Document:

f8k0808ex10i_guangzhou.htm

                                                                                                                                              EXHIBIT
      A

    

    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:

    Original
      Conversion Price (subject to adjustment herein):
$0.82

    

    $_______________

    

    

    8%
      SENIOR SECURED CONVERTIBLE DEBENTURE

    

    

    THIS
      DEBENTURE is one of a series of
      duly authorized and validly issued 8% Senior Secured Convertible Debentures
      of
      Guangzhou Global Telecom, Inc., a Florida corporation (the “Company”),
      having its principal place of business at APT 29D, Block E, No.11 Hao Jing
      Street, Zhu Jiang Di Jing Yuan, YiZhou Road, HaiZhu District, Guangzhou China,
      510310, designated as its 8% Senior Secured Convertible Debenture (this
      debenture, the “Debenture” and, collectively with the other debentures of
      such series, 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 July __, 2009 (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 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 and (b) the following terms shall have the following
      meanings:

     

     

    
      
        
        

      

      
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    “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 meeting of its creditors with a view to arranging a composition,
      adjustment or restructuring of its debts; or (g) the Company or any Significant
      Subsidiary thereof, by any act or failure to act, 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 any Saturday, any 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 33% 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 66% 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
      66% of the aggregate voting power of the acquiring entity immediately after
      the
      transaction, or 

     

     

    
      
        
        

      

      
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    (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 approved by a
      majority of those individuals who are members of the board of directors on
      the
      date hereof (or by those individuals who are serving as members of the board
      of
      directors on any date whose nomination to the board of directors was approved
      by
      a majority of the members of the board of directors who are members on the
      date
      hereof), 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.

    

    “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 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 shares issuable
      pursuant to the Transaction Documents are 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
      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 constitute an Event of Default, (vii) the issuance
      of
      the shares in question (or, in the case of an Optional or Monthly Redemption,
      the shares issuable upon conversion in full of the Optional or Monthly
      Redemption Amount) 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
      may
      constitute, material non-public information and (x) for each Trading Day in
      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 $200,000 of shares (subject to adjustment for forward and reverse stock
      splits and the like) per Trading Day.

     

     

    
      
        
        

      

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

     

            “Forced
      Conversion” shall have the meaning set forth in Section 6(d).

    

    “Forced
      Conversion Date” shall
      have the meaning set forth in Section 6(d).

    

    “Forced
      Conversion Notice” shall have the meaning set forth in Section
      6(d).

    

    “Forced
      Conversion Notice Date” shall have the meaning set forth in Section
      6(d).

    

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

    

    “Interest
      Conversion Rate” means the lesser of (a) the Conversion Price or (b) 85% of
      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.

    

    “Interest
      Conversion Shares” shall have the meaning set forth in Section
      2(a).

    

    “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 100% of 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.

     

     

    
      
        
        

      

      
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    “Monthly
      Conversion Period” shall have the meaning set forth in Section 6(b)
      hereof.

    

    “Monthly
      Conversion Price” shall have the meaning set forth in Section 6(b)
      hereof.

    

    “Monthly
      Redemption” means the redemption of this Debenture pursuant to Section 6(b)
      hereof.

    

     “Monthly
      Redemption Amount” means, as to a Monthly Redemption, $______1, plus accrued but unpaid interest,
      liquidated
      damages and any other amounts then owing to the Holder in respect of this
      Debenture.

    

    “Monthly
      Redemption Date” means the 1st of each month, commencing on February 1, 2008
      and terminating upon the full redemption of this Debenture.

    

    “Monthly
      Redemption Notice” shall have the meaning set forth in Section 6(b)
      hereof.

    

    “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(a).

    

    “Optional
      Redemption Amount” means the sum of (i) 120% 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(a).

    

    “Optional
      Redemption Notice” shall have the meaning set forth in Section
      6(a).

    

    “Optional
      Redemption Notice Date” shall have the meaning set forth in Section
      6(a).

    

    “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.

    

    “Permitted
      Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b)
      the Indebtedness existing on the Original Issue Date and set forth on
Schedule 3.1(aa) attached to the Purchase Agreement, (c) lease
      obligations and purchase money indebtedness of up to $100,000, in the aggregate,
      incurred in connection with the acquisition of capital assets and lease
      obligations with respect to newly acquired or leased assets and (d) indebtedness
      that (i) is expressly subordinate to the Debentures pursuant to a written
      subordination agreement with the Purchasers that is acceptable to each Purchaser
      in its sole and absolute discretion and (ii) matures at a date later than the
      Maturity Date).

     

    ______________________________

    
      1           1/18th
        of the original
        Principal Amount.

    

     

    
      
        
        

      

      
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    “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 which were
      incurred in the ordinary course of the Company’s business, such as carriers’,
      warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, 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; (c) Liens
      incurred in connection with Permitted Indebtedness under clauses (a) and (b)
      thereunder; and (d) Liens incurred in connection with Permitted Indebtedness
      under clause (c) thereunder, provided that such Liens are not secured by assets
      of the Company or its Subsidiaries other than the assets so acquired or
      leased.

     

    “Pre-Redemption
      Conversion Shares” shall have the meaning set forth in Section 6(b)
      hereof.

    

    “Purchase
      Agreement” means the Securities Purchase Agreement, dated as of July 31,
      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 Interest Conversion Shares of the Holder, names the 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.

     

     

    
      
        
        

      

      
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    “Threshold
      Period” shall have the meaning set forth in Section 6(d).

    

    “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.

    

    “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 OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      quoted for trading on the OTC Bulletin Board 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
      (d) 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 November 1, February
      1, May 1 and August 1, beginning on the first such date after the Original
      Issue
      Date, on each Monthly Redemption Date (as to that principal amount then being
      redeemed), 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, at the Company’s option, in 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 

     

     

    
      
        
        

      

      
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    (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 actually issued to the Holder, (ii)
      the
      Company shall have given the Holder notice in accordance with the notice
      requirements set forth below and (iii) as to such Interest Payment Date, prior
      to such Interest Notice Period (but not more than 5 Trading Days prior to the
      commencement of such Interest Notice Period), the Company shall have delivered
      to the Holder’s account with The Depository Trust Company a number of shares of
      Common Stock to be applied against such Interest Share Amount equal to the
      quotient of (x) the applicable Interest Share Amount divided by (y) the then
      Conversion Price (the “Interest Conversion Shares”).

    

    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 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 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.  The aggregate number of shares of Common Stock otherwise
      issuable to the Holder on an Interest Payment Date shall be reduced by the
      number of Interest Conversion Shares previously issued to the Holder in
      connection with such Interest Payment Date.

    

    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 commencing
      on the Original Issue Date until payment in full of the outstanding principal,
      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 (other than the Interest Conversion Shares
      issued prior to an Interest Notice Period) 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.

     

     

    
      
        
        

      

      
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    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 actual 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 actually
      made.  If any Interest Conversion Shares are issued to the Holder in
      connection with an Interest Payment Date and are not applied against an Interest
      Share Amount, then the Holder shall promptly return such excess shares to the
      Company.

    

    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.

    

    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 exchange.

    

    b)  Investment
      Representations. This Debenture has been issued 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.

     

     

    
      
        
        

      

      
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    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).  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.

    

    b)  Conversion
      Price.  The conversion price in effect on any Conversion Date
      shall be equal to $0.82, subject to adjustment herein (the
“Conversion Price”).

    

    c)  Holder’s
      Restriction on Conversion. 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, the Holder (together with the
      Holder’s Affiliates, and any other person or entity acting as a group together
      with the Holder or any of the 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 the 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 the 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 the Holder or any of its Affiliates.  

     

     

     

    
      
        
        

      

      
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    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 the Holder together with any Affiliates) and of which
      principal amount of this Debenture is convertible shall be in the sole
      discretion of the Holder, and the submission of a Notice of Conversion shall
      be
      deemed to be the Holder’s determination of whether this Debenture may be
      converted (in relation to other securities owned by the Holder together with
      any
      Affiliates) and which principal amount of this Debenture is convertible, in
      each
      case subject to the Beneficial Ownership Limitation. To ensure compliance with
      this restriction, the 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, the 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 the 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 the 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 the Holder, at the election of the 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 the 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 shall apply to a successor holder of this Debenture.

     

     

    
      
        
        

      

      
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              d)  

            	
              Mechanics
                of Conversion.

            

    

    

    i.  Conversion
      Shares Issuable Upon Conversion of Principal Amount.  The number
      of Conversion Shares 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.

    i.  

    

    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
      Conversion Shares 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 Notice Period
      is the 20 Trading Days period immediately prior to the date on which the
      Conversion Notice is delivered to the Company and excluding for such issuance
      the condition that the Company deliver Interest Conversion Shares as to such
      interest payment) 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 electronically through the Depository Trust Company or
      another established clearing corporation performing similar
      functions.

    

    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
      to the Company the Common Stock certificates representing the principal amount
      of this Debenture unsuccessfully tendered for conversion to the
      Company.

     

    
 

    
      
        
        

      

      
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    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 150% 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 the 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) by the third
      Trading Day after the Conversion Date, the Company shall pay to the 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 the 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.

    

    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 the
      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 the 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).  

     

     

    
      
        
        

      

      
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    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.

    

    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 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. No fractional shares or scrip representing fractional shares shall
      be issued upon the conversion of this Debenture.  As to any fraction
      of a share which Holder would otherwise be entitled to purchase upon such
      conversion, 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 Conversion Price or round up to the next whole share.

     

    
 

    
      
        
        

      

      
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    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 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); (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.

    

    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 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.  

     

     

    
      
        
        

      

      
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    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.  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. 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.

     

    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 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.  

     

     

    
      
        
        

      

      
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    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 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.

     

    
 

    
      
        
        

      

      
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    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 deliver
      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.

    

    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.

     

     

    
      
        
        

      

      
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    Section
      6.                         Redemption
      and Forced Conversion.

    

    a)  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 10th 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 the 10 Trading Day
      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.

    

    b)  Monthly
      Redemption.  On each Monthly Redemption Date, the Company shall
      redeem the Monthly Redemption Amount (the “Monthly Redemption”). The
      Monthly Redemption Amount payable on each Monthly Redemption Date shall be
      paid
      in cash; provided, however, as to any Monthly Redemption and upon
      10 Trading Days’ prior written irrevocable notice (the “Monthly Redemption
      Notice”), in lieu of a cash redemption payment the Company may elect to pay
      all or part of a Monthly Redemption Amount in Conversion Shares based on a
      conversion price equal to the lesser of (i) the then Conversion Price and (ii)
      85% of the average of the VWAPs for the 10 consecutive Trading Days ending
      on
      the Trading Day that is immediately prior to the applicable Monthly Redemption
      Date (subject to adjustment for any stock dividend, stock split, stock
      combination or other similar event affecting the Common Stock during such 10
      Trading Day period) (the price calculated during the 10 Trading Day period
      immediately prior to the Monthly Redemption Date, the “Monthly Conversion
      Price” and such 10 Trading Day period, the “Monthly Conversion
      Period”); provided, further, that the Company may not pay the
      Monthly Redemption Amount in Conversion Shares unless (y) from the date the
      Holder receives the duly delivered Monthly Redemption Notice through and until
      the date such Monthly Redemption is paid in full, the Equity Conditions have
      been satisfied, unless waived in writing by the Holder, and (z) as to such
      Monthly Redemption, prior to such Monthly Conversion Period (but not more than
      5
      Trading Days prior to the commencement of the Monthly Conversion Period), the
      Company shall have delivered to the Holder’s account with The Depository Trust
      Company a number of shares of Common Stock to be applied against such Monthly
      Redemption Amount equal to the quotient of (x) the applicable Monthly Redemption
      Amount divided by (y) Monthly Conversion Price assuming for such purposes that
      the Monthly Conversion Period ended 5 Trading Days prior to the actual Monthly
      Conversion Period for such Monthly Conversion (the “Pre-Redemption Conversion
      Shares”).  

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    The
      Holder may convert, pursuant to Section 4(a), any principal amount of this
      Debenture subject to a Monthly Redemption at any time prior to the date that
      the
      Monthly Redemption Amount, plus accrued but unpaid interest, liquidated damages
      and any other amounts then owing to the Holder are due and paid in
      full.  Unless otherwise indicated by the Holder in the applicable
      Notice of Conversion, any principal amount of this Debenture converted during
      the applicable Monthly Conversion Period until the date the Monthly Redemption
      Amount is paid in full shall be first applied to the principal amount subject
      to
      the Monthly Redemption Amount payable in cash and then to the Monthly
      Redemption  Amount payable in Conversion Shares.  Any
      principal amount of this Debenture converted during the applicable Monthly
      Conversion Period in excess of the Monthly Redemption Amount shall be applied
      against the last principal amount of this Debenture scheduled to be redeemed
      hereunder, in reverse time order from the Maturity Date; provided,
however, if any such conversion is applied against such Monthly
      Redemption Amount, the Pre-Redemption Conversion Shares, if any were issued
      in
      connection with such Monthly Redemption or were not already applied to such
      conversions, shall be first applied against such conversion.  The
      Company covenants and agrees that it will honor all Notice of Conversions
      tendered up until such amounts are paid in full.  The Company’s
      determination to pay a Monthly Redemption in cash, shares of Common Stock or
      a
      combination thereof shall be applied ratably to all of the holders of the then
      outstanding Debentures based on their (or their predecessor’s) initial purchases
      of Debentures pursuant to the Purchase Agreement.  At any time the
      Company delivers a notice to the Holder of its election to pay the Monthly
      Redemption Amount in shares of Common Stock, the Company shall file a prospectus
      supplement pursuant to Rule 424 disclosing such election.

    

    c)  Redemption
      Procedure.  The payment of cash or issuance of Common Stock, as
      applicable, pursuant to an Optional or Monthly Redemption shall be payable
      on
      the Optional or Monthly Redemption Date.  If any portion of the
      payment pursuant to an Optional or Monthly 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 or
      Monthly 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 or Monthly Redemption, abinitio,
      and, with respect to the Company’s failure to honor the Optional Redemption, the
      Company shall have no further right to exercise such Optional
      Redemption.  

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    Notwithstanding
      anything to the contrary in this Section 6, the Company’s determination to
      redeem in cash or its elections under Section 6(b) shall be applied ratably
      among the Holders of Debentures. The Holder may elect to convert the outstanding
      principal amount of the Debenture pursuant to Section 4 prior to actual payment
      in cash for any redemption under this Section 6 by the delivery of a Notice
      of
      Conversion to the Company.

    

    d)  Forced
      Conversion. Notwithstanding anything herein to the contrary, if after the
      Effective Date, the VWAP for each of any 20 out of any 30 consecutive Trading
      Days, which period shall have commenced only after the Effective Date (such
      period the “Threshold Period”), exceeds $____2 (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 1 Trading Day 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
      third Trading Day following the Forced Conversion Notice Date (such third
      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 the 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.

    

    Section
      7.                        Negative
      Covenants. As long as any portion of this Debenture remains outstanding,
      unless the holders of at least 75% in principal amount of the then outstanding
      Debentures shall have otherwise given prior written consent, 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, a guarantee, 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;

     

    ____________________________________

    
      2           250%
        of the Conversion Price on the Initial Issue Date.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    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, its 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
deminimis 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;

    

    f)  enter
      into any transaction with any Affiliate of the Company which would be required
      to be disclosed in any public filing with the Commission, unless such
      transaction 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); or

    

    g)  enter
      into any agreement with respect
      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;

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    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 or should have 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);

    

    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 leasing or factoring arrangement that (a) involves an
      obligation greater than $150,000, 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 33% 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.  the
      Initial Registration Statement (as defined in the Registration Rights Agreement)
      shall not have been declared effective by the Commission on or prior to the
      180th calendar
      day
      after the Closing Date;

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    
 

    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);

    

    xi.  the
      Company shall fail for any reason to deliver certificates to a Holder prior
      to
      the fifth 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 $50,000, and such judgment, writ or similar final process
      shall remain unvacated, unbonded or unstayed for a period of 45 calendar
      days.

    

    b)  Remedies
      Upon Event of Default. If any Event of Default occurs, 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 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.  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.

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
 

    Section
      9.                         Miscellaneous.

    

    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, 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 each Holder at the facsimile number or address
      of
      the Holder appearing on the books of the Company, or if no such facsimile number
      or address appears, at the principal place of business of the
      Holder.  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 mailing, if sent by nationally recognized overnight courier service,
      or (iv) upon actual receipt by the party to whom such notice is required to
      be
      given.

    

    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
paripassu 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, reasonably satisfactory to
      the
      Company.

    

    d)  Governing
      Law.  All questions concerning the construction, validity,
      enforcement and interpretation of this Debenture shall be governed by and
      construed and enforced in accordance with the internal laws of the State of
      New
      York, without regard to the principles of conflict of laws
      thereof.  

     

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    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.  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.
      Each
      party hereto hereby irrevocably waives, to the fullest extent permitted by
      applicable law, any and all right to trial by jury in any legal proceeding
      arising out of or relating to this Debenture or the transactions contemplated
      hereby. 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. 

     

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    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.

    

    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
      are secured by all assets of the Company and each Subsidiary pursuant to the
      Security Agreement, dated as of July __, 2007, between the Company, the
      Subsidiaries of the Company and the Secured Parties (as defined
      therein).

    

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

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     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.

    

    

    
      	
              GUANGZHOU
                GLOBAL TELECOM, INC.

               

               

            
	
              By:
                /s/ Li Yankuan                

                   Name:
                Li Yankuan

                   Title:
                Chief Executive Officer

              Facsimile
                No. for delivery of Notices: (732) 577-1188 c/o Richard I. Anslow
                Esq.,
                Anslow & Jaclin, LLP

            
	 
	 

    

     

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    
 

    ANNEX
      A

    

    NOTICE
      OF CONVERSION

    

    

    The
      undersigned hereby elects to
      convert principal under the 8% Senior Secured Convertible Debentures of
      Guangzhou Global Telecom, Inc., a Florida corporation (the “Company”),
      into shares of common stock (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
      for Delivery of Common Stock Certificates:

    

    Or

    

    DWAC
      Instructions:

    

    Broker
      No:   ________________________                                                   

    Account
      No:   ______________________                                                  

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

     

    Schedule
      1

     

    CONVERSION
      SCHEDULE

    

    The
      8%
      Senior Secured Convertible Debentures of Guangzhou Global Telecom, Inc., a
      Florida corporation, in the aggregate principal amount of
      $____________.  This Conversion Schedule reflects conversions made
      under Section 4 of the above referenced Debenture.

    

    Dated:

    

    

    
      	
               

              Date
                of Conversion

              (or
                for first entry, Original Issue Date)

            	
               

              Amount
                of Conversion

            	
               

              Aggregate
                Principal Amount Remaining Subsequent to Conversion

              (or
                original Principal Amount)

            	
               

              Company
                Attest

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    

    30f8k0808ex10ii_guangzhou.htm

               EXHIBIT
      B

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement
      (this “Agreement”) is made and entered into as of July 31, 2007, between
      Guangzhou Global Telecom, Inc., a Florida corporation (the “Company”) and
      each of the several purchasers signatory hereto (each such purchaser, a
“Purchaser” and, collectively, the “Purchasers”).

    

                   This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and each Purchaser (the “Purchase
      Agreement”).

    

                   The
      Company and each Purchaser hereby agrees as follows:

    

            1.                      Definitions

    

                   Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have
      the following meanings:

    

                    
      “Advice” shall have the meaning set forth in Section 6(d).

    

    “Effectiveness
      Date” means, with respect to the Initial Registration Statement required to
      be filed hereunder, the 90th calendar
      day
      following the date hereof (or, in the event of a “full review” by the
      Commission, the 120th calendar
      day
      following the date hereof) and with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 90th calendar
      day
      following the date on which an additional Registration Statement is required
      to
      be filed hereunder; provided, however, that in the event the
      Company is notified by the Commission that one or more of the above Registration
      Statements will not be reviewed or is no longer subject to further review and
      comments, the Effectiveness Date as to such Registration Statement shall be
      the
      fifth Trading Day following the date on which the Company is so notified if
      such
      date precedes the dates otherwise required above.

    

    “Effectiveness
      Period” shall have the meaning set forth in Section 2(a).

    

    “Event”
      shall have the meaning set forth in Section 2(b).

    

    “Event
      Date” shall have the meaning set forth in Section 2(b).

    

    “Filing
      Date” means, with respect to the Initial Registration Statement required
      hereunder, the 30th calendar
      day
      following the date hereof and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the earliest
      practical date on which the Company is permitted by SEC Guidance to file such
      additional Registration Statement related to the Registrable
      Securities.

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    “Holder”
      or “Holders” means the holder or holders, as the case may be, from time
      to time of Registrable Securities.

    

    “Indemnified
      Party” shall have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party” shall have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement” means the initial Registration Statement filed
      pursuant to this Agreement.

    

    “Initial
      Shares” means a number of Registrable Securities equal to the lesser of (i)
      the total number of Registrable Securities; or (ii) one-third of the number
      of
      issued and outstanding shares of Common Stock that are held by non-affiliates
      of
      the Company on the day immediately prior to the filing date of the Initial
      Registration Statement.

    

    “Losses”
      shall have the meaning set forth in Section 5(a).

    

    “Plan
      of Distribution” shall have the meaning set forth in Section
      2(a).

    

    “Prospectus”
      means the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    

    “Registrable
      Securities” means 130% of (i) all the shares of Common Stock issuable upon
      conversion in full of the Debentures (assuming on the date of determination
      the
      Debentures are converted in full without regard to any conversion limitations
      therein), (ii) all shares of Common Stock issuable as interest and principal
      on
      the Debentures assuming all permissible interest and principal payments are
      made
      in shares of Common Stock and the Debentures are held until maturity and using
      the lowest VWAP in the prior 90 day period to make such calculation, (iii)
      all
      Warrant Shares (assuming on the date of determination the Warrants are exercised
      in full without regard to any exercise limitations therein), (iv) any additional
      shares of Common Stock issuable in connection with any anti-dilution provisions
      in the Debentures or the Warrants (in each case, without giving effect to any
      limitations on conversion set forth in the Debentures or limitations on exercise
      set forth in the Warrant) and (v) any securities issued or issuable upon any
      stock split, dividend or other distribution,  recapitalization or
      similar event with respect to the foregoing.

    
 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    “Registration
      Statement” means the registration statement required to be filed hereunder
      and any additional registration statements contemplated by Section 3(c),
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

    

     “Rule
      415” means Rule 415 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    

    “Rule
      424” means Rule 424 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    

    “Selling
      Shareholder Questionnaire” shall have the meaning set forth in Section
      3(a).

    

    “SEC
      Guidance” means (i) any publicly-available written or oral guidance,
      comments, requirements or requests of the Commission staff and (ii) the
      Securities Act.

    

            2.                      Shelf
      Registration

    

    (a)  On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the resale of all or such maximum
      portion of the Registrable Securities as permitted by SEC Guidance (provided
      that the Company shall use diligent efforts to advocate with the Commission
      for
      the registration of all of the Registrable Securities in accordance with the
      SEC
      Guidance, including without limitation, the Manual of Publicly Available
      Telephone Interpretations D.29) that are not then registered on an effective
      Registration Statement for an offering to be made on a continuous basis pursuant
      to Rule 415.  The Registration Statement shall be on Form S-3 (except
      if the Company is not then eligible to register for resale the Registrable
      Securities on Form S-3, in which case such registration shall be on another
      appropriate form in accordance herewith) and shall contain (unless otherwise
      directed by at least a 75% majority in interest of the Holders) substantially
      the “Plan of Distribution” attached hereto as Annex
      A.  Subject to the terms of this Agreement, the Company shall use
      its best efforts to cause a Registration Statement to be declared effective
      under the Securities Act as promptly as possible after the filing thereof,
      but
      in any event prior to the applicable Effectiveness Date, and shall use its
      best
      efforts to keep such Registration Statement continuously effective under the
      Securities Act until all Registrable Securities covered by such Registration
      Statement have been sold, or may be sold without volume restrictions pursuant
      to
      Rule 144(k), as determined by the counsel to the Company pursuant to a written
      opinion letter to such effect, addressed and acceptable to the Transfer Agent
      and the affected Holders (the “Effectiveness Period”).  The
      Company shall telephonically request effectiveness of a Registration Statement
      as of 5:00 p.m. New York City time on a Trading
      Day.   

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    The
      Company shall immediately notify the Holders via facsimile or by e-mail of
      the
      effectiveness of a Registration Statement on the same Trading Day that the
      Company telephonically confirms effectiveness with the Commission, which shall
      be the date requested for effectiveness of such Registration
      Statement.  The Company shall, by 9:30 a.m. New York City time on the
      Trading Day after the effective date of such Registration Statement, file a
      final Prospectus with the Commission as required by Rule 424.  Failure
      to so notify the Holder within 1 Trading Day of such notification of
      effectiveness or failure to file a final Prospectus as foresaid shall be deemed
      an Event under Section 2(b).  Notwithstanding any other provision of
      this Agreement and subject to the payment of liquidated damages pursuant to
      Section 2(b), if any SEC Guidance sets forth a limitation on the number of
      Registrable Securities permitted to be registered on a particular Registration
      Statement (and notwithstanding that the Company used diligent efforts to
      advocate with the Commission for the registration of all or a greater portion
      of
      Registrable Securities), unless otherwise directed in writing by a Holder as
      to
      its Registrable Securities, the number of Registrable Securities to be
      registered on such Registration Statement will first be reduced by Registrable
      Securities represented by Warrant Shares (applied, in the case that some Warrant
      Shares may be registered, to the Holders on a pro rata basis based on the total
      number of unregistered Warrant Shares held by such Holders), and second by
      Registrable Securities represented by Conversion Shares (applied, in the case
      that some Conversion Shares may be registered, to the Holders on a pro rata
      basis based on the total number of unregistered Conversion Shares held by such
      Holders); provided, however, that, prior to any reduction in the
      number of Registrable Securities included in a Registration Statement as set
      forth in this sentence, the number of shares of Common Stock set forth on
      Schedule 6(b) hereto which shall have been included on such Registration
      Statement shall be reduced by up to 100% before any Registrable Securities
      are
      excluded.

    

    (b)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to its Filing Date
      (if the Company files the Initial Registration Statement without affording
      the
      Holders the opportunity to review and comment on the same as required by Section
      3(a) herein, the Company shall be deemed to have not satisfied this clause
      (i)),
      or (ii) the Company fails to file with the Commission a request for acceleration
      of a Registration Statement in accordance with Rule 461 promulgated by the
      Commission pursuant to the Securities Act, within five Trading Days of the
      date
      that the Company is notified (orally or in writing, whichever is earlier) by
      the
      Commission that such Registration Statement will not be “reviewed” or will not
      be subject to further review, or (iii) prior to the effective date of a
      Registration Statement, the Company fails to file a pre-effective amendment
      and
      otherwise respond in writing to comments made by the Commission in respect
      of
      such Registration Statement within 10 Trading Days after the receipt of comments
      by or notice from the Commission that such amendment is required in order for
      such Registration Statement to be declared effective, or (iv) as to, in the
      aggregate among all Holders on a pro-rata basis based on their purchase of
      the
      Securities pursuant to the Purchase Agreement, a Registration Statement
      registering for resale all of the Initial Shares is not declared effective
      by
      the Commission by the Effectiveness Date of the Initial Registration Statement,
      or (v) all of the Registrable Securities are not registered for resale pursuant
      to one or more effective Registration Statements on or before February 1, 2008,
      or 

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    (vi)
      after the effective date of a Registration Statement, such Registration
      Statement ceases for any reason to remain continuously effective as to all
      Registrable Securities included in such Registration Statement, or the Holders
      are otherwise not permitted to utilize the Prospectus therein to resell such
      Registrable Securities, for more than 25 consecutive calendar days or more
      than
      an aggregate of 30 calendar days (which need not be consecutive calendar days)
      during any 12-month period (any such failure or breach being referred to as
      an
“Event”, and for purposes of clause (i), (iv) and (v) the date on which
      such Event occurs, and for purpose of clause (ii) the date on which such five
      Trading Day period is exceeded, and for purpose of clause (iii) the date which
      such 10 calendar day period is exceeded, and for purpose of clause (vi) the
      date
      on which such 25 or 30 calendar day period, as applicable, is exceeded being
      referred to as “Event Date”), then, in addition to any other rights the
      Holders may have hereunder or under applicable law, on each such Event Date
      and
      on each monthly anniversary of each such Event Date (if the applicable Event
      shall not have been cured by such date) until the applicable Event is cured,
      the
      Company shall pay to each Holder an amount in cash, as partial liquidated
      damages and not as a penalty, if during the 6 month period immediately following
      the date hereof, 2% of the aggregate purchase price paid by such Holder pursuant
      to the Purchase Agreement for any unregistered Registrable Securities then
      held
      by such Holder and 1% per month of such amount thereafter.  If the
      Company fails to pay any partial liquidated damages pursuant to this Section
      in
      full within seven days after the date payable, the Company will pay interest
      thereon at a rate of 18% per annum (or such lesser maximum amount that is
      permitted to be paid by applicable law) to the Holder, accruing daily from
      the
      date such partial liquidated damages are due until such amounts, plus all such
      interest thereon, are paid in full. The partial liquidated damages pursuant
      to
      the terms hereof shall apply on a daily pro rata basis for any portion of a
      month prior to the cure of an Event.

    

    3.           Registration
      Procedures.

    

                   In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    (a)  Not
      less
      than 5 Trading Days prior to the filing of each Registration Statement and
      not
      less than one Trading Day prior to the filing of any related Prospectus or
      any
      amendment or supplement thereto (including any document that would be
      incorporated or deemed to be incorporated therein by reference), the Company
      shall (i) furnish to each Holder copies of all such documents proposed to be
      filed, which documents (other than those incorporated or deemed to be
      incorporated by reference) will be subject to the review of such Holders and
      (ii) cause its officers and directors, counsel and independent certified public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel to each Holder, to conduct a reasonable
      investigation within the meaning of the Securities Act. The Company shall not
      file a Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities shall reasonably object in good faith, provided that the Company
      is
      notified of such objection in writing no later than 5 Trading Days after the
      Holders have been so furnished copies of a Registration Statement or 1 Trading
      Day after the Holders have been so furnished copies of any related Prospectus
      or
      amendments or supplements thereto. 

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Each
      Holder agrees to furnish to the Company a completed questionnaire in the form
      attached to this Agreement as Annex B (a “Selling Shareholder
      Questionnaire”) not less than two Trading Days prior to the Filing Date or
      by the end of the fourth Trading Day following the date on which such Holder
      receives draft materials in accordance with this Section.

    

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424; (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders true
      and
      complete copies of all correspondence from and to the Commission relating to
      a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company);
      and (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

    

    (c)  If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities.

    

    (d)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement; and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective;

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

     (ii)
      of any request by the Commission or any other federal or state governmental
      authority for amendments or supplements to a Registration Statement or
      Prospectus or for additional information; (iii) of the issuance by the
      Commission or any other federal or state governmental authority of any stop
      order suspending the effectiveness of a Registration Statement covering any
      or
      all of the Registrable Securities or the initiation of any Proceedings for
      that
      purpose; (iv) of the receipt by the Company of any notification with respect
      to
      the suspension of the qualification or exemption from qualification of any
      of
      the Registrable Securities for sale in any jurisdiction, or the initiation
      or
      threatening of any Proceeding for such purpose; (v) of the occurrence of any
      event or passage of time that makes the financial statements included in a
      Registration Statement ineligible for inclusion therein or any statement made
      in
      a Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; and (vi) of the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in
      the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
further, that notwithstanding each Holder’s agreement to keep such
      information confidential, each such Holder makes no acknowledgement that any
      such information is material, non-public information.

    

    (e)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

    

    (f)  Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, and
      all exhibits to the extent requested by such Person (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission; provided, that any such item which is available
      on the EDGAR system need not be furnished in physical form.

    

    (g)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    (h)   If
      requested by a registered broker dealer in connection with the resale of the
      Registrable Securities by any Holder, the Company shall effect a filing with
      respect to the public offering contemplated by each Registration Statement
      (an
“Issuer Filing”) with the National Association of Securities Dealers,
      Inc. (“NASD”) Corporate Financing Department pursuant to NASD Rule 2710
      as described in proposed NASD Rule 2710(b)(10)(A)(i) within one Trading Day
      of
      the date that the Registration Statement is first filed with the Commission
      and
      pay the filing fee required by such Issuer Filing.  The Company shall
      use commercially reasonable efforts to pursue the Issuer Filing until the NASD
      issues a letter confirming that it does not object to the terms of the offering
      contemplated by the Registration Statement as described in the Plan of
      Distribution attached hereto as Annex A.  A copy of the Issuer
      Filing and all related correspondence to or from the NASD with respect thereto
      shall be provided to FWS.

    

    (i)  Prior
      to
      any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided, that the Company
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in
      any such jurisdiction where it is not then so subject or file a general consent
      to service of process in any such jurisdiction.

    

    (j)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted by the Purchase Agreement,
      of all restrictive legends, and to enable such Registrable Securities to be
      in
      such denominations and registered in such names as any such Holder may
      request.

    

    (k)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. 

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    If
      the
      Company notifies the Holders in accordance with clauses (iii) through (vi)
      of
      Section 3(d) above to suspend the use of any Prospectus until the requisite
      changes to such Prospectus have been made, then the Holders shall suspend use
      of
      such Prospectus.  The Company will use its best efforts to ensure that
      the use of the Prospectus may be resumed as promptly as is
      practicable.  The Company shall be entitled to exercise its right
      under this Section 3(k) to suspend the availability of a Registration Statement
      and Prospectus, subject to the payment of partial liquidated damages otherwise
      required pursuant to Section 2(b), for a period not to exceed 60 calendar days
      (which need not be consecutive days) in any 12 month period.

    

    (l)  Comply
      with all applicable rules and regulations of the Commission.

    

    (m)  The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the shares. During any periods that the
      Company is unable to meet its obligations hereunder with respect to the
      registration of the Registrable Securities solely because any Holder fails
      to
      furnish such information within three Trading Days of the Company’s request, any
      liquidated damages that are accruing at such time as to such Holder only shall
      be tolled and any Event that may otherwise occur solely because of such delay
      shall be suspended as to such Holder only, until such information is delivered
      to the Company.

    

            4.                      Registration
      Expenses. All fees and expenses incident to the performance of or compliance
      with this Agreement by the Company shall be borne by the Company whether or
      not
      any Registrable Securities are sold pursuant to a Registration Statement. The
      fees and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, (C) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the NASD pursuant
      to
      NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of counsel for the Company, (v) Securities Act liability
      insurance, if the Company so desires such insurance, and (vi) fees and expenses
      of all other Persons retained by the Company in connection with the consummation
      of the transactions contemplated by this Agreement.  In addition, the
      Company shall be responsible for all of its internal expenses incurred in
      connection with the consummation of the transactions contemplated by this
      Agreement (including, without limitation, all salaries and expenses of its
      officers and employees performing legal or accounting duties), the expense
      of
      any annual audit and the fees and expenses incurred in connection with the
      listing of the Registrable Securities on any securities exchange as required
      hereunder.  In no event shall the Company be responsible for any
      broker or similar commissions of any Holder or, except to the extent provided
      for in the Transaction Documents, any legal fees or other costs of the
      Holders.

     

     

    
      
        
        

      

      
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            5.                      Indemnification.

    

    (a)  Indemnification
      by the Company. The Company shall, notwithstanding any termination of this
      Agreement, indemnify and hold harmless each Holder, the officers, directors,
      members, partners, agents, brokers (including brokers who offer and sell
      Registrable Securities as principal as a result of a pledge or any failure
      to
      perform under a margin call of Common Stock), investment advisors and employees
      (and any other Persons with a functionally equivalent role of a Person holding
      such titles, notwithstanding a lack of such title or any other title) of each
      of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, members, shareholders, partners, agents and employees (and any other
      Persons with a functionally equivalent role of a Person holding such titles,
      notwithstanding a lack of such title or any other title) of each such
      controlling Person, to the fullest extent permitted by applicable law, from
      and
      against any and all losses, claims, damages, liabilities, costs (including,
      without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or
      alleged untrue statement of a material fact contained in a Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or supplement thereto, in light of the circumstances under which
      they
      were made) not misleading or (2) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act or any state securities law,
      or
      any rule or regulation thereunder, in connection with the performance of its
      obligations under this Agreement, except to the extent, but only to the extent,
      that (i) such untrue statements or omissions are based solely upon information
      regarding such Holder furnished in writing to the Company by such Holder
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in a Registration Statement, such Prospectus or in any
      amendment or supplement thereto (it being understood that the Holder has
      approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
      Holder of an outdated or defective Prospectus after the Company has notified
      such Holder in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by such Holder of the Advice contemplated in Section
      6(d).  The Company shall notify the Holders promptly of the
      institution, threat or assertion of any Proceeding arising from or in connection
      with the transactions contemplated by this Agreement of which the Company is
      aware.

     

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (b)  Indemnification
      by Holders. Each Holder shall, severally and not jointly, indemnify and hold
      harmless the Company, its directors, officers, agents and employees, each Person
      who controls the Company (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, agents or
      employees of such controlling Persons, to the fullest extent permitted by
      applicable law, from and against all Losses, as incurred, to the extent arising
      out of or based solely upon: (x) such Holder’s failure to comply with the
      prospectus delivery requirements of the Securities Act or (y) any untrue or
      alleged untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or in any amendment or supplement thereto or in
      any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein not misleading (i) to the extent, but only to the extent,
      that such untrue statement or omission is contained in any information so
      furnished in writing by such Holder to the Company specifically for inclusion
      in
      such Registration Statement or such Prospectus or (ii) to the extent that such
      information relates to such Holder’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      such Holder expressly for use in a Registration Statement (it being understood
      that the Holder has approved Annex A hereto for this purpose), such Prospectus
      or in any amendment or supplement thereto or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
      Holder of an outdated or defective Prospectus after the Company has notified
      such Holder in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by such Holder of the Advice contemplated in Section 6(d). In no
      event shall the liability of any selling Holder hereunder be greater in amount
      than the dollar amount of the net proceeds received by such Holder upon the
      sale
      of the Registrable Securities giving rise to such indemnification
      obligation.

    

    (c)  Conduct
      of Indemnification Proceedings. If any Proceeding shall be brought or
      asserted against any Person entitled to indemnity hereunder (an “Indemnified
      Party”), such Indemnified Party shall promptly notify the Person from whom
      indemnity is sought (the “Indemnifying Party”) in writing, and the
      Indemnifying Party shall have the right to assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it shall be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have prejudiced
      the Indemnifying Party.

    

                   An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless:  (1) the Indemnifying Party has agreed in writing to pay such
      fees and expenses; (2) the Indemnifying Party shall have failed promptly to
      assume the defense of such Proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
      parties to any such Proceeding (including any impleaded parties) include both
      such Indemnified Party and the Indemnifying Party, and counsel to the
      Indemnified Party shall reasonably believe that a material conflict of interest
      is likely to exist if the same counsel were to represent such Indemnified Party
      and the Indemnifying Party (in which case, if such Indemnified Party notifies
      the Indemnifying Party in writing that it elects to employ separate counsel
      at
      the expense of the Indemnifying Party, the Indemnifying Party shall not have
      the
      right to assume the defense thereof and the reasonable fees and expenses of
      no
      more than one separate counsel shall be at the expense of the Indemnifying
      Party).  

     

     

    
      
        
        

      

      
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    The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed.  No Indemnifying Party shall, without the prior
      written consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.

    

                   Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten Trading Days of written notice thereof to the
      Indemnifying Party; provided, that the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined to be not entitled to indemnification hereunder.

    

    (d)  Contribution.
      If the indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party or insufficient to hold an Indemnified Party harmless for
      any
      Losses, then each Indemnifying Party shall contribute to the amount paid or
      payable by such Indemnified Party, in such proportion as is appropriate to
      reflect the relative fault of the Indemnifying Party and Indemnified Party
      in
      connection with the actions, statements or omissions that resulted in such
      Losses as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether any action in question, including
      any
      untrue or alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission.  The amount
      paid or payable by a party as a result of any Losses shall be deemed to include,
      subject to the limitations set forth in this Agreement, any reasonable
      attorneys’ or other fees or expenses incurred by such party in connection with
      any Proceeding to the extent such party would have been indemnified for such
      fees or expenses if the indemnification provided for in this Section was
      available to such party in accordance with its terms.

    

                   The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    Notwithstanding
      the provisions of this Section 5(d), no Holder shall be required to contribute,
      in the aggregate, any amount in excess of the amount by which the net proceeds
      actually received by such Holder from the sale of the Registrable Securities
      subject to the Proceeding exceeds the amount of any damages that such Holder
      has
      otherwise been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

            6.                 Miscellaneous.

    

    (a)  Remedies.  In
      the event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement.  The Company
      and each Holder agree that monetary damages would not provide adequate
      compensation for any losses incurred by reason of a breach by it of any of
      the
      provisions of this Agreement and hereby further agrees that, in the event of
      any
      action for specific performance in respect of such breach, it shall not assert
      or shall waive the defense that a remedy at law would be adequate.

    

    (b)  No
      Piggyback on Registrations; Prohibition on Filing Other Registration
      Statements. Except as set forth on Schedule 6(b) attached hereto,
      neither the Company nor any of its security holders (other than the Holders
      in
      such capacity pursuant hereto) may include securities of the Company in any
      Registration Statements other than the Registrable Securities.  The
      Company shall not file any other registration statements until all Registrable
      Securities are registered pursuant to a Registration Statement that is declared
      effective by the Commission, provided that this Section 6(b) shall not prohibit
      the Company from filing amendments to registration statements filed prior to
      the
      date of this Agreement.

    

    (c)  Compliance.
      Each Holder covenants and agrees that it will comply with the prospectus
      delivery requirements of the Securities Act as applicable to it in connection
      with sales of Registrable Securities pursuant to a Registration
      Statement.

    

    (d)  Discontinued
      Disposition.  By its acquisition of Registrable Securities, each
      Holder agrees that, upon receipt of a notice from the Company of the occurrence
      of any event of the kind described in Section 3(d)(iii) through (vi), such
      Holder will forthwith discontinue disposition of such Registrable Securities
      under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it
      may have been supplemented or amended) may be resumed.  The Company
      will use its best efforts to ensure that the use of the Prospectus may be
      resumed as promptly as is practicable.  The Company agrees and
      acknowledges that any periods during which the Holder is required to discontinue
      the disposition of the Registrable Securities hereunder shall be subject to
      the
      provisions of Section 2(b).

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
 

    (e)  Piggy-Back
      Registrations. If, at any time during the Effectiveness Period, there is not
      an effective Registration Statement covering all of the Registrable Securities
      and the Company shall determine to prepare and file with the Commission a
      registration statement relating to an offering for its own account or the
      account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the Securities
      Act) or their then equivalents relating to equity securities to be issued solely
      in connection with any acquisition of any entity or business or equity
      securities issuable in connection with the Company’s stock option or other
      employee benefit plans, then the Company shall deliver to each Holder a written
      notice of such determination and, if within fifteen days after the date of
      the
      delivery of such notice, any such Holder shall so request in writing, the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Holder requests to be registered; provided,
however, that the Company shall not be required to register any
      Registrable Securities pursuant to this Section 6(e) that are eligible for
      resale pursuant to Rule 144(k) promulgated by the Commission pursuant to the
      Securities Act or that are the subject of a then effective Registration
      Statement.

    

    (f)  Amendments
      and Waivers. The provisions of this Agreement, including the provisions of
      this sentence, may not be amended, modified or supplemented, and waivers or
      consents to departures from the provisions hereof may not be given, unless
      the
      same shall be in writing and signed by the Company and the Holders of a majority
      of the then outstanding Registrable Securities (including, for this purpose
      any
      Registrable Securities issuable upon exercise or conversion of any
      Security).  If a Registration Statement does not register all of the
      Registrable Securities pursuant to a waiver or amendment done in compliance
      with
      the previous sentence, then the number of Registrable Securities to be
      registered for each Holder shall be reduced pro rata among all Holders and
      each
      Holder shall have the right to designate which of its Registrable Securities
      shall be omitted from such Registration Statement. Notwithstanding the
      foregoing, a waiver or consent to depart from the provisions hereof with respect
      to a matter that relates exclusively to the rights of a Holder or some Holders
      and that does not directly or indirectly affect the rights of other Holders
      may
      be given by such Holder or Holders of all of the Registrable Securities to
      which
      such waiver or consent relates; provided, however, that the
      provisions of this sentence may not be amended, modified, or supplemented except
      in accordance with the provisions of the first  sentence of this
      Section 6(f).

    

    (g)  Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be delivered as set forth in the Purchase
      Agreement.

    

    (h)  Successors
      and Assigns. This Agreement shall inure to the benefit of and be binding
      upon the successors and permitted assigns of each of the parties and shall
      inure
      to the benefit of each Holder. The Company may not assign (except by merger)
      its
      rights or obligations hereunder without the prior written consent of all of
      the
      Holders of the then outstanding Registrable Securities. Each Holder may assign
      their respective rights hereunder in the manner and to the Persons as permitted
      under the Purchase Agreement.

    

    (i)  No
      Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has
      entered, as of the date hereof, nor shall the Company or any of its
      Subsidiaries, on or after the date of this Agreement, enter into any agreement
      with respect to its securities, that would have the effect of impairing the
      rights granted to the Holders in this Agreement or otherwise conflicts with
      the
      provisions hereof.  Except as set forth on Schedule 6(i),
      neither the Company nor any of its Subsidiaries has previously entered into
      any
      agreement granting any registration rights with respect to any of its securities
      to any Person that have not been satisfied in full.

     

     

    
      
        
        

      

      
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    (j)  Execution
      and Counterparts. This Agreement may be executed in two or more
      counterparts, all of which when taken together shall be considered one and
      the
      same agreement and shall become effective when counterparts have been signed
      by
      each party and delivered to the other party, it being understood that both
      parties need not sign the same counterpart.  In the event that any
      signature is delivered by facsimile transmission or by e-mail delivery of a
      “.pdf” format data file, such signature shall create a valid and binding
      obligation of the party executing (or on whose behalf such signature is
      executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

    

    (k)  Governing
      Law.  All questions concerning the construction, validity,
      enforcement and interpretation of this Agreement shall be determined in
      accordance with the provisions of the Purchase Agreement.

    

    (l)  Cumulative
      Remedies. The remedies provided herein are cumulative and not exclusive of
      any other remedies provided by law.

    

    (m)  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (n)  Headings.
      The headings in this Agreement are for convenience only, do not constitute
      a
      part of the Agreement and shall not be deemed to limit or affect any of the
      provisions hereof.

    

    (o)  Independent
      Nature of Holders’ Obligations and Rights. The obligations of each Holder
      hereunder are several and not joint with the obligations of any other Holder
      hereunder, and no Holder shall be responsible in any way for the performance
      of
      the obligations of any other Holder hereunder. Nothing contained herein or
      in
      any other agreement or document delivered at any closing, and no action taken
      by
      any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders
      as a partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Holders are in any way acting in concert with
      respect to such obligations or the transactions contemplated by this Agreement.
      Each Holder shall be entitled to protect and enforce its rights, including
      without limitation the rights arising out of this Agreement, and it shall not
      be
      necessary for any other Holder to be joined as an additional party in any
      proceeding for such purpose.

    

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

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
 

                   IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    

    
      	
              GUANGZHOU
                GLOBAL TELECOM, INC.

               

               

            
	
              By: 
                /s/  Li Yankuan            

                   Name:
                Li Yankuan

                   Title:
                Chief Executive Officer

               

            

    

    

    

    

    

    

    

    

    

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
 

    [SIGNATURE
      PAGE OF HOLDERS TO GZGT RRA]

    

    

    Name
      of
      Holder: __________________________

    

    Signature
      of Authorized Signatory of Holder: __________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

    

    

    

    [SIGNATURE
      PAGES CONTINUE]

     

     

    
      
        
        

      

      
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    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of common stock on the principal Trading
      Market or any other stock exchange, market or trading facility on which the
      shares are traded or in private transactions.  These sales may be at
      fixed or negotiated prices.  A Selling Stockholder may use any one or
      more of the following methods when selling shares:

     

    
      	
              ·  

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	
              ·  

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	
              ·  

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	
              ·  

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	
              ·  

            	
              privately
                negotiated transactions;

            

    

     

    
      	
              ·  

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a
                part;

            

    

     

    
      	
              ·  

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	
              ·  

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	
              ·  

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	
              ·  

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than
      under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be negotiated,
      but, except as set forth in a supplement to this Prospectus, in the case of
      an
      agency transaction not in excess of a customary brokerage commission in
      compliance with NASDR Rule 2440; and in the case of a principal transaction
      a
      markup or markdown in compliance with NASDR IM-2440.

     

     

    
      
        
        

      

      
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    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume.  The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities.  The
      Selling Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales.  In such event, any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act.  Each Selling
      Stockholder has informed the Company that it does not have any written or oral
      agreement or understanding, directly or indirectly, with any person to
      distribute the Common Stock. In no event shall any broker-dealer receive fees,
      commissions and markups which, in the aggregate, would exceed eight percent
      (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares.  The Company has agreed to
      indemnify the Selling Stockholders against certain losses, claims, damages
      and
      liabilities, including liabilities under the Securities Act.

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder.  In addition, any
      securities covered by this prospectus which qualify for sale pursuant to Rule
      144 under the Securities Act may be sold under Rule 144 rather than under this
      prospectus.  There is no underwriter or coordinating broker acting in
      connection with the proposed sale of the resale shares by the Selling
      Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect.  The resale shares will be sold
      only through registered or licensed brokers or dealers if required under
      applicable state securities laws. In addition, in certain states, the resale
      shares may not be sold unless they have been registered or qualified for sale
      in
      the applicable state or an exemption from the registration or qualification
      requirement is available and is complied with.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution.  In addition, the Selling Stockholders will be subject
      to applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person.  We will make copies of this prospectus available to the
      Selling Stockholders and have informed them of the need to deliver a copy of
      this prospectus to each purchaser at or prior to the time of the sale (including
      by compliance with Rule 172 under the Securities Act).

     

     

     

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    Annex
      B

     

    Guangzhou
      Global Telecom, Inc.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”) of Guangzhou Global Telecom, Inc., a Florida corporation (the
“Company”), understands that the Company has filed or intends to file
      with the Securities and Exchange Commission (the “Commission”) a
      registration statement (the “Registration Statement”) for the
      registration and resale under Rule 415 of the Securities Act of 1933, as amended
      (the “Securities Act”), of the Registrable Securities, in accordance with
      the terms of the Registration Rights Agreement (the “Registration Rights
      Agreement”) to which this document is annexed.  A copy of the
      Registration Rights Agreement is available from the Company upon request at
      the
      address set forth below.  All capitalized terms not otherwise defined
      herein shall have the meanings ascribed thereto in the Registration Rights
      Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus.  Accordingly,
      holders and beneficial owners of Registrable Securities are advised to consult
      their own securities law counsel regarding the consequences of being named
      or
      not being named as a selling securityholder in the Registration Statement and
      the related prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling Securityholder”) of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
               

            	
              1.

            	
              Name.

            

    

     

    
      	
               

            	
              (a)

            	
              Full
                Legal Name of Selling
                Securityholder

            

    

     

    
      	 
	 

    

    

    
      	
               

            	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are
                held:

            

    

    
       

      
        	 
	 

      

      

    

    
      	
               

            	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this
                Questionnaire):

            

    

    
       

      
        	 
	 

    

    
      	
               

            	
              2.  Address
                for Notices to Selling
                Securityholder:

            

    

     

    
      	 
	 
	 
	
              Telephone:
                

            
	
              Fax:

            
	
              Contact
                Person:

            

    

    

    
      	
               

            	
              3.  Broker-Dealer
                Status:

            

    

     

    
      	
               

            	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes                         No   

     

    
      	
               

            	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company?

            

    

     

    Yes                         No   

     

    
      	
              Note:

            	
              If
                “no” to Section 3(b), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

     

    
      	
               

            	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes                         No   

     

    
      	
               

            	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                purchased
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes                         No   

     

    
      	
              Note:

            	
              If
                “no” to Section 3(d), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    
      	
               

            	
              4.  Beneficial
                Ownership of Securities of the Company Owned by the Selling
                Securityholder.

            

    

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	
               

            	
              (a)

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder:

            

    

     

    
      	 
	 
	 

    

    

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              5.  Relationships
                with the Company:

            

    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    
      	
               

            	
              State
                any exceptions here:

            

    

     

    
      	 
	 
	 

    

    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus and any amendments or supplements
      thereto.  The undersigned understands that such information
      will be relied upon by the Company in connection with the preparation or
      amendment of the Registration Statement and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    Date:  _____________________________                 Beneficial
      Owner:_____________________________________                                                                         

    

    By:  _______________________________________________                                                                       

    Name:

    Title:

    

    PLEASE
      FAX OR E-MAIL (BY PDF) A COPY OF THE COMPLETED AND EXECUTED NOTICE AND
      QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL,
      TO:

    

    Anslow
      & Jaclin, LLP

    195
      Route
      9 South, Suite 204

    Manalapan,
      New Jersey 07726

    Attn:
      Richard I. Anslow, Esq.

    FAX:
      (732) 577-1188

    Email:
      ranslow@anslowlaw.com

     

    24

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