EXHIBIT
4.2


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.


OPEN
ENERGY CORPORATION


SECURED
CONVERTIBLE DEBENTURE


	
  Issuance Date: March 29, 2007

  	
  Original Principal Amount:      $3,000,000

  
	
  No. OEGY-2-1

  	
   

  



 


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


(1)           GENERAL TERMS


(a)           Payment
of Principal.  On 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 March 29, 2008, as may be extended at the option of the Holder (i) in
the event that, and for so long as, an Event of Default (as defined below)
shall have occurred and 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 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 lower
of the Closing Bid Price on the Trading Day immediately prior to the date paid
or applicable Conversion Price on such date.


(c)           Security.  The Debenture
is secured by a security interest in all of the assets of the Company and of
each of the Company’s subsidiaries as evidenced by (i) the Security Agreement
dated March 2006 between the Company and the Buyer and the UCC-1 financing
statements filed in Nevada and California in connection therewith (Filing No.
2006011096-8 in Nevada, Filing No. 2007008728-6 in Nevada, Filing No.
06-7065733491 in California), (ii) the Security Agreement dated March 2006
between the Barnabus/CRE Acquisition Corp. and the Buyer and the UCC-1
financing statements filed in Nevada in connection therewith (Filing No.
2006008728-6), (iii) the Security Agreement dated March 2006 between 2093603
Ontario Corp. and the Buyer and the Financing Charge Statement filed in Ontario
in connection therewith (Filing No. 624389715), and (iv) the security agreement
of even date herewith between the Company, each subsidiary of the Company, and
the Buyer (items (i) thorough (iv) are collectively referred to herein as the “Security
Documents”).


(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 



 2
 









against the Company or any subsidiary of the
Company any such bankruptcy, insolvency or other proceeding which remains
undismissed for a period of 61 days; or the Company or any subsidiary of the
Company is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Company or any
subsidiary of the Company suffers any appointment of any custodian, private or
court appointed receiver or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of sixty one
(61) days; or the Company or any subsidiary of the Company makes a general
assignment for the benefit of creditors; or the Company or any subsidiary of
the 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)          RESERVED;


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



 3
 









(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 an Event of Default at the lower of
the Conversion Price or the price equal to $0.065.  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 REDEMPTION.  The Company may not prepay or redeem any
portion of the outstanding Principal of this Debenture without the prior
written consent of the Holder.


(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 



 4
 









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 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, $0.50,
subject to adjustment as provided herein;


(b)           Mechanics
of Conversion.


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



 5
 









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


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



 6
 









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.


(ii)           In
no event shall the Company be obligated to issue more than sixty million
(60,000,000) shares of Common Stock upon conversion of this Debenture.


(d)   Other
Provisions.


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


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


(iii)          The
Company covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of this Debenture and payment of interest on this Debenture,
each as herein provided, free from preemptive rights or any other actual
contingent purchase rights of 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 



 7
 









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 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 



 8
 









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 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 



 9
 









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 (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 



 10
 









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 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 



 11
 









deliver upon the order of the Holder a new Debenture (in accordance
with Section 5(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 5(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 5(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 5(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.


(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 5(a) or Section 5(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:



 12















 


	
  If to the Company, to:

  	
   

  	
  Open Energy Corporation

  
	
   

  	
   

  	
  514 Via de la Valle, Suite 200

  
	
   

  	
   

  	
  Solana Beach, CA 92075

  
	
   

  	
   

  	
  Attention: David Saltman, Chief Executive Officer

  
	
   

  	
   

  	
  Telephone:                                    858-794-8800

  
	
   

  	
   

  	
  Facsimile:                                            858-794-8811

  



 


	
  With
  a copy to:

  	
   

  	
  Sue J. Hodges, Partner

  
	
   

  	
   

  	
  Pillsbury Winthrop Shaw Pittman LLP

  
	
   

  	
   

  	
  12255 El Camino Real, Suite 300

  
	
   

  	
   

  	
  San Diego, CA 92130

  
	
   

  	
   

  	
  Telephone:                                    858-509-4003

  
	
   

  	
   

  	
  Facsimile:                                            858-509-4010

  



 


	
  If to the Holder:

  	
   

  	
  Cornell Capital Partners, LP

  
	
   

  	
   

  	
  101 Hudson Street, Suite 3700

  
	
   

  	
   

  	
  Jersey City, NJ 07303

  
	
   

  	
   

  	
  Attention:                                         Mark
  Angelo

  
	
   

  	
   

  	
  Telephone:                                    (201)
  985-8300

  



 


	
  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 



 13
 









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 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



 14
 









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
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 



 15
 









Company which is not approved by a majority
of those individuals who are members of the board of directors on the date
hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved
by a majority of the members of the board of directors who are members on the
date hereof), (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, 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.


(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)                                     “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
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 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 



 16
 









without restriction and without the need for
registration under any applicable federal or state securities laws.


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


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


(l)                                     “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.


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


(n)                                 “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.


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


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


(q)                                 “Securities
Purchase Agreement” means the Securities Purchase Agreement dated March 29,
2007 by and among the Company and the Buyers listed on Schedule I attached
thereto.


(r)                                    “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.



 17
 









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


(t)                                    “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.


(u)                                 “Underlying
Shares Registration Statement” means a registration statement covering
among other things the resale of the Underlying Shares and naming the Holder as
a “selling stockholder” thereunder.


(v)                                 “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.


(w)                               “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]


 



 18














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.


	
  

  	
  COMPANY:

  
	
   

  	
  OPEN ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 

  	
  David Saltman

  
	
   

  	
  Name:

  	
  David Saltman

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
				



 











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.OEGY-2-1 into Shares of Common Stock of
OPEN ENERGY CORPORATION, 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: