Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Global Energy Inc. - Exhibit 10.4

THE SYMBOL “*****” DENOTES PLACES WHERE PORTIONS
  OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
  SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Exhibit 10.4

LICENSE AGREEMENT

     This License Agreement (this
“Agreement”) is made and entered into as of the 6th day of February,
2008, by and between AlphaKat - Global Energy GmbH, a company organized and
existing under the laws of Germany (“Licensor”), and American Renewable Diesel,
LLC, a limited liability company organized and existing under the laws of the
State of Delaware (“American”).

     WHEREAS, AlphaKat GmbH, a company
organized and existing under the laws of Germany (as further defined below,
“AK”), has granted certain rights to Licensor with respect to a proprietary
technology to convert waste material that contains hydrocarbons into diesel oil
(as further defined below, the “Technology”) in various countries, including the
United States;

     WHEREAS, American is interested
in obtaining license rights from Licensor with respect to the Technology, all on
the terms and conditions set forth herein, to secure or to help secure orders
for the sale of the equipment that utilizes the Technology; and

     WHEREAS, Licensor is willing to
grant such license rights to American, all on the terms and conditions set forth
herein;

     NOW, THEREFORE, in light of the
mutual premises set forth herein and other good and valuable consideration, the
receipt and the sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows.

ARTICLE 1 – DEFINITIONS AND INTERPRETATION

Section 1.1 Capitalized Terms. Unless otherwise
specified herein, the following capitalized terms shall have the following
meanings:

     “Affiliate” means, in
relation to any Person, any other Person that controls, is controlled by, or is
in common control with, such Person. For the purpose of this definition, control
means the direct or indirect control of fifty percent (50%) or more of the
voting rights in such Person or the power to direct the management or policies
of such Person, whether by operation of law, by contract or otherwise. Except as
shall otherwise be expressly provided in this Agreement, and for the avoidance
of any doubt, as of the Effective Date, (i) Licensor and AK are Affiliates and
(ii) Licensor and Global are Affiliates, but AK and Global are not
Affiliates.

     “Agreement” has the
meaning set forth in the first paragraph hereof.

     “AK” means AlphaKat GmbH,
a company organized and existing under the laws of Germany, and its successors
and permitted assigns.

     “American” has the meaning
set forth in the first paragraph hereof and includes its successors and
permitted assigns.

     “Commercial Waste” means
all non-hazardous solid waste that is collected from commercial establishments,
including residential apartment buildings, office buildings, restaurants,
industrial parks, all other business facilities and all recyclable materials
from recycling facilities.

     “Competitor of Licensor”
means a Person, directly or through Affiliates, engaged primarily in the
business of selling equipment that converts waste or organic feedstock(s)
containing hydrocarbon materials into diesel fuel or any Person that is involved
primarily in the development of such equipment or the technology on which it is
based.

     “Contracted Waste” means
all non-hazardous waste, regardless of the source of such waste, which is under
contract to be delivered to Covanta or any of its Affiliates for disposal in, or
processing by, one of the facilities owned or operated by Covanta or any of its
Affiliates.

     “Covanta” means Covanta
Energy Corporation, a Delaware corporation.

     “Covanta License
Agreement” means the License Agreement of even date herewith entered into
between Licensor and Covanta, a copy of which is attached hereto as Exhibit
1.

     “Customer” means any
Person that is not owned or controlled by American that wants to purchase a
System for its own account.

     “Default” has the meaning
set forth in Section 10.1.

     “Demonstration Plant”
means the System to be purchased by Covanta as provided for in the Covanta
License Agreement, the order for which has been procured by American.

     “Dispute” has the meaning
set forth in Section 9.1.

     “Effective Date” has the
meaning set forth in Section 5.1.

     “Extended Period” means
the period that begins on the date that the Initial Period terminates and ends
on the date that this Agreement terminates.

     “Feedstock” means
Household Waste, Contracted Waste, Commercial Waste or Radial Biomass, as the
case may be.

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     “Full Right” means that
the Person being granted the right(s) described herein shall be the only Person
that is entitled to exercise such right(s) so long as this Agreement is in
effect and that no other Person shall be authorized, by the grantor of such
right(s), to exercise such right(s) or be granted such right(s).

     “Global” means Global
Energy, Inc., a Nevada corporation.

     “Household Waste” means
all non-hazardous, post-recycled municipal solid waste which is collected from
residences, which waste is of the type normally accepted for processing at waste
to energy facilities in the United States.

     “ICC” means the
International Chamber of Commerce.

     “ICC Rules” has the
meaning set forth in Section 9.1.

     “Improvements” means all
the techniques, enhancements, modifications, changes, experience, methods,
information, data or knowledge that will be created or acquired in the future
relating to the Technology and/or the manufacturing of such components for
Systems (whether or not patentable, useful or workable) through the
implementation, development, testing and improvement of the Technology.

     “Initial Period” means the
period which begins on the date that the Interim Period ends and terminates on
the second (2nd) anniversary thereof.

     “Intellectual Property”
means any intellectual property and/or proprietary information and materials
relating to the Technology along with all rights therein, whether existing
before or conceived or developed after the Effective Date (except as otherwise
expressly provided), including: (i) patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not reduced
to practice), including the Patents; (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) trade secrets, confidential information
and know-how (including ideas, formulae, compositions, manufacturing and
production processes and techniques, research and development information, test
data and results, drawings, specifications, designs, supplier lists and related
information); and (vi) registrations, applications, divisionals, continuations,
continuations-in-part, foreign counterparts and renewals for any of the
foregoing.

     “Interim Period” means the
period which begins on the Effective Date and ends twelve (12) months following
the date that the Demonstration Plant has been successfully commissioned and is
ready for commercial operation; provided, however, that if the
Demonstration Plant passes the performance test that is agreed to by AK and
Covanta (all as further provided for in Section 2.2(c) of the Covanta License
Agreement) more than thirty (30) days prior to the scheduled end of the Interim
Period, the Interim Period shall terminate thirty (30) days following the date
that the Demonstration Plant has passed 

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such performance test, Licensor to provide a notice to such
effect to American in writing; provided further, however, that the
Interim Period shall in no event be longer than two (2) years.

     “KDV 500” means the system
of components, including all of the structural steel, piping, pumps, vessels,
control systems, wiring, two proprietary “mixing turbine pumps” and the
operations, maintenance and start-up manuals provided by AK, to convert
hydrocarbon feedstock, including any Feedstock, into diesel oil using the
Technology which is capable of producing a minimum of 500 liters of diesel oil
per hour.

     “Licensor” has the meaning
set forth in the first paragraph hereof and includes its successors and
permitted assigns.

     “Parties” means Licensor
and American.

     “Party” means Licensor or
American, as the case may be.

     “Patents” means any
existing or future patent applications, patents, registrations, utility models
and utility model applications relating to the Technology which are necessary or
useful to manufacture or to sell, offer for sale, use or otherwise make
available Systems or the components of Systems, including those set forth in
Exhibit 2 attached hereto.

     “Person” means any natural
person, corporation, company, partnership, business trust, governmental
authority or other entity.

     “Purchase Order” has the
meaning set forth in Section 2.5.

     “Purchaser” has the
meaning set forth in Section 2.5.

     “Qualified Right” means
that the Person being granted the right(s) described herein shall be entitled to
exercise such right(s) so long as this Agreement is in effect, but the grantor
of such right(s) shall be entitled to grant such right(s) or allow such right(s)
to be exercised by all other Persons except a Person that is precluded from
exercising such right(s) under the express terms hereof.

     “Radial Biomass” means
biomass, including wood, wood waste and other types of cellulosic materials
which are collected within or from an area within a 100 mile radius of any
biomass facility owned by Covanta or an Affiliate of Covanta in the states of
California or New York as of the Effective Date.

     “Rights Agreements” means
(i) the “Terms of Agreement” dated May 2, 2007, (ii) the “Shareholders’
Agreement” dated July 10, 2007 and (iii) the Articles of Association of Licensor
dated November 14, 2007 and November 22, 2007, a copy of each of which is
attached hereto in Exhibit 2.

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     “System” means any system
of components, whether it is in existence today or developed hereafter,
including all of the structural steel, piping, pumps, vessels, control systems,
wiring, the proprietary “mixing turbine pump(s),” any new components of any
future system of components and all of the operations, maintenance and start-up
manuals provided by AK, to convert hydrocarbon feedstock, including any
Feedstock, into diesel oil using the Technology, including, for the avoidance of
doubt, the KDV 500.

     “Technology” means the
proprietary, renewable diesel technology developed by Dr. Christian Koch (as
well as any related technology licensed to Dr. Christian Koch or to AK) to
convert municipal solid waste, organic materials, sludge and other hydrocarbon
materials, including Feedstock, to diesel oil, including all Improvements to
such technology made or acquired from time to time, including Intellectual
Property, Systems, the formulation of catalysts used in Systems and all related
materials and information.

     “Territory” has the
meaning set forth in Section 2.1.

     “Third Party Purchaser”
has the meaning set forth in Section 2.5.

Section 1.2 Interpretation. In this Agreement, unless
otherwise indicated or required by the context:

     (a) Reference to and the
definition of any document (including this Agreement) or any applicable law
shall be deemed a reference to such document or applicable law as it may be
amended, supplemented, revised or modified from time to time;

     (b) All references to an
“Article,” “Section” or “Exhibit” are to an Article or Section hereof or to an
Exhibit attached hereto;

     (c) Article and Section headings
and other captions are for the purpose of reference only and do not limit or
affect the meaning of the terms and provisions hereof;

     (d) Defined terms in the singular
include the plural and vice versa, and the masculine, feminine and neuter gender
include all genders;

     (e) The words “hereof,” “herein”
and “hereunder” and words of similar import refer to this Agreement as a whole
and not to any particular provision of this Agreement; and

     (f) The words “include,”
“includes” and “including” mean include, includes, and including “without
limitation” and “without limitation by specification.”

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ARTICLE 2 – LICENSE RIGHTS

Section 2.1 Grant of License Rights. Subject to the
terms of this Agreement, Licensor hereby grants American the Full Right in the
Territory to market and sell Systems and utilize the Technology. As of the
Effective Date, the territory (the “Territory”) shall be the states of
California, New York and Texas, it being agreed that Licensor shall not grant
any Person the right to sell Systems in New Jersey or Florida before the date by
which American must satisfy the requirement set forth in clause (ii) of the
first sentence of Section 2.1(b) . For the avoidance of doubt, American shall be
entitled to exercise any or all of the license rights that are granted to it in
the Technology itself or through any of its Affiliates, but American shall not
have the right to issue sublicenses to any Person other than an Affiliate. The
Parties further agree as follows:

     (a) Notwithstanding anything that
is contained herein to the contrary, American shall be credited for the sale of
all of the Systems sold to Covanta during the term of this Agreement regardless
of whether such Systems are for use inside or outside the Territory.

     (b) American shall be required to
secure or to help Licensor or Global to secure (i) an order for one KDV 500
prior to the end of the Interim Period (it being agreed that the Purchase Order
being placed by Covanta for the Demonstration Plant satisfies this requirement)
and (ii) orders for an additional two KDV 500s prior to the end of the Initial
Period. If American fails to secure or help Licensor or Global to secure orders
for a total of three KDV 500s prior to the end of the Initial Period, Licensor
shall have the right, in its sole and absolute discretion, to notify American
that it must give up its Full Rights for one (1) of the states in the Territory
(such state to be selected by American). If American meets the two (2)
requirements set forth in this Section 2.1(b), the Territory thereafter shall be
the states of California, New York, Texas, New Jersey and Florida. The phrases
“secure orders” as used herein mean that a Person has executed a Purchase Order
for one or more KDV 500s and made the initial deposit thereunder.

     (c) Licensor acknowledges and
agrees that the ability of American to meet the requirements set forth in this
Section 2.1 will depend, in part, on the initial three KDV 500s installed in the
United States (including the Demonstration Plant) demonstrating the technical
and financial viability of the Technology. Notwithstanding anything contained
herein to the contrary, (i) if there is any delay in the installation of any of
the initial three (3) KDV 500s in the United States, including the Demonstration
Plant (with such KDV 500s meeting all performance guarantees), beyond the date
committed by AK in the applicable Purchase Order or (ii) if any such KDV 500s
experience operating or financial problems due to a failure of the KDV 500 to
operate in accordance with its performance guarantees, then all of the time
periods set forth in this Section 2.1 shall be extended automatically for the
full period of all such delays for all purposes hereof.

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     (d) During the Extended Period,
American shall be required to secure orders for: (i) two (2) KDV 500s per year
for each of the first two (2) full calendar years of the Extended Period; (ii)
five (5) KDV 500s per year for each of the next two (2) calendar years of the
Extended Period; and (iii) ten (10) KDV 500s per year for each calendar year
thereafter, each such determination to be made on a cumulative basis (such that
American shall be entitled to credit additional KDV 500s sold in one year above
the minimum requirement for that year to a later year). If American fails to
meet any such targets in any calendar year during the Extended Period, Licensor
shall have the right, in its sole discretion, to notify American that it shall
only have a Qualified Right in all of the states in the Territory to market and
sell Systems and utilize the Technology for the remainder of the term of this
Agreement. Licensor agrees that all Systems sold by Licensor outside the
Territory that are pursuant to a referral made by American shall count towards
American’s minimum purchase requirements hereunder. However, none of the Systems
purchased by Covanta or an Affiliate of Covanta for its own account during the
Extended Period shall count towards meeting American’s minimum purchase
requirements unless the sale of Systems is to a project developed by American or
an Affiliate of American in which Covanta is an investor.

     (e) For purpose of meeting any of
the minimum order thresholds for KDV 500s which are set forth in this Section
2.1, if a System is developed by AK (such as the “KDV 2000” which is currently
under development by AK) that is capable of producing a higher amount of diesel
oil per hour than a KDV 500 (expected to be 2,000 liters per hour in the case of
a “KDV 2000” as compared to 500 liters per hour for a KDV 500), then such System
will count as more than one KDV 500 based on the amount of diesel oil per hour
capable of being provided (expected to be four KDV 500s in the case of a “KDV
2000”).

     (f) Notwithstanding anything
contained herein to the contrary, American shall not lose its Full Rights in any
state in the Territory if it fails to meet the cumulative order requirements in
Section 2.1(b) or (d) if (i) AK is not able to produce enough Systems to meet
the Purchase Orders secured by American, Licensor and Global or (ii) any
problems experienced with the Technology in the Systems installed by AK make it
commercially unreasonable for American to secure orders for any additional
Systems until such problems have been resolved, in which case the Parties shall
agree to an equitable adjustment, in good faith, to the cumulative requirements
provisions of Sections 2.1(b) and (d) or extend the date for such requirements
to be performed.

     (g) If American fails to meet its
performance obligations under this Section 2.1 and Licensor elects to require
American to give up its Full Rights in one or more of the states in the
Territory as further provided for herein, American’s sole penalty will be for
its rights in such state(s) to become a Qualified Right to market and sell the
Technology for the remainder of the term of this Agreement.

Section 2.2 Obligation to Make Referrals. If any Person
contacts Licensor or any of its Affiliates regarding the purchase of one or more
Systems for installation in the Territory, Licensor shall refer such Person to
American.

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Section 2.3 Sales to Covanta Energy. The sale of all Systems
  to Covanta or to any of its Affiliates, including the Demonstration Plant, shall
  be pursuant to Purchase Orders placed with AK through Licensor, and American
  shall derive a license fee on all such sales. Licensor shall mark up the cost
  of all of the Systems that are sold to Covanta or any of its Affiliates (other
  than the System for the Demonstration Plant) by ten percent (10%) and pay fifty
  percent (50%) of such amount to American as its commission. Such commissions
  shall be paid to American as the payments that are due from Covanta or its Affiliates
  are received under the applicable Purchase Order.

Section 2.4 Commission on Sales to Other Customers. American
  shall be entitled to a commission of five percent (5%) on all Systems that are
  sold in the Territory. If American identifies a Customer that is interested
  in purchasing one or more Systems in an area that is outside the Territory,
  American shall refer such Customer to Licensor and, if such sale is completed
  (the decision to complete such sale to be made by Licensor in its sole discretion),
  American shall be entitled to a commission of five percent (5%) on such sale.
  Licensor shall mark up the cost of all of the Systems on which American is entitled
  to a commission by ten percent (10%) and pay fifty percent (50%) of such amount
  to American as its commission. Commissions shall be paid to American as the
  payments that are due under the applicable Purchase Orders are received. For
  the avoidance of doubt, in connection with Customers that are identified by
  American outside of the Territory, Licensor shall be obligated to pay the commission
  to American if the System is sold within two (2) years after the Customer is
  identified to Licensor by American.

Section 2.5 Purchase Orders. All purchase orders for
System(s) (“Purchase Orders”) shall be entered into by and between AK (or its
designee) and the ultimate purchaser of such System(s) (the “Purchaser”),
although all Purchase Orders shall be placed through Licensor and provide for
the payment of a sales commission to Licensor (except for the Systems sold for
the Demonstration Plant). Each Purchase Order shall include a set of
representations and warranties made by AK to the Purchaser which are consistent
with those provided by Licensor to American in Article 8 and a non-exclusive,
irrevocable and perpetual license (a “Use License”) for the Purchaser to (i)
use, practice, operate, maintain, repair and make Improvements to the System(s),
(ii) purchase the catalyst that is required for the operation of the System(s)
from AK and/or any Person that is authorized to manufacture and/or sell such
catalyst by AK, (iii) purchase components and spare parts for the System(s) from
AK and/or any Person that is authorized to manufacture and/or to sell such
components and spare parts and (iv) reproduce, modify and internally distribute
copies of any and all materials and information received by American from
Licensor and/or AK relating to the System(s), in whole or in part. In addition,
if the Purchaser sells or transfers any of the System(s) to any Person (a “Third
Party Purchaser”), the Purchaser shall be entitled to transfer its Use License
to such Third Party Purchaser and each Third Party Purchaser shall be entitled
to transfer such Use License to another Third Party Purchaser. Notwithstanding
anything to the contrary contained or implied in clauses (ii) or (iii) of this
Section 2.5, all Purchasers and all Third Party Purchasers shall be entitled to
procure components, spare parts and catalysts that 

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are commercially available from any Person. Further, if AK and
the Persons authorized to make spare parts and components that are not
commercially available are unable to timely supply the spare parts and
components ordered by a Purchaser or a Third Party Purchaser, such Purchaser or
Third Party Purchaser shall be authorized to purchase such spare parts and
components from any other Person and to make such spare parts and components
itself.

ARTICLE 3 – ANNUAL PRICING; NO ROYALTIES

Section 3.1 Annual Pricing. Licensor, American and AK
shall agree on a procedure to establish the price, at the end of each November,
for the following year, of (i) Systems, (ii) the catalyst that is used with the
Technology, (iii) replacement/spare parts for Systems and (iv) the cost for AK
or Licensor to provide services on Systems or other engineering services in
order to (a) ensure that such prices are not increased inappropriately from year
to year and (b) to provide price certainty to American for the upcoming year in
connection with its sales and marketing efforts. The Parties are aware that the
current price of a KDV 500 includes a technology fee of [*****] and acknowledge
that the minimum technology fee to AK from the sale of a System in the future,
as arrangements are put in place by AK to broaden the manufacturing base and
reduce the total cost of the Systems will include a technology fee not to exceed
[*****]. Licensor, American and AK shall use their best efforts to negotiate in
good faith and agree as soon as practicable to the terms of such procedure and
any other mechanisms that may be necessary or helpful to determine the pricing
for the Systems or any other items. Licensor shall provide American, prior to
the end of each November, with the updated pricing for the following year.
Licensor further agrees (and AK, by its execution of this Agreement in the space
provided below, agrees) that American’s Customers will not be charged more
during any year for a System than the lowest price that is paid by any other
licensee of Licensor or customer of AK for a comparable System in such year in
the United States.

Section 3.2 No Royalties. Neither American (or its
Affiliates) nor any Purchasers or Third Party Purchasers shall be required to
pay royalties to Licensor, AK, Global or any other Person in connection with the
exercise by American or its Affiliates of any of the license rights in the
Technology granted under this Agreement.

ARTICLE 4 – CERTAIN OBLIGATIONS OF THE PARTIES

Section 4.1 Supply of Information. Licensor shall supply
American from time to time with all information relating to the installation and
operation of Systems reasonably required or requested by American. Further,
Licensor and/or AK shall provide American with any revised or updated
installation or operating manuals or bulletins as soon as such materials are
completed and available for distribution.

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Section 4.2 Provision of Technical Assistance.
Notwithstanding Section 4.1, Licensor shall not have any obligation to provide
any engineering services or technical assistance regarding the Technology or the
Systems under this Agreement. Any such services and assistance may be provided
under other agreements with Licensor or with AK.

Section 4.3 Acknowledgment and Agreement. Licensor shall
arrange for Dr. Christian Koch to execute this Agreement in the space that is
provided below, on behalf of himself and in his capacity as the President of AK,
to evidence (i) their acknowledgement that they have reviewed this Agreement and
agree to any obligations on their parts, (ii) their consent to the terms of this
Agreement and (iii) their agreement for AK to enter into a substantially similar
form of license agreement with American if the rights of Licensor pursuant to or
as contemplated by the Rights Agreements are not supplemented to the extent
necessary to enable Licensor to grant all of the rights being granted to
American hereunder or if any such rights granted to Licensor are terminated for
any reason, such new license agreement to preserve American’s Full Rights and/or
Qualified Rights in the Territory.

ARTICLE 5 – EFFECTIVE DATE AND TERM

Section 5.1 Effective Date. This Agreement shall become
effective on the date that it has been signed by both of the Parties and by Dr.
Christian Koch (the “Effective Date”).

Section 5.2 Term of the Agreement. This Agreement shall
continue in effect from the Effective Date until July 1, 2028 unless it is
terminated earlier by the provisions hereof or by either Party in accordance
with its rights hereunder.

ARTICLE 6 – INTELLECTUAL PROPERTY

Section 6.1 No Transfer of Ownership of the Technology.
The Parties agree that this Agreement shall not transfer the ownership of the
Technology or any of the Intellectual Property therein, and that American will
not have any right, title or interest in or to the Technology, except as
expressly licensed to American pursuant to this Agreement or any separate
agreement.

Section 6.2 Improvements. All Improvements conceived,
developed or acquired by AK or Licensor during the term hereof shall be included
under the license rights granted herein. All such Improvements conceived,
developed or acquired exclusively by AK or Licensor shall remain the property of
AK or Licensor, respectively. 

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ARTICLE 7 – INFRINGEMENT AND DESIGNATIONS

Section 7.1 Notice of Infringements. During the term
hereof, Licensor and American shall promptly notify each other in writing with
respect to any claim of infringement of any Patent or other right asserted
against it by any Person arising out of the exercise of the rights being granted
hereunder.

Section 7.2 Indemnity for Infringement or
Misappropriation. Licensor shall indemnify and hold harmless American, its
Affiliates, any Purchasers and Third Party Purchasers (collectively, the
“Indemnified Parties”) from any and all claims of infringement or
misappropriation and attendant damages and costs by virtue of the exercise of
the rights granted to an Indemnified Party hereunder or under any Purchase
Order. To secure the indemnity provided for in this Section 7.2, the Indemnified
Party shall: (i) provide notice to Licensor of the claim giving rise to the
liability as soon as reasonably practicable after receiving a notice of the
claim, it being agreed that any delay in providing such notice to Licensor shall
not relieve Licensor of its indemnity obligations except to the extent it was
prejudiced by such delay; and (ii) use reasonable business efforts to cooperate
fully with Licensor in defending the claim; provided, however,
that Licensor shall not enter into any settlement or compromise creating any
payment obligation, admission or other obligation on the part of any Indemnified
Party without such Indemnified Party’s prior written consent. The Indemnified
Parties shall permit Licensor to defend and compromise such claim, but each
Indemnified Party may employ its own counsel, at its own expense, to assist
Licensor with respect to any such claim. Notwithstanding the foregoing, the
Indemnified Parties shall not be entitled to indemnification hereunder if the
infringement is due to the Indemnified Party or its Affiliates: (i) using the
System in violation of the express written operating instructions that are
provided by AK if the subject claim would have been avoided but for such
unauthorized use; or (ii) modifying the System in a manner which is not
authorized by Licensor which actually causes such infringement if the subject
claim would have been avoided but for such modification.

Section 7.3 Use of Designations. If requested by
Licensor in writing, American shall, in accordance with the written instructions
of Licensor, provide for any System or any part of the Technology, legible
statutory notice of any Patent, the existence of the license herein granted and
the identity of Licensor and/or AK. Notwithstanding anything contained herein to
the contrary, no rights are being granted by either Party to the other regarding
their respective trade names or trademarks.

Section 7.4 Limitation of Liability. The Parties
expressly waive any claims against each other and their respective Affiliates
for indirect, special, non-compensatory, incidental, punitive, exemplary or
consequential damages of any type, whether arising in contract or tort
(including negligence, whether sole, joint or concurrent or strict liability),
arising out of or relating to this Agreement or a breach hereof;
provided, however, that this provision shall not waive any claims
that the Parties may have under any other agreements entered into between the
Parties. The limitations on liability and the remedies set forth in this
Agreement have been expressly bargained for by the Parties and reflect the
knowing allocation of the risks inherent in this Agreement between the
Parties.

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ARTICLE 8 – REPRESENTATIONS AND WARRANTIES

Section 8.1 Party Representations. As of the Effective
Date, each Party represents and warrants to the other Party that:

     (a) It is duly organized and
validly existing and, where applicable, is in good standing under the laws of
the jurisdiction of its formation and it has all requisite power and authority
to enter into and perform its obligations under this Agreement; 

     (b) The execution, delivery and
performance of this Agreement have been authorized and approved by its Board of
Directors or Managers, as the case may be, and do not and will not (i) violate
any law, rule, regulation, order, decree or permit which is applicable to it or
(ii) violate its organizational documents or any agreement to which it is a
party;

     (c) This Agreement is a legal and
binding obligation of such Party, enforceable against such Party in accordance
with its terms, except to the extent enforceability is modified by bankruptcy,
reorganization and other similar laws affecting the rights of creditors
generally and by general principles of equity; and

     (d) There is no litigation
pending or, to the best of its knowledge, threatened to which such Party, its
parent or any of its subsidiaries is a party that, if adversely determined,
would have a material adverse effect on the financial condition, prospects or
business of such Party or its ability to perform its obligations under this
Agreement.

Section 8.2 Licensor Representations Regarding the
Technology. As of the Effective Date, Licensor represents and warrants to
American, its Affiliates and each Purchaser and Third Party Purchaser that:

     (a) A list of all relevant
Patents as of the Effective Date is set forth in Exhibit 3 attached hereto and
all such Patents are current and valid as of the Effective Date with any and all
required fees to maintain the same having been paid;

     (b) Licensor has licensed or
otherwise has or otherwise will secure the rights in and to the existing and
future Technology, including Intellectual Property, necessary for Licensor to
grant to American the rights being granted in this Agreement, and there are no
rights, options or other contractual obligations on the part of AK, Dr.
Christian Koch of any other Person that would result in such Technology,
including Intellectual Property, no longer being owned by or licensed to AK or
licensed by Licensor, and AK shall maintain, prosecute and defend (or cause any
other Person that owns any Patents to maintain, prosecute and defend) all
Patents and pay all fees in connection therewith;

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     (c) The Technology, including
Intellectual Property, does not use or include or rely on any third party
intellectual property and no third party owns any rights, including intellectual
property rights, necessary to American’s exercise of any of its rights under
this Agreement that have not been licensed to AK;

     (d) Except for any rights granted
to Covanta or Global, no rights have been provided to, or authorized for, any
Person to exercise any rights in, the Technology, including the Intellectual
Property, which are inconsistent with the rights granted to American
hereunder;

     (e) The Technology as currently
used by AK and as planned to be used by Licensor and American in accordance with
the terms of this Agreement, does not infringe, misappropriate or otherwise
violate any patent, copyright, trademark, trade secret or other proprietary or
intellectual property right of any Person, and AK and/or Licensor have not
received, and to its knowledge does not know of any facts that could give rise
to, any charge, complaint, claim, demand, notice or other communication (i)
alleging any such infringement, misappropriation or other violation, (ii)
requesting that AK and/or Licensor take a license from any Person or (iii)
challenging the validity or enforceability of the Intellectual Property. AK
and/or Licensor has no knowledge of any current or threatened infringement,
misappropriation or other violation by any Person of the Intellectual Property,
and AK and/or Licensor has not, and has no knowledge of any facts that would
require that there be, sent or otherwise communicated to any Person any charge,
complaint, claim, demand or notice asserting infringement, misappropriation or
other violation of any of any such Intellectual Property; and

     (f) Licensor has provided
American with a true and correct copy of the Rights Agreements and there has not
been any amendment to the Rights Agreements since they were executed. Licensor
shall provide American with a true and correct copy of any amendments made to
the Rights Agreements during the term hereof and a copy of any additional
agreements entered into by Licensor with AK or Dr. Christian Koch regarding the
rights of Licensor with respect to the Technology. Licensor shall provide
American with a copy of any default notice or any similar communications
received by Licensor from AK during the term hereof and provide American with
updates from time to time regarding the resolution of any such termination
notice. Licensor shall not agree to or make any amendment to any of the Rights
Agreements or enter into any other agreements regarding its rights to the
Technology that would reduce or affect any of American’s rights under this
Agreement.

ARTICLE 9 – RESOLUTION OF DISPUTES

Section 9.1 Dispute Resolution. The Parties agree to
cooperate with each other in good faith to try to resolve any controversy or
dispute between them arising under this Agreement (each a “Dispute”) in
accordance with the following procedures:

     (a) If a Dispute cannot be
resolved informally, such Dispute shall initially be referred, through written
notice by one Party to the other Party, to a meeting of senior 

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management representatives of the Parties. The senior
management representatives will meet to resolve the Dispute within fifteen (15)
days following presentation of the matter to them.

     (b) If the Dispute cannot be
resolved pursuant to Section 9.1(a), the Chief Executive Officers of the Parties
shall meet to resolve the Dispute within fifteen (15) days following the
conclusion of the consideration of the Dispute under Section 9.1(a) .

     (c) If the matter is not resolved
within thirty (30) days of the written notice in Section 9.1(a), either Party
may submit the Dispute to arbitration by submitting a Request for Arbitration
pursuant to Article 4 of the Rules of Arbitration of the ICC or such equivalent
arbitration rules of the ICC then in effect (the “ICC Rules”), provided that
nothing in this Agreement shall prevent or delay either Party from applying for
interim or conservatory measures pursuant to Article 23 of the ICC Rules.

Section 9.2 Arbitration of Unresolved Disputes.

     (a) All Disputes arising out of
or in connection with this Agreement that are not resolved in accordance with
the provisions of Section 9.1 shall be finally settled under the ICC Rules by
binding arbitration conducted in the English language and held in London,
England before a panel of three (3) arbitrators. Notwithstanding anything to the
contrary in the ICC Rules, the following procedures shall apply for the
appointment of the three (3) arbitrators. Each Party shall appoint one (1)
arbitrator, obtain its appointee’s acceptance of such appointment and deliver
written notification of such appointment and acceptance to the other Party
within thirty (30) days from the date that the Dispute was submitted to
arbitration. If a Party fails to deliver written notification of its appointment
of an arbitrator and his/her acceptance within the time period provided in this
Section 9.2, then such arbitrator shall be appointed by the ICC in accordance
with the ICC Rules and be deemed a Party-appointed arbitrator for all purposes
hereof. The first two arbitrators so selected shall select the third arbitrator
(who shall act as chairman of the arbitration proceedings), prior to the
thirtieth (30th) day following the appointment of the second
Party-appointed arbitrator. If the Party-appointed arbitrators are unable to
select a neutral arbitrator, they shall jointly submit a list of four names (two
each) to the ICC, which shall select the third arbitrator from the list
submitted to it.

     (b) No arbitrator shall be a past
or present employee or agent of, or consultant or counsel to, a Party or any
Affiliate of a Party, unless such restriction has been waived in writing by the
other Party to the proceeding.

     (c) The substantive law governing
the Dispute shall be the laws of the State of New York.

     (d) The arbitrators shall have
the sole power and authority to determine the arbitrability of any Dispute
arising under or relating to this Agreement or the subject matter hereof.
Subject to any other relevant limitations set forth elsewhere herein, the
arbitrators will have the power to award any type of relief that is just and
appropriate in 

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the arbitrators’ discretion, including compensatory damages,
injunctive orders, orders for specific performances and declarations of
rights.

     (e) The arbitrators shall not
have power, however, to award punitive, consequential, exemplary or treble
damages or any other type of relief in the nature of a penalty, and the Parties
hereby expressly waive any right they might otherwise have to such relief. THE
PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 9.3 Finality; Enforcement. Any decision or award
of a majority of an arbitral panel, as applicable, shall be final and binding
upon the Parties. Each Party agrees that the arbitral award may be enforced
against it or its assets wherever they may be found and that a judgment upon the
arbitral award may be entered in any court having jurisdiction thereof. The
Parties hereby waive any right to appeal or to review of the decision or the
award of an arbitral panel by any court or tribunal and also waive any
objections to the enforcement of such decision or award.

Section 9.4 Costs. The costs of arbitration shall be
paid in accordance with the decision of the arbitral panel pursuant to the ICC
Rules.

Section 9.5 Continuing Performance Obligations. The
existence of any Dispute or the pendency of the Dispute resolution procedures
set forth herein will not relieve or excuse a Party from its ongoing duties and
obligations under this Agreement, and the Parties shall nevertheless proceed
with the performance of this Agreement in accordance with the terms hereof.

ARTICLE 10 – TERMINATION

Section 10.1 Termination Rights. This Agreement may be
terminated by either Party in the case of the failure of the other Party to
fulfill any of its material obligations hereunder (a “Default”) on ninety (90)
days’ prior written notice to the Party in Default, such notice to specify the
performance failure of such Party.

Section 10.2 Cure Rights. Notwithstanding anything
contained herein to the contrary, a Party that is in Default shall be entitled
to cure such Default by satisfying its performance obligation prior to the end
of such ninety (90) day period. Furthermore, if such Party is diligently
proceeding to cure such Default but such cure cannot be accomplished within such
ninety (90) day period, the Party in Default shall be given up to an additional
sixty (60) days to cure the Default so long as such Party continues to
diligently pursue curing the Default. If the Default is cured by the Party that
is in Default prior to the end of the cure period, then the notice of
termination shall be null and void. If a Party fails to cure a Default, then
this Agreement shall terminate on the date set forth in the notice of Default,
but in no event prior to ninety (90) days following the issuance of such notice
of Default.

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Section 10.3 Right to Retain the License.
Notwithstanding anything contained herein to the contrary, if Licensor is in
Default for a failure to perform any material obligation hereunder, American
shall retain all the license rights and other rights granted to American
hereunder, without any obligation to purchase any System through Licensor. In
such case, American shall place all Purchase Orders through AK.

Section 10.4 Termination by Licensor. If Licensor
terminates this Agreement based on a failure of American to fulfill any of its
material obligations hereunder, American shall not be relieved of the
limitations and restrictions imposed by this Agreement upon the use or
dissemination of the Technology and/or the Systems which is not at such time in
the public domain; and that for installed Systems, American shall retain all the
license rights and other rights granted to American hereunder.

ARTICLE 11 – GENERAL PROVISIONS

Section 11.1 Expenses. Except as is otherwise expressly
provided in this Agreement, each Party will bear its respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement.

Section 11.2 Confidentiality. The Parties agree to
maintain the confidentiality of this Agreement and the terms and conditions
hereof. Any public announcements or similar publicity with respect to this
Agreement shall be issued at such time and in such manner as the parties shall
jointly determine. Notwithstanding the foregoing, each Party (and its
Affiliates) shall have the right to make all such disclosures as required by
applicable law or by any governmental body, including any stock exchange or
securities market to whose regulations or disclosure requirements a Party is
subject, without the consent of the other Party hereto; provided,
however, that in the event of any such required disclosure, the
disclosing Party (and its Affiliates), to the extent reasonably practicable,
shall provide the other Party with advance notice of any such disclosure and an
opportunity to comment thereon. The parties acknowledge that it is their intent
to limit, to the fullest extent possible, any publicity regarding their joint
cooperation during the Interim Period, it being recognized, however, that
American will need to contact public officials in connection with securing
permits or other approvals for the Demonstration Plant. In such regard, American
will undertake to obtain assurances of confidentiality from such public
officials, but disclosures may nevertheless result.

Section 11.3 Notices. All notices, consents, waivers and
other communications under this Agreement must be in writing and will be deemed
to have been duly given when (i) delivered by hand (with written confirmation of
receipt), (ii) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(iii) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):

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Licensor:

AlphaKat Global Energy GmbH

Schulstrasse 8 
96155 Buttenheim, Germany 
Attention: Chief Executive
Officer 
Facsimile: +49-9545-950325

American:

945 Ellington Lane 
Pasadena, CA
91105, USA 
Attention: Bruce I. Drucker 
Facsimile: +1-815-361-9052

Section 11.4 Waiver. Neither the failure nor any delay
by either Party in exercising any right, power or privilege under this Agreement
shall operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted by applicable
law, (i) no claim or right arising out of this Agreement can be discharged by
one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless in a writing signed by the other Party, (ii) no waiver that may be
given by a Party will be applicable except in the specific instance for which it
is given and (iii) no notice to or demand on one Party will be deemed to be a
waiver of any obligation of such Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement.

Section 11.5 Entire Agreement and Modification. This
Agreement supersedes all prior agreements between the Parties with respect to
its subject matter and constitutes a complete and exclusive statement of the
terms of the agreement between the Parties with respect to its subject matter.
This Agreement may not be amended except by a written agreement executed by the
Party to be charged with the amendment.

Section 11.6 Assignment. Neither Party may assign its
rights under this Agreement, in whole or in part, without the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed, except that each Party may make an assignment of this Agreement to an
Affiliate (so long as such Party remains liable for its obligations hereunder
following such assignment) and each Party may make a collateral assignment of
its rights hereunder to one or more lender(s) in connection with the financing
being arranged by such Party. In the case of a collateral assignment by one
Party to one or more lenders, the other Party shall, if requested to so,
negotiate the terms of a consent to assignment in good faith and enter into such
consent without delay. Notwithstanding the foregoing, Licensor may withhold its
consent in the case of a proposed assignment to any Person that is a Competitor
of Licensor.

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Section 11.7 Severability. If any provision of this
Agreement is held to be invalid, illegal or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid, illegal or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid, illegal or unenforceable.

Section 11.8 Governing Law. This Agreement will be
governed by, and construed in accordance with the laws of, the State of New York
without regard to its conflicts of law (other than Sections 5-1401 and 5-1402 of
the New York General Obligations Law).

Section 11.9 No Power of Representation. Neither Party
shall have the authority or right under this Agreement to, nor shall either
Party hold itself out as having the authority or right under this Agreement to,
(i) assume, create or undertake any obligation of any kind whatsoever, express
or implied, on behalf of or in the name of the other Party without the express
prior written consent of such other Party or (ii) accept service of any legal
process addressed to or intended for such other Party.

Section 11.10 No Partnership. Nothing in this Agreement
shall be construed as creating a partnership, association, joint venture or any
other legal entity between the Parties (including their Affiliates), nor a
fiduciary relationship between the Parties (including their Affiliates).

Section 11.11 No Third Party Beneficiaries. No provision
of this Agreement is intended or is to be construed to confer upon any Person,
other than the Parties and their respective Affiliates and successors and
permitted assigns, any rights or remedies under or by reason of this Agreement,
except for all Purchasers and Third Party Purchasers to the extent provided for
in Section 2.5.

Section 11.12 Counterparts and Facsimile Signatures.
This Agreement, and any other agreement, instrument, certificate of other
documents desirable to be executed and delivered in order to consummate the
Contemplated Transactions, may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
Any such document may be executed by facsimile signature. The signatures below
of American and Licensor also serve to state their agreement and position as
parties to the “Acknowledgement and Agreement” which is being signed below by
Dr. Christian Koch and AK.

[Signature page follows]

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

	 	ALPHAKAT - GLOBAL ENERGY GMBH 
	 	 	  
	 	 	  
	 	 	  
	 	By:	 /s/ Yossi Raz 
	 	 	Yossi Raz, Chief Executive Officer 
	 	 	Date: February 6, 2008 
	 	 	  
	 	 	  
	 	 	AMERICAN RENEWABLE 
	 	 	DIESEL, LLC 
	 	 	  
	 	 	  
	 	 	  
	 	By:	 /s/ Bruce I. Drucker 
	 	 	Bruce I. Drucker, Chief Executive Officer 
	 	 	Date: February 6, 2008 

Acknowledgment and Agreement:

Dr. Christian Koch, in his capacity as President of AK and his
individual capacity hereby, as signed below, acknowledges he has reviewed this
License Agreement in its entirety and agrees to all of the terms hereof and
confirms that the representations and warranties that are made in Section 8.2
are true and correct.

AK owns or has sufficient rights, and has granted Licensor
sufficient rights, to allow Covanta to exercise the rights granted under the
License Agreement. If for any reason the rights granted to Covanta by Licensor
are not sufficient to allow Covanta to exercise its rights under the License
Agreement, Dr. Christian Koch or AK shall convey or cause to be conveyed any and
all further rights needed by AK or Licensor to permit Covanta to exercise such
rights under the License Agreement. If the rights granted or to be granted to
Licensor are terminated for any reason or if Licensor ceases to exist, AK shall
enter into a substantially similar form of license agreement with American, such
new license agreement to preserve the Full Rights and/or the Qualified Rights
granted to American in the Territory. Dr. Christian Koch agrees that he will
cause AK to perform its obligations hereunder.

All capitalized terms herein have the meanings given in the
License Agreement.

By: /s/ Dr. Christian Koch

       Dr. Christian Koch

       Date: February 6, 2008

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EXHIBIT 1 – COVANTA LICENSE AGREEMENT

 

 

 

 

[filed as Exhibit 10.2 to this Form 8-K/A]

 

 

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EXHIBIT 2 – RIGHTS AGREEMENTS

Terms of Agreement dated May 2, 2007 
Shareholders’
Agreement dated July 10, 2007
Articles of Association of Licensee dated
November 14, 2007 and November 22, 2007

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	May 2, 2007 
	  
	Terms of agreement between: 
	Global Energy Inc (GE) public company on NASDAQ
      OTCBB, 
	With offices in Israel at 
	Migdal Aviv 35 floor 
	7 Abba Hillel St., Ramat Gan, Israel 
	  
	And 
	  
	ALPHAKAT GMBH (AK) 
	Schlstrasse 8 
	D-96155 Buttenheim, Germany 

  	1. 	ALPHAKAT GMBH 

        (AK) Technology 	 AK and its principle
          Dr. Christian Koch developed owned and registered
          patents for technology to convert different types
          of Municipal solid Waste (MSW), organic materials,
          refinery sludge etc. into mineral diesel oil. The
          technology incorporates KDV plant and low temperature
          vacuum process including special patented catalyst
          and high speed turbine to distillate organics into
          diesel, all together the "technology" KDV500 has
          turbine of 2X200 KW, KDV5000 has turbine of 2X2000
          KW 

	2. 	AK demonstration 

        plants 	 AK has built five
          plants to demonstrate its technology in the following
          countries: Mexico, Canada, Spain, Bulgaria and Italy. The
          plants KDV500 in Spain, Canada and Bulgaria are in
          a phase of final commission, GE has started due diligence and visited the KDV500 in Bulgaria, GE also discussed with the principals of the Canadian operation to learn more about the KDV500 in the state of Toronto town Berrie, Canada. 

	3. 	GE and AK 

        cooperation 	 Both companies
          GE and AK are looking to find a framework to cooperate
          in developing the technology, the potential market,
          and establish long term relationship to bring the
          technology to its utmost potential. 

	4. 	GE contributions 	 GE can assist
          AK in the following fields: 

                    a     
          Financial support. 

                    b.  
           Assistance in corporate management, sales
          and after sales support. This will achieve by new
          joint marketing and 

                          
          Sales Company (M&S) as defined below.
          

                   
          c. Organizer of engineering and plant erection
          world wide. 

                    d. Manage of Joint Ventures in many countries
          to produce diesel by utilizing the technology. 

	5. 	AK contributions 	 AK and its principle
          Dr. Christian Koch can emphasize its valuable time
          for: 

  			          a.
        Continues R&D for perfection of the technology. 

                  b. Continues study to reduce the cost of
        the KDV units. 

                  c. Leading the R&D program for KDV
        5000. 

                  d. Support the team of building and erection
        of plants. 

                  e. Support field ideas from the Joint
        Ventures to maximize the technology. 
	 6. 
	 Phase one: Marketing
          

          and Sales Company 
	 AK and GE will
          establish a marketing and sales world wide marketing
          company with equal partnership. 

          The M&S will have exclusive right to sell the
          technology and plants worldwide. No other company
          will receive such exclusive rights. 

        AK will continue to sell the technology
          and plants with other and smaller turbine up to
          200 KW and 350 KW directly to any person in the
          world. 

          It is AK's option to give old or new contact for new
          plant to the joint M&S Company to continue the sales
          negotiations. 

          AK already gave exclusive rights for sales to: Italy,
          Spain, Portugal, Bulgaria, Mexico and Canada, and in
          Mexico and Spain for cooperation in mounting plants. 

                    o
          The end user of M&S Company will pay the cost
          of the plant directly to AK the price includes agreed
          fee of 10% to the joint M&S Company.
          

                    o GE will finance all the M&S Company
          activity in the world. 

                    o GE will deal with all permits required
          for erecting and selling the diesel in these
          countries. 

                    o GE will manage the company and will appoint
          the personnel to achieve the goals of sales and
          after sales maintenance for these plants. 

                    o GE will build a finance program to support
          the end user worldwide and allow them to pay the
          plant costs to AK. 

                    o AK will support all technical aspects
          of the company and the customers.

                    o
          AK and GE will agree of the company strategy and its annual plans. 

                    o AK has the right to vote against a specific
          decision of a deal. 

                    o The Joint Company will be the only company
          with such rights.

                    o
          The Joint Company will have the exclusive 

  			               
          right to sell any KDV turbine larger than and 350
          KW. 

	7. 	Order of 3 KDV 500 	 GE intends to
          order 3 KDV500 for Poland, USA and Israel.
          

          GE intends to start the permitting process for these 3
          KDV500 plant. 

          The price of one KDV500 will be 2.5 million Euros if
          GE will order one unit and 2.4 if GE will order all 3
          units together. 

          Payment terms: 

                    o 100,000 Euros for permitting process for
          all 3 units, AK and Dr. Koch will support the
          permitting and EIA process, 

                      
          if the process will require more hourly work then
          GE will pay additional hourly rate of 100 Euros
          for Dr. Koch, 

                      
          80 Euros for senior engineer and 60 Euros for technician.
          

                    o Second payment of 1.2 million Euros for
          ordering of 6 turbines. 

                    o Third payment for each plant of 50% -
          400K already paid for the 2 turbines payment when
          building permit received. 

                    o Fourth payment of 40% at delivery to site.
          

                    o
          Fifth payment of 10% after commission. 

	8. 	Monthly payment 	 GE directly or
          through the Joint Company will pay to Dr. Koch a
          salary of 10,000 Euro per month. 

	9. 	Initial Payment 	 The monthly payment
          will start subject to: 

          First payment of 10,000 Euro will be only after
          complete technical "Due Diligence (DD)" which will
          include: (i) laboratory test of sealed sample of diesel
          from KDV 500 and (ii) visit continues operation of
          KDV plants. 

	10. 	Phase two 	 AK and GE want
          to establish long term cooperation and allow the
          parties to know each other and achieve mutual trust
          in the technology and the people involved in the
          two companies. 

          GE will have the option to invest directly in AK. 

          For the money invested by GE in AK, GE will get shares of the Company as defined below. 

                    a.
          GE will pay the actual cost of the KDV2000 and AK
          will keep open books for that purpose GE will also
          be involved in this process. 

                    b.
          All the above said investment will consider as full price and payment for the first KDV5000 that GE will order. 

                    c.
          The investment for order of KDV5000 will be done by
          3 equal installments every 6 months starting at the
          end of the DD period. 

                    d.
          For the payment of the KDV5000 GE will get 

  			               
          10% shares of AK. 

                    e. AK will show all the information to representative
          of GE, and GE representative will assist AK as much
          as possible. 

                    f. The phase two is limited to start this year
          2007 with the first prepayment for ordering the
          necessary parts and payments of the first part of 2
          million Euros, when the payment is not released
          this year the agreement about phase two is cancelled. 

          AK acknowledges that GE is a public company and
          has to report to the Stock Exchange Commissioner
          (SEC) according to the law and AK will report accordingly.
          

          This investment will subject to full DD that will
          include: 

                    i. Patent and intellectual properties.
          

                    ii. Auditing company's balance sheets for the
          previous three years, including all bank loans
          and other obligations. 

                    iii. Full discloser of KDV 500 production
          

                    iv. Full discloser of shareholding and
          shareholding agreements with companies in
          the countries mentioned in section 2 above.
          

                    v. Full discloser of employee and subcontract
          agreements. 

                    vi. Discloser of all company's registration,
          article of association, legal aspects, past law
          sues, etc. 

                    vii. Board resolution. viii. Any other discloser that GE may request
          to comply with its obligation to SEC. 

                    ix. The money will invest in the company
          according to agreed milestones of the R&D program and the need of agreed working capital. 

                    x. AK will arrange in proper manner all the
          company's intellectual property, process; know
          how, drawings and engineering data. 

          This option for second DD period will be up to eight (8) months after the first payment of first phase. 

	11. 	DD period 	 GE will finalize
          its first DD period 30 days after the visit to an
          operational KDV 500 plant. 

	12. 	Final agreement 	 Upon mutual decision
          of both sides after the DD period GE and AK will
          work to draft a final agreement for development
          of KDV5000 GE in AK. The final agreement will include
          but not limited to: New Articles of Association,
          new Board of Directors, mechanism to achieve decisions,
          appointing of general 

  			manager CEO, appointing of CFO,
        dispute resolutions, etc. 
	13. 	First refusal 	AK agrees that if AK wants to sell
        part of AK shares to third party it will give right
        of first refusal to GE. 
	14. 	Termination of terms of agreement 	the This agreement
        is canceled automatically if one of the parties does not fulfill the obligations. 

 

   

	By: 	/s/ Dr. Christian Koch 	 	By: 	/s/ Mr. Asi Shalgi 
	 	Name: Christian Koch 	 	  	Name: Asi Shalgi 
	 	Title: CEO ALPHAKAT GMBH 	 	  	Title: CEO Global Energy 

July 10, 2007

SHAREHOLDERS’ AGREEMENT

THIS AGREEMENT is effective
  as of July 10, 2007 by and among GLOBAL ENERGY INC., a company incorporated under the laws of the
  State of Nevada (“GEYI”),
  and ALPHAKAT GMBH, a company incorporated under the laws of
  the State of Germany (“AK”),
  (each: a “Party” and
  together: the “Parties”).
  

WHEREAS, the Parties have incorporated a company in (to be defined later) under
  the name of Alphakat - Global Energy Inc (the “Company”), with GEYI to initially hold 50%
  of the shares and AK to initially hold the remaining 50% of the Shares; and
  

WHEREAS, the
  Parties desire to cooperate in order to promote the business of the Company
  in accordance with the provisions set forth herein.

NOW, THEREFORE,
  in consideration of the undertakings and the mutual covenants of the Parties
  hereinafter set forth, it is agreed as follows:

	1. 	 SHAREHOLDING
        IN THE COMPANY 

	 	  
	  

		 Each of the parties shall subscribe
        for the shares of the Company, in consideration for the shares’ par
        value, and the Company shall issue 50% of the Company's shares to GEYI,
        and 50% of the Company’s shares to AK (each such amount of the shareholding
        shall hereinafter be referred to as the “Shares”). 

	 	  
	  

	2. 	 MAIN
        PURPOSE
      

	 	  
	  

		 The Company’s purpose will
        be the worldwide marketing and sales of the Technology and the products
        (as these terms are defined bellow), or any such other activities as the
        Company may at any time determine, and to engage in any other lawful act
        or activity (the “Company’s Business”). 

	 	  
	  

		 For the purpose of this Agreement,
        the term "Technology" shall
        mean: the technology of KDV to convert waste containing hydrocarbons into
        mineral diesel oil. And the term "Products" shall
        mean any products ensuing or resulting from the Technology including KDV
        turbines. 

	 	  
	  

	3. 	 PLACE
        OF BUSINESS
      

	 	  
	  

		 The Company’s principal
        place of business shall be (TBD), unless determined otherwise by the Company’s
        Board of Directors. 

	 	  
	  

	4. 	 TRANSFER
        RESTRICTIONS 

	 	  
	  

		 4.1 
	 No Party shall sell, assign, transfer,
        pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or
        in any way encumber (any of the above, "Transfer"), all or any part of the Shares
        owned by it (or securities convertible or exercisable therefore), other
        than in compliance with the terms of this Agreement or other than to a
        Permitted Transferee. For the purposes of this Agreement, "Permitted Transferee" shall mean an entity
        which is wholly owned or controlled by the Party. A transfer to a Permitted
        Transferee is only permitted if (i) each such transferee agrees in writing
        on a form prescribed by the Company 

	 		 to be bound by all of the provisions of
        this Agreement and (ii) any Transfer in interests in a Permitted Transferee
        shall be subject to all the transfer restrictions in this section and
        otherwise contained in this Agreement (section 5, 6 and 7) as if interests
        in such Permitted Transferee were shares in the Company. 

	 	 	  

	 	4.2 	 In no event may either Party Transfer any
        of their Shares to any person, entity, business or venture that competes
        with the Company's Business. 

	 	 	  

	 	4.3 	 Notwithstanding the foregoing, neither
        Party may Transfer any of its Shares during the first five (5) years following
        incorporation of the Company. 

	5. 	RIGHT OF FIRST
      OFFER (THE
      "RIGHT") 
	 	 	 
		5.1 	 If at any time either Party (the "Offeror")
        wishes to Transfer any or all of the Shares owned by him/it to a third
        party (the "Offered Shares"),
        then prior to soliciting an offer from, or making any such offer to, a
        third party, the Offeror shall first submit a written offer containing
        all material terms to the other Party (the "Offer") in respect of the Offered Shares.
      

	 	 	  

		5.2 	 Within sixty (60) days after receipt of
        the Offer, the other Party shall have the right to give notice to the
        Offeror of its intent to purchase all (but not less than all) of the Offered
        Shares on the same terms and conditions as set forth in the Offer. Once
        delivered, such notice, taken in conjunction with the Offer, shall be
        deemed to constitute a valid, legally binding and enforceable agreement
        for the sale and purchase of such Offered Shares to the other Party, and
        the sale of the Offered Shares to the other Party shall occur within sixty
        (60) days of receipt of the Offeror's written notice. 

	 	 	  

		5.3 	 Should written notice not be received by
        the Offeror within the sixty day time period referenced above, or if the
        other Party shall give notice of its election not to acquire such Offered
        Shares, then the Offer will be deemed to have lapsed, and the Offeror
        may, for a period of up to ninety (90) days thereafter, offer the Offered
        Shares to a bona fide third party on terms and conditions, including price,
        not more favorable to the proposed buyer than those contained in the Offer
        to the other Party. 

	 	 	  

		5.4 	 Any Shares not sold to a bona fide third
        party within the 90-day period referred to in Section 5.3 shall again
        be subject to the requirements of this Section 5. 

	 	 	  

		5.5 	 In the event that Shares are sold to pursuant
        to this Section 5, said Shares shall continue to subject to the restrictions
        imposed by Sections 4, 5, 6 and 7 of this Agreement, and the purchaser
        of said Shares shall agree in writing to abide by such Sections.
      

	 	 	  

	6. 	TAG ALONG
    
	 	 	  

		6.1 	 In the event that either Party (the "Initiating
        Party") wishes to Transfer any shares of the Company
        held by it to a third party, the Initiating Party shall notify the other
        Party in writing, and the other Party shall have the right to require,
        as a condition to such Transfer, that the proposed transferee purchase
        from him/it upon the same terms, that number of shares which constitutes
        the same portion of the total number of shares held by him/it as the number
        of shares proposed to be sold by the Initiating Party (the "Co-
        Sale Shares"). 

2

	 	6.2 	 The other Shareholder shall have the option,
        exercisable by written notice to the Offereor, within thirty (30) days
        after receipt of the notice from the Offeror, to require participation
        in the sale as referenced in section 6.1 above.

	 	 	 
	 	6.3 	 In the event that the other Party exercises
        its tag along rights hereunder, the Initiating Party must cause the proposed
        transferee to add such shares to the shares to be purchased by the transferee,
        as part of the sale agreement to such a degree that all of the Co-Sale
        Shares are included.

	7. 	 RESERVED

	 	 	 
		8 	 ACKNOWLEDGMENT
        AND PRE-EMPETION
        RIGHTS

	 	 	 
		8.1 	 The Parties acknowledge that their Shares
        may be diluted as a result of investments and other issuances of shares
        by the Company.

	 	 	 
		8.2 	 If at any time prior to an IPO, the Company
        proposes to issue and sell New Securities, as defined below, the Parties
        agree that the Company shall enable the Parties to maintain their percentage
        ownership of the outstanding shares of the Company, as stated below:

	 	 	 
		8.3 	 For the purpose of this Section 8, "New
        Securities" shall mean any capital stock of the
        Company, whether or not now authorized, and rights, options or warrants
        to purchase capital stock, and securities of any type whatsoever that
        are, or may become, convertible into capital stock; provided that the
        term "New Securities" shall not include (i) shares of the Company issuable
        upon exercise of outstanding options or warrants; (ii) securities issued
        pursuant to the acquisition of another corporation by the Company by merger,
        purchase of substantially all the assets of another corporation or any
        other reorganization; (iii) securities issued to employees, officers,
        directors and consultants of the Company pursuant to any stock option
        plan or stock purchases or stock bonus arrangement; (iv) securities issued
        pursuant to payment of any dividend or distribution with respect to all
        of the Company's issued and outstanding shares; and (v) securities issued
        to a strategic investor approved as such by the Board of Directors.

	 	 	 
		8.4 	 If the Company proposes to issue New Securities,
        it shall give the Parties written notice (the "Rights Notice") of its intention, describing
        the New Securities, the price, the general terms upon which the Company
        proposes to issue them and the number of shares that each Party has the
        right to purchase under this Section 8. Each Party shall have fourteen
        (14) days from delivery of the Rights Notice to agree to purchase all
        or any part of its pro-rata share of such New Securities for the price
        and upon the general terms specified in the Rights Notice, by giving written
        notice to the Company setting forth the quantity of New Securities to
        be purchased. The Party's pro rata share shall be the ratio of the number
        of shares of the Company's Ordinary Shares then held by such Party of
        the date of the Rights Notice, to the sum of the total number of Ordinary
        Shares as of such date .

	 	 	 
		8.5 	 If the Parties fail to accept such offer
        as to all or part of the New Securities, the Company shall have the right
        within one hundred and twenty (120) days thereafter to sell or enter into
        an agreement to sell, the New Securities as to which such offer, or offers,
        were not accepted; provided, however, that no such sale shall be effected
        at a price or upon terms more favorable to the purchasers thereof than
        those specified. In the event the Company has not sold or entered into
        an agreement to sell such New Securities within such 120-day period, the
        Company shall not thereafter issue or sell such New Securities without
        first complying with the procedure set forth in this Section 8.

3

	9 	TERMINATION OF RIGHTS
    

	9.1 	 The rights contained in Sections 4, 5,
        6, 7, 8 and 11 shall terminate and be of no further force or effect (i)
        immediately upon the consummation of the IPO or (ii) when the Company
        first becomes subject to the periodic reporting requirements of Section
        12(g) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended,
        or the reporting requirements of a similar reporting regime of another
        jurisdiction, whichever event occurs first. 

	10 	BOARD OF DIRECTORS 

	10.1 	 So long as each Party owns 50% of the outstanding
        shares of the Company, then each Party shall be entitled to appoint an
        equal number of directors to the board of directors of the Company. In
        the event that either Party holds, at any time in the future, a majority
        of the number of outstanding Shares, then such Party will have the right
        to appoint a majority of the directors of the board of directors of the
        Company. 

	 	  

	10.2 	 Initially, the directors appointed by GEYI
        shall be Mr. Asi Shalgi and Mr. Yossi Raz and the directors appointed
        by AK shall initially be Dr. Christian Koch and Mr. Ludwig Christian Koch.
      

	 	  

	10.3 	 Neither Party shall be able to assign or
        transfer its/his right to designate a director to any other third party.
      

	 	  

	10.4 	 Within 60 Days from the Effective Date
        of this Agreement, the board of directors shall agree on the Company's
        marketing and sales strategy, annual business plan, and goals.
      

	11 	MANAGEMENT OF THE COMPANY 

	11.1 	 GEYI shall appoint Mr. Yossi Raz as the
        Company's Chief Executive Officer ("CEO"') in accordance with the terms
        of an Employment Agreement attached hereto at Appendix A (the "Employment
        Agreement") between Mr. Yossi Raz and the Company
        as set out at Appendix A. Any subsequent CEO shall be appointed by GEYI.
      

	 	  

	11.2 	 AK shall initially appoint Dr. Christian
        Koch as the Company's Chairman. The Company's Chairman shall not have
        a casting vote. Any subsequent Chairman shall be appointed by AK.
      

	 	  

	11.3 	 AK shall have the right object to any sale
        of Product promoted or intended by the Company, in which case the Company
        shall not perform such sale and/or cease the promotion of such sale as
        applicable 

	 	  

	11.4 	 The Company's CEO and Chairman shall be
        responsible for the day to day management of the Company, and the implementation
        of the Company's marketing and sales strategy and business plan, and for
        meeting the Company's goals. 

	 	  

	11.5 	 Notwithstanding any action or resolution
        regarding any of the following issues, is to be approved by the Company’s
        board of directors: 

4

.i any
  action that authorizes, creates or issues shares of any class.

.ii any action that reclassifies any outstanding shares into shares having
  preferences or priority as to dividends or assets senior to or on a parity with
  the Ordinary Shares; .

iii any merger or consolidation of the Company with or into one or more other
  corporations; 

.iv
  the sale, lease, or other disposition of a material asset
  or the sale of all or substantially all of the Company’s assets; 

.v any
  change in the rights relating to the composition or in the right to appoint
  members to the Board of Directors; 

.vi any transactions between the Company and any Interested Party; an “Interested
  Party” shall mean a director, officer, employee,
  or significant shareholder or any family member of or consultant to any such
  person, corporation or other entity of which any such person beneficially owns
  ten percent (10%) or more of the equity interests or has ten percent (10%) or
  more of the voting power, other than transactions in the ordinary course of
  business.

.vii the terms and conditions of any initial public offering of the Company;
  

.viii the liquidation or dissolution of the Company;

.ix incur any indebtedness, make any capital expenditures, lend, enter into
  any material contract or commitment, incur any pledge or lien on the assets
  of the Company, other than as required in the ordinary course of business, but
  in no event in excess in the aggregate of US$ 5,000; 

.x amendment of the Articles of Association of the Company; and 

.xi the Company's signatory rights.

	12 	REMOVAL OF BOARD MEMBERS
    

	12.1 	 Each Party agrees to vote in whatever manner
        as shall be necessary to ensure that (i) no director elected by either
        Party is removed from office, other than for cause, unless such removal
        is approved by the Party which so appointed that director and (ii) any
        vacancies created by the resignation, removal or death of a director shall
        be filled by the Party that appointed such director pursuant to the provisions
        of this agreement. 

	 	  

	12.2 	 All Parties agree to execute any written
        consents required to effectuate the obligations of this Agreement.
      

	13 	EXPENSES AND FINANCING
    

	13.1 	 The Parties agree that GEYI will lend to
        the Company such amounts as the Parties may agree, and in any event in
        accordance with a budget to be approved by the board of directors of the
        Company. The terms of such loan, including interest on such loan, will
        be agreed upon between the Parties. 

	 	  

	13.2 	 All such payments as referenced in section
        13.2 above shall be made for costs and expenses set forth in a budget
        approved by the board of directors of the Company from time to time.
      

5

	14 	EXCLUSIVITY 

AK and the Company have
  the rights to market and distributor the Technology based on the KDV500, as
  define in the agreement dated May 2 2007.

14.1.1 AK herby appoints
  the Company as its sole agent exclusive for USA and China market, AK will not
  directly market to these markets but through the Company.

14.1.2 When GEYI will invest
  in the technology of Turbine 2000 than the Turbine 2000 technology will be marketing
  only through out the Company

14.1.3. The parties acknowledge
  that AK has already granted some third parties the right to sale the Technology
  and Products in certain territories as detailed in agreement signed May 2, 2007
  ("Third Party Rights"). 

14.1.4 All sales transactions
  shall be made directly between AK and the purchaser. The sale price of any transaction
  shall include a fee of 10% which shall be paid by AK to the Company. The company
  has the right to offer higher prices as the market will accept in such case
  the Company will benefit from the full difference between the purchase price
  and the sale price. AK and the Company will coordinate prices.

	15. 	DERTAKINGS OF THE PARTIES
    

15.1 AK shall provide all required technical assistance
  and support to the Company and any potential end users and purchasers of the
  Technology and the Products, in order to help the promotion of the Technology
  and the Products and the procurement of purchases.

15.2 GEYI will build a finance program to support
  end users in the procurement of the Products from AK, however, GA shall only
  offer such finance program to suitable end users at its sole and absolute discretion.

15.3 GEYI shall be responsible for obtaining necessary
  approvals and permits for the sale of diesel produced by the use ofthe Products
  and the Technology, were it finds it to be reasonable at its sole and absolute
  discretion.

	16 	REPRESENTATIONS AND WARRANTIES OF THE PARTIES 

	16.1 	Each of the Parties hereby represents and warrants with respect
      to itself/himself the following: 
	 	 
		(i) Authority and Validity.
      Such Party has full power and authority to enter into, execute and deliver
      this Agreement and perform its/his obligations under this Agreement in accordance
      with its terms. 

6

(ii) Absence of Conflicts. The execution and delivery
  of this Agreement by it and the consummation of the transactions as contemplated
  hereunder (i) do not and will not violate or conflict with any statute, regulation,
  judgment, order, writ, decree, or injunction currently applicable to it/him;
  and (ii) do not and will not violate or conflict with any existing mortgage,
  indenture, contract, licensing agreement, financing statement, or other agreement
  binding on it.

(iii) Consents and Contractual Restrictions. No consents
  or approvals of any third party are required in connection with the execution
  and delivery of this Agreement or the performance of the transactions contemplated
  hereunder otherwise. No agreement or arrangement binding upon such Party restricts
  its ability to fulfill its obligations and responsibilities under this Agreement
  or any related agreement or to carry out the activities contemplated herein.
  

(iv) Investment Representations. Each Party is acquiring the Shares for its/his or her own account.

	16.2 	AK further represents and warrants
      that: 

(i) it has all valid legal
  rights to the Technology and the Products;

(ii) it has the right to
  grant to GEYI all rights contained in this Agreement, including the Exclusivity
  set forth in section 14 above; and

(iii) the provisions of
  this agreement and any of AK's undertakings hereunder does not infringe upon
  the intellectual property rights of any third parties.

Each Party undertakes to
  inform the other Party immediately upon any material change in the above representations
  and warranties. 

	17. 	ASSISTANCE TO THE COMPANY 

The Parties shall use their best efforts to actively
  assist and promote the interests of the Company.

	18. 	MISCELLANEOUS 

	18.1 	ENTIRE AGREEMENT. 

This Agreement represents the entire agreement between
  the Parties. 

	18.3 	ASSIGNMENT. 

No part of this agreement may be assigned by any
  of the Parties hereto without the consent of all of the Parties hereto. 

	18.4 	GOVERNING LAW
      AND JURISDICTION. 

This Agreement shall be governed by and construed
  under the laws of the Republic of Germany. The competent courts in Gerrmany,
  shall have exclusive jurisdiction over any

 7

dispute arising in connection with this Agreement.

18.5           HEADINGS.

  Headings in this Agreement are for convenience only and shall not be used
  to interpret or construe its provisions.

18.6           NOTICES.

  All notices or other documents under this Agreement shall
  be in writing and delivered personally or mailed, addressed to the Parties.

18.7           BINDING
  EFFECT.

  The provisions of this agreement shall be binding upon and
  inure to the benefit of each of the Parties and their respective successors
  and assigns. The provisions of this Agreement shall supersede any conflicting
  provisions of the Articles of Associations of the Company with respect to the
  relationship between the Parties. The Parties agree to amend the Company's Articles
  of Association within the next thirty (30) days to the extent any terms of this
  Agreement so conflict or to the extent they otherwise deem it necessary to conform
  the Articles with the terms and condition set forth in this Agreement.

18.8           AMENDMENT.

  This Agreement may be amended or modified only by written
  agreement between the Parties.

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

	GLOBAL ENERGY INC. 	 	ALPHAKAT GMBH 
	  	 	  
	By: 	 	By: 
	Name:	 	Name:
	Title: 	 	Title: 

8

APPENDIX A

9

Record book number R1650 /2007 Re

Establishment of 

  Limited Liability Company

Today, the fourteenth and twenty-second day of November
  two thousand and seven, 

  - 14 and 22 November 2007 -, 

  the following appeared before me, 

  Martin Reiß, 

  Notary in Forchheim/Ofr., in the office at Nürnberger
  Street 8:

1) Dr. Christian
  Koch, born on July 04, 1940, 

  of 96155 Buttenheim, Schul Street 8, 

  acting herein as manager of 

Alphakat GmbH 

  a company whose registered place of business is in Buttenheim 

  (business address: 96155 Buttenheim, Schul Street 8) 

with the authority of single representation and
  exempted from the limitations of Section 181 of the Civil Code, regarding which,
  after perusal of the Electronic Trade Register at the Bamberg District Court
  made on November 14th 2007, I confirm that the above company is registered therein
  under HRB 5308 and Dr. Christian Koch is on record as manager with the authority
  of single representation and is exempted from the limitations of Section 181
  of the Civil Code,

2. Mr. Joseph,
  known as Yossi, Raz, born on January 1, 1947, of
  12 Nurit Str. , Haifa Isreal 34654 acting for

Global Energy Inc. 

a company limited by shares incorporated under the
  laws of Nevada/USA, registered at the Secretary of State of Nevada, Corp Number
  C3690-1999, with office at 7 Zabotinski Str., Aviv-Tower, Floor 38, 52520 Ramat
  Gan, Israel,

subject to the consent of the aforesaid corporation
  which has to be certified by a notary public.

The parties identified themselves by official identity
  documents with pictures.

Mr. Yossi Raz, according to his own statement and
  the notary’s conviction, has insufficient knowledge of the German language,
  but knows sufficient English. At the time of certification the notary translated
  the document and the questions asked into English. All parties waived the services
  of an interpreter. As appendix 2 there is an English translation that has been
  made by the party and controlled by the notary. The annex also was made part
  of the notarial act. If there are differences between the German and the English
  text the German text shall prevale.

The reading of this deed was started on Nov. 14th,
  but interrupted as Mr. Raz had to leave, and resumed at the point, where it
  had been interrupted on Nov. 22nd and finished and signed by the parties on
  this day.

Upon the parties’ request I hereby certify
  the following:

I. Establishment

The parties mentioned in the introduction establish
  a Private Limited Company whose registered place of business is in Buttenheim
  (business address: 96155 Buttenheim, Schul Street 8) under the name

Alphakat - Global Energy GmbH

The Articles of Association are set down in the
  Annex to this document. Refer-ence is made to the Annex. The shareholders are
  taking over the shares as provided in the Articles of Association.

II. Costs, Copies

2

The costs of application and registration in the
  Commercial Register will be borne by the company as well as the costs of this
  certification in accordance with the Articles of Association.

The shareholders, the company, the tax office and
  the Registry Court of jurisdiction will each be given notarized copies.

III. Power of Attorney

Each of the Notary’s employees and every party
  of the contract will be exempted from the legal limitations and will be given
  power of attorney, including legal successors, to complete or amend this document
  in order to correct objections made by the Registry Court.

The notary shall get and receive for the parties
  of the contract the notarized consent of the party not represented today.

References

The Notary has pointed out inter alia:

- that only after registration in the Commercial
  Register will the company be established and that, according to Section 11,
  2 of the Limited Liability Companies Law, before the company is registered the
  person performing legal acts on behalf of the company will be personally liable.

- that all
  shareholders and directors are in principle responsible for the authenticity
  of the data stated when establishing the company;

- that at
  the time of registration of the company in the Trade Register, the value of
  the company’s assets may not be less than that of the share capital, and
  that every shareholder has the obligation to pay any difference, without any
  limitation, compared with the pledged investment, and that the Registry Court
  has the right to refuse registration of the company in the Trade Registry on
  the grounds of unpaid prior charges. 

3

V. Shareholder Resolution

Waiving any formal and time regulations, a shareholder
  meeting is called and the following resolution adopted:

The first business manager appointed is Dr. Christian
  Koch. He always has the authority of single representation and is exempted from
  the limitations of Section 181 of the Civil Code (prohibition of acting as contracting
  party and of multiple representations).

Mr. Yossi Raz will be granted single signature (Prokura),
  as well as being exempted from the limitations of Section 181 of the Civil Code.

VI. Guarantees

Each of the parties guarantees, insofar as they
  are concerned,

- that the
  signing parties have full power and authority of representation, of signing
  this agreement, executing and performing it and fulfilling the obligations based
  hereon;

- that signature and execution of the agreement
  is not contrary to any obligations stipulated in the Articles of Association,
  the law, agreements or otherwise;

- that no
  consent whatsoever by any third party is required for the execution or signature
  of this agreement, and

- that each
  party is acting on its own account.

Alphakat GmbH, Buttenheim, moreover guarantees:

- that it
  is legally entitled to KDV Technology and the corresponding products;

4

- that it
  is entitled to grant the newly established enterprise all the rights agreed
  upon herein, including the exclusive marketing right according to the Articles
  of Association;

- that the stipulations agreed upon herein and execution
  thereof do not infringe upon the protected copyrights of any third party.

Should any practical change occur regarding the
  above guarantees, each party has the obligation to inform the other accordingly,
  without delay.

Together with the Annexes 1 and 2 read by the notary,
  

  approved by the parties and signed

(this is still part of annex 2, the English translation):

5

Annex 1 

  to the document certified by Notary Reiss in
  Forchheim 

  dated November 14th and 22nd, 2007, Document no. R1650 /2007

Articles of Association

Article 1: Company’s Name and Registered
  Place of Business

1.            The
  company’s name is

Alphakat - Global Energy GmbH.

2.           The
  company’s registered place of business is Buttenheim, district of Bamberg.

Article 2: Purpose of the Enterprise

	1. 	 The purpose of the company is the worldwide
        marketing and distribution of KDV Technology (un-pressurized catalytic
        lubrication) for transforming recycling and waste material containing
        hydrocarbons into diesel fuels, as well as of products connected to this
        technology, including KDV tur-bines.

	 	 
	2. 	 The company is entitled to perform any
        transaction which may directly or indirectly benefit the company’s
        purpose, in particular - acquiring other enterprises, being a partner
        therein or assuming their representation and management. The company is
        entitled to establish branches.

Article 3: Share Capital

	1. 	 The company’s share capital amounts
        to € 25,000.

	 	 
	2. 	 The share capital is divided as follows:

	 	Shareholder 	Amount of Authorized Capital
    
	 	Alphakat GmbH, Buttenheim
    	€ 12,500
    
	 	Global Energy Inc., New York/Ramat Gan
    	€ 12,500 

6

	3. 	 The capital invested must be paid in cash
        and becomes fully payable immediately.

	 	 
	4. 	 No stipulations are agreed upon in the
        Articles of Association regarding capital increase or later contributions.
        Such measures can only be decided by amending the Articles of Association.
        Any measure that may modify the participation quotas by modifying the
        authorized capital, i.e. capital increases, conditional capital increase
        or the issue of convertible debentures and similar financial instruments
        may only be decided by a unanimous resolution of all shareholders present.

Article 4: Duration, Business Year

	1. 	 The agreement is concluded for an undetermined
        period of time.

	 	 
	2. 	 The business year is the calendar year.
        The first business year begins upon registration in the Commercial Register
        and ends at the end of the calendar year in which the registration is
        made.

	 	 
	3. 	 Under the contracts law any transactions
        made from the time the company was established are considered to be made
        on account of the company.

Article 5: The Company’s Executive Organs

The company’s executive organs are the management
  (manager) and the shareholder meeting.

Article 6: Representation

	1. 	 As long as the company has only one manager,
        he has the right to sole representation.

	 	 
	2. 	 If several managers are appointed, the
        company will be represented by two managers jointly or by one manager
        jointly with an authorized signatory (“Prokurist").

7

	3. 	 By a resolution of the shareholders, the
        managers or one of them can be granted sole representation rights and/or
        exemption from the limitations of Section 181 of the Civil Code.

	 	 
	4. 	 The above stipulations apply also to the
        liquidators of the company.

	 	 
	5. 	 As long as both partners own each one half
        of the company, the partners, Alphakat GmbH, Buttenheim, and Global Energy
        Inc. have the right to appoint one manager or signatory each with the
        sole outside representation right on behalf of the company. The partner
        can freely decide whether to appoint a manager or a signatory (Prokurist).
        The other partner has the obligation to agree to the appointment insofar
        as there are no important reasons against the appointment of the intended
        person. Cancellation of such appointment against the wish of the partner
        entitled to decide is only possible on serious grounds. Upon conclusion
        of the manager/signatory’s legal office, the entitled partner may
        require the appointment of a new manager or signatory to be named by him.

Article 7: Business Management

	1. 	 The managers must manage the
        company’s business carefully and conscientiously according to the
        stipulations of the law and the partnership agreement. They must respect
        instructions given as per the partners’ resolutions.

	 	 	 
	2. 	 Any measures beyond the regular
        business operation of the enterprise may only be performed by one of the
        managers based on a partners’ resolution. A partners’ resolution
        can set forth the measures requiring consent in detail.

	 	 	 
	3. 	 Subject to an extraordinary partners’
        resolution and subject to stricter legal regulations, the following business
        management measures always require the consent of both partners:

	 	 	 
		1. 	 Sale, letting, leasing or other transfer
        of all or a substantial part of the company’s assets;

	 	 	 
		2. 	 Agreements of any kind between the company,
        its executive organs, its partners, persons closely connected to the executive
        organs or to the partners, or anyone else with at least 10% participation
        in the above mentioned entities.

	 	 	 
		3. 	 Establishing and closing branches;

	 	 	 
		4. 	 Liquidation of the company;

8

		5. 	 Conclusion of a
        transaction of any kind outside the company’s normal business
        operations, at a value of more than € 5,000 per transaction.
      

	 	 	  

	 	6. 	 Establishment of
        signature power or general power of attorney 

	 	 	  

		7. 	 Establishment of
        connections with corporations, conclusion of secret partnership
        agreements, of management agreements and other agreements which
        may give third parties the power to manage the company.
      

Article 8: Partners’ Assembly (Shareholder
  Meeting)

	1. 	 Partners’ resolutions are adopted
        at partners’ assemblies if not otherwise stipulated by law or these
        Articles of Association.

	 	 
	2. 	 The partners’ assembly is convened
        by the managers, each manager being separately authorized to convene the
        assembly. Notice is given by registered letter giving the place, time
        and agenda, and mailed to the last address of the partner provided to
        the company. The time allowed for the notice, if there is no particular
        need for haste, is at least two weeks after mailing, not including the
        day of the assembly.

	 	 
	3. 	 The partners’ assembly constitutes
        a quorum if at least 70% (seventy percent) of the authorized share capital
        is represented. Otherwise, an additional assembly must be convened without
        delay respecting the time al-lowed for notice as per paragraph 2, which
        assembly will constitute a quorum regardless of the number of participants.
        This must be stipulated in the second notice.

	 	 
	4. 	 Partners’ resolutions, if not otherwise
        stipulated by law or the Articles of Association, will be adopted by a
        simple majority of votes. Abstention from voting will be considered a
        negative answer. Every € 50 of a business share grants one vote.

	 	 
	5. 	 Insofar as no other partners’ resolution
        was adopted, the partners’ assembly will take place at the company’s
        registered place of business. At the assembly the representation by executive
        organs or executive employees of the partners, the other partners or people
        obliged to maintain professional secrecy is permissible.

	 	 
	6. 	 The assembly will elect a chairman by a
        simple majority. The chairman will also take care that the resolutions
        are recorded in writing. Within a period of four weeks after the assembly
        he will send the partners a protocol of the assembly.

9

	7. 	 The partners may deviate from the provisions
        regarding the partners’ assembly and its formalities if it is agreed
        by all partners. With the consent of all involved, resolutions can also
        be adopted by circular resolution, by phone, fax or electronically. In
        this case care must be taken that the text of the resolution be immediately
        documented in writing. If all partners take part in a deviating form of
        resolution, their consent is assumed if they do not immediately protest
        against this form of resolution.

	 	 
	8. 	 Except in cases of nullity, in particular
        when obligatory laws are broken - the partners may only protest against
        the resolution by submitting a claim in court within a period of two months
        from the date the resolution was adopted.

Article 9: Balance Sheet, Appropriation of Earnings

	1. 	 Within three months after the end of the
        business year, the managers must prepare a balance sheet with a Profit
        and Loss Account for the previous year, while respecting legal provisions,
        and submit it to the partners’ assembly with the proposed appropriation
        of earnings. Insofar as legally permissible the period for this will be
        six months.

	 	 
	2. 	 The appropriation of earnings is subject
        to legal provisions. This means that in principle the partners’ assembly
        will decide about the appropriation and distribution of the earnings by
        resolution (Section 29 of the Limited Liability Companies Law in the version
        of the Balance Sheet Directives Law).

	 	 
	3. 	 Global Energy Inc. can demand that every
        quarter balance sheets are filed as required by the American SEC regulation
        to be filed with the Global Energy Inc. obligation for 10-Q.

Article 10: Disposal of Partnership Shares

	1. 	 The disposal of a partnership share or
        parts thereof requires written permission by the company to be valid,
        which shall only be given by the management after all partners have given
        their consent.

	 	 
	2. 	 The above regulations apply also to the
        establishment of a beneficial interest in respect to the partnership shares
        as well as to pledging and assignment for security of partnership shares.

10

	3. 	 Every partner is obliged, if intending
        to sell, to inform the other partner in good time before beginning negotiations
        with third parties, and to accordingly submit a sales offer. He must leave
        the other partner a reflection time of at least one month. In case of
        sale, the other partner has the right of first refusal.

Article 11: Termination

	1. 	 Each partner may terminate the partnership
        in the company by a notice of six months before the end of the business
        year, but not before December 31, 2010.

	 	 
	2. 	 In consequence of the termination - subject
        to the provisions of Paragraph 3 - the terminating partner shall leave
        the company after the end of the notice period and the company shall continue
        according to Articles 12 and 13.

	 	 
	3. 	 If the other partners join the termination
        by a partners’ resolution, the company will be in liquidation at
        the date of termination. The terminating party will take part in the liquidation.

Article 12: Confiscation of Partnership Share,
  Retirement

	1. 	 The confiscation of business
        shares is permissible. It does not require the consent of the involved
        partner if:

	 	 	 
		a) 	 insolvency proceedings are opened concerning
        his assets, or the opening is refused for lack of assets,
        or

	 	 	 
		b) 	 his business share is taken in execution
        (by a third party);

	 	 	 
		c) 	 there is significant cause. A significant
        cause is in particular when, due to the misconduct of a partner,
        the other partners cannot be required to continue their business relationship
        with him. No fault is necessary for this.

	 	 	 
	2. 	 Instead of confiscating the partnership
        share, the partners’ assembly may decide to transfer the business
        share to one or several partners or to a third party named by the partners’
        assembly. In the partners’ resolution each co-partner may require
        that in the case of assignation, the share of the retiring partner shall
        be transferred in proportion to his share in the company (accrual). Should
        an exact proportional division not be possible, the shares shall be divided
        as closely as possible.

	 	 	 
	3. 	 If there is a right to confiscate,
        such confiscation or a partners’ resolution according to Paragraph
        2 can only occur within six months from of the time the cause becomes

11

		 known, but only as long as the cause for
        confiscation still exists. This includes the knowledge by one of the managers
        (regardless of the type of representation authority) of the company, insofar
        as the cause is not linked to the very person of this manager.

	 	 
	4. 	 The resolution concerning confiscation
        or retirement is adopted by the partnership assembly at which the partner
        to be dismissed has no right to vote.

	 	 
	5. 	 Confiscation or retirement are subject
        to remuneration. The remuneration will be payable by the buyer of the
        share, observing Section 30 of the Limited Liability Companies Law (forbidding
        that the share capital is being paid back by the company to the partner).
        The amount of remuneration will be determined according to the regulations
        et forth below.

Article 13: Remuneration for confiscated or assigned
  shares

	1. 	 If business shares are confiscated or assigned
        in accordance with these Articles of Association, the entitled partner
        or his successors will be remunerated for it. For this purpose the management
        will immediately prepare a compensation balance sheet. In this balance
        sheet all assets and liabilities shall appear at their real value at the
        time of the partner’s retirement. The company’s goodwill - if
        permissible - is not to be taken into account. The retired partner will
        not participate in pending transactions.

	 	 
	2. 	 If the parties involved cannot reach an
        agreement as to the value, it will be determined by an expert. The expert
        will be appointed upon demand of one of the parties by the President of
        the Bayreuth Chamber of Industry and Commerce. The costs of the valuation
        will be borne by the retired party and the company in equal shares.

	 	 
	3. 	 The remuneration will be paid in five equal
        annual installments. The first installment is due for payment six months
        after the confiscation resolution or the date of retirement of the partner
        involved, and the following installments on the corresponding calendar
        day of the subsequent years. The outstanding installment will bear annual
        interest of 2% - two percent - over the basic interest rate as described
        in the Euro Introduction Law commencing with the confiscation resolution
        or the date of retirement. The interest will be calculated at current
        account bank rates and shall be due for payment together with the following
        installment.

12

	4. 	 The compensation can be pre-paid fully
        or partially, and partial pre-paid amounts will be deducted from the following
        installment due. No security may be demanded.

Article 14: Exclusivity/Prohibition of Competition

Alphakat GmbH, Buttenheim gives the right to sell
  world wide. No other company or person can get the same rights for the world-wide
  distribution.

Alphakat GmbH appoints the company to be the sole
  marketing agent for the United States of America and the Chinese market. Alphakat
  GmbH will not use any marketing channels on those markets except already established
  contacts.

The parties involved acknowledge that Alphakat GmbH,
  Buttenheim has already granted third parties the right to sell the Technology
  and products in various areas, as described in detail in the agreement dated
  May 02, 2007. Alphakat GmbH explicitly reserves the right, as long as those
  agreements are valid and in their material extent, to execute and fulfill those
  agreements with third parties on its own account. No compensation in that respect
  has been agreed upon.

The foregoing exclusive dealing requirements are
  valid as long the contract from May 2nd 2007 is valid (including amendments
  or following contracts).

By a partners’ resolution to which both partners
  must consent, the partners and managers may also regulate whether there are
  further prohibitions of competition, whether to give exemptions and whether
  the exemption occurs against remuneration or without remuneration.

Should one of the partners - for whatever reason
  - retire from the company, he has the obligation not to exploit business secrets
  of which he learned pursuant to the execution of this partnership agreement,
  either himself or by transfer to third parties at the expense of the company
  founded or on the account of the other partner.

Article 15: Additional Contributions to the Company

13

	1. 	 All sales and similar transactions will
        be made directly between Alphakat GmbH, Buttenheim and the business partner.
        The sales price of each such transaction will include a 10% commission
        (not including Value Added Taxes as per law), which will be paid by Alphakat
        GmbH directly to the newly founded company. The company has the right
        to make higher price offers, as long as the market accepts them. In such
        case, the company would profit fully from the difference between the purchase
        price offered by it and the regular sales prices. Alphakat GmbH and the
        company will mutually coordinate their prices.

	 	 
	2. 	 Alphakat GmbH will grant all necessary
        technical assistance and support by the company to any end user and buyer
        of the Technology and products in order to support the marketing of the
        technology and the products during sales.

	 	 
	3. 	 Global Energy Inc. will establish a financial
        program in order to support the end user in the acquisition of Alphakat
        GmbH products. However Global Energy Inc. reserves the right to put such
        financial support only at the disposal of selected and adequate end users.
        Moreover Global Energy Inc. has the responsibility of providing the permits
        and tests necessary for the sale of the diesel oil produced by the use
        of the marketed products and technology. Global Energy Inc. is free to
        decide where they should do the marketing (i.e. also obtaining permits).

Article 17: Publications

The company’s publications will be made only
  in the Electronic Federal Journal (elektronischer Bundesanzeiger).

Article 18: Tax Clause

The executive organs of the company must respect
  the trading and tax law principles of orderly business management and shall
  maintain the care in business transactions that would be taken by an orderly
  and conscientious businessman.

The management shall in particular not be authorized
  to grant advantages to the partners or persons and companies close to them beyond
  the profit distribution resolution duly adopted, neither to violate the prohibition
  of additional or retroactive payments, nor to breach other acknowledged tax
  law principles which, when 

14

disregarded, cause covert profit distribution. In
  case of non compliance, the amount of the imbalance shall be covered by the
  partner to whom the advantage was credited and the usual bank interests paid
  from the time the advantage was granted until the payment is settled. Transactions
  in breach of the above stipulations are void ab initio.

Insofar as the tax administration or tax courts
  recognize the payment received as income received by the partner concerned despite
  the above tax clause, without considering the repayment as negative income,
  the partner will only have to repay the advantage remaining after deducting
  the additional income tax payable by him plus the usual bank interest.

Article 19: General Instructions

	1. 	 Insofar as not otherwise stipulated in
        this agreement, the German Law regarding Private Limited Companies (GmbH)
        shall prevail. The agreement is formulated according to the provisions
        of German Company Law and is subject to the jurisdiction of German courts.

	 	 
	2. 	 Should any of the provisions of this agreement
        be or become invalid or unenforceable, the other parts of the agreement
        shall remain valid nevertheless and shall be binding on the parties to
        the agreement. The partners undertake in such case to immediately and
        retroactively change the interpretation, whether completely or by replacing
        any invalid provision retroactively, so that it becomes as close as possible
        to the intended purpose.

Article 20: Cost

The costs of notarizing the partnership agreement,
  the publication, the application for registration and registration of the Company
  in the Trade Registry as well as the costs of consultancy services in respect
  of the establishment shall be borne by the Company up to an estimated amount
  of € 2,000; any establishment costs above that amount shall be borne by
  the partners. This applies without prejudice to the legal personal liability
  of the parties.

-End of Annex 2-

15

EXHIBIT 3 – LIST OF PATENTS

	Document Number 	Title 	Country 	Registration Date 	Docket Number 	File / Reference Number 
	ALP6004WO 	High-power 	WO 	04/04/07 	PCT/DE2007/0 	PCT/DE2007/0 
	ALP7001BR 	Diesel Oil out of 	BR (Britain) 	03/31/04 	PIO400912-6 	PIO400912-6 
	ALP7001CA 	Diesel Oil out of ... 	CA (Canada) 	07/15/04 	2,474,523 	2,474,523 
	ALP7001CN 	Diesel Oil out of ... 	CN (China) 	03/23/04 	200410030270 	200410030270 
	ALP7001IN 	Diesel Oil out of ... 	IN (India) 	08/02/04 	747/CHE/2004 	747/CHE/2004 
	ALP7001JP 	Diesel Oil out of ... 	JP (Japan) 	10/08/04 	2004-295764 	2004-295764 
	ALP7001MX 	Diesel Oil out of ... 	MX (Mexico) 	03/15/04 	PA/A/2004/002 	PA/A/2004/002 
	ALP7001RU 	Diesel Oil out of ... 	RU (Russia) 	03/30/04 	2004109567 	2004109567 
	ALP7001US 	Diesel Oil out of ... 	US (US) 	07/15/04 	10/891971 	10/891971 
	ALP7002BR 	High-power 	BR (Britain) 	02/02/06 	PIO601891-2 	PIO601891-2 
	ALP7002CA 	High-power 	CA (Canada) 	09/01/06 	2558401 	2558401 
	ALP7002CN 	High-power 	CN (China) 	02/14/06 	200610004445 	200610004445 
	ALP7002IN 	High-power 	IN (India) 	07/25/06 	1290/CHE/200 	1290/CHE/200 
	ALP7002JP 	High-power 	JP (Japan) 	04/27/06 	2006-123066 	2006-123066 
	ALP7002MX 	High-power 	MX (Mexico) 	04/07/06 	PA/a/2006/003 	PA/a/2006/003 
	ALP7002RU 	High-power 	RU (Russia) 	04/19/06 	2006113270 	2006113270 
	ALP7002US 	High-power 	US (US) 	08/23/06 	11/2508760 	11/2508760 
	ALP7004BR 	  	BR (Britain) 	04/10/07 	  	  
	ALP7004CN 	High-power 	CN (China) 	  	  	  
	ALP7004IN 	High-power 	IN (India) 	11/20/07 	  	  
	ALP7004JP 	High-power 	JP (Japan) 	11/19/07 	2007-299152 	2007-299152 
	ALP7004KR 	High-power 	KR (Korea) 	11/20/07 	10-2007-01186 	10-2007-01186 
	ALP7004MX 	High-power 	MX (Mexico) 	05/25/07 	MX/a/2007/006 	MX/a/2007/006 
	ALP7004RU 	High-power 	RU (Russia) 	11/19/07 	  	  

 22WWW.EXFILE.COM, INC. -- 888-775-4789 -- ARKADOS GROUP, INC. -- EXHIBIT 4.1 TO FORM 8-K

    EXHIBIT 4.1

    
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: See schedule of original principal set forth on the signature page
hereof

    Original
Conversion Price (subject to adjustment herein): $0.85

    

    $
addprin

    

    

    6%
SECURED CONVERTIBLE DEBENTURE

    DUE
DECEMBER 28, 2008

    

    THIS
SECURED DEBENTURE is one of a series of duly authorized and issued 6% Secured
Convertible Debentures of Arkados Group, Inc. (formerly CDKNet.com, Inc.), a
Delaware corporation, having a principal place of business at 220 Old New
Brunswick Road, 2nd Floor, Piscataway, NJ  08854 (the “Company”), designated
as its 6% Secured Convertible Debenture, due December 28, 2008 (this debenture,
the “Debenture”
and collectively with the other such series of debentures, the “Debentures”).  The
obligations represented by this Debenture are secured by and the holder hereof
is entitled to the benefits of a security interest in the assets of the Company
contained in the Security Agreement..

    

    FOR VALUE
RECEIVED, the Company promises to pay to reghold or its registered
assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum
of   $ addprin
by December 28, 2008 (the “Maturity Date”), or
such earlier date as this Debenture is required 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 have the meanings
given to such terms in the Purchase Agreement, and (b) the following terms shall
have the following meanings:

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Alternate
Consideration” shall have the meaning set forth in Section
5(d).

    

    

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

    

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

     

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

    

    “Change of Control
Transaction” means the occurrence after the date hereof of any of (i) an
acquisition after the date hereof by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 40% of the
voting securities of the Company, or (ii) the Company merges into or
consolidates with any other Person, or any Person merges into or consolidates
with the Company and, after giving effect to such transaction, the stockholders
of the Company immediately prior to such transaction own less than 60% of the
aggregate voting power of the Company or the successor entity of such
transaction, or (iii) the Company sells or transfers its assets, as an entirety
or substantially as an entirety, to another Person and the stockholders of the
Company immediately prior to such transaction own less than 60% of the aggregate
voting power of the acquiring entity immediately after the transaction, (iv) a
replacement at one time or within a two 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 above in (i) through (iv).

    

    “Cash Sale Redemption
Amount” shall equal the sum of (i) 100% of the principal amount of this
Debenture to be prepaid, plus all accrued and unpaid interest thereon, (ii) the
principal amount of this Debenture to be prepaid, plus all other accrued and
unpaid interest hereon, divided by the Conversion Price on the closing date of
the applicable event multiplied by the “Effective Price” (defined below), and
(iii) all other amounts, costs, expenses and liquidated damages due in respect
of this Debenture.  The “Effective Price” shall be the cash
consideration paid by the acquirer in such event (less the amount set forth in
clause (i) above) divided by the sum of; (x) the issued and outstanding shares
of Common Stock of the Company then outstanding and (y) the shares of Common
Stock into which the outstanding Debentures may be converted on the day
immediately preceding the record date fixed for determining the holders of
shares of Common Stock eligible to receive a distribution (or if no such date
has been fixed, the date of the day 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    immediately
preceding the closing of the transaction) and (z) the number of shares deemed
issuable to the Warrant holders pursuant to the mandatory redemption provisions
in the Warrants which take effect upon sale of assets for cash consideration
whether or not any Warrant holder shall have elected to have their Warrants
Redeemed; provided, however, that the number of shares of
Common Stock issuable on conversion of the Debentures and issuable upon exercise
of the Warrants for this purpose shall be determined on a fully converted or
exercised basis and ignoring any conversion or exercise limitations
therein).

    

    “Common Stock” means
the common stock, par value $.0001 per share, of the Company and stock of any
other class of securities into which such securities may hereafter have been
reclassified or changed into.

    

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

    

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

    

    “Conversion Shares”
means the shares of Common Stock issuable upon conversion of this Debenture or
as payment of interest in accordance with the terms.

    

    “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 given to such term in the Registration Rights
Agreement.

    

    “Equity Conditions”
shall mean, 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 Notice of Conversions of the Holder, if any, (ii) all
liquidated damages and other amounts owing to the Holder in respect of this
Debenture shall have been paid, (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 the Trading Market and all of the shares issuable pursuant to the
Transaction Documents are listed for trading on a 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 then existing no Event of Default or 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  to
the Holder would not violate the limitations set forth in Section 4(c), (viii)

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    no public
announcement of a pending or proposed Fundamental Transaction, Change of Control
Transaction or acquisition transaction has occurred that has not been
consummated and (ix) for a period of 20 consecutive Trading Days prior to
the applicable date in question, the daily trading volume for the Common Stock
on the Trading Market exceeds 200,000 shares per Trading Day (subject to
adjustment for forward and reverse stock splits and the like) in the case of a
Forced Conversion pursuant to Section 6.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    “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”  shall equal the sum of (i) the greater of: (A) 130% of
the principal amount of this Debenture to be prepaid, plus all accrued and
unpaid interest thereon, or (B) the principal amount of this Debenture to be
prepaid, plus all other accrued and unpaid interest hereon, divided by the
Conversion Price on (x) the date the Mandatory Default Amount is demanded or
otherwise due or (y) the date the Mandatory Default Amount is paid in full,

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    whichever
is less, multiplied by the average of the 15 VWAPs immediately prior to (x) the
date the Mandatory Default Amount is demanded or otherwise due or (y) the date
the Mandatory Default Amount is paid in full, whichever is greater, and (ii) all
other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

    

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

    

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

    

    “Original Issue Date”
shall mean the date of the first issuance of the Debentures regardless of the
number of transfers of any Debenture and regardless of the number of instruments
which may be issued to evidence such Debenture.

    

    “Permitted
Indebtedness” shall mean (a) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(aa)
attached to the Purchase Agreement, (b) 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, (c) Indebtedness incurred pursuant to the Transaction
Documents, (d) unsecured accounts payable incurred in the ordinary course of
business, (e) indebtedness with respect to taxes, governmental changes or levies
which are being contested in good faith, provided that adequate reserves are
maintained on the books of the Company or Subsidiaries, as the case may be, in
accordance with GAAP and (f) additional Indebtedness incurred by the Company in
connection with raising capital for the financing of its operations, acquisition
of another entity (by merger, consolidation, the acquisition of all or
substantially of the assets of such entity or similar transaction), provided
that such Indebtedness does not mature or require payments of principal
prior to the Maturity Date and is subordinate in right of payment to the
Indebtedness evidenced by this Debenture.

    

    “Permitted Lien” shall
mean 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 prior to the Original Issue Date as set forth on
the Disclosure Schedules, (c) Liens granted in connection with clauses (b) and
(c) under Permitted Indebtedness (provided, in the case of clause (b) such Liens
are not secured by assets of the Company or its Subsidiaries other than the
assets so leased or acquired), and (d) Liens imposed by law which were incurred
in the ordinary course of business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of business, and (x) which 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) which are being contested in
good faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to such
Lien.

     

    
      
        
        

      

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

    

    “Purchase Agreement”
means the Securities Purchase Agreement, dated as of June 30, 2006 to which the
Company and the original Holder are parties, 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, to which the Company and the original Holder are
parties, as amended, modified or supplemented from time to time in accordance
with its terms.

    

    “Registration
Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement, covering among other things the
resale of the Conversion Shares and naming the Holder as a “selling stockholder”
thereunder.

    

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

    

    “Subsidiary” shall
have the meaning given to such term in the Purchase Agreement.

    

    “Threshold Period”
shall have the meaning given to such term in Section 6(b).

    

    “Trading Day” means a
day on which the Common Stock is traded on a Trading Market.

    

    “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 Nasdaq SmallCap Market, the American
Stock Exchange, the New York Stock Exchange,  the Nasdaq National
Market 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 as reported by Bloomberg Financial L.P. (based on a Trading Day from
9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)  if the Common Stock
is not then listed or quoted on a Trading Market and if prices for the Common
Stock are then reported in the “Pink Sheets” published by the Pink Sheets, LLC
(or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported; or
(c) in all other cases, the fair 

     

    
      
        
        

      

      
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    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.

    

    “Warrants” shall have
the meaning set forth in the Purchase Agreement.

    

    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 6% per annum, payable semiannually  on January 1 and July 1,
beginning on January 1, 2007 (provided that interest due on January 1, 2007,
July 1, 2007 and January 1, 2008 upon principal outstanding on such date shall
be added to the principal outstanding and shall thereafter bear interest at the
rate set forth herein), upon a redemption event pursuant to Section 6(a) and on
the Maturity Date (except that, if any such date is not a Business Day, then
such payment shall be due on the next succeeding Business Day) (each such date,
an “Interest Payment
Date”), in cash or duly authorized, fully paid and non-assessable shares
of Common Stock at the Interest Conversion Rate, or a combination
thereof  (the amount to be paid in shares, the “Interest Share
Amount”); provided, however, payment in
shares of Common Stock may only occur if during the 20 Trading Days immediately
prior to the applicable Interest Payment Date  (the “Interest Notice
Period”) and through and including the date such shares of Common Stock
are issued to the Holder all of the Equity Conditions, unless waived by the
Holder in writing, have been met and the Company shall have given the Holder
notice in accordance with the notice requirements set forth below.

    

    b) Company’s Election to Pay
Interest in Kind.  Subject to the terms and conditions herein,
the decision whether to pay interest hereunder in shares of Common Stock or cash
shall be at the sole discretion of the Company.  Prior to the
commencement of an Interest Notice Period, the Company shall provide the Holder
with 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 (the Company may indicate in such notice that the election contained in
such notice shall continue for later periods until revised) and the Interest
Share Amount as to the applicable Interest Payment Date.  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
provide such written notice 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 file a prospectus supplement pursuant
to Rule 424 disclosing such election.

    

    c) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year
and shall accrue daily commencing on the Original Issue Date until payment in
full of the principal sum, together with all accrued and unpaid interest and
other amounts which may become due hereunder, has been made.  Payment
of interest in shares of Common Stock shall otherwise occur pursuant to Section
4(d)(ii) and only for purposes 

     

    
      
        
        

      

      
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    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 in fact delivers the
Conversion Shares within the time period required by Section
4(d)(ii).  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 shall be distributed ratably among the holders of
the Debentures based on their (or their predecessor’s initial purchases of
Debentures pursuant to the Purchase Agreement.

    

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

    

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

    

    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 made for such registration of transfer or 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 to the Company for transfer of this
Debenture, the Company and any agent of the Company may treat the 

     

    
      
        
        

      

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

    

    Section
4.               Conversion.

    

    a) Voluntary Conversion.
At any time after the Original Issue Date until this Debenture is no longer
outstanding, this Debenture shall be convertible into shares of Common Stock at
the option of the Holder, in whole or in part at any time and from time to time
(subject to the limitations on conversion set forth in Section 4(c)
hereof).  The Holder shall effect conversions by delivering to the
Company the form of Notice of Conversion 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 is to be effected (a
“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 provided hereunder.  Once delivered, the Notice of Conversion shall
be irrevocable, unless provided otherwise by the Company in its sole discretion
or as provided in Section 4(d)(iii).  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 converted and the
date of such conversions.  The Company shall deliver any objection to
any Notice of Conversion within 1 Business Day of receipt of such
notice.  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 $0.85
(subject to adjustment herein)(the “Conversion
Price”).

    

    c) Conversion
Limitations. The Company shall not effect any conversion of this
Debenture, and a Holder shall not have the right to convert any portion of this
Debenture to the extent that after giving effect to such conversion, such Holder
(together with such Holder’s affiliates, and any other person or entity acting
as a group together with such Holder or any of such Holder’s affiliates), as set
forth on the applicable Notice of Conversion, would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below).  For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned
by such Holder and its affiliates shall include the number of shares of Common
Stock issuable upon conversion of this Debenture with respect to which the
determination of such sentence is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (A) conversion of the

     

    
      
        
        

      

      
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    remaining,
nonconverted principal amount of this Debenture beneficially owned by such
Holder or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Debentures or the Warrants) subject to
a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such Holder or any of its affiliates.  Except
as set forth in the preceding sentence, for purposes of this Section 4(c),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.  To
the extent that the limitation contained in this Section 4(c) applies, the
determination of whether this Debenture is convertible (in relation to other
securities owned by such Holder together with any affiliates) and of which
amounts of this Debenture are convertible shall be in the sole discretion of
such Holder, and the submission of a Notice of Conversion shall be deemed to be
such Holder’s determination of whether this Debenture may be converted (in
relation to other securities owned by such Holder) and which amounts of this
Debenture are convertible, in each case subject to such aggregate percentage
limitations. To ensure compliance with this restriction, each Holder will be
deemed to represent to the Company each time it delivers a Notice of Conversion
that such Notice of Conversion has not violated the restrictions set forth in
this paragraph and the Company shall have no obligation to verify or confirm the
accuracy of such determination.  In addition, a determination as to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.   For purposes of this Section 4(c), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the
number of outstanding shares of Common Stock as reflected 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) any
other notice by the Company or the Company’s transfer agent setting forth the
number of shares of Common Stock outstanding.  Upon the written request of
a Holder, the Company shall within two Trading Days confirm in writing to such
Holder the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Debenture, by such Holder or its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. The
Company, in refraining from or taking actions under this Section 4(c), may rely
solely upon filings made by the Holder under Section 13(d) of the Exchange Act
or written representation of the Holder as to its beneficial
ownership.  The “Beneficial Ownership Limitation” shall be 4.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon conversion of
this Debenture held by the Holder.  The Beneficial Ownership
Limitation provisions of this Section 4(c) may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior notice to the Company
to change the Beneficial Ownership Limitation to 9.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon conversion of this Debenture held by the Holder,
and the provisions of this Section 4(c) shall continue to apply.  Upon
such a change by a Holder of the Beneficial Ownership Limitation from such 4.99%
limitation to such 9.99% limitation, the Beneficial Ownership Limitation

     

    
      
        
        

      

      
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    may not
be waived by such Holder.  The provisions of this paragraph shall be
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.

    

    
      	
            	
              d)  

            	
              Mechanics of
      Conversion

            

    

    

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

    

    ii. Delivery of Certificate Upon
Conversion. Not later than three Trading Days after any Conversion Date,
the Company will deliver or cause to be delivered to the Holder (A) a
certificate or certificates representing the Conversion Shares which shall be
free of restrictive legends and trading restrictions (other than those required
by the Purchase Agreement) representing the number of shares of Common Stock
being acquired upon the conversion of this Debenture (including, if the Company
has given continuous notice pursuant to Section 2(b) for payment of interest in
shares of Common Stock at least 20 Trading Days prior to the date on which the
Conversion Notice is delivered to the Company, shares of Common Stock
representing the payment of accrued interest otherwise determined pursuant to
Section 2(a) but assuming that the Interest Payment Period is the 20 Trading
Days period immediately prior to the date on which the Conversion Notice is
delivered to the Company and (B) a bank check in the amount of accrued and
unpaid interest (to the extent the Company is paying to pay accrued interest in
cash). The Company shall, if available and if allowed under applicable
securities laws, use its reasonable best efforts to deliver any certificate or
certificates required to be delivered by the Company under this Section
electronically through the Depository Trust Corporation 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 a Conversion Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the principal amount of this Debenture tendered for
conversion.

    

    iv. Obligation Absolute; Partial
Liquidated Damages.  If the Company fails for any reason to
deliver to the Holder such certificate or certificates 

     

    
      
        
        

      

      
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    pursuant
to Section 4(d)(ii) by the third Trading Day after the Conversion Date, the
Company shall pay to such Holder, in cash, as liquidated damages and not as a
penalty, for each $1000 of principal amount being converted, $10 per Trading Day
(increasing to $20 per Trading Day after 5 Trading Days after such damages begin
to accrue) for each Trading Day after such third Trading Day until such
certificates are delivered.  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, 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 any one 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, 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 principal
amount of this Debenture outstanding, which is subject to the injunction, which
bond shall remain in effect until the completion of arbitration/litigation of
the dispute and the proceeds of which shall be payable to such Holder to the
extent it obtains judgment.  In the absence of an injunction
precluding the same, the Company shall issue Conversion Shares or, if
applicable, cash, upon a properly noticed conversion.  Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of
Default pursuant to Section 8 herein for the Company’s failure to deliver
Conversion Shares within the period specified herein and such Holder shall have
the right to pursue all remedies available to it 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 pursuant to Section
4(d)(ii) by the third Trading Day after the Conversion Date, and if after such
third Trading Day the Holder is required by its brokerage firm to purchase (in
an open market transaction or otherwise) Common Stock to deliver in satisfaction
of a sale by such Holder of the Conversion Shares

     

    
      
        
        

      

      
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    which the
Holder anticipated receiving upon such conversion (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
of Common Stock that such Holder anticipated receiving from the conversion at
issue multiplied by (2) the actual sale price of the Common Stock at the time of
the sale (including brokerage commissions, if any) giving rise to such purchase
obligation 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 had the Company timely complied with its
delivery requirements under Section 4(d)(ii).  For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover
a Buy-In with respect to an attempted conversion of this Debenture with respect
to which the actual sale price of the Conversion Shares at the time of the sale
(including brokerage commissions, if any) 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 proof indicating the amounts payable to
the Holder in respect of the Buy-In.

    

    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 solely for the purpose of issuance upon conversion of this Debenture and
payment of interest on this Debenture, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holder (and the other holders of the Debentures), not less than
such number of shares of the Common Stock as shall (subject to the terms and
conditions set forth in the Purchase Agreement) be issuable (taking into account
the adjustments and restrictions of Section 5) upon the conversion of the
outstanding principal amount of this Debenture and payment of interest
hereunder.  The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly and validly authorized, issued
and fully paid, nonassessable.

    

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

    

    
      
        
        

      

      
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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 certificate, provided that the Company shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in
a name other than that of the Holder of this Debenture so converted and the
Company shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.

    

    Section
5.               Certain
Adjustments.

    

    a) Stock Dividends and Stock
Splits.  If the Company, at any time while this Debenture is
outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Debenture, including as interest thereon), (B) subdivides
outstanding shares of Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (D) issues by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
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.

    

    i. If the
Company or any Subsidiary thereof, as applicable, at any time while this
Debenture is outstanding, shall sell, grant any option to purchase, sell or
grant any right to reprice its securities, or otherwise dispose of or issue any
Common Stock or Common Stock Equivalents entitling any Person to acquire shares
of Common Stock, at an effective price per share less than the then Conversion
Price (such lower price, the “Base Conversion
Price” and such issuances collectively, a “Dilutive Issuance”),
as adjusted hereunder (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 is issued in
connection with such issuance, be entitled to 

     

    
      
        
        

      

      
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    receive
shares of Common Stock at an effective price per share which is less 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.

    

    ii. The
Company or any Subsidiary there, as applicable, at any time while this Debenture
is outstanding, shall offer, sell, grant any option to purchase or offer, sell
or grant any right to reprice its securities, or otherwise dispose of or issue
(or announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock, at an effective price per share less than the
VWAP on either the Trading Day immediately prior to the date agreements for such
issuance are entered into or the date such issuance is consummated, whichever
results in a higher VWAP, but more than the then effective Conversion Price
(which is addressed in 5(b)(i) above) (such lower price, the “Market Base Conversion
Price” and such issuances collectively, a “Market Dilutive
Issuance”), as adjusted hereunder (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 is issued in connection with such issuance, be entitled to receive shares
of Common Stock at an effective price per share which is less than the
Conversion Price, such issuance shall be deemed to have occurred for less than
the Conversion Price on such date of the Market Dilutive Issuance) then the
Conversion Price shall be reduced to a price determined by multiplying the then
effective Conversion Price by a fraction, the numerator of which is the number
of shares of Common Stock issued and outstanding immediately prior to the Market
Dilutive Issuance plus the number of shares of Common Stock which the aggregate
offering price for such Market Dilutive Issuance would purchase at the then
Market Base Conversion Price, and the denominator of which shall be the sum of
the number of shares of Common Stock issued and outstanding immediately prior to
the Market Dilutive Issuance plus the number of shares of Common Stock so issued
or issuable in connection with the Market Dilutive Issuance

    

    iii. Such
adjustments under this Section 5(b) 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.  The Company shall notify the Holder in writing, no later
than the Business Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable issuance
price, or of 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),
immediately after the occurrence of any Dilutive

     

    
      
        
        

      

      
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    Issuance
or Market Dilutive Issuance, after the date of such Dilutive Issuance or Market
Dilutive Issuance the Holder is entitled to receive a number of Conversion
Shares based upon the Base Conversion Price or the price determined pursuant to
5(b)(ii), as applicable, regardless of whether the Holder accurately refers to
the Base Conversion Price or the price determined pursuant to 5(b)(ii) in the
Notice of Conversion.

    

    iv. Notwithstanding
the foregoing, no adjustment shall be made pursuant to this Section 5(b) for an
Exempt Issuance (defined in the Purchase Agreement.

    

    c) Pro Rata
Distributions. If the Company, at any time while this Debenture is
outstanding, shall distribute to all holders of Common Stock (and not to the
holders of the Debenture) evidences of its indebtedness or assets (including
cash and cash dividends) or rights or warrants to subscribe for or purchase any
security, 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
one outstanding share of the Common Stock as determined by the Board of
Directors in good faith.  In either case the adjustments shall be
described in a statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock.  Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.

    

    d) 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 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 one 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 

     

    
      
        
        

      

      
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    Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the 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
paragraph (d) and insuring that this Debenture (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.

    

    e) 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 treasury shares, if any) issued and
outstanding.

    

    f) Notice to the
Holder.

    

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

    

    ii. Notice to Allow Conversion
by Holder.  If (A) the Company shall declare a dividend (or any
other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other

     

    
      
        
        

      

      
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    securities,
cash or property; (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Debenture, and shall cause to
be mailed to the Holder at its last addresses as it shall appear upon
the  stock books of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.  The Holder is entitled to convert this Debenture
during the 20-day period commencing the date of such notice to the effective
date of the event triggering such notice.

    

    Section
6.               Redemption and Forced
Conversion.

    

    a)           
Redemption at Election
of Holder.  If the Company shall agree to sell substantially
all of its assets in one or more transactions in which the consideration
consists solely of cash, cash equivalents, assumption of indebtedness, or any
combination thereof, the Holder shall have the right to require the Company, by
written notice to the Company, to redeem this Debentures, in full and in cash,
at the closing of such Change of Control Transaction, Fundamental Transaction or
sale of assets.   The aggregate amount payable upon such Change
of Control Transaction, Fundamental Transaction or sale of assets shall be equal
to the Cash Sale Redemption Amount.  In the event that the Company
fails to pay the Cash Sale Redemption Amount on or prior to the applicable
closing date, the interest rate on this Debenture shall accrue at the rate of
18% per annum, or such lower maximum amount of interest permitted to be charged
under applicable law, until the Cash Sale Redemption Amount is paid in
full.  Concurrently with the payment in full of the Cash Sale
Redemption Amount, the Holder shall surrender this Debenture to or as directed
by the Company (or the successor company).    The Holder may
elect to convert the outstanding principal amount of the Debenture pursuant to
Section 4 prior to actual payment in cash for the redemption under this Section
6 by fax delivery of a Notice of Conversion to the Company.

    

    b).           
Forced
Conversion.  Notwithstanding anything herein to the contrary,
if after the Effective Date, each of the VWAPs for any 20 consecutive Trading
Days (such period commencing only after the Effective Date, such period the
“Threshold
Period”) 

     

    
      
        
        

      

      
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    exceeds
400% of the then effective Conversion Price, the Company may, within 1 Trading
Day of the end of any such period, deliver a notice to the Holder (a “Forced Conversion
Notice” and the date such notice is received by the Holder, the “Forced Conversion Notice
Date”) to cause the Holder to convert, at the Company’s sole discretion,
all or part of the then outstanding principal amount of Debentures pursuant to
Section 4, it being understood that the “Conversion Date” for purposes of
Section 4 shall be deemed to occur on the thirtieth Trading Day following the
Forced Conversion Notice Date (such thirtieth Trading Day being referred to as
the “Forced Conversion
Date”).  The Company may not deliver a Forced Conversion
Notice, and any Forced Conversion Notice delivered by the Corporation shall not
be effective, unless all of the Equity Conditions are met on each Trading Day
occurring during the 10 Trading Days immediately prior to the applicable
Threshold Period, during the applicable Threshold Period and from the end of the
Threshold Period through and including the later of the Forced Conversion Date
and 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.  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. So long as any portion of this Debenture is outstanding, the
Company will not and will not permit any of its Subsidiaries to directly or
indirectly without the prior written consent of the holders of at least 60% of
the principal amount of Debentures and Prior Debentures then
outstanding:

    

    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;

    

    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
certificate of incorporation, bylaws or other charter documents so as to
materially and adversely affect any rights of the Holder;

    

    d) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of
shares of Common Stock or Common Stock Equivalents other than (i) as to the
Conversion Shares to the extent permitted or required under the Transaction
Documents, (ii) as otherwise permitted by the Transaction Documents or (iii)
shares of Common Stock held by former employees of the Company which the Company
is entitled to repurchased from such employees pursuant to the contractual
rights relating to their termination of employment but not to exceed $50,000 in
any 12 month period;

    

    
      
        
        

      

      
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    e) enter
into any agreement with respect to any of the foregoing;

    

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

    

    g) enter
into any Fundamental Transaction or Change of Control Transaction without the
consent of the Holders of 60% of the outstanding principal amount of the
Debentures, Except with respect to a sale of assets of the Company pursuant to
which the Company is required to (i) redeem all outstanding Debentures under
Section 6(a) hereof and (ii) redeem all the Warrants pursuant to Section 1(f)
therof.

    

    Section
8.               Events of
Default.

    

    a) “Event of Default”,
wherever used herein, means any one of the following events (whatever the reason
and whether it shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):

    

    i. any
default in the payment of (A) the principal amount of any Debenture, or (B)
interest (including Late Fees) on, or liquidated damages in respect of, 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 is not cured within 3 Trading Days after written notice from the
Holder;

    

    ii. the
Company shall materially fail to observe or perform any other covenant or
agreement contained in this Debenture or any other Debenture (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) 10
Trading Days after notice of such default sent by the Holder or by any other
Holder and (B)15 Trading Days after the Company shall become or should have
become aware of such failure;

    

    iii. a default
or event of default (subject to any grace or cure period provided for 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 bound;

    

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

    

    
      
        
        

      

      
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    v. (i) the
Company or any of its Subsidiaries shall commence a case, as debtor, a case
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or the Company or any Subsidiary commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or any
Subsidiary thereof or (ii) there is commenced a case against the Company or any
Subsidiary thereof, in a court of competent jurisdiction, under any applicable
bankruptcy or insolvency laws, as now or hereafter in effect or any successor
thereto which remains undismissed for a period of 60 days; or (iii) the Company
or any Subsidiary thereof is adjudicated by a court of competent jurisdiction
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or (iv) the Company or any Subsidiary thereof
suffers any appointment of any custodian or the like for it or any substantial
part of its property which continues undischarged or unstayed for a period of 60
days; or (v) the Company or any Subsidiary thereof makes a general assignment
for the benefit of creditors; or (vi) the Company shall fail to pay, or shall
state in writing that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or (vii) the Company or any Subsidiary thereof
shall call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or (viii) the Company or any
Subsidiary thereof shall by any act or failure to act expressly indicate its
consent to, approval of or acquiescence in any of the foregoing; or (ix) any
corporate or other action is taken by the Company or any Subsidiary thereof for
the purpose of effecting any of the foregoing;

    

    vi. the
Company or any Subsidiary shall default in any of its obligations (other than
under any of the Transaction Documents) 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 of the Company in an amount exceeding $150,000, whether
such indebtedness now exists or shall hereafter be created and such default
shall result in such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise become due and payable, and all
applicable cure periods with respect thereto shall have expired;

    

    vii. the
Common Stock shall not be eligible for quotation on or quoted for trading on a
Trading Market for at least five consecutive Trading Days (other than as a
result of events that affect the Trading Market in general);

    

    viii. the
Company shall redeem or repurchase more than a de minimis number of its
outstanding shares of Common Stock or other equity securities of the Company
(other than redemptions of Conversion Shares and repurchases of shares of Common
Stock or other equity securities of 

     

    
      
        
        

      

      
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    departing
officers and directors of the Company, provided that such repurchases shall not
exceed $200,000, in the aggregate, for all officers, directors and employees
during any 12 month period);

    

    ix. the
Company shall fail for any reason to deliver certificates to or as directed by a
Holder by the seventh Trading Day after a Conversion Date or any Forced
Conversion Date pursuant to and in accordance with Section 4(d) or the Company
shall provide notice to the Holder, including by way of public announcement, at
any time, of its intention not to comply with requests for conversions of any
Debentures in accordance with the terms hereof; or

    

    x. 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 than $100,000, and 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 full principal amount of
this Debenture, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become, at the Holder’s election,
immediately due and payable in cash.   The aggregate amount
payable upon an Event of Default shall be equal to 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 the rate of 18% per annum, or
such lower maximum amount of interest permitted to be charged under applicable
law.  Concurrently with the payment in full of the Mandatory Default
Amount the Holder shall surrender this Debenture to or as directed by the
Company.  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 election may be rescinded and annulled by Holder
at any time prior to payment hereunder and the Holder shall have all rights as a
Debenture holder until such time, if any, as the full payment under this Section
shall have been received by it.  No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent
thereon.

    

    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, sent by a nationally
recognized overnight courier service, addressed to the Company, at the address
set forth above, facsimile number (732) 465-9600, Attn: CEO or such other address or
facsimile number as the Company may specify for such purposes by notice to the
Holder 

     

    
      
        
        

      

      
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    delivered
in accordance with this Section.  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, sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile telephone
number or address of such Holder appearing on the books of the Company, or if no
such facsimile telephone 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 telephone number specified in this Section prior to
5:30 p.m. (New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such 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, interest and liquidated damages (if any) on, this
Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed.  This Debenture is a direct debt obligation of the
Company.  This Debenture ranks pari passu with all other
Debentures now or hereafter issued under the terms set forth
herein.

    

    c) Lost or Mutilated
Debenture.  If this Debenture shall be mutilated, lost, stolen
or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, and indemnity, if requested, all
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 conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, 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
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    court, 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 manner permitted by 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 with 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 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
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

    

    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.

    

    
      
        
        

      

      
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    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 surviving entity in a Fundamental Transaction shall
(i) assume in writing 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) prior to such Fundamental Transaction and (ii) to 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 amounts and the interest rates of the Debentures held by the
Holder and having similar ranking to this Debenture, and 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.

    

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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    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.

    

     

     

    
      
        	 	ARKADOS GROUP,
      INC.	 
	 	 	 	 
	 	 	 	 
	
                Dated:    
      April 1,
      2008

              	
                By:
      

              	 	 
	 	 	Name: 
      Barbara Kane-Burke	 
	 	 	Title:   
      Chief Financial Officer	 
	 	 	 	 

      

    

    
 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    ANNEX
A

    

    NOTICE
OF CONVERSION

    

    

    The undersigned hereby elects to
convert principal under the 6% Secured Convertible Debenture of Arkados Group,
Inc. (formerly CDKNet.Com, Inc.), a Delaware corporation (the “Company”), due on
December 28 , 2008 into shares of common stock, par value $.0001 per share (the
“Common
Stock”), of the Company according to the conditions hereof, as of the
date written below.  If shares 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 determined in
accordance with Section 13(d) of the Exchange Act, specified under Section 4 of
this Debenture.

    

    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:

            

    

     

     

    

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    Schedule
1

    

    CONVERSION
SCHEDULE

    

    The 6%
Secured Convertible Debentures due on December 28, 2008 in the aggregate
principal amount of $________ issued by Arkados Group, Inc. (formerly
CDKNet.com, Inc.)  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

            
	
               
      

               

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	
               

               
      

            	 
      	 
      	 
      
	 
      	
               
      

               

            	 
      	 
      

    

    

    

    
 

     

    
      
        
        

      

      
        28

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]