Document:

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

Original Issue Date: February 9, 2007
Original Conversion Price (subject to adjustment herein): $2.00

                                                                $_______________

                    FORM OF 8% SECURED CONVERTIBLE DEBENTURE
                             DUE FEBRUARY ___, 2010

      THIS DEBENTURE is one of a series of duly authorized and validly issued 8%
Secured Convertible Debentures of Star Energy Corporation, a Nevada corporation,
(the "Company"), having its principal office at 317 Madison Avenue, 21st Floor,
New York, NY, 10017, designated as its 8% Secured Convertible Debenture due
February ___, 2010 as the same may be supplemented, modified, amended, restated
or replaced from time to time in the manner provided herein, this "Debenture"
and, collectively with the other such series of debentures, the "Debentures").

      FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the "Holder"), or shall have
paid pursuant to the terms hereunder, the principal sum of $_______________ on
February ___, 2010 (the "Maturity Date") or such earlier date as this Debenture
is required or permitted to be repaid as provided hereunder, and to pay interest
to the Holder on the aggregate unconverted and then outstanding principal amount
of this Debenture, all in accordance with the provisions hereof. This Debenture
is subject to the following additional provisions:

      Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement or other
applicable Transaction Document (as such terms are defined herein), and (b) the
following terms shall have the following meanings:

<PAGE>

            "Alternate Consideration" shall have the meaning set forth in
      Section 5(e).

            "Bankruptcy Event" means any of the following events: (a) the
      Company or any Significant Subsidiary (as such term is defined in Rule
      1-02(w) of Regulation S-X) thereof commences a case or other proceeding
      under any bankruptcy, reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law
      of any jurisdiction relating to the Company or any Significant Subsidiary
      thereof; (b) there is commenced against the Company or any Significant
      Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement; (c) the Company or any Significant
      Subsidiary thereof is adjudicated insolvent or bankrupt or any order of
      relief or other order approving any such case or proceeding is entered;
      (d) the Company or any Significant Subsidiary thereof suffers any
      appointment of any custodian or the like for it or any substantial part of
      its property that is not discharged or stayed within 60 calendar days
      after such appointment; (e) the Company or any Significant Subsidiary
      thereof makes a general assignment for the benefit of creditors; (f) the
      Company or any Significant Subsidiary thereof calls a general meeting of
      all or substantially all of its creditors for the stated purpose of
      arranging a composition, adjustment or restructuring of its debts; or (g)
      the Company or any Significant Subsidiary thereof, by any act or document,
      expressly indicates its consent to, approval of or acquiescence in any of
      the foregoing or takes any corporate or other action for the purpose of
      effecting any of the foregoing.

            "Base Conversion Price" shall have the meaning set forth in Section
      5(b).

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

            "Buy-In" shall have the meaning set forth in Section 4(d)(v).

            "Change of Control Transaction" means the occurrence after the date
      hereof of any of (i) an acquisition after the date hereof by an individual
      or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated
      under the Exchange Act) of effective control (whether through legal or
      beneficial ownership of capital stock of the Company, by contract or
      otherwise) of in excess of 40% of the voting securities of the Company
      (other than by means of conversion or exercise of the Debentures and the
      Securities issued together with the Debentures), or (ii) the Company
      merges into or consolidates with any other Person, or any Person merges
      into or consolidates with the Company and, after giving effect to such
      transaction, the stockholders of the Company immediately prior to such
      transaction own less than 60% of the aggregate voting power of the Company
      or the successor entity of such transaction, or (iii) the Company sells or
      transfers all or substantially all of its assets to another Person and the
      stockholders of the Company immediately prior to such transaction own less
      than 60% of the aggregate voting power of the acquiring entity immediately
      after the transaction, or (iv) a replacement at one time or within a three
      year period of more than one-half of the members of the Company's board of
      directors which is not nominated or approved by a majority of those
      individuals who are members of the board of directors or nominating
      committee on the date hereof (or by those individuals who are serving as
      members of the board of directors on any date whose position on the board
      of directors was approved by a majority of the members of the board of
      directors or nominating committee who are members on the date hereof), or
      (v) 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
      in clauses (i) through (iv) above.

                                        2
<PAGE>

            "Common Stock" means the common stock, par value $.001 per share, of
      the Company and stock of any other class of securities into which such
      securities may hereafter be reclassified or changed into.

            "Conversion Date" shall have the meaning set forth in Section 4(a).

            "Conversion Price" shall have the meaning set forth in Section 4(b).

            "Conversion Shares" means, collectively, the shares of Common Stock
      issuable upon conversion of this Debenture in accordance with the terms
      hereof.

            "Debenture Register" shall have the meaning set forth in Section
      2(c).

            "Dilutive Issuance" shall have the meaning set forth in Section
      5(b).

            "Dilutive Issuance Notice" shall have the meaning set forth in
      Section 5(b).

            "Effectiveness Period" shall have the meaning set forth in the
      Registration Rights Agreement.

            "Equity Conditions" means, during the period in question, (i) the
      Company shall have duly honored all conversions and redemptions scheduled
      to occur or occurring by virtue of one or more Notices of Conversion of
      the Holder, if any, (ii) the Company shall have paid all liquidated
      damages and other amounts owing to the Holder in respect of this
      Debenture, (iii) there is an effective Registration Statement pursuant to
      which the Holder is permitted to utilize the prospectus thereunder to
      resell all of the Underlying Shares issuable pursuant to the Transaction
      Documents (and the Company believes, in good faith, that such
      effectiveness will continue uninterrupted for the foreseeable future),
      (iv) the Common Stock is trading on a Trading Market and all of the
      Underlying Shares issuable pursuant to the Transaction Documents are or
      upon issuance will be listed or quoted for trading on such Trading Market
      (and the Company believes, in good faith, that trading of the Common Stock
      on a Trading Market will continue uninterrupted for the foreseeable
      future), (v) there is a sufficient number of authorized but unissued and
      otherwise unreserved shares of Common Stock for the issuance of all of the
      Underlying Shares issuable pursuant to the Transaction Documents, (vi)
      there is no existing Event of Default or no existing event which, with the
      passage of time or the giving of notice, would reasonably constitute an
      Event of Default, (vii) the issuance of the shares in question (or, in the
      case of an Optional Redemption, the shares issuable upon conversion in
      full of the Optional Redemption) to the Holder would not violate the
      limitations set forth in Section 4(c) herein, (viii) there has been no
      public announcement of a pending or proposed Fundamental Transaction or
      Change of Control Transaction that has not been consummated, (ix) the
      Holder is not in possession of any information provided by the Company
      that constitutes, or could reasonably be expected to constitute, material
      non-public information and (x) for a period of 20 consecutive Trading Days
      prior to the applicable date in question, the daily trading volume for the
      Common Stock on the principal Trading Market exceeds 100,000 shares
      (subject to adjustment for forward and reverse stock splits and the like)
      per Trading Day.

                                        3
<PAGE>

            "Event of Default" shall have the meaning set forth in Section 8.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended, and the rules and regulations promulgated thereunder.

            "Forced Conversion" shall have the meaning set forth in Section
      6(a).

            "Forced Conversion Date" shall have the meaning set forth in Section
      6(a).

            "Forced Conversion Notice" shall have the meaning set forth in
      Section 6(a).

            "Forced Conversion Notice Date" shall have the meaning set forth in
      Section 6(a).

            "Fundamental Transaction" shall have the meaning set forth in
      Section 5(e).

            "Indebtedness" means (a) any liabilities for borrowed money or
      similar amounts owed in excess of $50,000 (other than trade accounts
      payable incurred in the ordinary course of business and inter-company
      advances among the Company and its Subsidiaries), (b) all guaranties,
      endorsements and other contingent obligations in respect of Indebtedness
      of others, whether or not the same are or should be reflected in the
      Company's balance sheet (or the notes thereto), except for (i) guaranties
      by endorsement of negotiable instruments for deposit or collection or
      similar transactions in the ordinary course of business and (ii)
      guaranties of the Indebtedness or other obligations of the Company or any
      Subsidiary by any other Subsidiary or the Company; and (c) the present
      value of any lease payments in excess of $50,000 due under leases required
      to be capitalized in accordance with GAAP.

            "Interest Conversion Rate" means the lesser of (a) the Conversion
      Price or (b) 85% of the lesser of (i) the average of the VWAPs for the 10
      consecutive Trading Days ending on the Trading Day that is immediately
      prior to the applicable Interest Payment Date or (ii) the average of the
      VWAPs for the 10 consecutive Trading Days ending on the Trading Day that
      is immediately prior to the date the applicable Interest Conversion Shares
      are issued and delivered if after the Interest Payment Date.

                                        4
<PAGE>

            "Interest Notice Period" shall have the meaning set forth in Section
      2(a).

            "Interest Payment Date" shall have the meaning set forth in Section
      2(a).

            "Interest Share Amount" shall have the meaning set forth in Section
      2(a).

            "Late Fees" shall have the meaning set forth in Section 2(d).

            "Mandatory Default Amount" means the sum of (i) the greater of (A)
      130% of the outstanding principal amount of this Debenture, plus all
      accrued and unpaid interest hereon, or (B) the outstanding principal
      amount of this Debenture, plus all accrued and unpaid interest hereon,
      divided by the Conversion Price on the date the Mandatory Default Amount
      is either (a) demanded (if demand or notice is required to create an Event
      of Default) or otherwise due or (b) paid in full, whichever has a lower
      Conversion Price, multiplied by the VWAP on the date the Mandatory Default
      Amount is either (x) demanded or otherwise due or (y) paid in full,
      whichever has a higher VWAP, and (ii) all other amounts, costs, expenses
      and liquidated damages due in respect of this Debenture.

            "New York Courts" shall have the meaning set forth in Section 9(d).

            "Notice of Conversion" shall have the meaning set forth in Section
      4(a).

            "Optional Redemption" shall have the meaning set forth in Section
      6(b).

            "Optional Redemption Amount" means the sum of (i) if the Optional
      Redemption Date is on or prior to the second anniversary of the Original
      Issue Date, 120% of the then outstanding principal amount of the Debenture
      and if the Optional Redemption Date is after the second anniversary of the
      Original Issue Date and prior to the Maturity Date, 110% of the then
      outstanding principal amount of the Debenture (ii) accrued but unpaid
      interest and (iii) all liquidated damages and other amounts due in respect
      of the Debenture.

            "Optional Redemption Date" shall have the meaning set forth in
      Section 6(b).

            "Optional Redemption Notice" shall have the meaning set forth in
      Section 6(b).

            "Optional Redemption Notice Date" shall have the meaning set forth
      in Section 6(b).

            "Original Issue Date" means the date of the first issuance of the
      Debentures, regardless of any transfers of any Debenture and regardless of
      the number of instruments which may be issued to evidence such Debentures.

                                        5
<PAGE>

            "Permitted Indebtedness" means (a) the Indebtedness existing on the
      Original Issue Date and set forth on Schedule 3.1(aa) attached to the
      Purchase Agreement, (b) capital lease obligations, construction or
      improvement financing and purchase money indebtedness incurred in
      connection with the acquisition, construction or improvement of capital
      assets and capital lease obligations with respect to newly acquired,
      improved or leased assets (provided, that immediately following any such
      transaction, the pro forma consolidated total Indebtedness of the Company
      and its subsidiaries to their consolidated Total Asset ratio is not more
      than 0.75 to 1); (c) up to $[___________ of additional Indebtedness
      incurred by the Company in connection with raising capital for the
      acquisition of another entity which is, itself or through its
      subsidiaries, an operating company in a business synergistic with the
      business of the Company (by merger, consolidation, the acquisition of all
      or substantially of the assets of such entity or similar transaction)
      provided that any Indebtedness incurred under this clause (c) is expressly
      subordinate to the Debentures pursuant to a written subordination
      agreement with the Purchasers that is acceptable to each Purchaser; (d)
      the Indebtedness evidence by other Debentures, provided that the aggregate
      original principal amount of all Debentures (whenever issued) shall not
      exceed $___________; (e) up to $ _________ of additional senior
      Indebtedness incurred by the Company from a strategic commercial lender
      pursuant to a strategic commercial agreement; or (f) any continuation,
      extension, renewal, modification, refinancing or replacement of any such
      Permitted Indebtedness on overall terms that are generally no less
      favorable than those applicable to the existing Permitted Indebtedness.

            "Permitted Lien" means the individual and collective reference to
      the following: (a) Liens for taxes, assessments and other governmental
      charges or levies not yet due or Liens for taxes, assessments and other
      governmental charges or levies being contested in good faith and by
      appropriate proceedings for which adequate reserves (in the good faith
      judgment of the management of the Company) have been established in
      accordance with GAAP; (b) Liens imposed by law and incurred in the
      ordinary course of the Company's business, such as carriers',
      warehousemen's and mechanics' Liens, statutory landlords' Liens, Liens
      consisting of easements, right-of-way, restrictions, covenants or other
      agreements of record or similar charges or encumbrances, and other similar
      Liens arising in the ordinary course of the Company's business, and which
      (x) do not individually or in the aggregate materially detract from the
      value of such property or assets or materially impair the use thereof in
      the operation of the business of the Company and its consolidated
      Subsidiaries or (y) are being contested in good faith by appropriate
      proceedings, which proceedings have the effect of preventing for the
      foreseeable future the forfeiture or sale of the property or asset subject
      to such Lien; and (c) Liens incurred in connection with Permitted
      Indebtedness under clause (b) thereunder, provided that such Liens are not
      secured by assets of the Company or its Subsidiaries other than the assets
      so acquired, constructed, improved or leased (and the products and
      proceeds thereof, insurance therefor and warranty and other contract
      rights related thereto); (d) Liens incurred in respect of judgments and
      awards discharged within 30 days from the making thereof; (e) any cash
      deposits made or bonds or letters of credit posted in the ordinary course
      to secure performance under any contract or applicable law; (f) in the
      case of any account, intangible, instrument, lease, agreement or document,
      any contractual right, power, privilege, remedy, interest, defect,
      restriction, covenant, claim, counterclaim, right of recoupment,
      abatement, reduction or setoff, or defense of any account debtor or other
      party thereto, whether now existing or hereafter arising, and whether
      pursuant to the applicable contractual provisions or applicable law; (g)
      Liens existing on the Original Issue Date and set forth on Schedule 3.1(n)
      attached to the Purchase Agreement or (h) any renewal, continuation,
      extension or replacement of any such Permitted Lien, provided that the
      scope of the assets encumbered thereby shall not be thereby increased.

                                        6
<PAGE>

            "Person" means an individual or corporation, partnership, trust,
      incorporated or unincorporated association, joint venture, limited
      liability company, joint stock company, government (or an agency or
      subdivision thereof) or other entity of any kind.

            "Purchase Agreement" means the Securities Purchase Agreement, dated
      as of February ___, 2007 among the Company and the original Holders, as
      amended, modified or supplemented from time to time in accordance with its
      terms.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated as of the date of the Purchase Agreement, among the
      Company and the original Holders, as amended, modified or supplemented
      from time to time in accordance with its terms.

            "Registration Statement" means a registration statement that
      registers the resale of all Conversion Shares and the shares of Common
      Stock issuable in lieu of cash interest payments of the Holder, names such
      Holder as a "selling stockholder" therein, and meets the requirements of
      the Registration Rights Agreement.

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

            "Share Delivery Date" shall have the meaning set forth in Section
      4(d).

            "Subsidiary" shall have the meaning set forth in the Purchase
      Agreement.

            "Threshold Period" shall have the meaning set forth in Section 6(a).

            "Trading Day" means a day on which the principal Trading Market is
      open for business.

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global
      Market, the Nasdaq Global Select Market, the New York Stock Exchange or
      the OTC Bulletin Board.

            "Transaction Documents" shall have the meaning set forth in the
      Purchase Agreement.

                                        7
<PAGE>

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies: (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest preceding date) on the Trading
      Market on which the Common Stock is then listed or quoted for trading as
      reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New
      York City time) to 4:02 p.m. (New York City time); (b) if the Common Stock
      is not then listed or quoted for trading on a Trading Market and if prices
      for the Common Stock are then reported in the "Pink Sheets" published by
      Pink Sheets, LLC (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of the
      Common Stock so reported; or (c) in all other cases, the fair market value
      of a share of Common Stock as determined by an independent appraiser
      selected in good faith by the Holder and reasonably acceptable to the
      Company.

      Section 2. Interest.

            a) Payment of Interest in Cash or Kind. The Company shall pay
      interest to the Holder on the aggregate unconverted and then outstanding
      principal amount of this Debenture at the rate of 8% per annum, payable
      quarterly on January 1, April 1, July 1 and October 1, beginning on the
      first such date after the Original Issue Date, on each Conversion Date (as
      to that principal amount then being converted), on each Optional
      Redemption Date (as to that principal amount then being redeemed) and on
      the Maturity Date (each such date, an "Interest Payment Date") (if any
      Interest Payment Date is not a Business Day, then the applicable payment
      shall be due on the next succeeding Business Day), in cash or duly
      authorized, validly issued, fully paid and non-assessable shares of Common
      Stock at the Interest Conversion Rate (the dollar amount to be paid in
      shares, the "Interest Share Amount") or a combination thereof; provided,
      however, that payment in shares of Common Stock may only occur if (i) all
      of the Equity Conditions have been met (unless waived by the Holder in
      writing) during the 20 Trading Days immediately prior to the applicable
      Interest Payment Date (the "Interest Notice Period") and through and
      including the date such shares of Common Stock are issued to the Holder
      and (ii) the Company shall have given the Holder notice in accordance with
      the notice requirements set forth below.

            b) Company's Election to Pay Interest in Kind. Subject to the terms
      and conditions herein, the decision whether to pay interest hereunder in
      cash, shares of Common Stock or a combination thereof shall be at the
      discretion of the Company. Prior to the commencement of any Interest
      Notice Period, the Company shall deliver to the Holder a written notice of
      its election (with any election to pay with shares of Common Stock, in
      whole or in part, conditioned on compliance with the Equity Conditions
      during the Interest Notice Period) to pay interest hereunder on the
      applicable Interest Payment Date either in cash, shares of Common Stock or
      a combination thereof and the Interest Share Amount as to the applicable
      Interest Payment Date, provided that the Company may indicate in such
      notice that the election contained in such notice shall apply to future
      Interest Payment Dates until revised by a subsequent notice. During any
      Interest Notice Period, the Company's election (whether specific to an
      Interest Payment Date or continuous) shall be irrevocable as to such
      Interest Payment Date. Subject to the aforementioned conditions, failure
      to timely deliver such written notice to the Holder or failure to comply
      with the Equity Conditions during the Interest Notice Period shall be
      deemed an election by the Company to pay the interest on such Interest
      Payment Date in cash. At any time the Company delivers a notice to the
      Holder of its election to pay the interest in shares of Common Stock, the
      Company shall timely file a prospectus supplement pursuant to Rule 424
      disclosing such election.

                                        8
<PAGE>

            c) Interest Calculations. Interest shall be calculated on the basis
      of a 360-day year, consisting of twelve 30 calendar day periods, and shall
      accrue daily on the outstanding principal balance commencing on the
      Original Issue Date until payment in full of the principal sum, together
      with all accrued and unpaid interest, liquidated damages and other amounts
      which may become due hereunder, has been made. Payment of interest in
      shares of Common Stock shall otherwise occur pursuant to Section 4(d)(ii)
      herein and, solely for purposes of the payment of interest in shares, the
      Interest Payment Date shall be deemed the Conversion Date. Interest shall
      cease to accrue with respect to any principal amount converted, provided
      that the Company actually delivers the Conversion Shares within the time
      period required by Section 4(d)(ii) herein. Interest hereunder will be
      paid to the Person in whose name this Debenture is registered on the
      records of the Company regarding registration and transfers of this
      Debenture (the "Debenture Register"). Except as otherwise provided herein,
      if at any time the Company pays interest partially in cash and partially
      in shares of Common Stock to the holders of the Debentures, then such
      payment of cash shall be distributed ratably among the holders of the
      then-outstanding Debentures based on their (or their predecessor's)
      initial purchases of Debentures pursuant to the Purchase Agreement.

            d) Late Fee. All overdue accrued and unpaid interest to be paid
      hereunder shall entail a late fee at an interest rate equal to the lesser
      of 18% per annum or the maximum rate permitted by applicable law ("Late
      Fees") which shall accrue daily from the date such interest is due
      hereunder through and including the date of payment in full.
      Notwithstanding anything to the contrary contained herein, if on any
      Interest Payment Date the Company has elected to pay accrued interest in
      the form of Common Stock but the Company is not permitted to pay accrued
      interest in Common Stock because it fails to satisfy the conditions for
      payment in Common Stock set forth in Section 2(a) herein, then, at the
      option of the Holder, the Company, in lieu of delivering either shares of
      Common Stock pursuant to this Section 2 or paying the regularly scheduled
      interest payment in cash, shall deliver, within three Trading Days of each
      applicable Interest Payment Date, an amount in cash equal to the product
      of (x) the number of shares of Common Stock otherwise deliverable to the
      Holder in connection with the payment of interest due on such Interest
      Payment Date multiplied by (y) the highest VWAP during the period
      commencing on the Interest Payment Date and ending on the Trading Day
      prior to the date such payment is made.

            e) Prepayment. Except as otherwise set forth in this Debenture, the
      Company may not prepay any portion of the principal amount of this
      Debenture without the prior written consent of the Holder.

                                        9
<PAGE>

      Section 3. Registration of Transfers and Exchanges.

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

            b) Investment Representations. This Debenture has been issued (as
      one of the "Securities" identified thereunder) subject to certain
      investment representations of the original Holder set forth in the
      Purchase Agreement and may be transferred or exchanged only in compliance
      with the Purchase Agreement and applicable federal and state securities
      laws and regulations.

            c) Reliance on Debenture Register. Prior to due presentment for
      transfer to the Company of this Debenture, the Company and any agent of
      the Company may treat the Person in whose name this Debenture is duly
      registered on the Debenture Register as the owner hereof for the purpose
      of receiving payment as herein provided and for all other purposes,
      whether or not this Debenture is overdue, and neither the Company nor any
      such agent shall be affected by notice to the contrary.

      Section 4. Conversion.

            a) Voluntary Conversion. At any time after the Original Issue Date
      until this Debenture is no longer outstanding, this Debenture shall be
      convertible, in whole or in part, into shares of Common Stock at the
      option of the Holder, at any time and from time to time (subject to the
      conversion limitations set forth in Section 4(c) hereof and irrespective
      of any Equity Condition). The Holder shall effect conversions by
      delivering to the Company a Notice of Conversion, the form of which is
      attached hereto as Annex A (a "Notice of Conversion"), specifying therein
      the principal amount of this Debenture to be converted and the date on
      which such conversion shall be effected (such date, the "Conversion
      Date"). If no Conversion Date is specified in a Notice of Conversion, the
      Conversion Date shall be the date that such Notice of Conversion is deemed
      delivered hereunder. To effect conversions hereunder, the Holder shall not
      be required to physically surrender this Debenture to the Company unless
      the entire principal amount of this Debenture, plus all accrued and unpaid
      interest thereon, has been so converted. Conversions hereunder shall have
      the effect of lowering the outstanding principal amount of this Debenture
      in an amount equal to the applicable conversion. The Holder and the
      Company shall maintain records showing the principal amount(s) converted
      and the date of such conversion(s). The Company may deliver an objection
      to any Notice of Conversion within 1 Business Day of delivery of such
      Notice of Conversion. In the event of any dispute or discrepancy, the
      records of the Holder shall be controlling and determinative in the
      absence of manifest error. The Holder, and any assignee by acceptance of
      this Debenture, acknowledge and agree that, by reason of the provisions of
      this paragraph, following conversion of a portion of this Debenture, the
      unpaid and unconverted principal amount of this Debenture may be less than
      the amount stated on the face hereof.

                                       10
<PAGE>

            b) Conversion Price. The conversion price in effect on any
      Conversion Date shall be equal to $2.00, subject to adjustment herein (the
      "Conversion Price").

            c) Conversion Limitations. The Company shall not effect any
      conversion of this Debenture, and a Holder shall not have the right to
      convert any portion of this Debenture, to the extent that after giving
      effect to the conversion set forth on the applicable Notice of Conversion,
      such Holder (together with such Holder's Affiliates, and any other person
      or entity acting as a group together with such Holder or any of such
      Holder's Affiliates) would beneficially own in excess of the Beneficial
      Ownership Limitation (as defined below). For purposes of the foregoing
      sentence, the number of shares of Common Stock beneficially owned by such
      Holder and its Affiliates shall include the number of shares of Common
      Stock issuable upon conversion of this Debenture with respect to which
      such determination is being made, but shall exclude the number of shares
      of Common Stock which are issuable upon (A) conversion of the remaining,
      unconverted principal amount of this Debenture beneficially owned by such
      Holder or any of its Affiliates and (B) exercise or conversion of the
      unexercised or unconverted portion of any other securities of the Company
      subject to a limitation on conversion or exercise analogous to the
      limitation contained herein (including, without limitation, any other
      Debentures or the Warrants) beneficially owned by such Holder or any of
      its Affiliates. Except as set forth in the preceding sentence, for
      purposes of this Section 4(c), beneficial ownership shall be calculated in
      accordance with Section 13(d) of the Exchange Act and the rules and
      regulations promulgated thereunder. To the extent that the limitation
      contained in this Section 4(c) applies, the determination of whether this
      Debenture is convertible (in relation to other securities owned by such
      Holder together with any Affiliates) and of which principal amount of this
      Debenture is convertible shall be in the sole discretion of such Holder,
      and the submission of a Notice of Conversion shall be deemed to be such
      Holder's determination of whether this Debenture may be converted (in
      relation to other securities owned by such Holder together with any
      Affiliates) and which principal amount of this Debenture is convertible,
      in each case subject to such aggregate percentage limitations. To ensure
      compliance with this restriction, each Holder will be deemed to represent
      to the Company each time it delivers a Notice of Conversion that such
      Notice of Conversion has not violated the restrictions set forth in this
      paragraph and the Company shall have no obligation to verify or confirm
      the accuracy of such determination. In addition, a determination as to any
      group status as contemplated above shall be determined in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. For purposes of this Section 4(c), in determining
      the number of outstanding shares of Common Stock, a Holder may rely on the
      number of outstanding shares of Common Stock as stated in the most recent
      of the following: (A) the Company's most recent Form 10-QSB or Form
      10-KSB, as the case may be; (B) a more recent public announcement by the
      Company; or (C) a more recent notice by the Company or the Company's
      transfer agent setting forth the number of shares of Common Stock
      outstanding. Upon the written or oral request of a Holder, the Company
      shall within two Trading Days confirm orally and in writing to such Holder
      the number of shares of Common Stock then outstanding. In any case, the
      number of outstanding shares of Common Stock shall be determined after
      giving effect to the conversion or exercise of securities of the Company,
      including this Debenture, by such Holder or its Affiliates since the date
      as of which such number of outstanding shares of Common Stock was
      reported. The "Beneficial Ownership Limitation" shall be 4.99% of the
      number of shares of the Common Stock outstanding immediately after giving
      effect to the issuance of shares of Common Stock issuable upon conversion
      of this Debenture held by the Holder. The Beneficial Ownership Limitation
      provisions of this Section 4(c) may be waived by such Holder, at the
      election of such Holder, upon not less than 61 days' prior notice to the
      Company, to change the Beneficial Ownership Limitation to 9.99% of the
      number of shares of the Common Stock outstanding immediately after giving
      effect to the issuance of shares of Common Stock upon conversion of this
      Debenture held by the Holder and the provisions of this Section 4(c) shall
      continue to apply. Upon such a change by a Holder of the Beneficial
      Ownership Limitation from such 4.99% limitation to such 9.99% limitation,
      the Beneficial Ownership Limitation may not be further waived by such
      Holder. The provisions of this paragraph shall be construed and
      implemented in a manner otherwise than in strict conformity with the terms
      of this Section 4(c) to correct this paragraph (or any portion hereof)
      which may be defective or inconsistent with the intended Beneficial
      Ownership Limitation herein contained or to make changes or supplements
      necessary or desirable to properly give effect to such limitation. The
      limitations contained in this paragraph along with the other provisions of
      this Debenture) shall apply to a successor holder of this Debenture.

                                       11
<PAGE>

            d) Mechanics of Conversion.

                  i. Conversion Shares Issuable Upon Conversion of Principal
            Amount. The number of shares of Common Stock issuable upon a
            conversion hereunder shall be determined by the quotient obtained by
            dividing (x) the outstanding principal amount of this Debenture to
            be converted by (y) the Conversion Price.

                  ii. Delivery of Certificate Upon Conversion. Not later than
            three Trading Days after each Conversion Date (the "Share Delivery
            Date"), the Company shall deliver, or cause to be delivered, to the
            Holder (A) a certificate or certificates representing the Conversion
            Shares which, on or after the Effective Date, shall be free of
            restrictive legends and trading restrictions (other than those which
            may then be required by the Purchase Agreement) representing the
            number of shares of Common Stock being acquired upon the conversion
            of this Debenture (including, if the Company has given continuous
            notice pursuant to Section 2(b) for payment of interest in shares of
            Common Stock at least 20 Trading Days prior to the date on which the
            Conversion Notice is delivered to the Company, shares of Common
            Stock representing the payment of accrued interest otherwise
            determined pursuant to Section 2(a) but assuming that the Interest
            Payment Period is the 20 Trading Days period immediately prior to
            the date on which the Conversion Notice is delivered to the Company)
            and (B) a bank check in the amount of accrued and unpaid interest
            (if the Company has elected or is required to pay accrued interest
            in cash). On or after the Effective Date, the Company shall use its
            best efforts to deliver any certificate or certificates required to
            be delivered by the Company under this Section 4 (other than any
            certificate that must bear any restrictive legend or trading
            restriction required by the Purchase Agreement) electronically
            through the Depository Trust Company or another established clearing
            corporation performing similar functions.

                                       12
<PAGE>

                  iii. Failure to Deliver Certificates. If in the case of any
            Notice of Conversion such certificate or certificates are not
            delivered to or as directed by the applicable Holder by the third
            Trading Day after the Conversion Date, the Holder shall be entitled
            to elect by written notice to the Company at any time on or before
            its receipt of such certificate or certificates, to rescind such
            Conversion, in which event the Company shall promptly return to the
            Holder any original Debenture delivered to the Company and the
            Holder shall promptly return the Common Stock certificates
            representing the principal amount of this Debenture tendered for
            conversion to the Company.

                  iv. Obligation Absolute; Partial Liquidated Damages. The
            Company's obligations to issue and deliver the Conversion Shares
            upon conversion of this Debenture in accordance with the terms
            hereof are absolute and unconditional, irrespective of any action or
            inaction by the Holder to enforce the same, any waiver or consent
            with respect to any provision hereof, the recovery of any judgment
            against any Person or any action to enforce the same, or any setoff,
            counterclaim, recoupment, limitation or termination, or any breach
            or alleged breach by the Holder or any other Person of any
            obligation to the Company or any violation or alleged violation of
            law by the Holder or any other Person, and irrespective of any other
            circumstance which might otherwise limit such obligation of the
            Company to the Holder in connection with the issuance of such
            Conversion Shares; provided, however, that such delivery shall not
            operate as a waiver by the Company of any such action the Company
            may have against the Holder. In the event the Holder of this
            Debenture shall elect to convert any or all of the outstanding
            principal amount hereof, the Company may not refuse conversion based
            on any claim that the Holder or anyone associated or affiliated with
            the Holder has been engaged in any violation of law, agreement or
            for any other reason, unless an injunction from a court, on notice
            to Holder, restraining and or enjoining conversion of all or part of
            this Debenture shall have been sought and obtained, and the Company
            posts a surety bond for the benefit of the Holder in the amount of
            125% of the outstanding principal amount of this Debenture, which is
            subject to the injunction, which bond shall remain in effect until
            the completion of arbitration/litigation of the underlying dispute
            and the proceeds of which shall be payable to such Holder to the
            extent it obtains judgment. In the absence of such injunction, the
            Company shall issue Conversion Shares or, if applicable, cash, upon
            a properly noticed conversion. If the Company fails for any reason
            to deliver to the Holder such certificate or certificates pursuant
            to Section 4(d)(ii) by the third Trading Day after the Conversion
            Date, the Company shall pay to such Holder, in cash, as liquidated
            damages and not as a penalty, for each $1000 of principal amount
            being converted, $10 per Trading Day (increasing to $20 per Trading
            Day on the fifth Trading Day after such liquidated damages begin to
            accrue) for each Trading Day after such third Trading Day until such
            certificates are delivered. Nothing herein shall limit a Holder's
            right to pursue actual damages or declare an Event of Default
            pursuant to Section 8 hereof for the Company's failure to deliver
            Conversion Shares within the period specified herein and such Holder
            shall have the right to pursue all remedies available to it
            hereunder, at law or in equity including, without limitation, a
            decree of specific performance and/or injunctive relief. The
            exercise of any such rights shall not prohibit the Holder from
            seeking to enforce damages pursuant to any other Section hereof or
            under applicable law.

                                       13
<PAGE>

                  v. Compensation for Buy-In on Failure to Timely Deliver
            Certificates Upon Conversion. In addition to any other rights
            available to the Holder, if the Company fails for any reason to
            deliver to the Holder such certificate or certificates by the Share
            Delivery Date pursuant to Section 4(d)(ii), and if after such Share
            Delivery Date the Holder is required by its brokerage firm to
            purchase (in an open market transaction or otherwise), or the
            Holder's brokerage firm otherwise purchases, shares of Common Stock
            to deliver in satisfaction of a sale by such Holder of the
            Conversion Shares which the Holder was entitled to receive upon the
            conversion relating to such Share Delivery Date (a "Buy-In"), then
            the Company shall (A) pay in cash to the Holder (in addition to any
            other remedies available to or elected by the Holder) the amount by
            which (x) the Holder's total purchase price (including any brokerage
            commissions) for the Common Stock so purchased exceeds (y) the
            product of (1) the aggregate number of shares of Common Stock that
            such Holder was entitled to receive from the conversion at issue
            multiplied by (2) the actual sale price at which the sell order
            giving rise to such purchase obligation was executed (including any
            brokerage commissions) and (B) at the option of the Holder, either
            reissue (if surrendered) this Debenture in a principal amount equal
            to the principal amount of the attempted conversion or deliver to
            the Holder the number of shares of Common Stock that would have been
            issued if the Company had timely complied with its delivery
            requirements under Section 4(d)(ii). For example, if the Holder
            purchases Common Stock having a total purchase price of $11,000 to
            cover a Buy-In with respect to an attempted conversion of this
            Debenture with respect to which the actual sale price of the
            Conversion Shares (including any brokerage commissions) giving rise
            to such purchase obligation was a total of $10,000 under clause (A)
            of the immediately preceding sentence, the Company shall be required
            to pay the Holder $1,000. The Holder shall provide the Company
            written notice indicating the amounts payable to the Holder in
            respect of the Buy-In and, upon request of the Company, evidence of
            the amount of such loss. Nothing herein shall limit a Holder's right
            to pursue any other remedies available to it hereunder, at law or in
            equity including, without limitation, a decree of specific
            performance and/or injunctive relief with respect to the Company's
            failure to timely deliver certificates representing shares of Common
            Stock upon conversion of this Debenture as required pursuant to the
            terms hereof.

                                       14
<PAGE>

                  vi. Reservation of Shares Issuable Upon Conversion. The
            Company covenants that it will at all times reserve and keep
            available out of its authorized and unissued shares of Common Stock
            for the sole 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 (and the other holders of
            the Debentures), not less than such aggregate number of shares of
            the Common Stock as shall (subject to the terms and conditions set
            forth in the Purchase Agreement) be issuable (taking into account
            the adjustments and restrictions of Section 5) 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
            authorized, validly issued, fully paid and nonassessable and, if the
            Registration Statement is then effective under the Securities Act,
            shall be registered for public sale in accordance with such
            Registration Statement.

                  vii. Fractional Shares. Upon a conversion hereunder the
            Company shall not be required to issue stock certificates
            representing fractions of shares of Common Stock, but may if
            otherwise permitted, make a cash payment in respect of any final
            fraction of a share based on the VWAP at such time. If the Company
            elects not, or is unable, to make such a cash payment, the Holder
            shall be entitled to receive, in lieu of the final fraction of a
            share, 1 whole share of Common Stock.

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

      Section 5. Certain Adjustments.

            a) Stock Dividends and Stock Splits. If the Company, at any time
      while this Debenture is outstanding: (A) pays a stock dividend or
      otherwise makes a distribution or distributions payable in shares of
      Common Stock on shares of Common Stock or any Common Stock Equivalents
      (which, for avoidance of doubt, shall not include any shares of Common
      Stock issued by the Company upon conversion of, or payment of interest on,
      the Debentures or the exercise of any Warrant); (B) subdivides outstanding
      shares of Common Stock into a larger number of shares; (C) combines
      (including by way of a reverse stock split) outstanding shares of Common
      Stock into a smaller number of shares; or (D) issues, in the event of a
      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 any treasury shares of the Company) outstanding
      immediately before such event and of which the denominator shall be the
      number of shares of Common Stock outstanding immediately 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.

                                       15
<PAGE>

            b) Subsequent Equity Sales. If, at any time while this Debenture is
      outstanding, the Company or any Subsidiary, as applicable, sells or grants
      any option to purchase or sells or grants any right to reprice, or
      otherwise disposes of or issues (or announces any sale, grant or any
      option to purchase or other disposition), any Common Stock or any Common
      Stock Equivalents entitling any Person to acquire shares of Common Stock
      at an effective price per share that is lower than the then Conversion
      Price (such lower price, the "Base Conversion Price" and such issuances,
      collectively, a "Dilutive Issuance") (if the holder of the Common Stock or
      Common Stock Equivalents so issued shall at any time, whether by operation
      of purchase price adjustments, reset provisions, floating conversion,
      exercise or exchange prices or otherwise, or due to warrants, options or
      rights per share which are issued in connection with such issuance, be
      entitled to receive shares of Common Stock at an effective price per share
      that is lower than the Conversion Price, such issuance shall be deemed to
      have occurred for less than the Conversion Price on such date of the
      Dilutive Issuance), then the Conversion Price shall be reduced to equal
      the Base Conversion Price. Such adjustment shall be made whenever such
      Common Stock or Common Stock Equivalents are issued. Notwithstanding the
      foregoing, no adjustment will be made under this Section 5(b) in respect
      of an Exempt Issuance, and for avoidance of doubt, Dilutive Issuances
      shall not include any shares of Common Stock issued by the Company upon
      conversion of, or payment of interest on, the Debentures or the exercise
      of any Warrant. The Company shall notify the Holder in writing, no later
      than 1 Business Day following the issuance of any Common Stock or Common
      Stock Equivalents subject to this Section 5(b), indicating therein the
      applicable issuance price, or applicable reset price, exchange price,
      conversion price and other pricing terms (such notice, the "Dilutive
      Issuance Notice"). For purposes of clarification, whether or not the
      Company provides a Dilutive Issuance Notice pursuant to this Section 5(b),
      upon the occurrence of any Dilutive Issuance, the Holder is entitled to
      receive a number of Conversion Shares based upon the Base Conversion Price
      on or after the date of such Dilutive Issuance, regardless of whether the
      Holder accurately refers to the Base Conversion Price in the Notice of
      Conversion.

                                       16
<PAGE>

            c) Subsequent Rights Offerings. If the Company, at any time while
      the Debenture is outstanding, shall issue rights, options or warrants to
      all holders of Common Stock (and not to the Holders) entitling them to
      subscribe for or purchase shares of Common Stock at a price per share that
      is lower than the VWAP on the record date referenced below, then the
      Conversion Price shall be multiplied by a fraction of which the
      denominator shall be the number of shares of the Common Stock outstanding
      on the date of issuance of such rights or warrants plus the number of
      additional shares of Common Stock offered for subscription or purchase,
      and of which the numerator shall be the number of shares of the Common
      Stock outstanding on the date of issuance of such rights or warrants plus
      the number of shares which the aggregate offering price of the total
      number of shares so offered (assuming delivery to the Company in full of
      all consideration payable upon exercise of such rights, options or
      warrants) would purchase at such VWAP. Such adjustment shall be made
      whenever such rights or warrants are issued, and shall become effective
      immediately after the record date for the determination of stockholders
      entitled to receive such rights, options or warrants.

            d) Pro Rata Distributions. If the Company, at any time while this
      Debenture is outstanding, distributes to all holders of Common Stock (and
      not to the Holders) evidences of its indebtedness or assets (including
      cash and cash dividends) or rights or warrants to subscribe for or
      purchase any security (other than the Common Stock, which shall be subject
      to Section 5(b)), then in each such case the Conversion Price shall be
      adjusted by multiplying such Conversion Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to
      receive such distribution by a fraction of which the denominator shall be
      the VWAP determined as of the record date mentioned above, and of which
      the numerator shall be such VWAP on such record date less the then fair
      market value at such record date of the portion of such assets or evidence
      of indebtedness so distributed applicable to 1 outstanding share of the
      Common Stock as determined by the Board of Directors of the Company in
      good faith. In either case the adjustments shall be described in a
      statement delivered to the Holder describing the portion of assets or
      evidences of indebtedness so distributed or such subscription rights
      applicable to 1 share of Common Stock. Such adjustment shall be made
      whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

            e) Fundamental Transaction. If, at any time while this Debenture is
      outstanding, (A) the Company effects any merger or consolidation of the
      Company with or into another Person, (B) the Company effects any sale of
      all or substantially all of its assets in one transaction or a series of
      related transactions, (C) any tender offer or exchange offer (whether by
      the Company or another Person) is completed pursuant to which holders of
      Common Stock are permitted to tender or exchange their shares for other
      securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is effectively converted into or
      exchanged for other securities, cash or property (in any such case, a
      "Fundamental Transaction"), then, upon any subsequent conversion of this
      Debenture, the Holder shall have the right to receive, for each Conversion
      Share that would have been issuable upon such conversion immediately prior
      to the occurrence of such Fundamental Transaction, the same kind and
      amount of securities, cash or property as it would have been entitled to
      receive upon the occurrence of such Fundamental Transaction if it had
      been, immediately prior to such Fundamental Transaction, the holder of 1
      share of Common Stock (the "Alternate Consideration"). For purposes of any

                                       17
<PAGE>

      such conversion, the determination of the Conversion Price shall be
      appropriately adjusted to apply to such Alternate Consideration based on
      the amount of Alternate Consideration issuable in respect of 1 share of
      Common Stock in such Fundamental Transaction, and the Company shall
      apportion the Conversion Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different
      components of the Alternate Consideration. If holders of Common Stock are
      given any choice as to the securities, cash or property to be received in
      a Fundamental Transaction, then the Holder shall be given the same choice
      as to the Alternate Consideration it receives upon any conversion of this
      Debenture following such Fundamental Transaction. To the extent necessary
      to effectuate the foregoing provisions, any successor to the Company or
      surviving entity in such Fundamental Transaction shall issue to the Holder
      a new debenture consistent with the foregoing provisions and evidencing
      the Holder's right to convert such debenture into Alternate Consideration.
      The terms of any agreement pursuant to which a Fundamental Transaction is
      effected shall include terms requiring any such successor or surviving
      entity to comply with the provisions of this Section 5(e) and insuring
      that this Debenture (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

            f) Calculations. All calculations under this Section 5 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For purposes of this Section 5, the number of shares of Common Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the number of shares of Common Stock (excluding any treasury shares of the
      Company) issued and outstanding.

            g) Notice to the Holder.

                  i. Adjustment to Conversion Price. Whenever the Conversion
            Price is adjusted pursuant to any provision of this Section 5, the
            Company shall promptly mail to each Holder a notice setting forth
            the Conversion Price after such adjustment and setting forth a brief
            statement of the facts requiring such adjustment. If the Company
            enters into a Variable Rate Transaction, despite the prohibition set
            forth in the Purchase Agreement, the Company shall be deemed to have
            issued Common Stock or Common Stock Equivalents at the lowest
            possible conversion price at which such securities may be converted
            or exercised.

                                       18
<PAGE>

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

      Section 6. Forced Conversion and Optional Redemption.

            a) Forced Conversion. Notwithstanding anything herein to the
      contrary, if after the 30th Trading Day following Effective Date, the VWAP
      for each of any 20 out of 30 consecutive Trading Days, which period shall
      have commenced only after the 30th Trading Day following the Effective
      Date (such period the "Threshold Period"), exceeds $6.00 (subject to
      adjustment for reverse and forward stock splits, stock dividends, stock
      combinations and other similar transactions of the Common Stock that occur
      after the Original Issue Date), the Company may, within 2 Trading Days
      after the end of any such Threshold Period, deliver a written notice to
      the Holder (a "Forced Conversion Notice" and the date such notice is
      delivered to the Holder, the "Forced Conversion Notice Date") to cause the
      Holder to convert all or part of the then outstanding principal amount of
      this Debenture plus, if so specified in the Forced Conversion Notice,
      accrued but unpaid interest, liquidated damages and other amounts owing to
      the Holder under this Debenture, it being agreed that the "Conversion
      Date" for purposes of Section 4 shall be deemed to occur on the thirtieth
      Trading Day following the Forced Conversion Notice Date (such thirtieth
      Trading Day, the "Forced Conversion Date"). The Company may not deliver a
      Forced Conversion Notice, and any Forced Conversion Notice delivered by
      the Company shall not be effective, unless all of the Equity Conditions
      are met (unless waived in writing by the Holder) on each Trading Day
      occurring during the applicable Threshold Period through and including the
      later of the Forced Conversion Date and the Trading Day after the date
      such Conversion Shares pursuant to such conversion are delivered to the
      Holder. Any Forced Conversion shall be applied ratably to all Holders
      based on their initial purchases of Debentures pursuant to the Purchase
      Agreement, provided that any voluntary conversions by a Holder shall be
      applied against such Holder's pro-rata allocation, thereby decreasing the
      aggregate amount forcibly converted hereunder if only a portion of this
      Debenture is forcibly converted. For purposes of clarification, a Forced
      Conversion shall be subject to all of the provisions of Section 4,
      including, without limitation, the provision requiring payment of
      liquidated damages and limitations on conversions.

                                       19
<PAGE>

            b) Optional Redemption at Election of Company. Subject to the
      provisions of this Section 6, at any time after the Effective Date, the
      Company may deliver a notice to the Holder (an "Optional Redemption
      Notice" and the date such notice is deemed delivered hereunder, the
      "Optional Redemption Notice Date") of its irrevocable election to redeem
      some or all of the then outstanding principal amount of this Debenture for
      cash in an amount equal to the Optional Redemption Amount on the 22nd
      Trading Day following the Optional Redemption Notice Date (such date, the
      "Optional Redemption Date" and such redemption, the "Optional
      Redemption"). The Optional Redemption Amount is payable in full on the
      Optional Redemption Date. The Company may only effect an Optional
      Redemption if each of the Equity Conditions shall have been met (unless
      waived in writing by the Holder) on each Trading Day during the period
      commencing on the Optional Redemption Notice Date through to the Optional
      Redemption Date and through and including the date payment of the Optional
      Redemption Amount is actually made in full. If any of the Equity
      Conditions shall cease to be satisfied at any time during such period,
      then the Holder may elect to nullify the Optional Redemption Notice by
      notice to the Company within 3 Trading Days after the first day on which
      any such Equity Condition has not been met (provided that if, by a
      provision of the Transaction Documents, the Company is obligated to notify
      the Holder of the non-existence of an Equity Condition, such notice period
      shall be extended to the third Trading Day after proper notice from the
      Company) in which case the Optional Redemption Notice shall be null and
      void, ab initio. The Company covenants and agrees that it will honor all
      Notices of Conversion tendered from the time of delivery of the Optional
      Redemption Notice through the date all amounts owing thereon are due and
      paid in full.

            c) Redemption Procedure. The payment of cash pursuant to an Optional
      Redemption shall be payable on the Optional Redemption Date. If any
      portion of the payment pursuant to an Optional Redemption shall not be
      paid by the Company by the applicable due date, interest shall accrue
      thereon at an interest rate equal to the lesser of 18% per annum or the
      maximum rate permitted by applicable law until such amount is paid in
      full. Notwithstanding anything herein contained to the contrary, if any
      portion of the Optional Redemption Amount remains unpaid after such date,
      the Holder may elect, by written notice to the Company given at any time
      thereafter, to invalidate such Optional Redemption, ab initio, and the
      Company shall have no further right to exercise such Optional Redemption.
      The Holder may elect to convert the outstanding principal amount of this
      Debenture subject to a redemption under this Section 6 pursuant to Section
      4 prior to actual payment in cash for such redemption by the delivery of a
      Notice of Conversion to the Company.

                                       20
<PAGE>

      Section 7. Negative Covenants. As long as any portion of this Debenture
remains outstanding, unless the holders of at least 51% in principal amount of
the then outstanding Debentures shall have otherwise given their written consent
or waiver, the Company shall not, and shall not permit any of its subsidiaries
(whether or not a Subsidiary on the Original Issue Date) to, directly or
indirectly:

            a) other than Permitted Indebtedness, enter into, create, incur,
      assume, guarantee or suffer to exist any indebtedness for borrowed money
      of any kind, including but not limited to, any guarantee of such
      indebtedness;

            b) other than Permitted Liens, enter into, create, incur, assume or
      suffer to exist any Liens of any kind, on or with respect to any of its
      property or assets now owned or hereafter acquired or any interest therein
      or any income or profits therefrom;

            c) amend its charter documents, including, without limitation, the
      certificate of incorporation and bylaws, in any manner that materially and
      adversely affects any rights of the Holder;

            d) repay, repurchase or offer to repay, repurchase or otherwise
      acquire more than a de minimis number of shares of its Common Stock or
      Common Stock Equivalents other than as to (a) the Conversion Shares or
      Warrant Shares as permitted or required under the Transaction Documents
      and (b) repurchases of Common Stock or Common Stock Equivalents of
      departing officers and directors of the Company, provided that such
      repurchases shall not exceed an aggregate of $100,000 for all officers and
      directors during the term of this Debenture;

            e) pay cash dividends or distributions on any equity securities of
      the Company;

                                       21
<PAGE>

            f) enter into any transaction with any Affiliate of the Company
      (other than any of the Company or Subsidiary) that would be required to be
      disclosed in any public filing with the Commission, except for (i) any
      such transaction that is made on an arm's-length basis and expressly
      approved by a majority of the disinterested directors of the Company (even
      if less than a quorum otherwise required for board approval), (ii) the
      establishment, modification or payment of reasonable and customary fees to
      Directors of the Company who are not officers or employees of any Company,
      (iii) the establishment or modification of reasonable salaries, wages, and
      compensation plans for any officer or employee of the Company or any of
      its Subsidiaries, the making of payments to any of them thereunder, and
      the making, extension or modification of any loan or advance to any of
      them, provided that in the case of the executive officers of the Company
      such salaries and compensation plans have been expressly approved by a
      majority of the disinterested directors of the Company (even if less than
      a quorum otherwise required for board approval), or (iv) the
      establishment, modification or implementation of reasonable employment
      arrangements, stock option and purchase plans, and benefit programs for
      the directors, officers and employees of the Company and its Subsidiaries
      expressly approved by a majority of the disinterested directors of the
      Company (even if less than a quorum otherwise required for board approval)
      and the resulting transactions thereunder; or

            g) enter into any agreement effecting or committing to any of the
      foregoing.

      Section 8. Events of Default.

            a) "Event of Default" means, wherever used herein, any of the
      following events (whatever the reason for such event and whether such
      event 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. any default in the payment of (A) the principal amount of
            any Debenture or (B) interest, liquidated damages and other amounts
            owing to a Holder on any Debenture, as and when the same shall
            become due and payable (whether on a Conversion Date or the Maturity
            Date or by acceleration or otherwise) which default, solely in the
            case of an interest payment or other default under clause (B) above,
            is not cured within 3 Trading Days;

                  ii. the Company shall fail to observe or perform any other
            covenant or agreement contained in the Debentures (other than a
            breach by the Company of its obligations to deliver shares of Common
            Stock to the Holder upon conversion, which breach is addressed in
            clause (xi) below) which failure is not cured, if possible to cure,
            within the earlier to occur of (A) 5 Trading Days after notice of
            such failure sent by the Holder or by any other Holder and (B) 10
            Trading Days after the Company has become aware of such failure;

                  iii. a default or event of default (subject to any grace or
            cure period provided in the applicable agreement, document or
            instrument) shall occur under (A) any of the Transaction Documents
            or (B) any other material agreement, lease, document or instrument
            to which the Company or any Subsidiary is obligated (and not covered
            by clause (vi) below), which default is not cured, if possible to
            cure, within the grace or cure period specified therein, or if none
            is so specified, within the earlier to occur of (A) 5 Trading Days
            after notice of such failure sent by the Holder or by any other
            Holder and (B) 10 Trading Days after the Company has become aware of
            such failure;

                                       22
<PAGE>

                  iv. any representation or warranty made in this Debenture, any
            other Transaction Documents, any written statement pursuant hereto
            or thereto or any other report, financial statement or certificate
            made or delivered to the Holder or any other Holder shall be untrue
            or incorrect in any material respect as of the date when made or
            deemed made;

                  v. the Company or any Significant Subsidiary shall be subject
            to a Bankruptcy Event;

                  vi. the Company or any Subsidiary shall default on any of its
            obligations under 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 capital lease or factoring arrangement that (a)
            involves an obligation greater than $250,000, whether such
            indebtedness now exists or shall hereafter be created, and (b)
            results in such indebtedness becoming or being declared due and
            payable prior to the date on which it would otherwise become due and
            payable;

                  vii. the Common Stock shall not be eligible for listing or
            quotation for trading on a Trading Market and shall not be eligible
            to resume listing or quotation for trading thereon within five
            Trading Days;

                  viii. the Company shall be a party to any Change of Control
            Transaction or Fundamental Transaction or shall agree to sell or
            dispose of all or in excess of 40% of its assets in one transaction
            or a series of related transactions (whether or not such sale would
            constitute a Change of Control Transaction);

                  ix. a Registration Statement shall not have been declared
            effective by the Commission on or prior to the 210th calendar day
            after the Closing Date;

                  x. if, during the Effectiveness Period (as defined in the
            Registration Rights Agreement), either (a) the effectiveness of the
            Registration Statement lapses for any reason or (b) the Holder shall
            not be permitted to resell Registrable Securities (as defined in the
            Registration Rights Agreement) under the Registration Statement for
            a period of more than 20 consecutive Trading Days or 30
            non-consecutive Trading Days during any 12 month period; provided,
            however, that if the Company is negotiating a merger, consolidation,
            acquisition or sale of all or substantially all of its assets or a
            similar transaction and, in the written opinion of counsel to the
            Company, the Registration Statement would be required to be amended
            to include information concerning such pending transaction(s) or the
            parties thereto which information is not available or may not be
            publicly disclosed at the time, the Company shall be permitted an
            additional 10 consecutive Trading Days during any 12 month period
            pursuant to this Section 8(a)(x);

                                       23
<PAGE>

                  xi. the Company shall fail for any reason to deliver
            certificates to a Holder prior to the tenth Trading Day after a
            Conversion Date or any Forced Conversion Date pursuant to Section
            4(d) or the Company shall provide at any time notice to the Holder,
            including by way of public announcement, of the Company's intention
            to not honor requests for conversions of any Debentures in
            accordance with the terms hereof; or

                  xii. any monetary judgment, writ or similar final process
            shall be entered or filed against the Company, any Subsidiary or any
            of their respective property or other assets for more than $250,000,
            and such judgment, writ or similar final process shall remain
            unpaid, unvacated, unbonded or unstayed for a period of 45 calendar
            days.

            b) Remedies Upon Event of Default. If any Event of Default occurs
      and is continuing without being waived by the Holder or cured by the
      Company, the outstanding principal amount of this Debenture, plus accrued
      but unpaid interest, liquidated damages and other amounts owing in respect
      thereof through the date of acceleration, shall become, at the Holder's
      election, immediately due and payable in cash at the Mandatory Default
      Amount. Commencing 5 Trading Days after the occurrence of any Event of
      Default that results in the eventual acceleration of this Debenture, the
      interest rate on this Debenture shall accrue at an interest rate equal to
      the lesser of 18% per annum or the maximum rate permitted under applicable
      law, subject to Section 5.17 of the Purchase Agreement. Upon the payment
      in full of the Mandatory Default Amount, the Holder shall promptly
      surrender this Debenture to or as directed by the Company. In connection
      with such acceleration described herein, the Holder need not provide, and
      the Company hereby waives, any presentment, demand, protest or other
      notice of any kind, and the Holder may immediately and without expiration
      of any grace period enforce any and all of its rights and remedies
      hereunder and all other remedies available to it under applicable law.
      Such acceleration may be rescinded and annulled by Holder at any time
      prior to payment hereunder and the Holder shall have all rights as a
      holder of the Debenture until such time, if any, as the Holder receives
      full payment pursuant to this Section 8(b). No such rescission or
      annulment shall affect any subsequent Event of Default or impair any right
      consequent thereon.

      Section 9. Miscellaneous.

                                       24
<PAGE>

            a) Notices. Any and all notices or other communications or
      deliveries to be provided by the Holder hereunder, including, without
      limitation, any Notice of Conversion, shall be in writing and delivered
      personally, by facsimile, or sent by a nationally recognized overnight
      courier service, addressed to the Company, at the address set forth above,
      facsimile number _______, Attention: _______________ or such other
      facsimile number or address as the Company may specify for such purpose by
      notice to the Holder delivered in accordance with this Section 9. Any and
      all notices or other communications or deliveries to be provided by the
      Company hereunder shall be in writing and delivered personally, by
      facsimile, or sent by a nationally recognized overnight courier service
      addressed to the Holder at the facsimile number or address of such Holder
      appearing on the signature page of the Purchase Agreement or in any
      transfer document delivered to the Company, as applicable, or such other
      facsimile number or address as such Holder may specify for such purpose by
      written notice to the Company delivered in accordance with Section 9.. Any
      notice or other communication or deliveries hereunder shall be deemed
      given and effective on the earliest of (i) the date of transmission, if
      such notice or communication is delivered via facsimile at the facsimile
      number specified in this Section 9 prior to 5:30 p.m. (New York City
      time), (ii) the date immediately following the date of transmission, if
      such notice or communication is delivered via facsimile at the facsimile
      number specified in this Section 9 between 5:30 p.m. (New York City time)
      and 11:59 p.m. (New York City time) on any date, (iii) the second Business
      Day following the date of timely delivered to a nationally recognized
      overnight courier service, or (iv) upon actual receipt by the party to
      whom such notice is required to be given. Refusal to accept delivery shall
      constitute delivery.

            b) Absolute Obligation. Except as expressly provided herein, no
      provision of this Debenture shall alter or impair the obligation of the
      Company, which is absolute and unconditional, to pay the principal of,
      liquidated damages and accrued interest, as applicable, on this Debenture
      at the time, place, and rate, and in the coin or currency, herein
      prescribed. This Debenture is a direct debt obligation of the Company.
      This Debenture ranks pari passu with all other Debentures now or hereafter
      issued under the terms set forth herein.

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

            d) Governing Law. All questions concerning the construction,
      validity, enforcement and interpretation of this Debenture shall, to the
      greatest extent permitted by applicable law, be governed by and construed
      and enforced in accordance with the internal laws of the State of New York
      and federal laws of the United States of America, without regard to any
      principles of conflicts of law thereof that would defer to the substantive
      laws of any other jurisdiction. Each party agrees that all legal
      proceedings concerning the interpretation, enforcement and defense of the
      transactions contemplated by any of the Transaction Documents (whether
      brought against a party hereto or its respective Affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced in the
      state and federal courts sitting in the City of New York, Borough of
      Manhattan (the "New York Courts"). Each party hereto hereby irrevocably
      submits to the exclusive jurisdiction of the New York Courts for the
      adjudication of any dispute hereunder or in connection herewith or with
      any transaction contemplated hereby or discussed herein (including with
      respect to the enforcement of any of the Transaction Documents), and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the
      jurisdiction of such New York Courts, or such New York Courts are improper
      or inconvenient venue for such proceeding. The preceding consents to New
      York governing law and jurisdiction and venue in New York State's Supreme

                                       25
<PAGE>

      Court have been made by the parties in reliance (at least in part) on
      Sections 5-1401 and 5-1402 of the General Obligations Law of the State of
      New York, as amended (as and to the extent applicable), and other
      applicable law. Each party hereby irrevocably waives personal service of
      process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the
      address in effect for notices to it under this Debenture and agrees that
      such service shall constitute good and sufficient service of process and
      notice thereof. Nothing contained herein shall be deemed to limit in any
      way any right to serve process in any other manner permitted by applicable
      law. In any action, suit or proceeding in any jurisdiction brought by any
      party against any other party, each party, knowingly and intentionally and
      to the fullest extent permitted by applicable law, hereby absolutely,
      unconditionally, irrevocably and expressly waives forever trial by jury.
      If either party shall commence an action or proceeding to enforce any
      provisions of this Debenture, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys fees
      and other costs and expenses incurred in the investigation, preparation
      and prosecution of such action or proceeding.

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

            f) Severability. 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 violates the applicable law governing usury,
      the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum rate of interest permitted under applicable
      law. 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.

                                       26
<PAGE>

            g) Next Business Day. 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.

            h) Headings. The headings contained herein are for convenience only,
      do not constitute a part of this Debenture and shall not be deemed to
      limit or affect any of the provisions hereof.

            i) Assumption. Any successor to the Company or any surviving entity
      in a Fundamental Transaction shall (i) assume, prior to such Fundamental
      Transaction, all of the obligations of the Company under this Debenture
      and the other Transaction Documents pursuant to written agreements in form
      and substance satisfactory to the Holder (such approval not to be
      unreasonably withheld or delayed) and (ii) issue to the Holder a new
      debenture of such successor entity evidenced by a written instrument
      substantially similar in form and substance to this Debenture, including,
      without limitation, having a principal amount and interest rate equal to
      the principal amount and the interest rate of this Debenture and having
      similar ranking to this Debenture, which shall be satisfactory to the
      Holder (any such approval not to be unreasonably withheld or delayed). The
      provisions of this Section 9(i) shall apply similarly and equally to
      successive Fundamental Transactions and shall be applied without regard to
      any limitations of this Debenture.

            j) Secured Obligation. The obligations of the Company under this
      Debenture and the other Debentures are (i) guarantied pursuant to the
      Subsidiary Guarantee dated as of February __, 2007, from the Subsidiaries
      of the Company to and with the Purchasers (as defined therein), as the
      same may be supplemented, modified, amended, restated or replaced from
      time to time in the manner provided therein (the "Subsidiary Guarantee"),
      and (ii) secured (and the obligations of the Subsidiary Guarantee also are
      secured) by substantially all personal assets and properties of the
      Company and each Subsidiary pursuant to the Security Agreement dated as of
      February __, 2007, between the Company, the Subsidiaries of the Company,
      the Agent and the Secured Parties (as defined therein), as the same may be
      supplemented, modified, amended, restated or replaced from time to time in
      the manner provided therein (the "Security Agreement").

                                       27
<PAGE>

            k) Purchase Agreement. This Debenture is one of the Debentures
      referred to in the Purchase Agreement and other Transaction Documents. All
      of the applicable provisions of the Purchase Agreement, including (without
      limitation) any provision for limiting the maximum rate of interest
      payable hereunder, are incorporated herein by reference and made a part
      hereof. In the event that any specific provision of this Debenture
      conflicts or is inconsistent with any specific term or provision contained
      in the Purchase Agreement, the specific term or provision of the Purchase
      Agreement shall control and be given effect. However, this Agreement
      contains provisions that are in addition to those contained in the
      Purchase Agreement, which each are cumulative with and not alternatives to
      each other, and which shall not be deemed or construed to be in conflict
      or inconsistent with the Purchase Agreement because they are not contained
      in it.

            l) Amendment; Holder is a Party. This Debenture may not be
      supplemented, modified, amended, restated, waived, extended, discharged or
      terminated orally. This Debenture may only be (i) supplemented, modified,
      amended or restated in a writing signed by the Company and the Holder (or
      in the case of a restated or replacement Debenture, consented to in a
      separate writing by the Holder if the Holder elects not to sign such
      Debenture) and (ii) waived, extended, discharged or terminated in a
      writing signed by the party against whom such waiver, extension, discharge
      or termination would have to be enforced. By accepting this Debenture, the
      Holder acknowledges and agrees that the Holder (A) is a "party" and one of
      the "parties" for the purposes of this Debenture and (A) is contractually
      bound by the provisions hereof applicable to it as a party or one of the
      parties.

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

                                       28
<PAGE>

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

                                          STAR ENERGY CORPORATION

                                          By:___________________________________
                                             Name:
                                             Title:

                                       29
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

      The undersigned hereby elects to convert principal under the 8% Secured
Convertible Debenture due February __, 2010 of Star Energy Corporation, a Nevada
corporation (the "Company"), into shares of common stock, par value $.001 per
share (the "Common Stock"), of the Company according to the conditions hereof,
as of the date written below. If shares of Common Stock are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.

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

      The undersigned agrees to comply with the prospectus delivery requirements
under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.

Conversion calculations:
                              Date to Effect Conversion:

                              Principal Amount of Debenture to be Converted:

                              Payment of Interest in Common Stock __ yes  __ no
                                   If yes,  $_____ of Interest  Accrued on
                                   Account of  Conversion at Issue.

                              Number of shares of Common Stock to be issued:

                              Signature:

                              Name:

                              Address:

                                       30
<PAGE>

                                   Schedule 1

                               CONVERSION SCHEDULE

The 8% Secured Convertible Debentures due on February ___, 2010 in the aggregate
principal amount of $____________ are issued by Star Energy Corporation. This
Conversion Schedule reflects conversions made under Section 4 of the above
referenced Debenture.

                                     Dated:

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

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

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

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

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

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

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

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

--------------------------------------------------------------------------------------------------
</TABLE>

                                       31NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                      FORM OF COMMON STOCK PURCHASE WARRANT

                             STAR ENERGY CORPORATION

Warrant Shares: [_______]     Initial Exercise Date:
February __, 2007

            THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that,
for value received, _____________ (the "Holder") is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial Exercise Date") and on or
prior to the close of business on the five year anniversary of the Initial
Exercise Date (the "Termination Date") but not thereafter, to subscribe for and
purchase from Star Energy Corporation, a Nevada corporation (the "Company"), up
to ______ shares (the "Warrant Shares") of common stock, par value $.001 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).

      Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the "Purchase Agreement"), dated January __, 2007, among the Company
and the purchasers signatory thereto.

      Section 2. Exercise.

<PAGE>

            a) Exercise of Warrant. Exercise of the purchase rights represented
      by this Warrant may be made, in whole or in part, at any time or times on
      or after the Initial Exercise Date and on or before the Termination Date
      by delivery to the Company of a duly executed facsimile copy of the Notice
      of Exercise Form annexed hereto (or such other office or agency of the
      Company as it may designate by notice in writing to the registered Holder
      at the address of such Holder appearing on the books of the Company); and,
      within 3 Trading Days of the date said Notice of Exercise is delivered to
      the Company, the Company shall have received payment of the aggregate
      Exercise Price of the shares thereby purchased by wire transfer or
      cashier's check drawn on a United States bank. Notwithstanding anything
      herein to the contrary, the Holder shall not be required to physically
      surrender this Warrant to the Company until the Holder has purchased all
      of the Warrant Shares available hereunder and the Warrant has been
      exercised in full, in which case, the Holder shall surrender this Warrant
      to the Company for cancellation within 3 Trading Days of the date the
      final Notice of Exercise is delivered to the Company. Partial exercises of
      this Warrant resulting in purchases of a portion of the total number of
      Warrant Shares available hereunder shall have the effect of lowering the
      outstanding number of Warrant Shares purchasable hereunder in an amount
      equal to the applicable number of Warrant Shares purchased. The Holder and
      the Company shall maintain records showing the number of Warrant Shares
      purchased and the date of such purchases. The Company shall deliver any
      objection to any Notice of Exercise Form within 2 Business Days of receipt
      of such notice. The Holder and any assignee, by acceptance of this
      Warrant, acknowledge and agree that, by reason of the provisions of this
      paragraph, following the purchase of a portion of the Warrant Shares
      hereunder, the number of Warrant Shares available for purchase hereunder
      at any given time may be less than the amount stated on the face hereof.

            b) Exercise Price. The exercise price per share of the Common Stock
      under this Warrant shall be $_____, subject to adjustment hereunder (the
      "Exercise Price").

            c) Cashless Exercise. If at any time after one year from the date of
      issuance of this Warrant there is no effective Registration Statement
      registering, or no current prospectus available for, the resale of the
      Warrant Shares by the Holder, then this Warrant may also be exercised at
      such time by means of a "cashless exercise" in which the Holder shall be
      entitled to receive a certificate for the number of Warrant Shares equal
      to the quotient obtained by dividing [(A-B) (X)] by (A), where:

            (A) = the VWAP on the Trading Day immediately preceding the date
                  of such election;

            (B) = the Exercise Price of this Warrant, as adjusted; and

            (X) = the number of Warrant Shares issuable upon exercise of this
                  Warrant in accordance with the terms of this Warrant by means
                  of a cash exercise rather than a cashless exercise.

            Notwithstanding anything herein to the contrary, on the Termination
      Date, this Warrant shall be automatically exercised via cashless exercise
      pursuant to this Section 2(c).

            d) Exercise Limitations.

                                        2
<PAGE>

            i.    Holder's Restrictions. The Company shall not effect any
                  exercise of this Warrant, and a Holder shall not have the
                  right to exercise any portion of this Warrant, pursuant to
                  Section 2(c) or otherwise, to the extent that after giving
                  effect to such issuance after exercise as set forth on the
                  applicable Notice of Exercise, such Holder (together with such
                  Holder's Affiliates, and any other person or entity acting as
                  a group together with such Holder or any of such Holder's
                  Affiliates), as set forth on the applicable Notice of
                  Exercise, would beneficially own in excess of the Beneficial
                  Ownership Limitation (as defined below). For purposes of the
                  foregoing sentence, the number of shares of Common Stock
                  beneficially owned by such Holder and its Affiliates shall
                  include the number of shares of Common Stock issuable upon
                  exercise of this Warrant with respect to which such
                  determination is being made, but shall exclude the number of
                  shares of Common Stock which would be issuable upon (A)
                  exercise of the remaining, nonexercised portion of this
                  Warrant beneficially owned by such Holder or any of its
                  Affiliates and (B) exercise or conversion of the unexercised
                  or nonconverted portion of any other securities of the Company
                  (including, without limitation, any other Debentures or
                  Warrants) subject to a limitation on conversion or exercise
                  analogous to the limitation contained herein beneficially
                  owned by such Holder or any of its affiliates. Except as set
                  forth in the preceding sentence, for purposes of this Section
                  2(d)(i), beneficial ownership shall be calculated in
                  accordance with Section 13(d) of the Exchange Act and the
                  rules and regulations promulgated thereunder, it being
                  acknowledged by a Holder that the Company is not representing
                  to such Holder that such calculation is in compliance with
                  Section 13(d) of the Exchange Act and such Holder is solely
                  responsible for any schedules required to be filed in
                  accordance therewith. To the extent that the limitation
                  contained in this Section 2(d) applies, the determination of
                  whether this Warrant is exercisable (in relation to other
                  securities owned by such Holder together with any Affiliates)
                  and of which a portion of this Warrant is exercisable shall be
                  in the sole discretion of a Holder, and the submission of a
                  Notice of Exercise shall be deemed to be each Holder's
                  determination of whether this Warrant is exercisable (in
                  relation to other securities owned by such Holder together
                  with any Affiliates) and of which portion of this Warrant is
                  exercisable, in each case subject to such aggregate percentage
                  limitation, and the Company shall have no obligation to verify
                  or confirm the accuracy of such determination. In addition, a
                  determination as to any group status as contemplated above
                  shall be determined in accordance with Section 13(d) of the
                  Exchange Act and the rules and regulations promulgated
                  thereunder. For purposes of this Section 2(d), in determining
                  the number of outstanding shares of Common Stock, a Holder may
                  rely on the number of outstanding shares of Common Stock as
                  reflected in (x) the Company's most recent Form 10-QSB or Form
                  10-KSB, as the case may be, (y) a more recent public
                  announcement by the Company or (z) any other notice by the
                  Company or the Company's Transfer Agent setting forth the
                  number of shares of Common Stock outstanding. Upon the written
                  or oral request of a Holder, the Company shall within two
                  Trading Days confirm orally and in writing to such Holder the
                  number of shares of Common Stock then outstanding. In any
                  case, the number of outstanding shares of Common Stock shall
                  be determined after giving effect to the conversion or
                  exercise of securities of the Company, including this Warrant,
                  by such Holder or its Affiliates since the date as of which
                  such number of outstanding shares of Common Stock was
                  reported. The "Beneficial Ownership Limitation" shall be 4.99%

                                        3
<PAGE>

                  of the number of shares of the Common Stock outstanding
                  immediately after giving effect to the issuance of shares of
                  Common Stock issuable upon exercise of this Warrant. The
                  Beneficial Ownership Limitation provisions of this Section
                  2(d)(i) may be waived by such Holder, at the election of such
                  Holder, upon not less than 61 days' prior notice to the
                  Company to change the Beneficial Ownership Limitation to 9.99%
                  of the number of shares of the Common Stock outstanding
                  immediately after giving effect to the issuance of shares of
                  Common Stock upon exercise of this Warrant, and the provisions
                  of this Section 2(d) shall continue to apply. Upon such a
                  change by a Holder of the Beneficial Ownership Limitation from
                  such 4.99% limitation to such 9.99% limitation, the Beneficial
                  Ownership Limitation may not be further waived by such Holder.
                  The provisions of this paragraph shall be construed and
                  implemented in a manner otherwise than in strict conformity
                  with the terms of this Section 2(d)(i) to correct this
                  paragraph (or any portion hereof) which may be defective or
                  inconsistent with the intended Beneficial Ownership Limitation
                  herein contained or to make changes or supplements necessary
                  or desirable to properly give effect to such limitation. The
                  limitations contained in this paragraph shall apply to a
                  successor holder of this Warrant.

            e)    Mechanics of Exercise.

                        i. Authorization of Warrant Shares. The Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase rights represented by this Warrant
                  will, upon exercise of the purchase rights represented by this
                  Warrant, be duly authorized, validly issued, fully paid and
                  nonassessable and free from all taxes, liens and charges
                  created by the Company in respect of the issue thereof (other
                  than taxes in respect of any transfer occurring
                  contemporaneously with such issue).

                                        4
<PAGE>

                        ii. Delivery of Certificates Upon Exercise. Certificates
                  for shares purchased hereunder shall be transmitted by the
                  transfer agent of the Company to the Holder by crediting the
                  account of the Holder's prime broker with the Depository Trust
                  Company through its Deposit Withdrawal Agent Commission
                  ("DWAC") system if the Company is a participant in such
                  system, and otherwise by physical delivery to the address
                  specified by the Holder in the Notice of Exercise within 3
                  Trading Days from the delivery to the Company of the Notice of
                  Exercise Form, surrender of this Warrant (if required) and
                  payment of the aggregate Exercise Price as set forth above
                  ("Warrant Share Delivery Date"). This Warrant shall be deemed
                  to have been exercised on the date the Exercise Price is
                  received by the Company. The Warrant Shares shall be deemed to
                  have been issued, and Holder or any other person so designated
                  to be named therein shall be deemed to have become a holder of
                  record of such shares for all purposes, as of the date the
                  Warrant has been exercised by payment to the Company of the
                  Exercise Price (or by cashless exercise, if permitted) and all
                  taxes required to be paid by the Holder, if any, pursuant to
                  Section 2(e)(vii) prior to the issuance of such shares, have
                  been paid. If the Company fails for any reason to deliver to
                  the Holder certificates evidencing the Warrant Shares subject
                  to a Notice of Exercise by the Warrant Share Delivery Date,
                  the Company shall pay to such Holder, in cash, as liquidated
                  damages and not as a penalty, for each $1,000 of Warrant
                  Shares subject to such exercise (based on the VWAP of the
                  Common Stock on the date of the applicable Notice of
                  Exercise), $10 per Trading Day (increasing to $20 per Trading
                  Day on the fifth Trading Day after such liquidated damages
                  begin to accrue) for each Trading Day after such Warrant Share
                  Delivery Date until such certificates are delivered.

                        iii.Delivery of New Warrants Upon Exercise. If this
                  Warrant shall have been exercised in part, the Company shall,
                  at the request of a Holder and upon surrender of this Warrant
                  certificate, at the time of delivery of the certificate or
                  certificates representing Warrant Shares, deliver to Holder a
                  new Warrant evidencing the rights of Holder to purchase the
                  unpurchased Warrant Shares called for by this Warrant, which
                  new Warrant shall in all other respects be identical with this
                  Warrant.

                        iv. Rescission Rights. If the Company fails to cause its
                  transfer agent to transmit to the Holder a certificate or
                  certificates representing the Warrant Shares pursuant to this
                  Section 2(e)(iv) by the Warrant Share Delivery Date, then the
                  Holder will have the right to rescind such exercise.

                        v. Compensation for Buy-In on Failure to Timely Deliver
                  Certificates Upon Exercise. In addition to any other rights
                  available to the Holder, if the Company fails to cause its
                  transfer agent to transmit to the Holder a certificate or
                  certificates representing the Warrant Shares pursuant to an
                  exercise on or before the Warrant Share Delivery Date, and if
                  after such date the Holder is required by its broker to
                  purchase (in an open market transaction or otherwise) or the
                  Holder's brokerage firm otherwise purchases, shares of Common
                  Stock to deliver in satisfaction of a sale by the Holder of
                  the Warrant Shares which the Holder anticipated receiving upon
                  such exercise (a "Buy-In"), then the Company shall (1) pay in
                  cash to the Holder the amount by which (x) the Holder's total
                  purchase price (including brokerage commissions, if any) for
                  the shares of Common Stock so purchased exceeds (y) the amount
                  obtained by multiplying (A) the number of Warrant Shares that
                  the Company was required to deliver to the Holder in
                  connection with the exercise at issue times (B) the price at
                  which the sell order giving rise to such purchase obligation
                  was executed, and (2) at the option of the Holder, either
                  reinstate the portion of the Warrant and equivalent number of
                  Warrant Shares for which such exercise was not honored or
                  deliver to the Holder the number of shares of Common Stock

                                        5
<PAGE>

                  that would have been issued had the Company timely complied
                  with its exercise and delivery obligations hereunder. For
                  example, if the Holder purchases Common Stock having a total
                  purchase price of $11,000 to cover a Buy-In with respect to an
                  attempted exercise of shares of Common Stock with an aggregate
                  sale price giving rise to such purchase obligation of $10,000,
                  under clause (1) of the immediately preceding sentence the
                  Company shall be required to pay the Holder $1,000. The Holder
                  shall provide the Company written notice indicating the
                  amounts payable to the Holder in respect of the Buy-In and,
                  upon request of the Company, evidence of the amount of such
                  loss. Nothing herein shall limit a Holder's right to pursue
                  any other remedies available to it hereunder, at law or in
                  equity including, without limitation, a decree of specific
                  performance and/or injunctive relief with respect to the
                  Company's failure to timely deliver certificates representing
                  shares of Common Stock upon exercise of the Warrant as
                  required pursuant to the terms hereof.

                        vi. No Fractional Shares or Scrip. No fractional shares
                  or scrip representing fractional shares shall be issued upon
                  the exercise of this Warrant. As to any fraction of a share
                  which Holder would otherwise be entitled to purchase upon such
                  exercise, the Company shall at its election, either pay a cash
                  adjustment in respect of such final fraction in an amount
                  equal to such fraction multiplied by the Exercise Price or
                  round up to the next whole share.

                        vii.Charges, Taxes and Expenses. Issuance of
                  certificates for Warrant Shares shall be made without charge
                  to the Holder for any issue or transfer tax or other
                  incidental expense in respect of the issuance of such
                  certificate, all of which taxes and expenses shall be paid by
                  the Company, and such certificates shall be issued in the name
                  of the Holder or in such name or names as may be directed by
                  the Holder; provided, however, that in the event certificates
                  for Warrant Shares are to be issued in a name other than the
                  name of the Holder, this Warrant when surrendered for exercise
                  shall be accompanied by the Assignment Form attached hereto
                  duly executed by the Holder; and the Company may require, as a
                  condition thereto, the payment of a sum sufficient to
                  reimburse it for any transfer tax incidental thereto.

                        viii. Closing of Books. The Company will not close its
                  stockholder books or records in any manner which prevents the
                  timely exercise of this Warrant, pursuant to the terms hereof.

                                        6
<PAGE>

      Section 3. Certain Adjustments.

            a) Stock Dividends and Splits. If the Company, at any time while
      this Warrant is outstanding: (A) pays 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
      (which, for avoidance of doubt, shall not include any shares of Common
      Stock issued by the Company upon exercise of this Warrant), (B) subdivides
      outstanding shares of Common Stock into a larger number of shares, (C)
      combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by
      reclassification of shares of the Common Stock any shares of capital stock
      of the Company, then in each case the Exercise 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 immediately
      before such event and of which the denominator shall be the number of
      shares of Common Stock outstanding immediately after such event and the
      number of shares issuable upon exercise of this Warrant shall be
      proportionately adjusted. Any adjustment made pursuant to this Section
      3(a) 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.

            b) Subsequent Equity Sales. If the Company or any Subsidiary
      thereof, as applicable, at any time while this Warrant is outstanding,
      shall sell or grant any option to purchase, or sell or grant any right to
      reprice its securities, or otherwise dispose of or issue (or announce any
      offer, sale, grant or any option to purchase or other disposition) any
      Common Stock or Common Stock Equivalents entitling any Person to acquire
      shares of Common Stock, at an effective price per share less than the then
      Exercise Price (such lower price, the "Base Share Price" and such
      issuances collectively, a "Dilutive Issuance") (if the holder of the
      Common Stock or Common Stock Equivalents so issued shall at any time,
      whether by operation of purchase price adjustments, reset provisions,
      floating conversion, exercise or exchange prices or otherwise, or due to
      warrants, options or rights per share which are issued in connection with
      such issuance, be entitled to receive shares of Common Stock at an
      effective price per share which is less than the Exercise Price, such
      issuance shall be deemed to have occurred for less than the Exercise Price
      on such date of the Dilutive Issuance), then the Exercise Price shall be
      reduced and only reduced to equal the Base Share Price and the number of
      Warrant Shares issuable hereunder shall be increased such that the
      aggregate Exercise Price payable hereunder, after taking into account the
      decrease in the Exercise Price, shall be equal to the aggregate Exercise
      Price prior to such adjustment. Such adjustment shall be made whenever
      such Common Stock or Common Stock Equivalents are issued. Notwithstanding
      the foregoing, no adjustments shall be made, paid or issued under this
      Section 3(b) in respect of an Exempt Issuance. The Company shall notify
      the Holder in writing, no later than the Trading Day following the
      issuance of any Common Stock or Common Stock Equivalents subject to this
      Section 3(b), indicating therein the applicable issuance price, or
      applicable reset price, exchange price, conversion price and other pricing
      terms (such notice the "Dilutive Issuance Notice"). For purposes of
      clarification, whether or not the Company provides a Dilutive Issuance
      Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive
      Issuance, after the date of such Dilutive Issuance the Holder is entitled
      to receive a number of Warrant Shares based upon the Base Share Price
      regardless of whether the Holder accurately refers to the Base Share Price
      in the Notice of Exercise.

                                        7
<PAGE>

            c) Subsequent Rights Offerings. If the Company, at any time while
      the Warrant is outstanding, shall issue rights, options or warrants to all
      holders of Common Stock (and not to Holders) entitling them to subscribe
      for or purchase shares of Common Stock at a price per share less than the
      VWAP at the record date mentioned below, then the Exercise Price shall be
      multiplied by a fraction, of which the denominator shall be the number of
      shares of the Common Stock outstanding on the date of issuance of such
      rights or warrants plus the number of additional shares of Common Stock
      offered for subscription or purchase, and of which the numerator shall be
      the number of shares of the Common Stock outstanding on the date of
      issuance of such rights or warrants plus the number of shares which the
      aggregate offering price of the total number of shares so offered
      (assuming receipt by the Company in full of all consideration payable upon
      exercise of such rights, options or warrants) would purchase at such VWAP.
      Such adjustment shall be made whenever such rights or warrants are issued,
      and shall become effective immediately after the record date for the
      determination of stockholders entitled to receive such rights, options or
      warrants.

            d) Pro Rata Distributions. If the Company, at any time prior to the
      Termination Date, shall distribute to all holders of Common Stock (and not
      to Holders of the Warrants) evidences of its indebtedness or assets
      (including cash and cash dividends) or rights or warrants to subscribe for
      or purchase any security other than the Common Stock (which shall be
      subject to Section 3(b)), then in each such case the Exercise Price shall
      be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to
      receive such distribution by a fraction of which the denominator shall be
      the VWAP determined as of the record date mentioned above, and of which
      the numerator shall be such VWAP on such record date less the then per
      share fair market value at such record date of the portion of such assets
      or evidence of indebtedness so distributed applicable to one outstanding
      share of the Common Stock as determined by the Board of Directors in good
      faith. In either case the adjustments shall be described in a statement
      provided to the Holder of the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one
      share of Common Stock. Such adjustment shall be made whenever any such
      distribution is made and shall become effective immediately after the
      record date mentioned above.

                                        8
<PAGE>

            e) Fundamental Transaction. If, at any time while this Warrant is
      outstanding, (A) the Company effects any merger or consolidation of the
      Company with or into another Person, (B) the Company effects any sale of
      all or substantially all of its assets in one or a series of related
      transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of
      Common Stock are permitted to tender or exchange their shares for other
      securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is effectively converted into or
      exchanged for other securities, cash or property (each "Fundamental
      Transaction"), then, upon any subsequent exercise of this Warrant, the
      Holder shall have the right to receive, for each Warrant Share that would
      have been issuable upon such exercise immediately prior to the occurrence
      of such Fundamental Transaction, the number of shares of Common Stock of
      the successor or acquiring corporation or of the Company, if it is the
      surviving corporation, and any additional consideration (the "Alternate
      Consideration") receivable as a result of such merger, consolidation or
      disposition of assets by a Holder of the number of shares of Common Stock
      for which this Warrant is exercisable immediately prior to such event. For
      purposes of any such exercise, the determination of the Exercise Price
      shall be appropriately adjusted to apply to such Alternate Consideration
      based on the amount of Alternate Consideration issuable in respect of one
      share of Common Stock in such Fundamental Transaction, and the Company
      shall apportion the Exercise Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different
      components of the Alternate Consideration. If holders of Common Stock are
      given any choice as to the securities, cash or property to be received in
      a Fundamental Transaction, then the Holder shall be given the same choice
      as to the Alternate Consideration it receives upon any exercise of this
      Warrant following such Fundamental Transaction. To the extent necessary to
      effectuate the foregoing provisions, any successor to the Company or
      surviving entity in such Fundamental Transaction shall issue to the Holder
      a new warrant consistent with the foregoing provisions and evidencing the
      Holder's right to exercise such warrant into Alternate Consideration. The
      terms of any agreement pursuant to which a Fundamental Transaction is
      effected shall include terms requiring any such successor or surviving
      entity to comply with the provisions of this Section 3(e) and insuring
      that this Warrant (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction. Notwithstanding anything to the contrary, in the event of a
      Fundamental Transaction that is (1) an all cash transaction, (2) a "Rule
      13e-3 transaction" as defined in Rule 13e-3 under the Securities Exchange
      Act of 1934, as amended, or (3) a Fundamental Transaction involving a
      person or entity not traded on a national securities exchange, the Nasdaq
      Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market,
      the Company or any successor entity shall pay at the Holder's option,
      exercisable at any time concurrently with or within 30 days after the
      consummation of the Fundamental Transaction, an amount of cash equal to
      the value of this Warrant as determined in accordance with the
      Black-Scholes option pricing formula using an expected volatility equal to
      the 100 day historical price volatility obtained from the HVT function on
      Bloomberg L.P. as of the trading day immediately prior to the public
      announcement of the Fundamental Transaction.

            f) Calculations. All calculations under this Section 3 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For purposes of this Section 3, the number of shares of Common Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the number of shares of Common Stock (excluding treasury shares, if any)
      issued and outstanding.

                                        9
<PAGE>

            g) Voluntary Adjustment By Company. The Company may at any time
      during the term of this Warrant reduce the then current Exercise Price to
      any amount and for any period of time deemed appropriate by the Board of
      Directors of the Company.

            h) Notice to Holder.

                        i. Adjustment to Exercise Price. Whenever the Exercise
                  Price is adjusted pursuant to any provision of this Section 3,
                  the Company shall promptly mail to the Holder a notice setting
                  forth the Exercise Price after such adjustment and setting
                  forth a brief statement of the facts requiring such
                  adjustment. If the Company enters into a Variable Rate
                  Transaction (as defined in the Purchase Agreement) despite the
                  prohibition thereon in the Purchase Agreement, the Company
                  shall be deemed to have issued Common Stock or Common Stock
                  Equivalents at the lowest possible conversion or exercise
                  price at which such securities may be converted or exercised.

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

                                       10
<PAGE>

      Section 4. Transfer of Warrant.

            a) Transferability. Subject to compliance with any applicable
      securities laws and the conditions set forth in Section 4(d) hereof and to
      the provisions of Section 4.1 of the Purchase Agreement, this Warrant and
      all rights hereunder (including, without limitation, any registration
      rights) are transferable, in whole or in part, upon surrender of this
      Warrant at the principal office of the Company or its designated agent,
      together with a written assignment of this Warrant substantially in the
      form attached hereto duly executed by the Holder or its agent or attorney
      and funds sufficient to pay any transfer taxes payable upon the making of
      such transfer. Upon such surrender and, if required, such payment, the
      Company shall execute and deliver a new Warrant or Warrants in the name of
      the assignee or assignees and in the denomination or denominations
      specified in such instrument of assignment, and shall issue to the
      assignor a new Warrant evidencing the portion of this Warrant not so
      assigned, and this Warrant shall promptly be cancelled. A Warrant, if
      properly assigned, may be exercised by a new holder for the purchase of
      Warrant Shares without having a new Warrant issued.

            b) New Warrants. This Warrant may be divided or combined with other
      Warrants upon presentation hereof at the aforesaid office of the Company,
      together with a written notice specifying the names and denominations in
      which new Warrants are to be issued, signed by the Holder or its agent or
      attorney. Subject to compliance with Section 4(a), as to any transfer
      which may be involved in such division or combination, the Company shall
      execute and deliver a new Warrant or Warrants in exchange for the Warrant
      or Warrants to be divided or combined in accordance with such notice.

            c) Warrant Register. The Company shall register this Warrant, upon
      records to be maintained by the Company for that purpose (the "Warrant
      Register"), in the name of the record Holder hereof from time to time. The
      Company may deem and treat the registered Holder of this Warrant as the
      absolute owner hereof for the purpose of any exercise hereof or any
      distribution to the Holder, and for all other purposes, absent actual
      notice to the contrary.

            d) Transfer Restrictions. If, at the time of the surrender of this
      Warrant in connection with any transfer of this Warrant, the transfer of
      this Warrant shall not be registered pursuant to an effective registration
      statement under the Securities Act and under applicable state securities
      or blue sky laws, the Company may require, as a condition of allowing such
      transfer, that (i) the Holder or transferee of this Warrant, as the case
      may be, furnish to the Company a written opinion of counsel (which is
      reasonably acceptable to the Company, and which opinion shall be in form,
      substance and scope customary for opinions of counsel in comparable
      transactions) to the effect that such transfer may be made without
      registration under the Securities Act and under applicable state
      securities or blue sky laws, and (ii) the Holder or transferee execute and
      deliver to the Company an investment letter in form and substance
      acceptable to the Company, and (iii) the transferee be an "accredited
      investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a "qualified institutional buyer"
      as defined in Rule 144A(a) promulgated under the Securities Act.

                                       11
<PAGE>

      Section 5. Miscellaneous.

            a) No Rights as Shareholder Until Exercise. This Warrant does not
      entitle the Holder to any voting rights or other rights as a shareholder
      of the Company prior to the exercise hereof as set forth in Section
      2(e)(ii).

            b) Loss, Theft, Destruction or Mutilation of Warrant. The Company
      covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this
      Warrant or any stock certificate relating to the Warrant Shares, and in
      case of loss, theft or destruction, of indemnity or security reasonably
      satisfactory to it (which, in the case of the Warrant, shall not include
      the posting of any bond), and upon surrender and cancellation of such
      Warrant or stock certificate, if mutilated, the Company will make and
      deliver a new Warrant or stock certificate of like tenor and dated as of
      such cancellation, in lieu of such Warrant or stock certificate.

            c) Saturdays, Sundays, Holidays, etc. If the last or appointed day
      for the taking of any action or the expiration of any right required or
      granted herein shall not be a Business Day, then such action may be taken
      or such right may be exercised on the next succeeding Business Day.

            d) Authorized Shares.

                  The Company covenants that during the period the Warrant is
            outstanding, it will reserve from its authorized and unissued Common
            Stock a sufficient number of shares to provide for the issuance of
            the Warrant Shares upon the exercise of any purchase rights under
            this Warrant. The Company further covenants that its issuance of
            this Warrant shall constitute full authority to its officers who are
            charged with the duty of executing stock certificates to execute and
            issue the necessary certificates for the Warrant Shares upon the
            exercise of the purchase rights under this Warrant. The Company will
            take all such reasonable action as may be necessary to assure that
            such Warrant Shares may be issued as provided herein without
            violation of any applicable law or regulation, or of any
            requirements of the Trading Market upon which the Common Stock may
            be listed.

                  Except and to the extent as waived or consented to by the
            Holder, the Company shall not by any action, including, without
            limitation, amending its certificate of incorporation or through any
            reorganization, transfer of assets, consolidation, merger,
            dissolution, issue or sale of securities or any other voluntary
            action, avoid or seek to avoid the observance or performance of any
            of the terms of this Warrant, but will at all times in good faith
            assist in the carrying out of all such terms and in the taking of
            all such actions as may be necessary or appropriate to protect the
            rights of Holder as set forth in this Warrant against impairment.
            Without limiting the generality of the foregoing, the Company will
            (a) not increase the par value of any Warrant Shares above the
            amount payable therefor upon such exercise immediately prior to such
            increase in par value, (b) take all such action as may be necessary
            or appropriate in order that the Company may validly and legally
            issue fully paid and nonassessable Warrant Shares upon the exercise
            of this Warrant, and (c) use commercially reasonable efforts to
            obtain all such authorizations, exemptions or consents from any
            public regulatory body having jurisdiction thereof as may be
            necessary to enable the Company to perform its obligations under
            this Warrant.

                                       12
<PAGE>

                  Before taking any action which would result in an adjustment
            in the number of Warrant Shares for which this Warrant is
            exercisable or in the Exercise Price, the Company shall obtain all
            such authorizations or exemptions thereof, or consents thereto, as
            may be necessary from any public regulatory body or bodies having
            jurisdiction thereof.

            e) Jurisdiction. All questions concerning the construction,
      validity, enforcement and interpretation of this Warrant shall be
      determined in accordance with the provisions of the Purchase Agreement.

            f) Restrictions. The Holder acknowledges that the Warrant Shares
      acquired upon the exercise of this Warrant, if not registered, will have
      restrictions upon resale imposed by state and federal securities laws.

            g) Nonwaiver and Expenses. No course of dealing or any delay or
      failure to exercise any right hereunder on the part of Holder shall
      operate as a waiver of such right or otherwise prejudice Holder's rights,
      powers or remedies, notwithstanding the fact that all rights hereunder
      terminate on the Termination Date. If the Company willfully and knowingly
      fails to comply with any provision of this Warrant, which results in any
      material damages to the Holder, the Company shall pay to Holder such
      amounts as shall be sufficient to cover any costs and expenses including,
      but not limited to, reasonable attorneys' fees, including those of
      appellate proceedings, incurred by Holder in collecting any amounts due
      pursuant hereto or in otherwise enforcing any of its rights, powers or
      remedies hereunder.

            h) Notices. Any notice, request or other document required or
      permitted to be given or delivered to the Holder by the Company shall be
      delivered in accordance with the notice provisions of the Purchase
      Agreement.

            i) Limitation of Liability. No provision hereof, in the absence of
      any affirmative action by Holder to exercise this Warrant to purchase
      Warrant Shares, and no enumeration herein of the rights or privileges of
      Holder, shall give rise to any liability of Holder for the purchase price
      of any Common Stock or as a stockholder of the Company, whether such
      liability is asserted by the Company or by creditors of the Company.

                                       13
<PAGE>

            j) Remedies. Holder, in addition to being entitled to exercise all
      rights granted by law, including recovery of damages, will be entitled to
      specific performance of its rights under this Warrant. The Company agrees
      that monetary damages would not be adequate compensation for any loss
      incurred by reason of a breach by it of the provisions of this Warrant and
      hereby agrees to waive and not to assert the defense in any action for
      specific performance that a remedy at law would be adequate.

            k) Successors and Assigns. Subject to applicable securities laws,
      this Warrant and the rights and obligations evidenced hereby shall inure
      to the benefit of and be binding upon the successors of the Company and
      the successors and permitted assigns of Holder. The provisions of this
      Warrant are intended to be for the benefit of all Holders from time to
      time of this Warrant and shall be enforceable by any such Holder or holder
      of Warrant Shares.

            l) Amendment. This Warrant may be modified or amended or the
      provisions hereof waived with the written consent of the Company and the
      Holder.

            m) Severability. Wherever possible, each provision of this Warrant
      shall be interpreted in such manner as to be effective and valid under
      applicable law, but if any provision of this Warrant shall be prohibited
      by or invalid under applicable law, such provision shall be ineffective to
      the extent of such prohibition or invalidity, without invalidating the
      remainder of such provisions or the remaining provisions of this Warrant.

            n) Headings. The headings used in this Warrant are for the
      convenience of reference only and shall not, for any purpose, be deemed a
      part of this Warrant.

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

                                       14
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized as of the date first above
indicated.

                                                        STAR ENERGY CORPORATION

                                                        By:____________________
                                                           Name:
                                                           Title:

                                       15
<PAGE>

                               NOTICE OF EXERCISE

TO:   STAR ENERGY CORPORATION

            (1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

            (2) Payment shall take the form of (check applicable box):

                  [ ] in lawful money of the United States; or

                  [ ] [if permitted] the cancellation of such number of Warrant
                  Shares as is necessary, in accordance with the formula set
                  forth in subsection 2(c), to exercise this Warrant with
                  respect to the maximum number of Warrant Shares purchasable
                  pursuant to the cashless exercise procedure set forth in
                  subsection 2(c).

            (3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:

                  _________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

                  _________________________

                  _________________________

                  _________________________

            (4) Accredited Investor. The undersigned is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:_______________________________________________________
Signature of Authorized Signatory of Investing Entity:__________________________
Name of Authorized Signatory:___________________________________________________
Title of Authorized Signatory:__________________________________________________
Date:___________________________________________________________________________

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

            FOR VALUE RECEIVED, [____] all of or [_______] shares of the
foregoing Warrant and all rights evidenced thereby are hereby assigned to

______________________________________________________________ whose address is

_______________________________________________________________________________.

_______________________________________________________________________________

                                                 Dated: ______________, _______

            Holder's Signature: _____________________________

            Holder's Address:   _____________________________

Signature Guaranteed: _______________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]