by the Borrower to the Holder and thus refunded to the
      Borrower.

     

    5.8           Shareholder
      Status.  The Holder shall not have rights as a shareholder of the
      Borrower with respect to unconverted portions of this Note.  However,
      the Holder will have all the rights of a shareholder of the Borrower with
      respect to the shares of Common Stock to be received by Holder after delivery
      by
      the Holder of a Conversion Notice to the Borrower.

     


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by
      an
      authorized officer as of the 6th day of August, 2007.

     

    
      	 	ACCOUNTABILITIES,
              INC.	 
	 	 	 	 
	
              Date:

            	
              By:
                

            	/s/ Stephen
              DelVecchia	 
	 	 	Name: 
Stephen
              DelVecchia 	 
	 	 	Title: 
Chief
              Financial
              Officer 	 
	 	 	 	 




    WITNESS:

     

    



    
      
        
        

      

      
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    NOTICE
      OF CONVERSION

     

    (To
      be
      executed by the Registered Holder in order to convert the Note)

     

    


     

    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by _______________on August __, 2007
      into
      Shares of Common Stock of Accountabilities, Inc.  (the "Borrower")
      according to the conditions set forth in such Note, as of the date written
      below.

     

    


     

    Date
      of
      Conversion:                                                                                                                                         

     

    Conversion
      Price:                                                                                                                                         

     

    Shares
      To
      Be
      Delivered:                                                                                                                                         

     

    Signature:                                                                                                                                         

     

    Print
      Name                                                                                                                                         

     

    Address                                                                                                                                         

     

    
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