Document:

Exhibit 10.1

	
   

  	
   

  
	 

	
  STANDARD
  FORM OF OFFICE LEASE

  	
  7/04

  
	
  The
  Real Estate Board of New York, Inc.

  
	 

	
   

  

Agreement of Lease, made as of this 9th day of June in the year 2006, between Cres, 
Inc. c/o Newmark Knight Frank, 125 Park Avenue, New York, New York 10017

party of the first part, hereinafter referred to as
OWNER, and DAG Media, Inc. having an office at 125-10 Queens Blvd, Kew Gardens, NY

party of the second part, hereinafter referred to as
TENANT,

Witnesseth: Owner hereby leases to Tenant and Tenant hereby
hires from Owner a portion of the fifth (5th) floor as shown on the attached floor plan marked Exhibit A in the building known as 192 Lexington Avenue, New York, New York in
the Borough of Manhattan, City of New York, for the term of
Five (5) years

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (or
  until such term shall sooner cease and expire as hereinafter provided) to
  commence on the

  
	
  1st

  	
  day of

  	
  July

  	
  in
  the year

  	
  2006

  	
  ,
  and to end on the

  
	
  30th

  	
  day of

  	
  June

  	
  in
  the year

  	
  2011

  	
  , and

  
	
  both dates inclusive, at the
  annual rental rate of

  	
   

  	
  see
  Article 62

  	
   

  

which Tenant agrees to pay in
lawful money of the United States, which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment, in equal
monthly installments in advance on the first day of each month during said term, at the office of Owner or such
other place as Owner may designate, without any setoff or deduction whatsoever, except that Tenant shall pay the
first monthly installment(s) on the
execution hereof (unless this lease be a renewal).

          In
the event that, at the commencement of the term of this lease, or thereafter.
Tenant shall be in default in the payment of rent to Owner pursuant to
the terms of another lease with Owner or with Owner’s predecessor in interest,
Owner may at Owner’s option and without
notice to Tenant add the amount of such arrears to any monthly installment of
rent hereunder and the same shall be
payable to Owner as additional rent.

          The
parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors
and assigns, hereby covenant as follows:

Rent:

1.
      Tenant shall pay the rent as above and as hereinafter provided,

Occupancy:

2.      Tenant shall use and
occupy the demised premises for general and executive offices for an online technology company and for no other purpose.

Tenant Alterations:

  3.      Tenant
    shall make no changes in or to the demised premises of any nature without
    Owner’s prior written consent. Subject to the prior written consent of
    Owner, and to the provisions of this article, Tenant, at Tenant’s expense,
    may make alterations, installations, additions or improvements which are non-structural
    and which do not affect utility services or plumbing and electrical lines,
    in or to the interior of the demised premises, by using contractors or mechanics
    first approved in each instance by Owner. Tenant shall, before making any
    alterations, additions, installations or improvements, at its expense, obtain
    all permits, approvals and certificates required by any governmental or quasi-governmental
    bodies and (upon completion) certificates of final approval thereof, and shall
    deliver promptly duplicates of all such permits, approvals and certificates
    to Owner, and Tenant agrees to carry, and will cause Tenant’s contractors
    and sub-contractors to carry, such worker’s compensation, commercial
    general liability, personal and property damage insurance as Owner may require.

  E-1

  

   

   If any
    mechanic’s lien is filed against the demised premises, or the building
    of which the same forms a part, for work claimed to have been done for, or
    materials furnished to, Tenant, whether or not done pursuant to this article,
    the same shall be discharged by Tenant within thirty days thereafter, at Tenant’s
    expense, by payment or filing a bond as permitted by law. All fixtures and
    all paneling, partitions, railings and like installations, installed in the
    demised premises at any time, either by Tenant or by Owner on Tenant’s
    behalf, shall, upon installation, become the property of Owner and shall remain
    upon and be surrendered with the demised premises unless Owner, by notice
    to Tenant no later than twenty days prior to the date fixed as the termination
    of this lease, elects to relinquish Owner’s right thereto and to have
    them removed by Tenant, in which event the same shall be removed from the
    demised premises by Tenant prior to the expiration of the lease, at Tenant’s
    expense. Nothing in this article shall be construed to give Owner title to,
    or to prevent Tenant’s removal of, trade fixtures, moveable office furniture
    and equipment, but upon removal of same from the demised premises or upon
    removal, of other installations as may be required by Owner, Tenant shall
    immediately, and at its expense, repair and restore the demised premises to
    the condition existing prior to any such installations, and repair any damage
    to the demised premises or the building due to such removal. All property
    permitted or required to be removed by Tenant at the end of the term remaining
    in the demised premises after Tenant’s removal shall be deemed abandoned
    and may, at the election of Owner, either be retained as Owner’s property
    or may be removed from the demised premises by Owner, at Tenant’s expense.

Maintenance and Repairs:

4.      Tenant shall, throughout
the term of this lease, take good
care of the demised premises and the fixtures
and appurtenances therein. Tenant shall be responsible for all damage or injury to the demised premises or any other part of the
building
and the systems and equipment thereof, whether requiring structural or
nonstructural repairs caused by, or
resulting from, carelessness, omission, neglect or improper conduct of Tenant, Tenant’s subtenants, agents,
employees, invitees or licensees, or
which arise out of any work, labor, service or equipment done for, or supplied
to, Tenant or any subtenant, or arising out of the installation, use or operation of the property or equipment of
Tenant or any subtenant. Tenant shall
also repair all damage to the building and the demised premises caused by the moving of Tenant’s
fixtures, furniture and equipment. Tenant shall promptly make, at Tenant’s
expense, all repairs in and to the demised premises for which Tenant is
responsible, using only the contractor for the trade or trades in question,
selected from a list of at least two contractors per trade submitted by Owner. Any other
repairs in or to the building or the facilities and systems thereof, for which Tenant is responsible, shall be
performed by Owner at the Tenant’s expense. Owner shall maintain in good
working order and repair the exterior and the structural portions of the building, including the
structural portions of the demised premises, and the public portions of the
building interior and the building plumbing, electrical, heating and ventilating
systems (to the extent such systems presently exist) serving the demised
premises. Tenant agrees to give prompt notice of any defective condition in the
demised premises for which Owner may be responsible hereunder. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason
of inconvenience, annoyance or injury to business arising from Owner or
others making repairs, alterations, additions or improvements in or to any portion of the building
or the demised premises, or in and to the fixtures, appurtenances or equipment
thereof. It is specifically agreed that Tenant shall not be entitled to any setoff or reduction of rent by reason of any failure of
Owner to comply with the covenants of this
or any other article of this lease. Tenant agrees that Tenant’s sole remedy at law in such instance will
be by way of an action for damages for breach of contract. The provisions of
this Article 4 shall not apply in
the case of fire or other casualty, which are dealt with in Article 9 hereof.

Window Cleaning:

5.      Tenant will not clean nor
require, permit, suffer or allow any window in the demised premises to be cleaned from the
outside in violation of Section 202 of the Labor Law or any other applicable law, or of
the Rules of the Board of Standards and Appeals, or of any other Board or body having or asserting jurisdiction.

Requirements of
Law, Fire
Insurance, Floor Loads:

6.       Prior to the commencement
of the lease term, if Tenant is then in possession, and at all times thereafter, Tenant, at
Tenant’s sole cost and expense, shall promptly comply with all present and future laws, orders
and regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any
direction of any public officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters, Insurance
Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant
with respect to the demised premises,
whether or not arising out of Tenant’s use or manner of use thereof, (including Tenant’s permitted use) or,
with respect to the building if arising out of Tenant’s use or manner of use of
the demised premises or the building
(including the use permitted under the lease). Nothing herein shall require
Tenant to make structural repairs or alterations unless Tenant has, by its
manner of use of the demised premises or method of operation therein, violated any such laws, ordinances,
orders, rules, regulations or requirements with respect thereto. Tenant may,
after securing Owner to Owner’s
satisfaction against all damages, interest, penalties and expenses, including,
but not limited to, reasonable attorney’s fees, by cash deposit or by
surety bond in an amount and in a company satisfactory to Owner, contest and appeal any such laws, ordinances,
orders, rules, regulations or

requirements
provided same is done with all reasonable promptness and provided such appeal
shall not subject Owner to prosecution for a criminal offense, or constitute a
default under any lease or mortgage under which Owner may be obligated, or cause the demised
premises or any part thereof to be condemned or vacated. Tenant shall not do or
permit any act or thing to be done in or to the demised premises which is contrary
to law, or which will invalidate or be in conflict with public liability, fire
or other policies of insurance at any time carried by or for the benefit of
Owner with respect to the demised premises or the building of which the demised premises form a part, or which shall or
might subject Owner to any liability or responsibility to any person, or for property damage. Tenant shall not keep
anything in the demised premises, except as now or hereafter permitted by the Fire Department,
Board of Fire Underwriters, Fire Insurance Rating Organization or other
authority having jurisdiction, and then only in such manner and such quantity
so as not to increase the rate for fire insurance applicable to the
building, nor use the demised premises in a manner which will increase the insurance rate for the
building or any property located therein
over that in effect prior to the commencement of Tenant’s occupancy. Tenant shall pay all costs, expenses,
fines, penalties, or damages, which
may be imposed upon Owner by reason of Tenant’s failure to comply with the
provisions of this article, and if by reason of such failure the fire insurance rate shall, at the beginning
of this lease, or at any time thereafter,
be higher than it otherwise would be, then, Tenant shall reimburse Owner, as additional rent hereunder,
for that portion of all fire insurance
premiums thereafter paid by Owner which shall have been charged because
of such failure by Tenant. In any action or proceeding wherein Owner and Tenant are parties, a schedule or “make-up” of rate
for the building or the demised
premises issued by the New York Fire Insurance
Exchange, or other body making fire insurance rates applicable to said premises shall be conclusive evidence of
the facts therein stated and of the
several items and charges in the fire insurance rates then applicable to said premises. Tenant shall not place a load
upon any floor of the demised
premises exceeding the floor load per square foot area which it was
designed to carry and which is allowed by law. Owner reserves the right to prescribe the weight and position of all
safes, business machines and
mechanical equipment. Such installations shall be placed and maintained by Tenant, at Tenant’s expense, in
settings sufficient, in Owner’s
judgment, to absorb and prevent vibration, noise and annoyance.

Subordination:

7.      This
lease is subject and subordinate to all ground or underlying leases and to all mortgages
which may now or hereafter affect such leases or the real property of which the demised premises are
a part, and to all renewals, modifications, consolidations, replacements and extensions of any
such underlying leases and mortgages. This clause shall be self-operative and
no further instrument of subordination shall be required by any ground or underlying
lessor or by any
mortgagee, affecting any lease or the real property of which the demised premises are a
part. In confirmation of such subordination, Tenant shall from time to time
execute promptly any certificate that Owner may request.

Property Loss, Damage
Reimbursement Indemnity:

8.      Owner or its agents
shall not be liable for any damage to property of Tenant or of others entrusted to employees of the building, nor for loss of or
damage to any property of Tenant by theft or
otherwise, nor for any injury or damage to persons
or property resulting from any cause of whatsoever nature, unless caused by, or due to, the negligence of Owner, its
agents, servants or employees. Owner or its agents will not be liable for any
such damage caused by other tenants or persons in, upon or about said
building, or caused by operations in
construction of any private, public or quasi public work. If at any time any
windows of the demised premises are temporarily closed, darkened or bricked up (or permanently closed, darkened or
bricked up, if required by law) for any reason whatsoever including, but not
limited to, Owner’s own acts, Owner shall not be liable for any damage Tenant
may sustain thereby, and Tenant shall
not be entitled to any compensation therefore,
nor abatement or diminution of rent, nor shall the same release Tenant from its
obligations hereunder, nor constitute an eviction. Tenant shall indemnify and
save harmless Owner against and from all liabilities, obligations, damages, penalties, claims, costs and
expenses for which Owner shall not be
reimbursed by insurance, including reasonable attorneys’ fees, paid, suffered or incurred as a result of any breach by Tenant,
Tenant’s agents, contractors, employees,
invitees, or licensees, of any covenant or condition of this lease, or the
carelessness, negligence or improper conduct of the Tenant, Tenant’s agents,
contractors, employees, invitees or licensees. Tenant’s liability under this
lease extends to the acts and
omissions of any subtenant, and any agent, contractor, employee, invitee
or licensee of any subtenant. In case any action or proceeding is brought against Owner by reason of any such claim,
Tenant, upon written notice from Owner, will, at Tenant’s expense, resist or
defend such action or proceeding by counsel approved by Owner in writing, such
approval not to be unreasonably
withheld.

Destruction, Fire and Other Casualty: 

9.
      (a) If the demised premises or any part thereof shall be damaged by fire
or other casualty. Tenant shall give immediate notice thereof to Owner, and this lease shall continue in full force and
effect except as hereinafter set forth. (b) If the demised premises are
partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by, and at the expense of, Owner, and
the rent and other items of
additional rent, until such repair shall be substantially completed, shall be apportioned from the day following
the casualty, according to the part of the demised premises which is usable. (c)
If the demised premises are totally
damaged or rendered wholly unusable by fire or other casualty, then the rent
and other items of additional rent, as hereinafter expressly provided, shall be
proportionately paid up to the time of the casualty, and thenceforth shall
cease until the date when the demised premises
shall have been repaired and restored by Owner (or if sooner reoccupied in part by the Tenant then rent shall
be apportioned as provided in subsection (b) above), subject to Owner’s right
to elect not to restore the same as
hereinafter provided. (d) If the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in
part) if the building shall be so damaged that Owner shall decide to demolish it or to rebuild it, then, in any of
such events, Owner may elect to terminate this lease by written notice to
Tenant, given within ninety (90) days
after such fire or casualty, or thirty (30) days after adjustment of the insurance claim for such fire or casualty,
whichever is sooner, specifying a date for the expiration of the lease, which
date shall not be more than sixty (60)
days after the giving of such notice, and upon the date specified in such notice the term of this lease shall expire as fully
and completely as if such date were the date set forth above for the
termination of this lease, and Tenant shall forthwith quit, surrender and
vacate the demised premises without
prejudice however, to Landlord’s rights and remedies against Tenant under the lease provisions in effect prior
to such termination, and any rent
owing shall be paid up to such date, and any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided for herein, Owner shall make the
repairs and restorations under the
conditions of (b) and (c) hereof, with all reasonable expedition, subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner’s control. After any such casualty,
Tenant shall cooperate with Owner’s
restoration by removing from the demised premises as promptly as reasonably possible, all of Tenant’s
salvageable inventory and movable
equipment, furniture, and other property. Tenant’s liability for rent shall
resume five (5) days after written notice from Owner that the demised premises are substantially ready for Tenant’s
occupancy. (e) Nothing contained
hereinabove shall relieve Tenant from liability that may exist as a result of
damage from fire or other casualty. Notwithstanding anything contained to the
contrary in subdivisions (a) through (e) hereof, including Owner’s obligation to restore under subparagraph
(b) above, each party shall look
first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting
from fire or
other casualty, and to the extent
that such insurance is in force and collectible, and to the extent permitted by law, Owner and Tenant
each hereby releases and waives all
right of recovery with respect to subparagraphs (b), (d), and (e) above, against the other, or any one claiming
through or under each of them by way
of subrogation or otherwise. The release and waiver herein referred to shall be
deemed to include any loss or damage to the demised premises and/or to any personal property, equipment, trade
fixtures, goods and merchandise
located, therein. The foregoing release and waiver shall be in force only if
both releasors’ insurance policies contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent,
that such waiver can be obtained only by the payment of additional premiums, then the party benefiting from the waiver
shall pay such premium within ten
days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under the provisions hereof with respect to waiver
of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant’s
furniture and/or furnishings or any fixtures or equipment, improvements,
or appurtenances removable by Tenant, and agrees that Owner will not be obligated to repair any damage thereto or replace the
same. (f) Tenant hereby waives the
provisions of section 227 of the Real Property
Law and agrees that the provisions of this article shall govern and control in lieu thereof.

Eminent
Domain:

10.      If the whole or any part
of the demised premises shall be acquired or condemned by Eminent Domain for any public or quasi public use or purpose, then, and
in that event, the term of this lease shall cease and terminate from the date
of title vesting in such proceeding, and Tenant shall have no claim for the
value of any unexpired term of said lease, and assigns to Owner, Tenant’s
entire interest in any such award. Tenant shall have the right to make an
independent claim to the condemning authority for the value of Tenant’s moving
expenses and personal property, trade fixtures and equipment, provided Tenant
is entitled pursuant to the terms of the lease to remove such property, trade fixtures and
equipment at the end of the term, and provided further such claim does not
reduce Owner’s award.

Assignment, Mortgage, Etc.:

11.      Tenant, for itself, its
heirs, distributees, executors, administrators, legal representatives, successors and assigns,
expressly covenants that it shall not assign, mortgage or encumber this agreement, nor underlet,
or suffer or permit the demised premises or any part thereof to be used by others, without the
prior written consent of Owner in each instance. Transfer of the majority of the stock
of a corporate Tenant or the majority interest in any partnership or other legal entity
which is Tenant shall be deemed an assignment. However this provision shall not apply so long as
the Tenant is a publicly traded company on NASDAQ, AMEX or NYSE. If this lease be
assigned, or if the demised premises or any part thereof be underlet or occupied by anybody other than Tenant, Owner
may, after default by Tenant, collect rent from the assignee, under-tenant or
occupant, and apply the net amount collected to the rent herein reserved, but
no such assignment, underletting, occupancy or collection shall be deemed a
waiver of this covenant, or the acceptance of the assignee, undertenant or
occupant as tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an assignment
or underletting shall not in any
way be construed to relieve Tenant from obtaining the express consent in writing of Owner to any further assignment or
underletting.

Electric
Current: 

12.      Rates and conditions in
respect to submetering
or rent inclusion, as the case may be, to be added in RIDER attached hereto. Tenant covenants and agrees that
at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the
risers or wiring installation, and Tenant may not use any electrical
equipment which, in Owner’s opinion, reasonably exercised, will overload such installations or interfere with
the use thereof by other tenants of
the building. The change at any time of the character of electric service shall in no way make Owner liable or responsible
to Tenant, for any loss, damages or
expenses which Tenant may sustain.

Access to
Premises:

13.      Owner or Owner’s agents
shall have the right (but shall not be obligated) to enter the demised premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements and improvements as Owner may deem
necessary and reasonably desirable
to the demised premises or to any other portion of the building or which Owner
may elect to perform. Tenant shall permit Owner to use and maintain and replace pipes, ducts, and conduits in and
through the demised premises and to erect new pipes, ducts, and conduits
therein, provided they are concealed
within the walls, floor, or ceiling. Owner may, during the progress of any work in the demised premises, take all
necessary materials and equipment
into said premises without the same constituting an eviction, nor shall the Tenant be entitled to any abatement of rent
while such work is in progress, nor
to any damages by reason of loss or interruption
of business or otherwise. Throughout the term hereof, Owner shall have the
right to enter the demised premises at reasonable hours for the purpose of
showing the same to prospective purchasers or mortgagoes

of the building, and during the
last six months of the term, for the purpose of showing the same to
prospective tenants. If Tenant is not present to open and permit an entry into the demised premises, Owner or Owner’s agents may
enter the same whenever such entry may be necessary or permissible by master
key or forcibly, and provided reasonable care is exercised to safeguard Tenant’s property, such entry shall not
render Owner or its agents liable
therefore, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or substantially all of Tenant’s property
therefrom, Owner may immediately
enter, alter, renovate or redecorate the demised premises without limitation or abatement of rent, or
incurring liability to Tenant for any
compensation, and such act shall have no effect on this lease or Tenant’s
obligations hereunder.

Vault, Vault Space, Area:

14.     No vaults,
vault space or area, whether or not enclosed or covered, not within the property line of the building, is leased hereunder, anything
contained
in or indicated on any sketch, blue print or
plan, or anything contained elsewhere in this lease to the contrary notwithstanding. Owner makes no representation as
to the location of the property line of the building. All vaults and vault
space and all such areas not within the property line of the building,
which Tenant may be permitted to use and/or
occupy, is to be used and/or occupied under a revocable license, and if any such license be revoked, or if
the amount of such space or area be
diminished or required by any federal, state or municipal authority or public utility. Owner shall not be
subject to any liability, nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution
or requisition be deemed constructive or
actual eviction. Any tax, fee or charge of municipal authorities for such vault or area shall be paid
by Tenant.

Occupancy:

15.     Tenant will
not at any time use or occupy the demised
premises in violation of the certificate of occupancy issued for the
building of which the demised premises are a part. Tenant has inspected the demised premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner’s work, if
any. In any event, Owner makes no
representation as to the condition of the demised premises, and Tenant agrees to accept the same
subject to violations, whether or not of record.

Bankruptcy:

16.     (a) Anything
elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled
by Owner by the sending of a written notice to Tenant within a reasonable time
after the happening of any one or more of the following events: (1) the
commencement of a case in bankruptcy or under the laws of any state naming
Tenant (or a guarantor of any of Tenant’s obligations under this lease)
as the debtor; or (2) the making by Tenant (or a guarantor of any of Tenant’s
obligations under this lease) of an assignment or any other arrangement for the benefit of creditors under any state statute. Neither
Tenant nor any person claiming through or under Tenant, or by reason of any statute or order of court, shall
thereafter be entitled to possession
of the premises demised but shall forthwith quit and surrender the demised premises. If this lease shall be
assigned in accordance with its terms,
the provisions of this Article 16 shall be applicable only to the party then
owning Tenant’s interest in this lease.

           (b) It is
stipulated and agreed that in the
event of the termination of this
lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from Tenant as and for liquidated damages, an amount
equal to the difference between the
rent reserved hereunder for the unexpired portion of the term demised and the fair and reasonable rental value
of the demised premises for the same period. In the computation of such
damages the difference between any installment
of rent becoming due hereunder after the date of termination, and the fair and reasonable rental value of the demised premises for
the period for which such
installment was payable, shall be discounted to the date of termination at the
rate of four percent (4%) per annum. If such demised premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or
any part thereof, before presentation of
proof of such liquidated damages to any court, commission or tribunal, the
amount of rent reserved upon such re-letting shall be deemed to be the fair
and reasonable rental value for the part or the whole of the demised premises so re-let during the term of the
re-letting. Nothing herein contained
shall limit or prejudice the right of the Owner to prove for and obtain
as liquidated damages, by reason of such termination, an amount equal to the maximum allowed by any statute or
rule of law in effect at the time
when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than, the amount of the difference referred to above.

Default:

17.     (1) If
Tenant defaults in fulfilling any of the covenants of this lease other than the covenants for the payment of rent or additional rent;
or if
the demised premises become vacant or deserted; or if any execution or
attachment shall be issued against Tenant or
any of Tenant’s property, whereupon the demised premises shall be taken
or occupied by someone other than Tenant; or if this lease be rejected under §365 of Title 11 of the U.S. Code
(Bankruptcy Code); or if Tenant shall have failed, after five (5) days
written notice, to redeposit with Owner any
portion of the security deposit hereunder which Owner has applied to the
payment of any rent and additional rent due and payable hereunder; or if Tenant shall be in default with
respect to any other lease between
Owner and Tenant; or if Tenant shall fail to move into or take possession of the demised premises within thirty
(30) days after the commencement of
the term of this lease, then, in any one or more of such events, upon Owner serving a written fifteen (15)
days notice upon Tenant specifying the nature of said default, and upon the
expiration of said fifteen (15) days,
if Tenant shall have failed to comply with or remedy such default, or if the said default or omission
complained of shall be of a nature that
the same cannot be completely cured or remedied within said fifteen (15) day period, and if Tenant shall not have
diligently commenced curing such default within such fifteen (15) day
period, and shall not thereafter with reasonable diligence and in good faith,
proceed to remedy or cure such default, then
Owner may serve a written five (5) days notice of cancellation of this lease
upon Tenant, and upon the expiration of said five (5) days this lease and the
term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof, and Tenant shall then quit and surrender the demised
premises to Owner, but Tenant shall remain liable as hereinafter
provided.

          (2) If the
notice provided for in (1) hereof shall
have been given, and the term shall expire as aforesaid; or if Tenant
shall make default in the payment of the
rent reserved herein, or any item of additional rent herein mentioned, or any
part of either, or in making any other payment herein required; then, and in any of such events. Owner may without
notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of
the demised premises, and remove their effects
and hold the demised premises as if this lease had not been made, and
Tenant hereby waives the service of notice of intention to re-enter or to institute legal proceedings to that end. If Tenant
shall make default hereunder prior to
the date fixed as the commencement of any renewal or extension of this lease,
Owner may cancel and terminate such renewal or extension agreement by written notice.

Remedies of Owner
and Waiver of Redemption:

18.     In case of any such default,
re-entry, expiration and/or dispossess by summary proceedings or otherwise, (a) the rent shall become
due thereupon and be paid up to the time of such re-entry, dispossess and/or
expiration, (b) Owner may re-let the demised
premises or any part or parts thereof, either in the name of Owner or otherwise, for a term or terms, which may at Owner’s option
be less than or exceed the period
which would otherwise have constituted
the balance of the term of this lease, and may grant concessions or free
rent or charge a higher rental than that in this lease, and/or (c) Tenant or the legal representatives of Tenant shall also pay
to Owner as liquidated damages for
the failure of Tenant to observe and perform
said Tenant’s covenants herein contained, any deficiency between the rent
hereby reserved and/or covenanted to be paid and the net amount, if any,
of the rents collected on account of the lease or leases of the demised premises for each month of the period which would
otherwise have constituted the
balance of the term of this lease. The failure of Owner to relet the demised premises, or any part or parts
thereof, shall not release or affect Tenant’s liability for damages. In
computing such liquidated damages there
shall be added to the said deficiency such expenses as Owner may incur in connection with re-letting, such as legal
expenses, reasonable attorney’s fees,
brokerage, advertising and for keeping the demised premises in good order or for preparing the same
for re-letting. Any such liquidated
damages shall be paid in monthly installments by Tenant on the rent day
specified in this lease, and any suit brought to collect the amount of
the deficiency for any month shall not prejudice in any way the rights of Owner to collect the deficiency for any subsequent
month by a similar proceeding. Owner, in putting the demised premises in good
order or preparing the same for
re-rental may, at Owner’s option, make such alterations, repairs, replacements, and/or decorations in the demised premises
as Owner, in Owner’s sole judgment, considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such
alterations, repairs, replacements, and/or decorations shall not operate or be construed to release Tenant
from liability hereunder as aforesaid. Owner shall in no event be liable
in any way whatsoever for failure to re-let
the demised premises, or in the event that the demised premises are re-let, for failure to collect the
rent thereof under such reletting, and
in no event shall Tenant be entitled to receive any excess, if any, of such net rents collected over the sums payable
by Tenant to Owner hereunder. In the
event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof, Owner shall
have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in
this lease of any particular remedy, shall not preclude Owner from any other
remedy, in law or in equity. Tenant hereby expressly
waives any and all rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or dispossessed for any
cause, or in the event of Owner obtaining possession of the demised premises, by reason of the violation by Tenant of
any of the covenants and conditions
of this lease, or otherwise.

Fees and Expenses:

19.     If Tenant
shall default in the observance or performance
of any term or covenant on Tenant’s part
to be observed or performed under, or by virtue of, any of the terms or
provisions in any article of this lease, after notice, if required, and upon expiration of any applicable grace
period, if any, (except in an emergency), then, unless otherwise provided
elsewhere in this lease, Owner may immediately, or at any time
thereafter and without notice, perform the
obligation of Tenant thereunder. If Owner, in connection with the
foregoing, or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to reasonable
attorneys’ fees, in instituting,
prosecuting or defending any action
or proceeding, and prevails in any such action or proceeding, then Tenant will reimburse Owner for such sums so paid,
or obligations incurred, with
interest and costs. The foregoing expenses incurred by reason of Tenant’s default shall be deemed to be
additional rent hereunder, and shall
be paid by Tenant to Owner within ten (10) days of rendition of any bill or statement to Tenant therefore. If
Tenant’s lease term shall have expired at the time of making of such
expenditures or incurring of such obligations,
such sums shall be recoverable by Owner, as damages.

Building Alterations
and Management:

20.     Owner shall have the right at any
time without the same constituting an eviction and without incurring liability to Tenant therefore, to change
the arrangement and/or location of
public entrances, passageways, doors,
doorways, corridors, elevators,
stairs, toilets or other public parts of the building, and to change the name,
number or designation by which the building may be known. There shall be
no allowance to Tenant for diminution of rental value and no liability on the
part of Owner by reason of inconvenience, annoyance
or injury to business arising from Owner or other Tenants making any repairs in the building or any such
alterations, additions and improvements.
Furthermore, Tenant shall not have any claim against Owner by reason of Owner’s imposition of such
controls of the manner of access to the building by Tenant’s social or business
visitors as the Owner may deem
necessary for the security of the building and its occupants.

No Representations Owner:

21.     Neither Owner nor Owner’s
agents have made any representations
or promises with respect to the physical condition of the building, the land upon which it is erected or the demised premises,
the rents, leases, expenses of operation or any other matter or 

thing
affecting or related to the
demised premises, except as herein expressly set forth, and no rights, casements or
licenses are acquired by Tenant
by implication or otherwise, except as expressly set forth in the provisions of
this lease. Tenant has inspected the building and the demised premises and is thoroughly acquainted with their
condition and agrees to take the same “as-is”, and acknowledges that the
taking of possession of the demised premises by Tenant shall be conclusive
evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition at the time such possession
was so taken, except as to latent defects. All understandings and agreements
heretofore made between the parties
hereto are merged in this contract, which alone fully and completely expresses the agreement between Owner and Tenant,
and any executory agreement
hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is
in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment
is sought.

End of Term:

22.     Upon the expiration or
other termination of the term of this lease, Tenant shall quit and surrender to Owner the demised premises, “broom-clean”,
in good order and condition,
ordinary wear and damages which
Tenant is not required to repair as provided elsewhere in this lease excepted,
and Tenant shall remove all its property. Tenant’s obligation to observe or perform this covenant shall survive the
expiration or other termination of this lease. If the last day of the
term of this lease or any renewal thereof,
falls on Sunday, this lease shall expire at noon on the preceding
Saturday, unless it be a legal holiday, in which case it shall expire at noon on the preceding business day.

Quiet Enjoyment:

23.     Owner covenants and
agrees with Tenant that upon Tenant paying the rent and additional rent and observing and
performing all the terms, covenants and conditions, on Tenant’s part to be observed
and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject, nevertheless, to the terms and conditions
of this lease including, but not limited to, Article 31 hereof, and to
the ground leases, underlying leases and
mortgages hereinbefore mentioned.

Failure to Give Possession:

24.     If Owner is unable to
give possession of the demised premises on the date of the commencement of the term hereof because of the holding-over or retention
of possession of any tenant, undertenant or occupants, or if the
demised premises are located in a
building being constructed, because such building has not been sufficiently
completed to make the demised premises ready for occupancy, or because of the
fact that a certificate of occupancy has not been procured, or for any other
reason. Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any way to extend
the term of this lease, but the rent payable hereunder shall be abated (provided Tenant is not responsible for
Owner’s inability to obtain possession
or complete construction) until after Owner shall have given Tenant written notice that the Owner is able to deliver
possession in condition required by
this lease. If permission is given to Tenant to enter into possession of the demises premises, or to
occupy premises other than the demised premises, prior to the date specified as
the commencement of the term of this
lease, Tenant covenants and agrees that such possession and/or occupancy
shall be deemed to be under all the terms, covenants, conditions and provisions
of this lease, except the obligation to pay the fixed annual rent set forth in the preamble to this lease. The
provisions of this article are intended to constitute “an express provision to
the contrary” within the meaning of Section 223-a of the New York Real Property
Law.

No Waiver:

25.     The failure of Owner to
seek redress for violation of, or to insist upon the strict performance of, any
covenant or condition of this lease or of any of the Rules or Regulations, set forth
or hereafter adopted by Owner, shall not prevent a subsequent act which would have originally
constituted
a violation from having all the force and effect of an original violation. The receipt by
Owner of rent and/or additional rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach, and no provision of this
lease shall be deemed to have
been waived by Owner unless such waiver be in writing signed by Owner. No
payment by Tenant or receipt by Owner of a lesser amount than the monthly rent herein stipulated shall be deemed
to be other than on account of the
earliest stipulated rent, nor shall any endorsement or statement of any check or any letter accompanying
any check or payment as rent be deemed an accord and satisfaction, and Owner
may accept such check or payment without prejudice to Owner’s right to
recover the balance of such rent or pursue
any other remedy in this lease provided. No act or thing done by Owner or
Owner’s agents during the term hereby demised shall be deemed an acceptance of a surrender of the demised premises,
and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner or Owner’s agent shall have any power
to accept the keys of said premises prior to the termination of the lease, and the delivery of keys to any such agent
or employee shall not operate as a termination of the lease or a
surrender of the demised premises.

Waiver of Trial by Jury:

26.     It is mutually agreed by
and between Owner and Tenant that
the respective parties hereto shall, and
they hereby do, waive trial by jury in any action proceeding or counterclaim brought by either of the parties
hereto against the other (except for personal injury or property damage) on any
matters whatsoever arising out of, or in any way connected with, this
lease, the relationship of Owner and Tenant, Tenant’s use of, or occupancy of,
the demised premises, and any emergency
statutory or any other statutory remedy.
It is further mutually agreed that in the event Owner commences any proceeding
or action for possession, including a summary proceeding for possession of the demised premises. Tenant
will not interpose any counterclaim of whatever nature or description in
any such proceeding, including a
counterclaim under Article 4, except for statutory mandatory counterclaims.

Inability to Perform:

27.     This lease and the
obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements
hereunder on part of Tenant to be performed shall in no way be affected,
impaired or excused because Owner is unable to fulfill any of its obligations under this
lease, or to supply, or is
delayed in supplying, any service expressly or impliedly to be supplied, or is
unable to make, or is delayed in making, any repair, additions, alterations, or decorations, or is unable to supply, or is
delayed in supplying, any equipment,
fixtures, or other materials, if Owner is prevented or delayed from so
doing by reason of strike or labor troubles or any cause whatsoever including,
but not limited to, government preemption or
restrictions, or by reason of any rule, order or regulation of any department
or subdivision thereof of any government agency, or by reason of the conditions which have been or are affected,
either directly or indirectly, by
war or other emergency.

Bills and Notices:

28.     Except as otherwise in this
lease provided, any notice, statement, demand or other communication required or permitted to be given, rendered or made by either
party to the other,
pursuant to this lease or pursuant to any
applicable law or requirement of public authority, shall be in writing (whether or not so stated elsewhere in
this lease) and shall be deemed to
have been properly given, rendered or made, if sent by registered or
certified mail (express mail, if available), return receipt requested, or by courier guaranteeing overnight delivery and
furnishing a receipt in evidence
thereof, addressed to the other party at the address hereinabove set forth
(except that after the date specified as the commencement of the term of this lease, Tenant’s address, unless Tenant
shall give notice to the contrary,
shall be the building), and shall be deemed to have been given, rendered or made (a) on the date delivered, if
delivered to Tenant personally, (b)
on the date delivered, if delivered by overnight courier or (c) on the date which is two (2) days after being mailed. Either party
may, by
notice as aforesaid, designate a different address or addresses for notices, statements,
demand or other communications intended for it. Notices given by Owner’s managing agent shall be deemed a valid
notice if addressed and set in
accordance with the provisions of this Article. At Owner’s option, notices and bills to Tenant may be sent by hand
delivery.

Services Provided by Owner:

29.       As long as Tenant is not in
default under any of the covenants of this lease beyond the applicable grace period provided in this lease for
the curing of such defaults, Owner shall provide: (a) necessary elevator
facilities on business days from 8 a.m. to 6 p.m. and have one elevator subject to call at all other times: (b) heat to the
demised premises when and as required by law, on business days from 8 a.m. to 6
p.m.; (c) water for ordinary lavatory
purposes, but if Tenant uses or consumes
water for any other purposes or in unusual quantities (of which fact
Owner shall be the sole judge), Owner may install a water meter at Tenant’s expense, which Tenant shall thereafter
maintain at Tenant’s expense in good
working order and repair, to register such water consumption, and Tenant shall pay for water consumed as shown on said meter as
additional rent as and when bills are
rendered; (d) Said premises are to be
kept clean by Tenant, at Tenant’s sole expense, in a manner reasonably satisfactory to Owner, and no one other than persons
approved by Owner shall be permitted to enter said
premises or the building of which they are a part for such purpose.
Tenant shall pay Owner the cost of removal
of any of Tenant’s refuse and rubbish from the building; (e) if the
demised premises are serviced by Owner’s air conditioning/cooling and ventilating
system, air conditioning/cooling will be furnished to Tenant from May 15th through September 30th on business
days (Mondays through Fridays, holidays excepted) from 8:00 a.m. to 6:00 p.m., and ventilation will be furnished on
business days during the aforesaid hours except when air
conditioning/cooling is being furnished as aforesaid. If Tenant requires air conditioning/cooling or
ventilation for more extended hours on Saturdays, Sundays or on
holidays, as defined under Owner’s contract with the applicable Operating
Engineers contract. Owner will  furnish
the same at Tenant’s expense. RIDER to be added in respect to rates and conditions for such
additional service; (f) Owner reserves the right to stop services of the
heating, elevators, plumbing, air-conditioning,
electric, power systems or cleaning or other services, if any, when necessary by reason of accident, or for repairs, alterations,
replacements or improvements necessary or desirable in the judgment of Owner, for as long as may be
reasonably required by reason thereof. If the building of which the demised
premises are a part supplies manually
operated elevator service, Owner at any time may substitute automatic control elevator service and proceed
diligently with alterations necessary therefor without in any way
affecting this lease or the obligations of
Tenant hereunder.

Captions:

30.    The Captions are inserted
only as a matter of convenience
and for reference, and in no way define,
limit or describe the scope of this lease nor the intent of any provisions thereof.

Definitions:

31.    The term “office”, or
“offices”, wherever used in this lease, shall not be construed to mean premises used
as a store or stores, for the sale or display, at any time, of goods, wares or merchandise, of any kind, or as a restaurant, shop,
booth, bootblack or other stand, barber shop, or for other similar purposes, or
for manufacturing. The term “Owner” means a landlord or lessor, and as used in
this lease means only the owner, or the mortgagee in possession for the time being, of the land and building (or the
owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that
in the event of any sale or sales or conveyance, assignment or transfer
of said land and building, or of said lease,
or in the event of a lease of said building, or of the land and building, the
said Owner shall be, and hereby is, entirely freed and relieved of all covenants and obligations of Owner
hereunder, and it shall be deemed
and construed without further agreement between the parties or their successors
in interest, or between the parties and the purchaser, at any such sale, or the said lessee of the building,
or of the land and building, that
the purchaser, grantee, assignee or transferee or the lessee of the building has assumed and agreed to carry
out any and all covenants and obligations of Owner, hereunder. The words
“re-enter” and “re-entry” as used in this lease are not restricted to their
technical legal meaning. The term
“business days” as used in this lease shall exclude Saturdays, Sundays and all days as observed by the State or
Federal Government as legal holidays
and those designated as holidays by the applicable building service union employees service contract, or by
the applicable Operating Engineers
contract with respect to HVAC service. Wherever it is expressly provided
in this lease that consent shall not be unreasonably withheld, such consent shall not be unreasonably delayed.

Adjacent
Excavation-Shoring:

32.
If an excavation shall be made upon land adjacent
to the demised premises, or shall be authorized
to be made, Tenant shall afford to the person
causing or authorized to cause such excavation,
a license to enter upon the demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building, of which demised
premises form a part, from injury or damage,
and to support the same by proper foundations, without any claim for damages or indemnity against Owner, or
diminution or abatement of rent.

Rules
and
Regulations:

33.
Tenant and Tenant’s servants, employees, agents, visitors, and licensees shall observe faithfully, and comply strictly with, the
Rules
and Regulations and such other and
further reasonable Rules and Regulations as Owner and Owner’s agents may from time to time adopt. Notice of any additional Rules
or Regulations shall be given in
such manner as Owner may elect. In case Tenant disputes the
reasonableness of any additional Rules or
Regulations hereafter made or adopted by Owner or Owner’s agents, the parties hereto agree to submit the
question of the reasonableness of
such Rules or Regulations for decision to the New York office of the American Arbitration Association, whose
determination shall be final and conclusive upon the parties hereto. The right
to dispute the reasonableness of any additional Rules or Regulations upon
Tenant’s part shall be deemed waived unless the same shall be asserted by
service of a notice, in writing, upon Owner, within fifteen (15) days
after the giving of notice thereof. Nothing
in this lease contained shall be construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or
conditions in any other lease, as against any other tenant, and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors
or licensees.

Security:

34. Tenant has deposited with Owner the sum of $ 17,515.00
as security for the faithful performance
and observance by Tenant of the terms,
provisions and conditions of this lease; it is agreed that in the event Tenant
defaults in respect of any of the terms, provisions and conditions of this
lease, including, but not limited to, the payment of rent and additional rent, Owner may use, apply or retain the whole or
any part of the security so deposited to the extent required for the
payment of any rent and additional rent, or
any other sum as to which Tenant is in default, or for any sum which Owner may expend or may be required to
expend by reason of Tenant’s default in respect of any of the terms, covenants
and conditions of this lease,
including but not limited to, any damages or deficiency in the reletting of the demised premises, whether such
damages or deficiency accrued before
or after summary proceedings or other re-entry
by Owner. In the case of every such use, application or retention, Tenant
shall, within five (5) days after
demand, pay to Owner the sum so used, applied or retained which shall be added to the security deposit so
that the same shall be replenished to
its former amount. In the event that Tenant shall fully and faithfully comply with all of the terms,
provisions, covenants and conditions of
this lease, the security shall be returned to Tenant after the date fixed as the end of the lease and after delivery of entire
possession of the demised premises to
Owner. In the event of a sale of the land and building, or leasing of the building, of which the demised premises
form a part, Owner shall have the
right to transfer the security to the vendee or lessee, and Owner shall thereupon be released by Tenant from all
liability for the return of such security; and Tenant agrees to look to the new
Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or encumber, or attempt to assign or encumber, the monies
deposited herein as
security, and that neither Owner nor
its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.

Estoppel Certificate: 

35.
Tenant, at any time, and from time to time, upon at least ten (10)
days prior notice by Owner, shall execute, acknowledge and deliver to
Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that this lease is
unmodified and in full force and effect (or, if there have been modifications,
that the same is in full force and effect as modified and stating the modifications), stating the dates to
which the rent and additional rent
have been paid, and stating whether or not there exists any default by Owner under this lease, and, if so, specifying
each such default and such other
information as shall be required of Tenant. 

Successors
and Assigns:

36. The
covenants, conditions and agreements contained
in this lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors,
and except as otherwise provided in this
lease, their assigns. Tenant shall look only to Owner’s estate and interest in the land and building, for the satisfaction
of Tenant’s remedies for the
collection of a judgment (or other judicial process) against Owner in the event of any default by Owner hereunder, and no other
property or assets of such Owner (or
any partner, member, officer or director thereof, disclosed or undisclosed),
shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Tenant’s remedies under,
or with respect to, this lease, the relationship of Owner and Tenant hereunder, or Tenant’s use and
occupancy of the demised premises.

    Rider to be added if necessary.

See Articles 37 - 66, Exhibit A
and Guaranty attached hereto and made a part hereof.

In Witness Whereof,  Owner and Tenant have respectively signed and
sealed this lease as of the day and year first
above written.

	
 

	
 

	
 

	
Witness  for Owner:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
/s/ Edward
          Walker  

	

	
 

	

	
 

	
 

	
Cres, Inc.

	
Witness
  for Tenant:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
/s/ Assaf
          Ran 

	

	
 

	

	
 

	
 

	
DAG Media, Inc. 

ACKNOWLEDGEMENT

	
 

	
 

	
STATE OF NEW YORK,

	
 

	
 

	
SS.:

	
COUNTY OF

	
 

          On the _____________ day
of ______________________________ in the year
____________________, before me, the
undersigned, a Notary Public in and
for said State, personally
appeared ______________________________________________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be
the individual(s) whose name(s) is (are) subscribed to the
within instrument and acknowledged
to me that he/she/they executed the same in his/her/their capacity(ies), and
that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.

	
 

	
 

	
 

	

	
 

	
NOTARY PUBLIC

GUARANTY

          FOR
VALUE RECEIVED, and in consideration for, and as an inducement to Owner making the within
lease with Tenant, the undersigned guarantees to Owner, Owner’s successors and
assigns, the full performance and observance of all the covenants, conditions and
agreements, therein provided to be performed and observed by Tenant, including the “Rules and Regulations” as therein
provided, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand, whereby to charge the undersigned
therefor, all of which the undersigned
hereby expressly waives and expressly agrees that the validity of this agreement and the obligations of
the guarantor hereunder shall in no way
be terminated, affected or impaired by reason of the assertion by Owner against
Tenant of any of the rights or remedies reserved to Owner pursuant to the
provisions of the within lease. The
undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification or extension of this lease and during any period
when Tenant is occupying the
demised premises as a “statutory tenant.” As a further inducement to
Owner to make this lease, and in
consideration thereof, Owner and the undersigned covenant and agree that in any action or proceeding brought by either
Owner or the undersigned against the
other on any matters whatsoever arising out of, under, or by virtue of, the
terms of this lease or of this
guarantee, that Owner and the undersigned shall and do hereby waive trial by jury.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dated:  

	
   

	
   

	
in the year  

	
   

	
   

	
   

	

	
   

	
   

	

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	

	
   

	
   

	
Guarantor  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	

	
   

	
   

	
Witness  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	

	
   

	
   

	
Guarantor’s
Residence  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	

	
   

	
   

	
Business Address  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	

	
   

	
   

	
Firm Name  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
	
	
	

	
 

	
 

	
 

	
 

	
 

	
STATE OF NEW YORK  

	
   

	
   

	
) ss:  

	
   

	
   

	
   

	
   

	
   

	
COUNTY OF  

	
   

	
)  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

On
the                    day
of                              in
the year                              before me, the
undersigned, a Notary Public in and for said State, personally appeared:                                                                                                    ,

personally
known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the
instrument

	
 

	
 

	
 

	

	
 

	
Notary Public 

 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
IMPORTANT – PLEASE READ

	
 

	

RULES AND REGULATIONS ATTACHED TO AND

MADE A PART OF THIS LEASE 

IN ACCORDANCE WITH ARTICLE 33.

1.       The
sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors
or halls shall not be obstructed or encumbered by Tenant or used for any
purpose other than for ingress or egress from the demised premises, and for
delivery of merchandise and
equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by Owner. There shall not be used in any
space, or in the public hall of the building, either by any tenant or by
jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires
and safe guards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant’s expense, keep the
sidewalk and curb in front of said premises clean and free from ice, snow, dirt and rubbish.

2.       The
water and wash closets and plumbing fixtures shall not be used for any purposes
other than those for which they were
designed or constructed, and no sweepings, rubbish, rags acids or other
substances shall be deposited therein, and the expense of any breakage, stoppage, or damage resulting from the violation
of this rule shall be borne by the Tenant, whether or not caused by the Tenant,
or its clerks, agents, employees or visitors. 

3.       No
carpet, rug or other article shall be hung or shaken out of any window of the building and Tenant
shall not sweep or throw, or permit to be swept or thrown, from the demised premises any
dirt or other substances into any of the corridors or halls, elevators, or out of the doors or
windows or stairways of the building, and Tenant shall not use, keep or permit
to be used or kept, any foul or noxious gas or substance in the demised
premises, or permit or suffer the demised premises to be occupied or used in a
manner offensive or objectionable to Owner or other occupants of the building by
reason of noise, odors, and/or vibrations, or interfere in any way with other tenants or those having business therein, nor shall any bicycles,
vehicles, animals, fish, or birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.

4.       No
awnings or other projections shall be attached to the outside walls of the
building without the prior written consent
of Owner.

5.       No
sign, advertisement, notice or other lettering shall be exhibited, inscribed,
painted or
affixed by Tenant on any part of the outside of the demised premises or the
building, or on the inside of the demised premise if the same is visible from
the outside of the demised premises, without the prior written consent of
Owner, except that the name of Tenant may appear on the entrance door of the demised premises. In the event of the
violation of the foregoing by Tenant, Owner
may remove same without any liability, and may charge the expense
incurred by such removal to Tenant. Interior signs on door and directory tablet
shall be inscribed, painted or affixed for Tenant by Owner at the expense of
Tenant, and shall be of a size, color and
style acceptable to Owner.

6.        Tenant
shall not mark, paint, drill into, or in any way deface, any part of the
demised premises
or the building of which they form a part. No boring, cutting or stringing of
wires shall
be permitted, except with the prior written consent of Owner, and as Owner may direct. Tenant shall not
lay linoleum, or other similar floor covering, so that the same shall come in direct contact with the floor of the
demised premises, and, if linoleum or other similar
floor covering is desired to be used, an interlining of builder’s deadening
felt shall be first affixed to the floor, by a paste or other material, soluble
in water, the use of cement or other similar adhesive material being expressly
prohibited.

7.       No
additional locks or bolts of any kind shall be placed upon any of the doors or
windows by Tenant, nor shall any changes be made in existing looks or mechanism thereof. Tenant must, upon the termination of
his tenancy, restore to Owner all keys of stores,
offices and toilet rooms, either furnished to, or otherwise procured by,
Tenant, and in the event of the loss
of any keys so furnished. Tenant shall pay to Owner the cost thereof.  

8.       Freight,
furniture, business equipment, merchandise and bulky matter of any description shall be delivered to and removed from
the demised premises only on the freight elevators and through the
service entrances and corridors, and only during hours and in a manner approved
by Owner. Owner reserves the right to inspect all freight to be brought into the building and to exclude from
the building all freight which violates any of
these Rules and Regulations of the lease, or which these Rules and Regulations
are a part.

9.       Canvassing,
soliciting and peddling in the building is prohibited and Tenant shall cooperate to prevent the same.

10.     Owner reserves the right
to exclude from the building all persons who do not present a pass to the
building signed by Owner, Owner will furnish passes to persons for whom Tenant
requests same in writing. Tenant shall be responsible for all persons for whom
he requests
such pass, and shall be liable to Owner for all acts of such persons. Tenant
shall not
have a claim against Owner by reason of Owner excluding from the building any person who does not
present such pass.

11.      Owner shall have the right to
prohibit any
advertising by Tenant which in Owner’s opinion,
tends to impair the reputation of the building or its desirability as a
building for offices, and upon
written notice from Owner. Tenant shall refrain from or discontinue such
advertising.

12.     Tenant shall not bring
or permit to be brought or kept in or on the demised premises, any inflammable,
combustible, explosive, or hazardous fluid, material, chemical or substance, or cause or
permit any odors of cooking or other processes, or any unusual or other objectionable odors, to permeate in, or
emanate from, the demised premises.

13.      If the building contains
central air conditioning and ventilation. Tenant agrees to keep all windows closed at
all times and to abide by all rules and regulations issued by Owner with respect to such services. If Tenant
requires air conditioning or ventilation after the usual hours. Tenant shall give notice in writing to the building
superintendent prior to 3:00 p.m. in the case of services required on
weekdays, and prior to 3:00 p.m. on the day prior in case of after hours service required on weekends or on holidays.
Tenant shall cooperate with Owner in
obtaining maximum effectiveness of the cooling system by lowering and closing
veneilan blinds and/or drapes and curtains when the sun’s rays fall directly on
the windows of the demised premises.

14.     Tenant
shall not move any safe, heavy machinery, heavy equipment, bulky matter, or fixtures into or out of
the building without Owners prior written consent. If such safe, machinery, equipment,
bulky matter or fixtures requires special handling, all work in connection therewith
shall comply with the Administrative Code of the City of New York and all other laws and regulations applicable
thereto, and shall be done during such hours as
Owner may designate.

15.     Refuse
and Trash. (1) Compliance by Tenant. Tenant covenants and agrees, at its sole cost and expense, to
comply with all present and future laws, orders, and regulations, of all state, federal, municipal, and local governments,
departments, commissions and boards regarding
the collection, sorting, separation and recycling of waste products, garbage, refuse and trash. Tenant shall sort and separate
such waste products, garbage, refuse and trash into such categories as
provided by law. Each separately sorted category of waste products, garbage, refuse and trash shall be
placed in separate receptacles reasonably approved by Owner. Such separate receptacles may, at Owner’s option, be
removed from the demised premises in accordance with a collection schedule
prescribed by law. Tenant shall
remove, or cause to be removed by a contractor acceptable to Owner, at Owner’s
sole discretion, such items as Owner
may expressly designate. (2) Owner’s Rights in Event of Noncompliance.
Owner has the option to refuse to collect or accept from Tenant waste products,
garbage, refuse or trash (a) that is not separated and sorted as required by
law or (b) which consists of such items as
Owner may expressly designate for Tenant’s removal, and to require Tenant to arrange for such collection
of Tenant’s sole cost and expense, utilizing a contractor satisfactory
to Owner. Tenant shall pay all costs, expenses, fines, penalties, or damages that may be imposed on Owner or Tenant by reason
of Tenant’s failure to comply with
the provisions of this Building Rule 15, and, at Tenant’s sole cost and expense, shall indemnity, defend and hold Owner
harmless (including reasonable legal
fees and expenses) from and against any actions, claims and suits arising from
such noncompliance, utilizing counsel
reasonably satisfactory to Owner.

	
 

	
 

	
Address

	
192 Lexington Avenue, New York, NY

	
 

	
 

	
Premises

	
Part
  fifth (5th) floor

	

	
 

	
TO

	
DAG Media, Inc.

	
 

	
 

	
 

	
 

	

	

	
STANDARD FORM OF

  Office

  Lease

	

	
 

	
 

	
 

	
 

	
The Real Estate Board of New York, lnc.

	
 

	
 

	
 

	
Copyright
  2004. All rights Reserved

  Reproduction in whole or in part prohibited.

	
 

	
 

	

	
 

	

	
Dated
            June 9th          
  in the

year                    2006

	
 

	
Rent Per
  Year                    
  see
  Article 61

	
 

	
Rent Per
  Month                 
  see
  Article 61

	
 

	
Term                    5 years

	
From               
  July
  1, 2006

	
To
                   June
  30, 2011

ADDITIONAL CLAUSES 37 – 66, EXHIBIT A, AND GOOD GUY
GUARANTY ATTACHED TO AND FORMING PART OF THE LEASE DATED JUNE 9, 2005, BETWEEN
CRES INC. AS LANDLORD AND DAG MEDIA, INC., AS TENANT FOR PART FIFTH (5TH)
FLOOR, IN THE BUILDING KNOWN AS 192 LEXINGTON AVENUE, NEW YORK, NY.

Wherever the terms, covenants and conditions contained
in the printed portion of this lease shall be in conflict with any of the
terms, covenants and conditions in the Additional Clauses 37 - 67 that follow,
the Additional Clauses shall prevail.

          37.
ELECTRICITY

          A.
The Landlord will furnish electricity to the Tenant through presently installed
electrical facilities for Tenant’s reasonable use of such lighting, electrical
appliances and equipment as the Landlord may permit to be installed in the
premises. There shall be no charge to Tenant for such electric energy by way of
measuring the same on any meter or otherwise, such electric energy being
included in the annual rent reserved hereunder. If findings of the consultant indicate
such average monthly electric consumption exceeds $548.33 per month, the amount
of rent presently allocable to electricity per month, then the monthly rental
payable by Tenant shall thereafter throughout the remainder of the Term
(subject to further findings) be increased by the amount specified by such
consultant commencing as of the date of such consultant’s findings. If the
Landlord’s electric rates and/or charges from the public utility furnishing
electrical service be increased then me aforesaid monthly rent shall be
increased accordingly. Tenant shall make no alterations or additions to the
electric equipment and/or appliances without first obtaining written consent
from the Landlord in each instance. Landlord shall not in any way be liable or
responsible to Tenant for any loss or damage or expense which Tenant may
sustain or incur if either the quantity or character of electric service is
changed or is no longer available or suitable for Tenant’s requirements. Tenant
covenants and agrees that at all times its use of electric current shall never
exceed the capacity of existing feeders to the building or the risers or wiring
installation. Any riser or risers to supply Tenant’s electrical requirements,
upon written request of Tenant, will be installed by Landlord at the sole cost
and expense of Tenant, if in Landlord’s sole judgment, the same are necessary
and will not cause or create a dangerous or hazardous condition or entail
excessive or unreasonable alterations, repairs or expense or interfere with or
disturb other Tenants or occupants. In addition to the installation of such
riser or risers Landlord will also at the sole cost and expense of Tenant,
install other equipment proper and necessary in connection therewith subject to
the aforesaid terms and conditions. The Landlord reserves the right to
terminate the furnishing of electricity at any time upon one hundred eighty
(180) days’ written notice to the Tenant, in which event the Tenant may make
application directly to the utility commencing any servicing the Building for
the Tenant’s entire separate supply. The Landlord, upon the expiration of the
aforesaid one hundred eighty (180) days’ written notice to the Tenant, may
discontinue furnishing the electric current in which later event, the annual
rent payable hereunder shall be reduced as of the date of discontinuance of the
supplying of electric current by $6,580.00 per annum otherwise, this lease
shall remain in full force and effect.

          B.
Tenant’s use of electric current in the Demised Premises shall not at any time
exceed the capacity of any of the electrical conductors and equipment in or
otherwise serving the

Demised Premises. Tenant shall not make or perform or
permit the making of any alterations to wiring, installations or other
electrical facilities in or serving the Demised Premises without the prior
consent of Landlord in each instance which shall not be unreasonably withheld.
Should Landlord grant any such consent, all additional risers or other
equipment required therefore shall be installed by Landlord and the cost
thereof shall be paid by Tenant upon Landlord’s demand; any such work performed
by Landlord shall be of workmanlike quality and the cost thereof shall be
comparable to costs payable for similar type installations performed by owners
of property similar to the Building.

          C.
Landlord shall not be liable in any way to Tenant for any failure or defect in
the supply or character of electric energy furnished to the Demised Premises by
reason of any requirement, act or omission of the public utility company
servicing the Building with electricity or for any other reason whatsoever.

          D.
If any tax (other than a Federal, State or City Income Tax) is imposed upon
Landlord’s receipt from the sale or resale of electricity to Tenant by any
Federal, State or Municipal Authority, Tenant covenants and agrees that where
permitted by law, Tenant’s pro rata share of such taxes shall be passed on to
and included in the bill of, and paid by Tenant to Landlord.

	
   

  	
   

  
	
  38.

  	
  Increase in Real Estate Taxes:

  

          Tenant
agrees to pay Landlord, as additional rent, its share of any such increase as
follows:

          A. As used in this Article 42, the Following Definitions Shall Apply:

          1.
“Taxes” as used herein shall mean the aggregate of the following items: (a)
real estate taxes, (b) assessments (including without limitation, assessments
for public improvements or benefits whether or not commenced or completed
during the term of this lease, which may be assessed, levied, confirmed or
imposed on or in respect of, or be a lien upon, the land and/or the Building
thereof on which the Demised Premises are a part and (e) any tax or assessment
levied, assessed or imposed against such land and/or Building or the rents or
profits therefrom or any other charge or levy made by a taxing authority to the
extent that the same shall be in lieu of all or any portion of any item set
forth herein. The term Taxes, except when determining the amount of the Base
Tax, shall also include all expenses, including legal fees, experts’ and other
witness fees incurred in contesting the validity or amount of any Taxes or in
obtaining a refund of Taxes.

          2.
“Base Tax” shall mean the taxes as finally determined, payable by Landlord, for
the calendar year beginning July 1, 2006 and ending June 30, 2007.

          3.
Tenant’s “Proportionate Share” shall be 1.88% of any increase in Taxes over
the Base Tax.

2

          B.
Tenant covenants and agrees to pay, in each and every calendar year during the
term of this lease and any and all renewals, extensions and modifications
thereof, Tenant’s Proportionate Share.

          C.
Tenant’s Proportionate Share shall be due and payable within ten (10) days
after Landlord shall have delivered to Tenant a statement setting forth the
amount of Tenant’s Proportionate Share and the basis therefore, however in the
event that and so long as Landlord is permitted to make semi-annual tax
payments Tenant shall be permitted to pay its Proportionate share of the Real
Estate tax escalation on a semi-annual basis. Bills for such Taxes shall be
sufficient evidence of amount, for the purpose of calculating Tenant’s
Proportionate Share. In the event Tenant fails to pay Tenant’s Proportionate
Share when due, the Landlord shall be entitled, with respect thereto, to any
and all remedies to which Landlord may be entitled under this lease for default
in the payment of rent. The failure of Landlord to bill Tenant for Tenant’s
Proportionate Share in any calendar year shall not prejudice the right of
Landlord to subsequently bill Tenant for such calendar year or any subsequent
calendar year.

          D.
In the event the Base Tax is reduced as a result of any appropriate proceeding,
such reduced liability as finally fixed shall be regarded as the Base Tax and
Landlord shall have the right to adjust the amount due from Tenant in any year
in which Tenant is or was obligated to pay Tenant’s Proportionate Share, and
Tenant agrees to pay the amount of such adjustment on the rent installment day
next following receipt of written statement from Landlord setting forth the
amount and basis of such adjustment. In the event Landlord shall receive a
refund of Taxes for any year during which Tenant has paid Tenant’s
Proportionate Share, as above provided, the proceeds of such refund, less legal
fees and other expenses incurred in collecting the same, shall be applied and
allocated to the periods for which the refund was obtained and appropriate
adjustment shall be made between Landlord and Tenant. This provision shall
survive the expiration of its Lease.

          E.
With respect to any period at the expiration of the term of this lease which
shall constitute a partial fiscal year, Landlord’s statement shall apportion
the amount due hereunder. The obligation of Tenant, with respect to Tenant’s
Proportionate Share applicable for the last year of the term of this lease, or
part thereof, shall survive the expiration, or sooner termination, of the term
of this lease.

39. Tenant’s Certificate

          Tenant
shall, without charge, at any time and from time to time, within five (5) days
after request by Landlord, certify by written instrument, duly executed,
acknowledged and delivered, to any mortgage, assignee of any mortgage or
purchaser, or any other person, firm or corporation specified by Landlord:

3

          (a)
that this lease is unmodified and in full force and effect (or, if there has
been modification, that the same is in full force and effect as modified and
stating the modifications);

          (b)
whether or not to Tenant’s knowledge there are then existing any set-off or
defenses against the enforcement of any of the agreements, terms, covenants or
conditions hereof upon the part of Tenant to be performed or complied with
(and, if so, specifying the same); and

          (c)
the dates, if any, to which the rental and other charges hereunder have been
paid in advance.

	
   

  	
   

  
	
  40.

  	
  Assignment and Subletting:

  

          A.
If Tenant shall desire to assign this Lease or to sublet the Demised Premises,
Tenant shall submit to Owner a written request for Owner’s consent to such
assignment or subletting, which request shall contain or be accompanied by the
following information: (i) the name and address of the proposed assignee or
subtenant; (ii) a duplicate original or photocopy of the executed assignment
agreement or sublease; (iii) the nature and character of the business of the
proposed assignee or subtenant and its proposed use of the Demised Premises;
and (iv) banking, financial and other credit information with respect to the
proposed assignee or subtenant reasonably sufficient to enable Owner to
determine the financial responsibility of the proposed assignee or subtenant.
Owner shall then have the following options, to be exercised by notice
(“Exercise Notice”) given to Tenant within thirty (30) days after receipt of
Tenant’s request for consent:

                    (i)
Owner may require Tenant to surrender the Demised Premises to Owner and to
accept a termination of this Lease as of a date (the “Termination Date”) to be
designated by Owner in the Exercise Notice, which date shall not be less than
thirty (30) days nor more than ninety (90) days following the date of Owner’s
Exercise Notice; or

                    (ii)
Owner may require Tenant to assign this Lease to Owner without merger of
Owner’s estates effective as of the day preceding the proposed assignment or
sublease.

               If
pursuant to part (i) above, Owner shall elect to require Tenant to surrender
the Demised Premises and accept a termination of this Lease, then this Lease
shall expire on the Termination Date as if that date had been originally fixed
as the Expiration Date. Regardless of any option Owner exercises under this
subsection A, whether to terminate this Lease or to take an assignment thereof,
Owner shall be free to, and shall have no liability to Tenant if Owner shall,
lease the Demised Premises to Tenant’s prospective assignee or subtenant.

          B.
If Owner shall not exercise any of its options under Paragraph A above within
the time period therein provided, then Owner shall not unreasonably withhold
consent to the proposed

4

assignment or subletting of the Demised Premises,
provided that the following further conditions shall be fulfilled:

                    1.
An event of monetary or material default shall not have occurred and be
continuing at the time Owner’s consent is requested and on the effective date
of the assignment or sublet.

                    2.
In the case of an assignment or sublease, the proposed assignee or sublessee
shall be financially capable, in Owner’s reasonable discretion, to assume the
obligations of Tenant under the lease. The proposed assignee or subtenant shall
be of a character in keeping with the standards of the other office tenants of
the Building. Tenant shall deliver to Owner all reasonably complete and
accurate financial data and other information as Owner may reasonably request
in a form prepared by Tenant in the ordinary course of its business.

                    3.
The proposed assignee or subtenant shall not be a tenant (or subsidiary,
affiliate or parent of a tenant) of other space in the Building.

                    4.
The Demised Premises shall be used by the assignee or subtenant solely in
accordance with the terms of this Lease.

                    5.
The use shall not violate any restrictions contained in any other leases in the
Building.

                    6.
In the case of an assignment, the instrument of assignment shall provide for
the acceptance by the assignee of the assignment; the assignee’s assumption of
all of the obligations and liabilities of Tenant under this Lease, and
assignee’s agreement to perform directly of Owner all of the terms and
provisions of this lease on Tenant’s part to be performed.

                    7.
In case of a subletting, the sublease shall be expressly subject to all of the
obligations of Tenant and the conditions of Tenant’s tenancy under this lease,
the subtenant shall not assign, encumber or otherwise transfer or sublease the
Premises in whole or in part, or allow any part to be used or occupied by
others without the prior written consent of Owner in each instance.

                    8.
So long as Tenant shall employ a real estate agent to effect a sublease or
assignment, Tenant shall designate the Landlord’s managing agent as Tenant’s
exclusive agent to effect such assignment or subletting and agrees to pay a
commission in accordance with the commission rates of the managing agent then
in effect.

          C.
The consent by Owner to any transfer, assignment or subletting shall not be
deemed to be a waiver on the part of Owner of any prohibition of any future
transfer, assignment or subletting. In no event shall a subletting to which
Owner shall have consented to under this Section release or relieve Tenant of
its obligations or liabilities under this lease.

5

          D.
Owner shall be furnished with a duplicate original of the assignment or
sublease within (i) ten (10) days after its execution, or (ii) prior to its
effective date, whichever is earlier. The assignment or sublease shall be fully
executed.

          E.
Tenant shall reimburse Owner for all reasonable out-of-pocket expenses incurred
by Owner in reviewing and approving Tenant’s request to any transfer,
assignment or sublet.

          F.
If Owner consents to an assignment of this lease or a subletting the following
shall apply:

               1.
Tenant shall pay to Owner, as and when received, one hundred (100%) percent of
any consideration payable directly and/or indirectly in connection with any
such assignment after deducting reasonable out of pocket expenses for legal
fees and brokerage commissions.

               2.
Tenant shall pay to Owner, as and when received, one hundred (100%) percent of
the amount by which the rental or other charges payable under or in connection
with any sublease shall exceed the rental payable under this lease after
deducting reasonable out of pocket expenses for legal fees and brokerage
commissions.

               3.
The provisions of this paragraph shall not be construed as a waiver of the
prohibition against assignment or subletting without Owner’s prior written
consent.

          G.
An assignment or sublease consummated in violation of this Section shall not be
valid.

41. Exculpatory Clauses

          If
the Landlord or any successor in interest be an individual, joint venture,
tenancy in common, co-partnership, unincorporated association, or other
unincorporated aggregate of individuals or a corporation (all of which are
referred to below, individually and collectively, as a “landlord entity”) then
anything elsewhere to the contrary notwithstanding, Tenant shall look solely to
the estate and property of such landlord entity in the land and Building of
which the Demised Premises are a part, for the satisfaction of Tenant’s
remedies for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord with respect to any of the terms, covenants
and conditions of the lease to be observed and/or performed by Landlord, and no
other property or assets of such landlord entity shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant’s
remedies.

6

42. Tenant hereby agrees that Tenant shall and will
indemnify and save harmless Landlord from and against all claims for damages of
whatever nature arising from any accident, injury or damage whatsoever, caused
to any person or to the property of any person occurring during the term of
this lease in, on, or about the demised premises unless caused by the
negligence or willful act of Landlord or Landlord’s officers, agents,
employees, licensees, servants, invitees, etc. Tenant likewise shall and will
indemnify and save harmless Landlord from and against all claims for damages of
whatever nature, arising from any accident, injury or damages occurring outside
of the demised premises but within the building, or on the sidewalks and areas
adjacent to the building where such accident, damage or injury results or is
claimed to have resulted from any action or omission on the part of Tenant or
Tenant’s contractors, licensees, agents, invitees, visitors, servants or
employees. Tenant shall and will, on written demand, repay to Landlord, as
additional rent, any amount that Landlord may be obligated to pay for any such
damages and the cost and expense or any action or legal proceedings brought
against the Landlord by reason of or in respect to any claim for such damages,
including but not limited to reasonable attorney’s fees expended in connection
therewith.

43. Tenant covenants and agrees, at its sole cost and
expense throughout the entire term of this lease and any renewals or extensions
thereof to maintain for the mutual benefit of the Owner and Tenant, as their
interests may appear and upon request by owner for the holder of any mortgage
or mortgages (as an additional insured) covering or including the demised
premises, general public liability insurance against claims for bodily
injuries, death or property damage, occurring upon, in or about the demised
premises, including complete sign coverage, to the limit of not less than TWO
MILLION ($2,000,000.00) DOLLARS in respect of bodily injuries to persons, and
to the limited of not less than FIVE HUNDRED THOUSAND ($500,000.00) DOLLARS for
property damage. Copies of certificates of the insurers reasonably satisfactory
to the owners showing that owner is covered thereunder, shall be furnished to
owner ten (10) days before the commencement of me term of this lease or before
Tenant shall enter the demised premises, whichever is earlier. At least fifteen
(15) days before the expiration date of any such policies of insurance, Tenant
shall furnish to owner a certificate or copy of renewal of such policy or new
policy of insurance. Each such policy or certificate therefore shall contain an
agreement by insurer that such policy shall not be cancelled without at least
twenty (20) days prior written notice to owner. Tenant covenants and agrees
that in no event shall any right of subrogation be asserted against the owner
for any injury or damage suffered by the Tenant, whether due to negligence or
otherwise.

44. The Landlord at its sole cost and expense will
remove all normal daily rubbish from the demised premises provided Tenant
places same properly bagged and sorted at door or near the freight elevator on
the floor.

7

45. Tenant shall be authorized to erect and maintain a
sign indicating Tenant’s name, on the exterior of the main entrance door to the
demised premises, it being understood and agreed that Tenant shall first obtain
Landlord’s written consent with respect to the décor, style and size of said
sign. Tenant shall not at any time erect, place, maintain or allow replacement
of any sign, lettering, advertisement or decoration of any kind or nature in
any public corridor adjacent to the demised premises or on any window within the
demised premises.

46. Tenant shall pay as additional rent, collectable
as such, an amount equal to 1.88% of Landlord’s increased cost of fuel, if any,
for the building of which the demised premises forms a part for each calendar
year of the term or portion thereof over the cost of fuel for the calendar year
2006. At the end of each calendar year, Landlord shall calculate such increased
cost and bill tenant for its share, which bill shall be due and payable with
the next regular installment of rent. This obligation shall survive termination
of this lease or any renewals thereof except that should tenant’s term expire
other than at the end of a calendar year, Tenant shall only be obligated pro
rata for the number of months in such year which formed a part of its term.
Landlord’s fuel bills for the years in question shall be conclusive as to cost.

47. Prior to the commencement of any and all work
(except for non-structural cosmetic work up to five thousand ($5,000.00]
dollars), Tenant shall submit to the Landlord for its approval in writing,
plans and specifications for all work and installations. All work shall be in
strict conformity with all rules, regulations and ordinances of any
governmental authority or bureau having jurisdiction thereof, including New York
Board of Fire Underwriters or any other similar body, and the Tenant agrees to
procure any permits needed in connection with such work prior to the
commencement thereof. Tenant further agrees that it shall require its
contractors and/or subcontractors to furnish the Landlord with Certificates of
Insurance for Workmen’s Compensation, Public Liability and Property Damage, as
provided for in Article #3 of this lease and otherwise comply with the terms
and conditions of this lease and particularly Article #3 thereof.

48. It is specifically understood and agreed that this
lease is offered to the tenant for signature by the Managing Agent of the
building solely in its capacity as such Agent and subject to the landlord’s
acceptance and approval, and that the tenant has hereunto affixed its signature
with the understanding that the said lease shall not in any way bind the
landlord or its Agent until such time as the landlord has approved said lease
and the same is executed and delivered to the tenant.

49. Tenant represents and warrants that it has dealt
with no broker except NEWMARK KNIGHT FRANK (“Broker”) in connection with the
execution of this lease or the showing of the Demised Premises and agrees to
hold and save Landlord harmless from and against any and all liabilities from
any claims of any broker arising out of Tenant’s acts (including, without
limitation,

8

the cost of counsel fees in connection with the
defense of any such claims) except the Brokers. Landlord acknowledges that it
is responsible to pay the Brokers pursuant to a separate agreement.

50. Emergency and Security Procedures. Tenant
shall abide and shall cause its employees, independent contractors, agents,
directors, officers, guests and invitees to abide by all rules, regulations and
procedures required by Landlord with respect to the Building and the demised
premises, including but not limited to, evacuation, fire safety, and security
rules and procedures. Tenant hereby agrees to indemnify and hold the Landlord
and its agents harmless from and against any and all losses arising from a
breach of the foregoing provision. Should Tenant desire to implement its own
fire safety or evacuation procedures above and beyond those required by
Landlord, Tenant must first obtain Landlord’s prior written consent in each
instance and shall indemnify and hold the Landlord harmless from and against
any losses arising from such procedures, unless any such loss is due to
Landlord’s sole negligence or willful misconduct.

51. Modification for Mortgages

          If,
in connection with obtaining financing or refinancing for the Building of which
the Demised Premises form a part, a banking, Insurance or other institution
lender shall request reasonable modifications to this lease as a condition to
such financing or refinancing, Tenant will not unreasonably withhold, delay or
defer its consent thereto, provided that such modifications do not increase the
obligations of Tenant hereunder (except, perhaps, to the extent that Tenant may
be required to give notices of any defaults by Landlord to such lender and/or
permit the curing of such defaults by such lender together with the granting of
such reasonable additional time for such curing as may be required for such
lender to get possession of the said Building) or materially adversely affect
the leasehold interest hereby created. In no event shall a requirement that the
consent of any such lender be given for any modification, termination, or
surrender of this lease be deemed to materially adversely affect the leasehold
interest hereby created.

52. Tenant’s Installations

          Notwithstanding
anything hereinbefore contained to the contrary, provided Tenant complies with
all of the laws, orders, rules and regulations of the governmental authorities
and the Fire Insurance Rating Organization having jurisdiction thereof and the
local Board of Fire Underwriters, or any other similar body, and provided
further Tenant is not in default under any of the terms, covenants and
conditions of this lease, Tenant shall have the right, at its own cost and
expense, to install such machinery, equipment and fixtures as may be required
for the proper conduct of Tenant’s business, except mat Landlord’s prior
consent shall be required for any installation requiring structural alteration
or changes to the Demised Premises. Subject to the provisions of this Article,
any and all movable machinery, equipment and fixtures installed by Tenant
(sometimes herein referred to as “Tenant’s Property”) shall remain personally
notwithstanding the fact that it may

9

be affixed or attached to the realty, and shall,
during the term of this lease or any extension or renewal thereof, belong to
and be removable by Tenant, provided that (a) Tenant shall remove said
installations prior to the expiration of such term or the sooner termination
thereof; and (b) Tenant shall repair any damage caused by said removal and
shall deliver the Demised Premises to Landlord in the same condition as upon
the commencement of the term hereof, reasonable wear and tear excepted. Prior to
the expiration of the term or sooner termination thereof, Tenant shall, at its
own cost and expense, remove from the Demised Premises all of Tenant’s Property
except such items thereof as Tenant shall have expressly agreed in writing with
Landlord are to remain and to become the property of Landlord, and Tenant shall
repair any damage to the Demised Premises resulting from such removal.

          Tenant
shall ascertain from Landlord within thirty (30) days prior to the end of the
term hereof or any extension or renewal thereof whether Landlord desires to
have any non-movable fixtures, machinery and/or equipment permanently installed
by Tenant removed from the demised premises and, if Landlord shall so desire,
Tenant shall, prior to the end of the term hereof, remove such indicated items
and restore the Demised Premises with respect thereto, to the same condition as
upon the commencement of the term hereof, reasonable wear and tear excepted.
All fixtures, machinery and equipment installed by Tenant, except those items
which Landlord expressly agrees are to remain in the Demised Premises and
become the property of Landlord, remaining within the Demised Premises after
the expiration of such term or sooner termination thereof and after Tenant is
no longer in possession of the demised premises shall, at Landlord’s option,
either (i) become the property of Landlord, free of any claim by Tenant or any
person claiming through Tenant, or (ii) be removed and disposed of by Landlord,
at Tenant’s cost and expense, without further notice to or demand upon Tenant.
Tenant’s obligations under this Article shall survive the expiration or sooner
termination of the term hereof.

53. Saving Provision

          If
any provision of this lease, or its application to any situation shall be
invalid or unenforceable to any extent, the remainder of this lease, or the
application thereof to situations other than that as to which it is invalid or
unenforceable, shall not be affected thereby, and every provision of this lease
shall be valid and enforceable to the fullest extent permitted by law.

54. Entire Agreement

          No
earlier statement or prior written matter shall have any force or effect.
Tenant agrees that it is not relying on any representations or agreements other
than those contained in this Lease. This agreement shall not be modified or
canceled except by writing subscribed by all the parties.

55. Late Payment Clause

10

                    A.
If Tenant shall fail to pay any rents, charges or other sums after the same
become due and payable, such unpaid amounts shall bear interest at the per
annum rate of three percent (3%) in excess of the rate from time to time
announced by Citibank, N.A. as its “Prime rate” or “Base rate,” calculated on
the basis of actual days elapsed, based on a 360 day year, payable for the
period from the date which is five (5) days after the due date of such rents,
charges or other sums to the date of payments; provided, however, that such
interest shall never exceed the maximum legal rate from time to time permitted
by applicable law.

                    B.
In addition thereto and to the extent permitted by applicable law, if Tenant
shall fail to pay any rents, charges or other sums, within ten (10) days after
the date same become due and payable, then Tenant shall also pay to Landlord
additional rent to cover Landlord’s additional overhead and administrative
costs and expenses arising out of such late payment in the amount of $250.00
per instance plus additional security deposit of $2,920.00 (subject to the
terms and conditions of Articles 34 and 63.) The provision herein for
additional rent shall not be construed to extend the date for payment of any
sums required to be paid by Tenant hereunder or to relieve Tenant of its
obligation to pay all such sums at the time or times herein stipulated.
Notwithstanding the imposition of such additional rent pursuant to this
subparagraph B, Tenant shall be in default under this Lease if any or all
payments required to be made by Tenant are not made at the time herein
stipulated, and neither the demand for, or collection by Landlord, of such
additional rent shall be construed as a curing of such default on the part of
the Tenant.

56. This Lease
and the term and estate hereby granted are subject to the following further
limitation. Whenever Tenant shall default in the payment of and installment of
fixed rent, or in the payment of any additional rent or any other charge
payable by Tenant to Landlord, on any day upon which the same ought to be paid,
and such default shall continue for five (5) days after Landlord shall have
given Tenant a notice specifying such default, then in any such case Landlord
may give to Tenant a notice of intention to end the term of this lease at the
expiration of three (3) days from the date of the service of such notice of
intention, and upon the expiration of said three (3) day notice period this
Lease and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
were set forth herein for the expiration of the term hereof, but Tenant shall
remain liable for damages as provided in Article 18.

57. Tenant has
inspected the demised premises and agrees to accept same in its present “as
is” condition and Landlord shall not be obligated to do any work or furnish any
materials in connection therewith.

58.
INTENTIONALLY DELETED.

11

59.
So long as the Tenant shall have duly kept and performed all of the terms,
provisions, conditions, and agreements to be kept and performed by Tenant under
this Lease, Tenant shall be permitted to use the air-conditioning system
presently contained and/or installed in the demised premises on business days
(holidays excluded) during the period May 15 – September 30 during the hours from 8:00 AM to 6:00 PM and four (4)
Saturdays from 8:00 AM to 6:00 PM during this period. Tenant covenants and
agrees to maintain and if necessary, repair such air-conditioning system in
good and proper working condition at all times during the term of this Lease at
Tenant’s sole cost and expense and Tenant further covenants and agrees to
furnish and maintain at its own cost and expense, at all times during the term
of this Lease an air-conditioning contract with a reputable air-conditioning
maintenance contractor acceptable to the Landlord. Title to such air
conditioning system shall be and continue to remain with Landlord at all times.
Tenant agrees and acknowledges that the cost of the electric to operate the
presently existing and/or installed air-conditioning system shall be paid for
pursuant to the provisions in Article 37.

60.
If Tenant holds over in possession after the expiration or sooner termination
of the original term or of any extended term of this Lease, such holding over
shall not be deemed to extend the term or renew the Lease, but such holding
over thereafter shall continue upon the covenants and conditions herein set
forth except that the charge for use and occupancy of such holding over for
each calendar month or part thereof (even if such part shall be a small
fraction of a calendar month) shall be the sum of:

	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  1/12
  of the highest annual rent rate set forth in Article 62 of this Lease, times
  two (2.0) plus

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  1/12
  of the net increase, if any, in annual fixed rental due solely to increases
  in the cost of the value of electric service furnished to the premises in
  effect on the last day of the term of the Lease, plus

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  1/12
  of all other items of annual additional rental, which annual additional
  rental would have been payable pursuant to this Lease had this Lease not
  expire, plus

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  those
  other items of additional rent (not annual additional rent) which would have
  been payable monthly or otherwise pursuant to this Lease, had this Lease not
  expired, which total sum Tenant agrees to pay to Landlord promptly upon
  demand, in full, without set-off or deduction. Neither the billing nor the
  collection of use and occupancy in the above amount shall be deemed a waiver
  of any right of Landlord to collect damages for Tenant’s failure to vacate
  the Demised Premises after the expiration or sooner termination of this
  Lease. The aforesaid provisions of this Article shall survive the expiration
  or sooner termination of this Lease.

  

61.
INTENTIONALLY DELETED

12

62. ANNUAL
RENTAL

          (A)
The basic annual rent for each year of the term of this Lease shall be paid to
Landlord in monthly installments as follows:

	
   

  	
   

  
	
  July 1, 2006 –
   June 30, 2007:

  	
  $62,980.00
  ($5,248.33 per month)

  
	
  July 1, 2007 –
   June 30, 2008:

  	
  $64,672.00
  ($5,389.33 per month)

  
	
  July 1, 2008 –
   June 30, 2009:

  	
  $66,414.73
  ($5,534.56 per month)

  
	
  July 1, 2009 –
  June 30, 2010:

  	
  $68,209.80
  ($5,684.15 per month)

  
	
  July 1, 2010 –
   June 30, 2011:

  	
  $70,058.70
  ($5,838.23 per month)

  

These annual
rental rates include $6,580.00 per annum for electric pursuant to the
provisions of Article 37.

          (B)
If at any time or times during the term the basic annual rent, additional rent,
or other charges payable by Tenant hereunder shall not be fully collectible for
reason or any order of law (including, without limitation, rent control, or
stabilization laws), then for the period prescribed by such laws, ordinances,
regulations, or directions, Tenant shall pay to Landlord the maximum amounts
permitted thereto. Upon the expiration of the applicable period of time during
which such amounts shall be uncollectible, Tenant shall pay to Landlord, as
additional rent, within fifteen (15) days after demand, all such uncollected
amounts that would have been payable for the period absent such legal
restrictions; provided, however, that the retroactive collection thereof shall
then be lawful.

          (C)
Except as may otherwise be specified in this Lease, Tenant shall pay or cause
to be paid without demand therefore or notice in each case without any set-off,
counterclaim, abatement or deduction whatsoever, as additional rent, all costs,
fees, taxes, interest, charges, expenses, reimbursements and obligations, and all
interest and penalties thereon, which Tenant, in any of the provisions of this
Lease has assumed or agreed to pay, or which Tenant agrees are to be the cost
or expense of Tenant, or as to which Landlord shall legally become entitled
pursuant to the term of the Lease (all of which are hereinbefore sometimes
referred to as “additional rent”); and in the event of non-payment thereof,
Landlord shall have, in addition to all other rights and remedies, all the
remedies provided for herein or by law in the case of non-payment of basic
annual rent.

63. Security:

                    A.
As a security for the full and faithful performance by Tenant of each and every
term, provisions, covenant, and condition of this Lease, Tenant shall deliver
to Landlord with the signing of this Lease and maintain throughout the term
hereof a cash security deposit held by Landlord in the amount of $17,515.00. If
Tenant defaults in respect of any of the terms, provisions, covenants, and
conditions of this Lease, including but not limited to payment of Annual Rent
and

13

additional
rent, Landlord may, but shall not be required to, use, apply, or retain the
whole or any part of the funds received as security, for the payment of any
Annual Rent and additional rent in default or for any other sum which Landlord
may extend or be required to extend by reason of Tenant’s default, including
any damages or deficiency in the re-letting of the Leased Premises, whether
such damages or deficiency accrue before or after summary proceedings or other re-entry
by Landlord.

                    B.
At any time or times when, pursuant to the provisions of this Article 63.
Landlord shall be entitled to apply any of the aforesaid security, and within
five (5) days after Landlord’s request therefore, Tenant shall deposit with
Landlord an amount sufficient to restore the cash security to its original
amount as set forth in this Article 63.

                    C.
In case of the assignment or other transfer by Landlord of its interest in the
Leased Premises, or any cessation of Landlord’s interest therein, whether in
whole or in part, Landlord shall pay over the otherwise transfer its interest
in any unapplied part of the security to the assignee or other transferee of
Landlord’s interest in the Leased premises and from and after such payment or
transfer Landlord shall be relieved of all liability with respect thereto
subject to assignee’s assumption of Landlord’s obligations.

                    D.
Provided Tenant has complied with all of the terms, conditions and covenants of
the lease and has vacated and surrendered the Premises at the end of its lease
term, Landlord shall return the security on deposit within 10 days.

64.
THIS LEASE MAY NOT BE CHANGED ORALLY

65. All checks
tendered to the Landlord as and for the rent of the Demised Premises shall be
deemed payments for the account of Tenant. Acceptance by the Landlord of rent
from anyone other than the Tenant shall not be deemed to operate as an
attornment to the Landlord by the payer of such rent or as consent of the
Landlord to an assignment or subletting by the Tenant of the Demised Premises
to such payer, or as a modification of the provisions of this Lease.

66. Additional
Rent

          The
term “Additional Rent” shall mean all other sums, other than fixed annual rent
payable by Tenant to Landlord, including but not limited to escalations for
real estate tax, and charges for electricity. In the event Tenant defaults in
the payment of Additional Rent Landlord shall have the same rights and remedies
for a default in the payment of fixed annual rent. Landlord’s failure during
the lease term to prepare and deliver any of the tax bills, statements, notices
or bills set forth in this Lease or Landlord’s failure to make a demand shall
not in any way cause Landlord to forfeit or surrender its rights to collect any
of the foregoing items of Additional Rent.

14EXHIBIT 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: August 8, 2006
Original Conversion Price (subject to adjustment herein): $6.00

                                                                $_______________

                   VARIABLE RATE SECURED CONVERTIBLE DEBENTURE

            THIS VARIABLE RATE SECURED CONVERTIBLE  DEBENTURE is one of a series
of duly authorized and validly issued Variable Rate Secured Convertible
Debentures of Able Energy,  Inc., a Delaware  corporation,  having its principal
place of  business  at 198 Green Pond  Road,  Rockaway,  New  Jersey  07866 (the
"Company"),  designated as its Variable Rate Secured Convertible Debenture (this
debenture,  the  "Debenture"  and  collectively  with the other  such  series of
debentures, the "Debentures").

      FOR    VALUE    RECEIVED,    the    Company    promises    to    pay    to
________________________ or its registered assigns (the "Holder"), or shall have
paid pursuant to the terms hereunder,  the principal sum of  $_______________ by
August 8, 2008, or such earlier date as this  Debenture is required or permitted
to be repaid as provided hereunder (the "Maturity Date"), and to pay interest to
the Holder on the aggregate unconverted and then outstanding principal amount of
this  Debenture in accordance  with the  provisions  hereof.  This  Debenture is
subject to the following additional provisions:

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

                                       1
<PAGE>

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

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

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

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

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

            "Change of Control  Transaction"  means,  except with respect to the
      Able Energy/All American Transaction, the occurrence after the date hereof
      of any of (i) an  acquisition  after the date hereof by an  individual  or
      legal  entity or "group" (as  described  in Rule  13d-5(b)(1)  promulgated
      under the Exchange  Act) of effective  control  (whether  through legal or
      beneficial  ownership  of capital  stock of the  Company,  by  contract or
      otherwise)  of in excess of 40% of the voting  securities  of the  Company
      (other than by means of conversion or exercise of the  Debentures  and the
      Securities  issued  together  with the  Debentures),  or (ii) the  Company
      merges into or  consolidates  with any other Person,  or any Person merges
      into or  consolidates  with the Company and,  after giving  effect to such
      transaction,  the  stockholders of the Company  immediately  prior to such
      transaction own less than 60% of the aggregate voting power of the Company
      or the successor entity of such transaction, or (iii) the Company sells or
      transfers all or substantially all of its assets to another Person and the
      stockholders of the Company immediately prior to such transaction own less
      than 60% of the aggregate voting power of the acquiring entity immediately
      after the transaction, or (iv) a replacement at one time or within a three
      year

                                       2
<PAGE>

      period of more than  one-half  of the  members of the  Company's  board of
      directors which is not approved by a majority of those individuals who are
      members  of the  board  of  directors  on the  date  hereof  (or by  those
      individuals  who are serving as members of the board of  directors  on any
      date whose nomination to the board of directors was approved by a majority
      of the  members  of the board of  directors  who are  members  on the date
      hereof),  or (v) the execution by the Company of an agreement to which the
      Company  is a party  or by  which it is  bound,  providing  for any of the
      events set forth in clauses (i) through (iv) above.

            "Common  Stock" means the common stock,  par value $0.001 per share,
      of the Company and stock of any other class of securities  into which such
      securities may hereafter be reclassified or changed into.

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

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

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

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

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

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

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

            "Equity  Conditions" 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  Notices  of
      Conversion  of the Holder,  if any,  (ii) the Company  shall have paid all
      liquidated  damages  and other  amounts  owing to the Holder in respect of
      this  Debenture,  (iii) there is an effective  Registration  Statement (if
      required  pursuant  to the  terms of the  Registration  Rights  Agreement)
      pursuant  to which the  Holder is  permitted  to  utilize  the  prospectus
      thereunder  to  resell  all  of  the  shares  issuable   pursuant  to  the
      Transaction  Documents (and the Company believes, in good faith, that such
      effectiveness  will continue  uninterrupted  for the foreseeable  future),
      (iv) the Common Stock is trading on a Trading Market and all of the shares
      issuable  pursuant to the Transaction  Documents are listed for trading on
      such Trading Market (and the Company believes, in good faith, that trading
      of the Common Stock on a Trading  Market will continue  uninterrupted  for
      the foreseeable  future),  (v) there is a sufficient  number of authorized
      but  unissued  and  otherwise  unreserved  shares of Common  Stock for the
      issuance  of  all of  the  shares  issuable  pursuant  to the  Transaction
      Documents, (vi) there is no existing Event of Default or no existing event
      which, with the passage of time or the giving of notice,  would constitute
      an Event of Default, (vii) the issuance of the shares in

                                        3
<PAGE>

      question (or, in the case of an Optional or Monthly Redemption, the shares
      issuable  upon  conversion  in full of the Optional or Monthly  Redemption
      Amount) to the  Holder  would not  violate  the  limitations  set forth in
      Section  4(c)(i) and Section  4(c)(ii)  herein,  (viii)  there has been no
      public  announcement of a pending or proposed  Fundamental  Transaction or
      Change of Control  Transaction  that has not been consummated and (ix) the
      Holder is not in possession of any information  that  constitutes,  or may
      constitute, material non-public information.

            "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.

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

            "Immediately  Accretive  Acquisition" is a business combination that
      causes an increase in fully  diluted  earnings per share of the Company as
      shown in the  Company's  Form 10-Q or 10-K next filed  after the  combined
      results  of such  business  combination  are  reflected  in the  Company's
      financial reports for one full fiscal quarter.

            "Interest  Conversion  Rate" means the lesser of (a) the  Conversion
      Price or (b) the 90% of the lesser of (i) the average of the VWAPs for the
      20 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 20  consecutive  Trading Days ending on the Trading Day that
      is immediately prior to the date the applicable Interest Conversion Shares
      are issued and delivered if after the Interest Payment Date.

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

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

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

            "Interest  Period"  means,  initially,  the period  beginning on and
      including the Original  Issue Date and ending on and  including  September
      30, 2006 and each successive  period as follows:  the period  beginning on
      October 1 and ending on and including December 31; the period beginning on
      and including  January 1 and ending on and including  March 31; the period
      beginning on and including  April 1 and ending on and  including  June 30;
      and  the  period  beginning  on and  including  July 1 and  ending  on and
      including September 30.

            "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).

                                       4
<PAGE>

            "LIBOR"  means,  for each Interest  Period (i) the six-month  London
      Interbank Offered Rate for deposits in U.S. dollars,  as shown on such the
      Trading Day immediately  prior to the beginning of such Interest Period in
      The Wall Street Journal (Eastern Edition) under the caption "Money Rates -
      London  Interbank  Offered  Rates  (LIBOR)";  or (ii) if The  Wall  Street
      Journal  does not  publish  such  rate,  the  offered  one-month  rate for
      deposits in U.S.  dollars which appears on the Reuters Screen LIBO Page as
      of 10:00 a.m.,  New York time,  the Trading Day  immediately  prior to the
      beginning of such  Interest  Period,  provided  that if at least two rates
      appear on the  Reuters  Screen  LIBO  Page on any such  Trading  Day,  the
      "LIBOR" for such day shall be the arithmetic mean of such rates.

            "Mandatory  Default  Amount" means the sum of (i) the greater of (A)
      125% of the  outstanding  principal  amount  of this  Debenture,  plus all
      accrued  and unpaid  interest  hereon,  or (B) the  outstanding  principal
      amount of this  Debenture,  plus all accrued and unpaid  interest  hereon,
      divided by the Conversion  Price on the date the Mandatory  Default Amount
      is either (a) demanded (if demand or notice is required to create an Event
      of Default) or otherwise  due or (b) paid in full,  whichever  has a lower
      Conversion Price, multiplied by the VWAP on the date the Mandatory Default
      Amount  is  either  (x)  demanded  or  otherwise  due or (y) paid in full,
      whichever has a higher VWAP, and (ii) all other amounts,  costs,  expenses
      and liquidated damages due in respect of this Debenture.

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

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

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

            "Monthly  Redemption  Amount"  means,  as to a  Monthly  Redemption,
      $____(1).

            "Monthly  Redemption  Date" means the 1st of each month,  commencing
      October  1,  2006  and  terminating  upon  the  full  redemption  of  this
      Debenture.

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

            "Monthly  Redemption  Period"  shall have the  meaning  set forth in
      Section 6(b) hereof.

            "Monthly  Redemption  Share Amount" shall have the meaning set forth
      in Section 6(b) hereof.

-------------
(1) 1/20th of the original principal amount of this Debenture.

                                       5
<PAGE>

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

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

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

            "Optional  Redemption  Amount"  means  the  sum of (i)  120%  of the
      principal  amount of the  Debenture  then  outstanding,  (ii)  accrued but
      unpaid interest and (iii) all liquidated  damages and other amounts due in
      respect of the Debenture.

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

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

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

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

            "Permitted  Indebtedness"  shall mean the  individual and collective
      reference to the following:  (a) Indebtedness existing on the Closing Date
      as described in the Disclosure Schedules to the Purchase Agreement; (b) up
      to, in the aggregate during the term of this Debenture,  $1,500,000 of new
      Indebtedness;  (c)  non-equity  linked  Indebtedness  incurred  solely  in
      connection with any business  combination  provided that such Indebtedness
      does not mature or require  payments  of  principal  prior to the two year
      anniversary of the Original  Issue Date and is made expressly  subordinate
      in right of payment to the  Indebtedness  evidenced by this Debenture,  as
      reflected in a written agreement  acceptable to the Holder and approved by
      the Holder in writing; and (d) a long-term non equity linked loan facility
      of  immediately  available  cash  proceeds of at least  $150,000,000  with
      Windstar Financial Corp. and/or its Affiliates.

            "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 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

                                       6
<PAGE>

      forfeiture  or sale of the  property  or asset  subject to such Lien;  (c)
      Existing  Liens as they exist on the date of the  Purchase  Agreement  and
      which are set forth in the Disclosure Schedules to the Purchase Agreement;
      (d)  Liens  on the  assets  of a  future  Subsidiary  incurred  solely  in
      connection  with  a  Permitted   Indebtedness  under  clause  (c)  of  the
      definition  of Permitted  Indebtedness  provided that such Lien is limited
      only to the assets of the  Subsidiary  to be acquired in  connection  with
      such Permitted  Indebtedness;  and (e) Liens incurred solely in connection
      with a  Permitted  Indebtedness  under  clause  (d) of the  definition  of
      Permitted Indebtedness.

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

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

            "Purchase  Agreement" means the Securities  Purchase Agreement among
      the  Company  and the  original  Holders,  dated as of August 8, 2006,  as
      amended, modified or supplemented from time to time in accordance with its
      terms.

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

            "Registration   Statement"  means  a  registration   statement  that
      registers  the resale of all  Conversion  Shares and  Interest  Conversion
      Shares  of the  Holder,  who  shall be named  as a  "selling  stockholder"
      therein, and meets the requirements of the Registration Rights Agreement.

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

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

            "Shareholder  Approval"  shall  have the  meaning  set  forth in the
      Purchase Agreement.

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

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

            "Trading  Market" means the following  markets or exchanges on which
      the Common  Stock is listed or quoted for trading on the date in question:
      the  American  Stock

                                       7
<PAGE>

      Exchange, the Nasdaq Capital Market, the Nasdaq National Market or the New
      York Stock Exchange.

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

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

      Section 2. Interest.

            a)  Payment  of  Interest  in Cash or Kind.  The  Company  shall pay
      interest to the Holder on the aggregate  unconverted and then  outstanding
      principal  amount of this  Debenture at the rate per annum equal to, prior
      to the date when (i) all Equity  Conditions  are met and (ii) all  "Equity
      Conditions",   as  that  term  is  defined  under  Variable  Rate  Secured
      Convertible Debenture to be issued as part of the Able Energy/All American
      Transaction Documents are met ("Liquidity Date"), the greater of (y) LIBOR
      for the applicable  Interest  Period plus 6.0% and (z) 12.5%,  and, on and
      after the Liquidity  Date,  LIBOR for the applicable  Interest Period plus
      4.0%,  or such  lesser  rate as shall be the  highest  rate  permitted  by
      applicable  law,  payable  quarterly  on April 1,  July 1,  October  1 and
      January 1, beginning on the first such date after the Original Issue Date,
      on each Monthly  Redemption  Date (as to that principal  amount then being
      redeemed), on each Conversion Date (as to that principal amount then being
      converted),  on each Optional Redemption Date (as to that principal amount
      then being  redeemed)  and on the Maturity  Date (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,  validly issued,  fully paid and  non-assessable
      shares of Common Stock at the Interest  Conversion  Rate (the amount to be
      paid in shares,  the "Interest Share Amount"),  or a combination  thereof;
      provided,  however,  that (i)  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 have been met (unless waived by the Holder in
      writing), (ii) the

                                       8
<PAGE>

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

            b) Company's  Election to Pay Interest in Kind. Subject to the terms
      and conditions  herein,  the decision whether to pay interest hereunder in
      cash or shares of Common Stock shall be at the  discretion of the Company.
      Prior to the commencement of any Interest Notice Period, the Company shall
      deliver to the Holder a written  notice of its  election  to pay  interest
      hereunder on the applicable  Interest Payment Date either in cash,  shares
      of Common Stock or a combination  thereof and the Interest Share Amount as
      to the  applicable  Interest  Payment Date,  provided that the Company may
      indicate in such notice that the  election  contained in such notice shall
      apply to future  Interest  Payment  Dates  until  revised by a  subsequent
      notice. During any Interest Notice Period, the Company's election (whether
      specific to an Interest  Payment Date or continuous)  shall be irrevocable
      as  to  such  Interest  Payment  Date.   Subject  to  the   aforementioned
      conditions,  failure to timely 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 timely file a prospectus  supplement pursuant to Rule 424 disclosing
      such election.  The aggregate  number of shares of Common Stock  otherwise
      issuable to the Holder on an Interest Payment Date shall be reduced by the
      number of Interest  Conversion  Shares  previously issued to the Holder in
      connection with such Interest Payment Date.

            c) Interest Calculations.  Interest shall be calculated on the basis
      of a 360-day year,  consisting of twelve thirty  consecutive  calendar day
      periods,  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, liquidated damages and other amounts which may become due
      hereunder,  has been made.  Payment of interest in shares of Common  Stock
      (other than the  Interest  Conversion  Shares  issued prior to an Interest
      Notice Period) shall otherwise  occur pursuant to Section  4(d)(ii) herein
      and,  solely for  purposes  of the  payment  of  interest  in shares,  the
      Interest Payment Date shall be deemed the Conversion Date.  Interest shall
      cease to accrue with respect to any principal amount  converted,  provided
      that the Company actually  delivers the Conversion  Shares within the time
      period required by Section  4(d)(ii).  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  then-outstanding  Debentures
      based on their (or their  predecessor's)  initial  purchases of Debentures
      pursuant to the Purchase Agreement.

                                       9
<PAGE>

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

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

      Section 3. Registration of Transfers and Exchanges.

            a) Different  Denominations.  This Debenture is exchangeable  for an
      equal  aggregate  principal  amount of Debentures of different  authorized
      denominations,  as  requested  by the  Holder  surrendering  the same.  No
      service  charge  will be payable  for such  registration  of  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  for
      transfer  to the Company of this  Debenture,  the Company and any agent of
      the  Company  may treat the  Person in whose name this  Debenture  is duly
      registered on the  Debenture  Register as the owner hereof for the purpose
      of  receiving  payment  as herein  provided  and for all  other  purposes,
      whether or not this Debenture is overdue,  and neither the Company nor any
      such agent shall be affected by notice to the contrary.

                                       10
<PAGE>

      Section 4. Conversion.

            a) Voluntary  Conversion.  At any time after the Original Issue Date
      until this Debenture is no longer  outstanding,  this  Debenture  shall be
      convertible,  in whole or in part,  into  shares  of  Common  Stock at the
      option of the  Holder,  at any time and from time to time  (subject to the
      conversion limitations set forth in Section 4(c) hereof). The Holder shall
      effect  conversions  by delivering to the Company a Notice of  Conversion,
      the  form  of  which  is  attached   hereto  as  Annex  A  (a  "Notice  of
      Conversion"), specifying therein the principal amount of this Debenture to
      be converted  and the date on which such  conversion  shall be effected (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 deemed delivered hereunder. To effect conversions hereunder,
      the Holder shall not be required to physically surrender this Debenture to
      the Company unless the entire  principal amount of this Debenture plus all
      accrued and unpaid  interest  thereon has been so  converted.  Conversions
      hereunder  shall have the effect of  lowering  the  outstanding  principal
      amount of this Debenture in an amount equal to the applicable  conversion.
      The Holder and the Company shall  maintain  records  showing the principal
      amount(s)  converted and the date of such  conversion(s).  The Company may
      deliver an objection to any Notice of Conversion within 2 Business Days of
      delivery  of such  Notice of  Conversion.  In the event of any  dispute or
      discrepancy,   the  records  of  the  Holder  shall  be  controlling   and
      determinative  in the  absence of  manifest  error.  The  Holder,  and any
      assignee by acceptance of this  Debenture,  acknowledge and agree that, by
      reason of the  provisions  of this  paragraph,  following  conversion of a
      portion of this Debenture,  the unpaid and unconverted principal amount of
      this Debenture may be less than the amount stated on the face hereof.

            b)  Conversion   Price.  The  conversion  price  in  effect  on  any
      Conversion  Date shall be equal to $6.00  (subject to  adjustment  herein)
      (the "Conversion Price").

            c) Conversion Limitations.

                  i. Trading Market Limitations. Notwithstanding anything herein
            to the  contrary,  if  the  Company  has  not  obtained  Shareholder
            Approval (as defined  below),  then the Company may not issue,  upon
            conversion  of this  Debenture,  a number of shares of Common  Stock
            which,  when aggregated with any shares of Common Stock issued on or
            after the Original Issue Date and prior to such  Conversion Date (A)
            in connection  with any Debentures  issued  pursuant to the Purchase
            Agreement,  (B) in connection  with any Warrants  issued pursuant to
            the  Purchase  Agreement  and (C) in  connection  with any  warrants
            issued to any registered  broker-dealer  as a fee in connection with
            the issuance of the Securities  pursuant to the Purchase  Agreement,
            would  exceed  19.999%  of the  number of  shares  of  Common  Stock
            outstanding  on the Trading Day  immediately  preceding the Original
            Issue Date (such number of shares,  the  "Issuable  Maximum").  Each
            Holder shall be entitled to a portion of the Issuable  Maximum equal
            to the  quotient  obtained by dividing (x) the  aggregate  principal
            amount of the  Debenture(s)  issued  and sold to such  Holder on the
            Original  Issue Date by (y) the  aggregate  principal  amount of all
            Debentures  issued  and sold by the  Company on the  Original  Issue
            Date. If any Holder shall no longer hold the Debenture(s), then

                                       11
<PAGE>

            such Holder's  remaining  portion of the Issuable  Maximum,  if any,
            shall be allocated pro-rata among the remaining Holders.  If, on any
            Conversion  Date, (1) the applicable  Conversion  Price is such that
            the shares  issuable under this Debenture on such  Conversion  Date,
            together  with the  aggregate  number of shares of Common Stock that
            would  then  be  issuable  upon  conversion  in  full  of  all  then
            outstanding  Debentures,  would exceed the Issuable  Maximum and (2)
            the Company shall not have previously obtained Shareholder Approval,
            then the Company shall issue to the Holder requesting a conversion a
            number of shares of Common  Stock  equal to such  Holder's  pro-rata
            portion (which shall be calculated  pursuant to the terms hereof) of
            the  Issuable  Maximum  and,  with  respect to the  remainder of the
            aggregate principal amount of the Debentures  (including any accrued
            interest)  then  held by such  Holder  for  which  a  conversion  in
            accordance with the applicable  Conversion  Price would result in an
            issuance  of  shares of  Common  Stock in  excess  of such  Holder's
            pro-rata  portion  (which shall be calculated  pursuant to the terms
            hereof)  of the  Issuable  Maximum  (the  "Excess  Principal"),  the
            Company shall be prohibited from  converting  such Excess  Principal
            and shall promptly  notify the Holder of the reason  therefor.  This
            Debenture shall thereafter be unconvertible to such extent until and
            unless  Shareholder  Approval  is  subsequently  obtained,  but this
            Debenture shall otherwise remain in full force and effect.

                  ii. Holder's Restriction on Conversion.  The Company shall not
            effect any conversion of this Debenture, and a Holder shall not have
            the right to convert  any portion of this  Debenture,  to the extent
            that  after  giving  effect  to  the  conversion  set  forth  on the
            applicable  Notice of  Conversion,  such Holder  (together with such
            Holder's  Affiliates,  and any other  person  or entity  acting as a
            group together with such Holder or any of such Holder's  Affiliates)
            would  beneficially  own  in  excess  of  the  Beneficial  Ownership
            Limitation  (as  defined  below).  For  purposes  of  the  foregoing
            sentence, the number of shares of Common Stock beneficially owned by
            such Holder and its Affiliates shall include the number of shares of
            Common Stock issuable upon conversion of this Debenture with respect
            to which such  determination  is being made,  but shall  exclude the
            number  of  shares  of Common  Stock  which  are  issuable  upon (A)
            conversion of the remaining,  unconverted  principal  amount of this
            Debenture beneficially owned by such Holder or any of its Affiliates
            and (B) exercise or conversion  of the  unexercised  or  unconverted
            portion  of  any  other  securities  of  the  Company  subject  to a
            limitation  on conversion  or exercise  analogous to the  limitation
            contained  herein   (including,   without   limitation,   any  other
            Debentures or the Warrants) beneficially owned by such Holder or any
            of its  Affiliates.  Except as set forth in the preceding  sentence,
            for purposes of this Section 4(c)(ii), 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)(ii)  applies,  the
            determination  of whether this Debenture is convertible (in relation
            to  other   securities  owned  by  such  Holder  together  with  any
            Affiliates)  and of which  principal  amount  of this  Debenture  is
            convertible shall be in the sole discretion of

                                       12
<PAGE>

            such Holder,  and the submission of a Notice of Conversion  shall be
            deemed to be such Holder's  determination  of whether this Debenture
            may be  converted  (in  relation to other  securities  owned by such
            Holder together with any  Affiliates) and which principal  amount of
            this  Debenture  is  convertible,  in  each  case  subject  to  such
            aggregate  percentage  limitations.  To ensure  compliance with this
            restriction,  each Holder will be deemed to represent to the Company
            each time it  delivers a Notice of  Conversion  that such  Notice of
            Conversion  has not  violated  the  restrictions  set  forth in this
            paragraph  and the  Company  shall have no  obligation  to verify or
            confirm  the  accuracy  of  such  determination.   In  addition,   a
            determination as to any group status as contemplated  above shall be
            determined in accordance  with Section 13(d) of the Exchange Act and
            the rules and regulations  promulgated  thereunder.  For purposes of
            this Section  4(c)(ii),  in  determining  the number of  outstanding
            shares  of  Common  Stock,  a  Holder  may  rely  on the  number  of
            outstanding  shares of Common  Stock as stated in the most recent of
            the following: (A) the Company's most recent Form 10-Q or Form 10-K,
            as the case may be; (B) a more  recent  public  announcement  by the
            Company; or (C) a more recent notice by the Company or the Company's
            transfer  agent  setting  forth the number of shares of Common Stock
            outstanding.  Upon the  written  or oral  request  of a Holder,  the
            Company shall within two Trading Days confirm  orally and in writing
            to  such   Holder  the  number  of  shares  of  Common   Stock  then
            outstanding. In any case, the number of outstanding shares of Common
            Stock shall be determined  after giving effect to the  conversion or
            exercise of securities of the Company,  including this Debenture, by
            such Holder or its Affiliates since the date as of which such number
            of outstanding shares of Common Stock was reported.  The "Beneficial
            Ownership  Limitation" shall be 4.99% of the number of shares of the
            Common Stock  outstanding  immediately  after  giving  effect to the
            issuance of shares of Common Stock issuable upon  conversion of this
            Debenture held by the Holder.  The Beneficial  Ownership  Limitation
            provisions of this Section 4(c)(ii) 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)(ii) shall  continue to apply.  Upon
            such a change by a Holder  of the  Beneficial  Ownership  Limitation
            from such 4.99% limitation to such 9.99% limitation,  the Beneficial
            Ownership  Limitation may not be further waived by such Holder.  The
            provisions of this paragraph shall be construed and implemented in a
            manner  otherwise than in strict  conformity  with the terms of this
            Section  4(c)(ii) 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.

                                       13
<PAGE>

            d) Mechanics of Conversion.

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

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

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

                  iv.  Obligation  Absolute;  Partial  Liquidated  Damages.  The
            Company's  obligations  to issue and deliver the  Conversion  Shares
            upon  conversion  of this  Debenture  in  accordance  with the terms
            hereof are absolute and unconditional, irrespective of any action or
            inaction  by the Holder to enforce  the same,  any waiver or consent
            with respect to any provision  hereof,  the recovery of any judgment
            against any Person or any action to enforce the same, or any setoff,
            counterclaim,  recoupment,  limitation or termination, or any breach
            or  alleged  breach  by  the  Holder  or  any  other  Person  of any
            obligation to the Company or any

                                       14
<PAGE>

            violation  or  alleged  violation  of law by the Holder or any other
            Person,  and  irrespective  of any other  circumstance  which  might
            otherwise  limit  such  obligation  of the  Company to the Holder in
            connection  with the issuance of such Conversion  Shares;  provided,
            however,  that such  delivery  shall not  operate as a waiver by the
            Company of any such action the Company may have  against the Holder.
            In the event the Holder of this Debenture shall elect to convert any
            or all of the outstanding  principal amount hereof,  the Company may
            not refuse  conversion  based on any claim that the Holder or anyone
            associated  or  affiliated  with the Holder has been  engaged in any
            violation  of law,  agreement  or for any  other  reason,  unless an
            injunction  from a court,  on notice to Holder,  restraining  and or
            enjoining  conversion  of all or part of this  Debenture  shall have
            been sought and  obtained,  and the Company  posts a surety bond for
            the  benefit of the Holder in the amount of 150% of the  outstanding
            principal  amount  of  this  Debenture,  which  is  subject  to  the
            injunction,  which bond shall remain in effect until the  completion
            of arbitration/litigation of the underlying dispute and the proceeds
            of which  shall be payable  to such  Holder to the extent it obtains
            judgment. In the absence of such injunction, the Company shall issue
            Conversion  Shares or, if applicable,  cash, upon a properly noticed
            conversion.  If the  Company  fails for any reason to deliver to the
            Holder such certificate or certificates pursuant to Section 4(d)(ii)
            by the fifth  Trading  Day after the  Conversion  Date,  the Company
            shall pay to such Holder, in cash, as liquidated  damages and not as
            a penalty,  for each $1000 of principal amount being converted,  $10
            per  Trading  Day  (increasing  to $20 per  Trading Day on the tenth
            Trading Day after such liquidated  damages begin to accrue) for each
            Trading Day after such fifth Trading Day until such certificates are
            delivered.  Nothing  herein  shall limit a Holder's  right to pursue
            actual damages or declare an Event of Default  pursuant to Section 8
            hereof for the Company's failure to deliver Conversion Shares within
            the period  specified herein and such Holder shall have the right to
            pursue all remedies  available to it hereunder,  at law or in equity
            including,  without  limitation,  a decree of  specific  performance
            and/or injunctive  relief. The exercise of any such rights shall not
            prohibit the Holder from seeking to enforce damages  pursuant to any
            other  Section  hereof  or  under  applicable  law.  Notwithstanding
            anything  herein to the  contrary,  as to any delays in  performance
            caused  solely and  directly by a Force  Majeure,  the Trading  Days
            during which such delay is occurring shall be tolled  hereunder with
            respect to liquidated  damages,  provided that the Company has used,
            and  continues  to use,  best  efforts  to perform  its  obligations
            notwithstanding such Force Majeure.

                  v.  Compensation  for  Buy-In on  Failure  to  Timely  Deliver
            Certificates  Upon  Conversion.  In  addition  to any  other  rights
            available  to the  Holder,  if the  Company  fails for any reason to
            deliver to the Holder such  certificate or certificates by the Share
            Delivery Date pursuant to Section 4(d)(ii),  and if after such Share
            Delivery  Date the  Holder  is  required  by its  brokerage  firm to
            purchase  (in an open market  transaction  or  otherwise)  shares of
            Common Stock to deliver in  satisfaction of a sale by such Holder of
            the Conversion  Shares which the

                                       15
<PAGE>

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

                  vi.  Reservation  of  Shares  Issuable  Upon  Conversion.  The
            Company  covenants  that it  will  at all  times  reserve  and  keep
            available out of its authorized and unissued  shares of Common Stock
            for the sole purpose of issuance upon  conversion of this  Debenture
            and payment of interest on this Debenture,  each as herein provided,
            free from preemptive rights or any other actual contingent  purchase
            rights of Persons  other than the Holder  (and the other  holders of
            the  Debentures),  not less than such aggregate  number of shares of
            the Common Stock as shall  (subject to the terms and  conditions set
            forth in the Purchase  Agreement)  be issuable  (taking into account
            the adjustments  and  restrictions of Section 5) upon the conversion
            of the outstanding principal amount of this Debenture and payment of
            interest hereunder.  The Company covenants that all shares of Common
            Stock  that  shall  be  so  issuable  shall,  upon  issue,  be  duly
            authorized, validly issued, fully paid and nonassessable and, if the
            Registration  Statement is then effective  under the Securities Act,
            shall  be  registered  for  public  sale  in  accordance  with  such
            Registration Statement.

                  vii.  Fractional  Shares.  Upon  a  conversion  hereunder  the
            Company   shall  not  be  required   to  issue  stock   certificates
            representing  fractions  of  shares  of

                                       16
<PAGE>

            Common Stock, but may if otherwise permitted, make a cash payment in
            respect of any final  fraction  of a share based on the VWAP at such
            time. If the Company  elects not, or is unable,  to make such a cash
            payment,  the Holder  shall be entitled  to receive,  in lieu of the
            final fraction of a share, 1 whole share of Common Stock.

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

      Section 5. Certain Adjustments.

            a) Stock  Dividends  and Stock Splits.  If the Company,  at any time
      while  this  Debenture  is  outstanding:  (A)  pays a  stock  dividend  or
      otherwise  makes a  distribution  or  distributions  payable  in shares of
      Common  Stock on shares of Common  Stock or any Common  Stock  Equivalents
      (which,  for  avoidance  of doubt,  shall not include any shares of Common
      Stock issued by the Company upon conversion of, or payment of interest on,
      this Debenture);  (B) subdivides outstanding shares of Common Stock into a
      larger number of shares; (C) combines (including by way of a reverse stock
      split) outstanding shares of Common Stock into a smaller number of shares;
      or (D) issues, in the event of a reclassification  of shares of the Common
      Stock,  any shares of capital  stock of the Company,  then the  Conversion
      Price shall be multiplied  by a fraction of which the  numerator  shall be
      the number of shares of Common Stock (excluding any treasury shares of the
      Company)  outstanding  immediately  before  such  event  and of which  the
      denominator  shall be the  number of shares  of Common  Stock  outstanding
      immediately after such event. Any adjustment made pursuant to this Section
      shall  become  effective   immediately  after  the  record  date  for  the
      determination  of  stockholders  entitled  to  receive  such  dividend  or
      distribution  and shall become effective  immediately  after the effective
      date in the case of a subdivision, combination or re-classification.

            b)  Subsequent  Equity  Sales.  If the  Company  or  any  Subsidiary
      thereof,  as applicable,  at any time while this Debenture is outstanding,
      sells or grants  any  option to  purchase  or sells or grants any right to
      reprice its securities,  or otherwise  disposes of or issues (or announces
      any sale, grant or any option to purchase or other disposition) any Common
      Stock or Common Stock  Equivalents  entitling any Person to acquire shares
      of Common  Stock at an  effective  price per share  that is lower than the
      then Conversion Price (such lower price,  the "Base Conversion  Price" and
      such issuances collectively,  a "Dilutive Issuance") (if the holder of the
      Common Stock or Common Stock Equivalents

                                       17
<PAGE>

            so issued shall at any time,  whether by operation of purchase price
      adjustments, reset provisions,  floating conversion,  exercise or exchange
      prices or otherwise, or due to warrants, options or rights per share which
      are issued in connection with such issuance, be entitled to receive shares
      of Common  Stock at an  effective  price per share  that is lower than the
      Conversion  Price, such issuance shall be deemed to have occurred for less
      than the Conversion Price on such date of the Dilutive Issuance), then the
      Conversion Price shall be reduced to equal the Base Conversion Price. Such
      adjustment  shall be made  whenever  such  Common  Stock or  Common  Stock
      Equivalents are issued.  Notwithstanding the foregoing, no adjustment will
      be made under this  Section  5(b) in  respect of an Exempt  Issuance.  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 5(b),  indicating therein the applicable  issuance
      price, or applicable  reset price,  exchange price,  conversion  price and
      other pricing terms (such notice,  the "Dilutive  Issuance  Notice").  For
      purposes of clarification,  whether or not the Company provides a Dilutive
      Issuance  Notice pursuant to this Section 5(b), upon the occurrence of any
      Dilutive  Issuance,  the  Holder  is  entitled  to  receive  a  number  of
      Conversion  Shares  based upon the Base  Conversion  Price on or after the
      date  of  such  Dilutive  Issuance,   regardless  of  whether  the  Holder
      accurately   refers  to  the  Base  Conversion  Price  in  the  Notice  of
      Conversion.

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

            d) Pro Rata  Distributions.  If the Company,  at any time while this
      Debenture is outstanding,  distributes to all holders of Common Stock (and
      not to the Holders)  evidences of its  indebtedness  or assets  (including
      cash and cash  dividends)  or  rights  or  warrants  to  subscribe  for or
      purchase any security (other than the Common Stock, which shall be subject
      to Section  5(b)),  then in each such case the  Conversion  Price shall be
      adjusted by multiplying such Conversion Price in effect  immediately prior
      to the record date fixed for  determination  of  stockholders  entitled to
      receive such  distribution by a fraction of which the denominator shall be
      the VWAP determined as of the record date

                                       18
<PAGE>

      mentioned  above,  and of which the  numerator  shall be such VWAP on such
      record  date less the then fair  market  value at such  record date of the
      portion  of  such  assets  or  evidence  of  indebtedness  so  distributed
      applicable to 1 outstanding share of the Common Stock as determined by the
      Board of  Directors  of the  Company  in good  faith.  In either  case the
      adjustments  shall be  described  in a statement  delivered  to the Holder
      describing  the  portion  of  assets  or  evidences  of   indebtedness  so
      distributed or such  subscription  rights  applicable to 1 share of Common
      Stock.  Such  adjustment  shall be made whenever any such  distribution is
      made  and  shall  become  effective  immediately  after  the  record  date
      mentioned above.

            e) Fundamental Transaction.  If, at any time while this Debenture is
      outstanding,  other than the Able Energy/All American Transaction, (A) the
      Company  effects any merger or  consolidation  of the Company with or into
      another Person,  (B) the Company effects any sale of all or  substantially
      all of its assets in one transaction or a series of related  transactions,
      (C) any tender offer or exchange  offer (whether by the Company or another
      Person)  is  completed  pursuant  to which  holders  of  Common  Stock are
      permitted to tender or exchange their shares for other securities, cash or
      property,  or (D) the Company effects any  reclassification  of the Common
      Stock or any compulsory share exchange  pursuant to which the Common Stock
      is effectively  converted into or exchanged for other securities,  cash or
      property (in any such case, a "Fundamental  Transaction"),  then, upon any
      subsequent  conversion of this Debenture,  the Holder shall have the right
      to receive,  for each Conversion  Share that would have been issuable upon
      such conversion  immediately  prior to the occurrence of such  Fundamental
      Transaction,  the same kind and amount of securities,  cash or property as
      it would  have  been  entitled  to  receive  upon the  occurrence  of such
      Fundamental  Transaction  if  it  had  been,  immediately  prior  to  such
      Fundamental  Transaction,  the  holder  of 1 share of  Common  Stock  (the
      "Alternate  Consideration").  For  purposes  of any such  conversion,  the
      determination of the Conversion  Price shall be appropriately  adjusted to
      apply to such  Alternate  Consideration  based on the amount of  Alternate
      Consideration  issuable  in  respect  of 1 share of  Common  Stock in such
      Fundamental  Transaction,  and the Company shall  apportion the Conversion
      Price among the Alternate  Consideration in a reasonable manner reflecting
      the  relative   value  of  any  different   components  of  the  Alternate
      Consideration.  If holders of Common  Stock are given any choice as to the
      securities,  cash or property to be received in a Fundamental Transaction,
      then the  Holder  shall  be given  the  same  choice  as to the  Alternate
      Consideration it receives upon any conversion of this Debenture  following
      such  Fundamental  Transaction.  To the extent necessary to effectuate the
      foregoing provisions,  any successor to the Company or surviving entity in
      such  Fundamental  Transaction  shall issue to the Holder a new  debenture
      consistent with the foregoing provisions and evidencing the Holder's right
      to convert such debenture into Alternate  Consideration.  The terms of any
      agreement  pursuant to which a Fundamental  Transaction  is effected shall
      include terms  requiring any such successor or surviving  entity to comply
      with the  provisions of this Section 5(e) and insuring that this Debenture
      (or any such  replacement  security)  will be similarly  adjusted upon any
      subsequent transaction analogous to a Fundamental Transaction.

                                       19
<PAGE>

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

            g) Notice to the Holder.

                  i.  Adjustment to Conversion  Price.  Whenever the  Conversion
            Price is adjusted  pursuant to any  provision of this Section 5, the
            Company shall  promptly  mail to each Holder a notice  setting forth
            the Conversion Price after such adjustment and setting forth a brief
            statement of the facts  requiring  such  adjustment.  If the Company
            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  in  whatever
            form) on the Common  Stock,  (B) the Company shall declare a special
            nonrecurring  cash  dividend on or a redemption of the Common Stock,
            (C) the Company  shall  authorize the granting to all holders of the
            Common Stock of rights or warrants to subscribe  for or purchase any
            shares  of  capital  stock of any  class or of any  rights,  (D) the
            approval of any  stockholders  of the  Company  shall be required in
            connection  with  any  reclassification  of the  Common  Stock,  any
            consolidation or merger to which the Company is a party, any sale or
            transfer of all or  substantially  all of the assets of the Company,
            of any  compulsory  share  exchange  whereby  the  Common  Stock  is
            converted into other securities, cash or property or (E) the Company
            shall   authorize   the   voluntary  or   involuntary   dissolution,
            liquidation  or winding up of the affairs of the Company,  then,  in
            each case,  the  Company  shall  cause to be filed at each office or
            agency  maintained for the purpose of conversion of this  Debenture,
            and shall cause to be delivered to the Holder at its last address as
            it shall appear upon the  Debenture  Register,  at least 10 calendar
            days prior to the applicable  record or effective  date  hereinafter
            specified,  a notice stating (x) the date on which a record is to be
            taken for the purpose of such  dividend,  distribution,  redemption,
            rights or warrants,  or if a record is not to be taken,  the date as
            of which the holders of the Common Stock of record to be entitled to
            such dividend, distributions,  redemption, rights or warrants are to
            be  determined  or (y) the  date  on  which  such  reclassification,
            consolidation,  merger, sale, transfer or share exchange is expected
            to  become  effective  or  close,  and the  date as of  which  it is
            expected  that  holders  of the  Common  Stock  of  record  shall be
            entitled  to  exchange   their   shares  of  the  Common  Stock  for
            securities,   cash  or  other   property   deliverable   upon   such
            reclassification,  consolidation,  merger,  sale,  transfer or share
            exchange,  provided  that the failure to deliver  such notice or any
            defect

                                       20
<PAGE>

            therein or in the delivery  thereof shall not affect the validity of
            the corporate  action  required to be specified in such notice.  The
            Holder is  entitled  to  convert  this  Debenture  during the 10-day
            period  commencing on the date of such notice  through the effective
            date of the event triggering such notice.

      Section 6. Redemption.

            a)  Optional  Redemption  at  Election  of  Company.  Subject to the
      provisions of this Section 6, at any time after (i) the Company shall have
      obtained  Shareholder Approval and it shall have been deemed effective and
      (ii) the Able  Energy/All  American  Transaction  and the Able  Energy/All
      American  Transaction   Documents  shall  have  been  consummated  and  be
      effective,  the Company  may deliver a notice to the Holder (an  "Optional
      Redemption Notice" and the date such notice is deemed delivered hereunder,
      the  "Optional  Redemption  Notice Date") of its  irrevocable  election to
      redeem  some or all of the  then  outstanding  Debentures  for  cash in an
      amount  equal to the  Optional  Redemption  Amount on the 20th Trading Day
      following the Optional  Redemption  Notice Date (such date,  the "Optional
      Redemption  Date" and such  redemption,  the "Optional  Redemption").  The
      Optional  Redemption Amount is payable in full on the Optional  Redemption
      Date.  The  Company  may only  effect an  Optional  Redemption  if on each
      Trading Day during the period commencing on the Optional Redemption Notice
      Date through to the Optional Redemption Date and through and including the
      date payment of the Optional  Redemption  Amount is actually made, each of
      the Equity Conditions shall have been met. If any of the Equity Conditions
      shall cease to be  satisfied at any time during the 20 Trading Day period,
      then the Holder may elect to nullify  the  Optional  Redemption  Notice by
      notice to the Company  within 3 Trading  Days after the first day on which
      any  such  Equity  Condition  has not  been met  (provided  that if,  by a
      provision of the Transaction Documents, the Company is obligated to notify
      the Holder of the non-existence of an Equity Condition, such notice period
      shall be extended to the third  Trading Day after  proper  notice from the
      Company) in which case the  Optional  Redemption  Notice shall be null and
      void, ab initio.  The Company  covenants and agrees that it will honor all
      Notices of  Conversion  tendered from the time of delivery of the Optional
      Redemption  Notice  through the date all amounts owing thereon are due and
      paid in full.  Notwithstanding  anything  herein to the  contrary,  in the
      event an Optional  Redemption is being  undertaken  in  connection  with a
      financing that would  otherwise  result in an adjustment to the Conversion
      Price  pursuant to Section  5(b) and the Company  arranges  for the direct
      redemption  of all or part of this  Debenture  out of the  closing of such
      Dilutive Issuance, the Conversion Price as to the principal amount of this
      Debenture  subject to an Optional  Redemption  shall not be adjusted as to
      such Dilutive Issuance on or before the Optional Redemption Date, provided
      that in the event the Optional Redemption Amount is not paid in full on or
      before  the  Optional  Redemption  Date,  the  Conversion  Price  shall be
      immediately adjusted to the lower price pursuant to Section 5(b).

            b) Monthly Redemption.  On each Monthly Redemption Date, the Company
      shall  redeem  the  Monthly  Redemption  Amount  plus  accrued  but unpaid
      interest,

                                       21
<PAGE>

      liquidated  damages  and any other  amounts  then owing to such  Holder in
      respect  of  this  Debenture  (the  "Monthly  Redemption").   The  Monthly
      Redemption Amount payable on each Monthly Redemption Date shall be paid in
      cash; provided,  however, as to any Monthly Redemption and upon 25 Trading
      Days' prior written  irrevocable  notice (the "Monthly  Redemption Notice"
      and the 25 Trading Day period immediately following the Monthly Redemption
      Notice,  the "Monthly  Redemption  Period"),  in lieu of a cash redemption
      payment the  Company may elect to pay all or part of a Monthly  Redemption
      Amount in  Conversion  Shares (such dollar  amount to be paid on a Monthly
      Redemption  Date in  Conversion  Shares,  the  "Monthly  Redemption  Share
      Amount")  based on a conversion  price equal to the lesser of (i) the then
      Conversion  Price  and (ii) 90% of the  average  of the  VWAPs  for the 20
      consecutive  Trading  Days ending on the  Trading Day that is  immediately
      prior to the applicable Monthly Redemption Date (subject to adjustment for
      any stock dividend,  stock split, stock combination or other similar event
      affecting  the Common  Stock during such 20 Trading Day period) (the price
      calculated  during the 20  Trading  Day  period  immediately  prior to the
      Monthly  Redemption  Date,  the  "Monthly  Conversion  Price"  and such 20
      Trading Day period, the "Monthly Conversion Period");  provided,  further,
      that the Company may not pay the Monthly  Redemption  Amount in Conversion
      Shares  unless (y) from the date the Holder  receives  the duly  delivered
      Monthly  Redemption  Notice  through  and  until  the  date  such  Monthly
      Redemption is paid in full,  the Equity  Conditions  have been  satisfied,
      unless  waived  in  writing  by the  Holder,  and (z) as to  such  Monthly
      Redemption,  prior to such Monthly  Redemption Period (but not more than 5
      Trading Days prior to the commencement of the Monthly Redemption  Period),
      the  Company  shall  have  delivered  to the  Holder's  account  with  The
      Depository  Trust Company a number of shares of Common Stock to be applied
      against such Monthly  Redemption Share Amount equal to the quotient of (x)
      the applicable  Monthly  Redemption Share Amount divided by (y) the lesser
      of (1) the then  Conversion  Price and (2) 90% of the average of the VWAPs
      for the 20 consecutive  Trading Days ending  immediately  prior to the 5th
      Trading Day prior to the  commencement  of the Monthly  Redemption  Period
      (the "Pre-Redemption Conversion Shares"). The Holder may convert, pursuant
      to Section  4(a),  any  principal  amount of this  Debenture  subject to a
      Monthly  Redemption  at any  time  prior  to the  date  that  the  Monthly
      Redemption  Amount,  plus accrued but unpaid interest,  liquidated damages
      and any other  amounts  then owing to the Holder are due and paid in full.
      Unless  otherwise  indicated  by the  Holder in the  applicable  Notice of
      Conversion,  any principal  amount of this Debenture  converted during the
      applicable Monthly Redemption Period until the date the Monthly Redemption
      Amount is paid in full  shall be first  applied  to the  principal  amount
      subject to the Monthly  Redemption  Amount payable in cash and then to the
      Monthly  Redemption  Share Amount.  Any principal amount of this Debenture
      converted during the applicable Monthly Redemption Period in excess of the
      Monthly  Redemption  Amount  shall be applied  against the last  principal
      amount of this Debenture  scheduled to be redeemed  hereunder,  in reverse
      time  order  from  the  Maturity  Date;  provided,  however,  if any  such
      conversion  is  applied  against  such  Monthly   Redemption  Amount,  the
      Pre-Redemption  Conversion  Shares,  if any were issued in connection with
      such Monthly  Redemption or were not already applied to such  conversions,
      shall be first applied against such conversion.  The Company covenants and
      agrees that it will honor all Notice of

                                       22
<PAGE>

      Conversions tendered up until such amounts are paid in full. The Company's
      determination to pay a Monthly  Redemption in cash, shares of Common Stock
      or a combination thereof shall be applied ratably to all of the holders of
      the then outstanding  Debentures  based on their (or their  predecessor's)
      initial purchases of Debentures pursuant to the Purchase Agreement. At any
      time the  Company  delivers a notice to the Holder of its  election to pay
      the Monthly Redemption Amount in shares of Common Stock, the Company shall
      file  a  prospectus  supplement  pursuant  to  Rule  424  disclosing  such
      election.

            c) Redemption  Procedure.  The payment of cash or issuance of Common
      Stock (other than the Pre-Redemption  Conversion  Shares),  as applicable,
      pursuant  to an  Optional  or  Monthly  Redemption  shall  be  made on the
      Optional or Monthly  Redemption Date, as applicable.  The aggregate number
      of Conversion Shares issued to the Holder pursuant to a Monthly Redemption
      shall be reduced by the number of Pre-Redemption  Conversion Shares issued
      to the Holder in connection with the Monthly Redemption less the number of
      Pre-Redemption  Conversion  Shares  applied to  conversions  of the Holder
      during the 20 Trading  Days  immediately  prior to the Monthly  Conversion
      Date.  If any  portion of the  payment  pursuant to an Optional or Monthly
      Redemption,  as  applicable,  shall  not be  paid  by the  Company  by the
      applicable  due date,  interest  shall accrue thereon until such amount is
      paid in full at an  interest  rate equal to the lesser of 18% per annum or
      the maximum rate  permitted by applicable  law.  Notwithstanding  anything
      herein  contained  to the  contrary,  if any  portion of the  Optional  or
      Monthly Redemption Amount, as applicable,  remains unpaid after such date,
      the Holder may elect,  by written  notice to the Company given at any time
      thereafter, to invalidate ab initio such redemption,  and, with respect to
      the Company's failure to honor the Optional Redemption,  the Company shall
      have  no   further   right   to   exercise   such   Optional   Redemption.
      Notwithstanding  anything to the contrary in this Section 6, the Company's
      determination  to redeem in cash or its elections under Section 6(b) shall
      be applied  ratably among the Holders of Debentures.  The Holder may elect
      to convert the outstanding  principal amount of the Debenture  pursuant to
      Section 4 prior to actual  payment in cash for any  redemption  under this
      Section 6 by the delivery of a Notice of Conversion to the Company. If any
      Pre-Redemption  Conversion  Shares are issued to the Holder in  connection
      with a Monthly  Redemption and are not applied  against either the Monthly
      Redemption  Amount or against  voluntary  conversions  during the  Monthly
      Redemption,  then the Holder shall  promptly  return such excess shares to
      the Company.

      Section 7. Negative  Covenants.  As long as any portion of this  Debenture
remains  outstanding,  the  Company  shall not,  and shall not permit any of its
Subsidiaries to, directly or indirectly:

            a) other than Permitted  Indebtedness,  enter into,  create,  incur,
      assume,  guarantee or suffer to exist any  indebtedness for borrowed money
      of any kind, including but not limited to, a guarantee, on or with respect
      to any of its  property or assets now owned or  hereafter  acquired or any
      interest therein or any income or profits therefrom;

                                       23
<PAGE>

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

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

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

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

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

      Section 8. Events of Default.

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

                  i. any default in the payment of (A) the  principal  amount of
            any Debenture or (B) interest,  liquidated damages and other amounts
            owing  to a Holder  on any  Debenture,  as and  when the same  shall
            become due and payable (whether on a Conversion Date or the Maturity
            Date or by acceleration or otherwise)  which default,  solely in the
            case of an interest payment or other default under clause (B) above,
            is not cured within 5 Trading Days;

                  ii. the  Company  shall  fail to observe or perform  any other
            covenant or  agreement  contained  in the  Debentures  (other than a
            breach by the Company of its obligations to deliver shares of Common
            Stock to the Holder upon  conversion,  which  breach is addressed in
            clause (xi) below) which failure is not cured,  if possible to cure,
            within the earlier to occur of (A) 10 Trading  Days after  notice of
            such  failure  sent by the Holder or by any other  Holder and (B) 20
            Trading  Days after the  Company  has become or should  have  become
            aware of such failure;

                                       24
<PAGE>

                  iii. a material  default or event of default  (subject  to any
            grace or cure period provided in the applicable agreement,  document
            or  instrument)  shall  occur  under  (A)  any  of  the  Transaction
            Documents or (B) any other material  agreement,  lease,  document or
            instrument to which the Company or any  Subsidiary is obligated (and
            not covered by clause (vi) below);

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

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

                  vi. the Company or any Subsidiary  shall default on any of its
            obligations under any mortgage,  credit agreement or other facility,
            indenture  agreement,  factoring agreement or other instrument under
            which  there may be  issued,  or by which  there may be  secured  or
            evidenced,  any  indebtedness  for borrowed money or money due under
            any long term leasing or factoring  arrangement that (a) involves an
            obligation  greater than  $600,000,  whether such  indebtedness  now
            exists  or shall  hereafter  be  created,  and (b)  results  in such
            indebtedness becoming or being declared due and payable prior to the
            date on which it would otherwise become due and payable;

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

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

                  ix. a  Registration  Statement  shall not have  been  declared
            effective by the  Commission  on or prior to the 180th  calendar day
            after the Closing Date;

                  x. if,  during the  Effectiveness  Period  (as  defined in the
            Registration Rights Agreement),  either (a) the effectiveness of the
            Registration Statement lapses for any reason or (b) the Holder shall
            not be permitted to resell Registrable Securities (as defined in the
            Registration Rights Agreement) under the Registration  Statement for
            a  period  of  more  than  20   consecutive   Trading   Days  or  40
            non-consecutive Trading Days (except that, if in connection with the
            acquisition of Able Energy/All American Transaction, 120 consecutive
            or  non-consecutive  Trading  Days)  during  any  12  month  period;
            provided, however, that

                                       25
<PAGE>

            if the Company is negotiating a merger,  consolidation,  acquisition
            or sale  of all or  substantially  all of its  assets  or a  similar
            transaction  and, in the written  opinion of counsel to the Company,
            the  Registration  Statement  would be  required  to be  amended  to
            include  information  concerning such pending  transaction(s) or the
            parties  thereto  which  information  is not available or may not be
            publicly  disclosed at the time,  the Company  shall be permitted an
            additional  20  consecutive  Trading Days during any 12 month period
            pursuant to this Section 8(a)(x);

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

                  xii. any Person shall  breach any  agreement  delivered to the
            initial  Holders  pursuant  to Section  2.2(a)(iv)  of the  Purchase
            Agreement;

                  xiii.  the Company and the Holder  shall have entered into and
            consummated  the Able Energy/All  American  Transaction and the Able
            Energy/All American Transaction  Documents on or before December 31,
            2006; or

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

            b) Remedies Upon Event of Default.  If any Event of Default  occurs,
      the  outstanding  principal  amount of this  Debenture,  plus  accrued but
      unpaid  interest,  liquidated  damages and other  amounts owing in respect
      thereof through the date of  acceleration,  shall become,  at the Holder's
      election,  immediately  due and payable in cash at the  Mandatory  Default
      Amount.  Commencing  5 days after the  occurrence  of any Event of Default
      that results in the eventual acceleration of this Debenture,  the interest
      rate on this  Debenture  shall  accrue at an  interest  rate  equal to the
      lesser of 18% per annum or the maximum  rate  permitted  under  applicable
      law. Upon the payment in full of the Mandatory Default Amount,  the Holder
      shall promptly  surrender this Debenture to or as directed by the Company.
      In connection with such acceleration described herein, the Holder need not
      provide, and the Company hereby waives, any presentment,  demand,  protest
      or other notice of any kind,  and the Holder may  immediately  and without
      expiration  of any grace  period  enforce  any and all of its  rights  and
      remedies hereunder and all other remedies available to it under applicable
      law. Such acceleration may be rescinded and annulled by Holder at any time
      prior to  payment  hereunder  and the  Holder  shall  have all rights as a
      holder of the Debenture  until such time,  if any, as the Holder

                                       26
<PAGE>

      receives full payment pursuant to this Section 8(b). No such rescission or
      annulment shall affect any subsequent Event of Default or impair any right
      consequent thereon.

      Section 9. Miscellaneous.

            a)  Notices.   Any  and  all  notices  or  other  communications  or
      deliveries  to be provided  by the Holder  hereunder,  including,  without
      limitation,  any Notice of  Conversion,  shall be in writing and delivered
      personally,  by facsimile,  or sent by a nationally  recognized  overnight
      courier service, addressed to the Company, at the address set forth above,
      facsimile number (973) 586-9866, Attn: Christopher P. Westad or such other
      facsimile number or address as the Company may specify for such purpose by
      notice to the Holder  delivered in accordance with this Section 9. Any and
      all notices or other  communications  or  deliveries to be provided by the
      Company  hereunder  shall  be in  writing  and  delivered  personally,  by
      facsimile,  or sent by a nationally  recognized  overnight courier service
      addressed to each Holder at the facsimile number or address of such Holder
      appearing on the books of the Company,  or if no such facsimile  number or
      address  appears,  at the principal  place of business of the Holder.  Any
      notice or other  communication  or  deliveries  hereunder  shall be deemed
      given and  effective on the earliest of (i) the date of  transmission,  if
      such notice or  communication  is delivered via facsimile at the facsimile
      number  specified  in this  Section  9 prior to 5:30  p.m.  (New York City
      time),  (ii) the date immediately  following the date of transmission,  if
      such notice or  communication  is delivered via facsimile at the facsimile
      number  specified in this Section 9 between 5:30 p.m. (New York City time)
      and 11:59 p.m. (New York City time) on any date, (iii) the second Business
      Day  following  the  date of  mailing,  if sent by  nationally  recognized
      overnight  courier  service,  or (iv) upon actual  receipt by the party to
      whom such notice is required to be given.

            b) Absolute  Obligation.  Except as expressly  provided  herein,  no
      provision of this  Debenture  shall alter or impair the  obligation of the
      Company,  which is absolute and  unconditional,  to pay the  principal of,
      liquidated damages and accrued interest, as applicable,  on this Debenture
      at the  time,  place,  and  rate,  and in the  coin  or  currency,  herein
      prescribed.  This  Debenture is a direct debt  obligation  of the Company.
      This Debenture ranks 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, 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

                                       27
<PAGE>

      enforced in  accordance  with the internal  laws of the State of New York,
      without regard to the  principles of conflict of laws thereof.  Each party
      agrees  that  all  legal   proceedings   concerning  the   interpretation,
      enforcement  and defense of the  transactions  contemplated  by any of the
      Transaction  Documents  (whether  brought  against  a party  hereto or its
      respective Affiliates,  directors,  officers,  shareholders,  employees or
      agents) shall be commenced in the state and federal  courts sitting in the
      City of New York, Borough of Manhattan (the "New York Courts"). Each party
      hereto hereby irrevocably submits to the exclusive jurisdiction of the New
      York Courts for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction  contemplated  hereby or discussed herein
      (including  with  respect  to the  enforcement  of any of the  Transaction
      Documents), and hereby irrevocably waives, and agrees not to assert in any
      suit, action or proceeding, any claim that it is not personally subject to
      the  jurisdiction  of such New York  Courts,  or such New York  Courts are
      improper or  inconvenient  venue for such  proceeding.  Each party  hereby
      irrevocably  waives  personal  service of process and  consents to process
      being  served in any such  suit,  action or  proceeding  by mailing a copy
      thereof via  registered  or  certified  mail or overnight  delivery  (with
      evidence of  delivery)  to such party at the address in effect for notices
      to it under this  Debenture and agrees that such service shall  constitute
      good and  sufficient  service  of  process  and  notice  thereof.  Nothing
      contained  herein  shall be  deemed to limit in any way any right to serve
      process in any other manner permitted by applicable law. Each party hereto
      hereby  irrevocably  waives, to the fullest extent permitted by applicable
      law,  any and all right to trial by jury in any legal  proceeding  arising
      out of or  relating to this  Debenture  or the  transactions  contemplated
      hereby.  If either party shall commence an action or proceeding to enforce
      any provisions of this Debenture, then the prevailing party in such action
      or  proceeding  shall be  reimbursed  by the other party for its attorneys
      fees  and  other  costs  and  expenses  incurred  in  the   investigation,
      preparation and prosecution of such action or proceeding.

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

            f)  Severability.  If any  provision  of this  Debenture is invalid,
      illegal or  unenforceable,  the balance of this Debenture  shall remain in
      effect,   and  if  any  provision  is   inapplicable   to  any  Person  or
      circumstance, it shall nevertheless remain applicable to all other Persons
      and circumstances.  If it shall be found that any interest or other amount
      deemed interest due hereunder violates the applicable law governing usury,
      the  applicable  rate of interest due  hereunder  shall  automatically  be
      lowered to equal the maximum rate of interest  permitted under  applicable
      law. 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

                                       28
<PAGE>

      the  principal of or interest on this  Debenture as  contemplated  herein,
      wherever  enacted,  now or at any time  hereafter  in force,  or which may
      affect the covenants or the performance of this indenture, and the Company
      (to the extent it may lawfully do so) hereby expressly waives all benefits
      or advantage of any such law, and covenants that it will not, by resort to
      any such law,  hinder,  delay or impeded the execution of any power herein
      granted to the Holder,  but will suffer and permit the  execution of every
      such as though no such law has been enacted.

            g) Next  Business  Day.  Whenever  any  payment or other  obligation
      hereunder  shall be due on a day other than a Business  Day,  such payment
      shall be made on the next succeeding Business Day.

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

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

            j) Security  Interest.  The  obligations  of the Company  under this
      Debenture  are  secured  by all of the  assets  of  the  Company  and  its
      Subsidiaries  pursuant to that certain Security  Agreement entered into in
      connection with the Purchase Agreement.

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

                                       29
<PAGE>

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

                                   ABLE ENERGY, INC.

                                   By:__________________________________________
                                      Name:
                                      Title:

                                       30
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

      The undersigned hereby elects to convert principal under the Variable Rate
Convertible  Debenture  of  Able  Energy,  Inc.,  a  Delaware  corporation  (the
"Company"),  due on August __,  2007 , into  shares of common  stock,  par value
$0.001  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:

                                       31
<PAGE>

                                   Schedule 1

                               CONVERSION SCHEDULE

The Variable Rate  Convertible  Debentures  due August 8, 2007, in the aggregate
principal  amount of  $____________  issued by Able  Energy,  Inc.,  a  Delaware
corporation.  This Conversion Schedule reflects conversions made under Section 4
of the above referenced Debenture.

                                     Dated:

======================------------------====================-------------------

                                             Aggregate
                                             Principal
                                               Amount
                                             Remaining
  Date of Conversion                       Subsequent to
 (or for first entry,      Amount of         Conversion
 Original Issue Date)     Conversion         (or original       Company Attest
                                              Principal
                                               Amount)
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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}]]