Document:

Exhibit 4.1

 

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

 

Original
Issue Date:       , 2010

Original
Conversion Price (subject to adjustment herein): $.50

 

$                           

 

12% SENIOR CONVERTIBLE DEBENTURE

DUE
                    ,
2011

 

THIS 12% SENIOR CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 12% Senior Convertible Debentures of WASTE2ENERGY HOLDINGS, INC., a Delaware corporation, (the “Company”), having its principal place of business at 1 Chick Springs Road, Suite 218, Greenville, SC 29609, designated as its 12% Convertible Debenture due     , 2011 (this debenture, the “Debenture” and, collectively with the other debentures of such series, the “Debentures”).
 

FOR VALUE RECEIVED, the Company promises to pay to
                                                
or its registered assigns (the “Holder”), or shall have paid pursuant to
the terms hereunder, the principal sum of
$                              
on                 , 2011 (the “Maturity
Date”) or such earlier date
as this Debenture is required or permitted to be repaid as provided hereunder,
and to pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture in accordance with the
provisions hereof.  This Debenture is
subject to the following additional provisions:

 

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

 

1

 

“Affiliate” means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule 405
under the Securities Act.

 

“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) other than Enerwaste Europe 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).

 

“Beneficial Ownership Limitation” shall have the meaning set
forth in Section 4(c).

 

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

 

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

 

“Change of Control Transaction” means the occurrence after the
date hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated
under the Exchange Act) of effective control (whether through legal or
beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 33% of the voting securities of the Company (other than by
means of conversion or exercise of the Debentures and the Securities issued
together with the Debentures), (b) the Company merges into or consolidates
with any other Person, or any Person merges into or consolidates with the
Company and, after 

 

2

 

giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 66% of the aggregate voting
power of the Company or the successor entity of such transaction, or (c) the
Company sells or transfers all or substantially all of its assets to another
Person and the stockholders of the Company immediately prior to such
transaction own less than 66% of the aggregate voting power of the acquiring
entity immediately after the transaction, (d) a replacement at one time or
within a three year period of more than one-half of the members of the 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 (e) 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 (a) through
(d) above.

 

“Common Stock Equivalents” means any securities of the Company
or the subsidiaries of the Company (“Subsidiaries”) which would entitle the
holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock

 

“Conversion” shall have the meaning ascribed to such term in Section 4.

 

“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 Schedule” means the Conversion Schedule in the form
of Schedule 1 attached hereto.

 

“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(b).

 

“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).

 

“Exempt Issuance” means the issuance of (a) shares of
Common Stock or options to employees, officers, directors or consultants of the
Company pursuant to any stock or option plan duly adopted for such purpose, by
a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such
purpose, (b) securities upon the exercise or exchange of or conversion of
the Debentures or Warrants and/or other securities exercisable or 

 

3

 

exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of
such securities or to decrease the exercise, exchange or conversion price of
such securities, and (c) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of
the Company, provided that any such issuance shall only be to a Person which
is, itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing
in securities.

 

“Event of Default” shall have the meaning set forth in Section 9(a).

 

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

 

“Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $50,000 (other than trade accounts payable
incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments in
excess of $50,000 due under leases required to be capitalized in accordance
with GAAP.

 

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

 

“Late Fees” shall have the meaning set forth in Section 2(c).

 

“Mandatory Default Amount” 
means the sum of (a) 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 (b) all
other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

 

“New York Courts” shall have the meaning set forth in Section 10(d).

 

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

 

4

 

“Permitted Indebtedness” means (a) the indebtedness
evidenced by the Debentures, (b) indebtedness that exists as of the date
hereof, (c) lease obligations and purchase money indebtedness of up to
$1,000,000, in the aggregate, incurred in connection with the acquisition of
capital assets and lease obligations with respect to newly acquired or leased
assets;  and (d) indebtedness that
is expressly subordinate to the Debentures.

 

“Permitted Lien” means the individual and collective reference
to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other
governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management
of the Company) have been established in accordance with GAAP; (b) Liens
imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory
landlords’ Liens, and other similar Liens arising in the ordinary course of the
Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing for
the foreseeable future the forfeiture or sale of the property or asset subject to
such Lien; (c) Liens incurred in connection with Permitted Indebtedness
under clauses (a), (b), and (d) of the definition of Permitted
Indebtedness; and (d) Liens incurred in connection with Permitted
Indebtedness under clause (c) thereunder, provided that such Liens are not
secured by assets of the Company or its Subsidiaries other than the assets so
acquired or leased.

 

“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.

 

“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)(ii).

 

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

 

“Subscription Agreement” 
means the Subscription Agreement between the Company and the Holder
dated February 15, 2010.

 

“Trading Day” means a day on which the New York Stock Exchange
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 NYSE Amex, 

 

5

 

the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board.

 

“Variable Rate Transaction” means a transaction in which the
Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive, additional shares of Common Stock either (A) at a conversion
price, exercise price or exchange rate or other price that is based upon,
and/or varies with, the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock or (ii) enters into any agreement, including,
but not limited to, an equity line of credit, whereby the Company may sell
securities at a future determined price.

 

“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
listed or 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 OTC
Markets, Inc. (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 Board of Directors of the Company, the fees and expenses
of which shall be paid by the Company.

 

Section 2.                                            Interest.

 

a)                          Payment of
Interest in Cash. The Company shall pay (or cause to be paid)
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture at the rate of 12% per annum, payable
quarterly on October 1, January 1, April 1 and July 1,
beginning on the first such date after the Original Issue Date, on each
Conversion Date (as to that principal amount then being converted), and on the
Maturity Date (each such date, an “Interest Payment Date”) (if any
Interest Payment Date is not a Business Day, then the applicable payment shall
be due on the next succeeding Business Day), in cash.  The Company, Charles Vista LLC and Sichenzia
Ross Friedman Ference LLP (“SRFF”) have entered into an escrow agreement (the “Escrow
Agreement”).  Pursuant to the Escrow
Agreement, at each closing for the Debentures, an amount equal to the interest
payable on the Debentures sold in that closing will be placed into escrow with
SRFF as escrow agent.  In accordance with
and subject to the terms of 

 

6

 

the Escrow Agreement SRFF will make interest payments to the
subscribers from the money deposited in escrow.

 

b)                         Interest
Calculations. Interest shall be calculated on the basis of a
360-day year, consisting of twelve 30 calendar day periods, and shall accrue
daily commencing on the Original Issue Date until payment in full of the
outstanding principal, together with all accrued and unpaid interest,
liquidated damages and other amounts which may become due hereunder, has been
made.  Interest shall cease to accrue with
respect to any principal amount converted, provided that, the Company actually
delivers the Conversion Shares within the time period required by Section 4(d)(ii) herein.  Interest hereunder will be paid to the Person
in whose name this Debenture is registered on the records of the Company regarding
registration and transfers of this Debenture (the “Debenture Register”).

 

c)                                      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 17% per annum or the maximum rate permitted by applicable law (the “Late
Fees”) which shall accrue daily from the date such interest is due
hereunder through and including the date of actual payment in full.

 

d)                         Prepayment.  The
Company may 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 Subscription
Agreement and may be transferred or exchanged only in compliance with the
Subscription Agreement and applicable federal and state securities laws and
regulations.

 

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

 

Section 4.                                            Conversion.

 

a)                                      Voluntary
Conversion. At any time after the Original Issue Date until
this Debenture is no longer outstanding, this Debenture shall be convertible,
in whole or in 

 

7

 

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 (each, a “Conversion”)
by delivering to the Company a Notice of Conversion, the form of which is
attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Debenture to be converted and
the date on which such conversion shall be effected (such date, the “Conversion
Date”).  If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be the date that
such Notice of Conversion is deemed delivered hereunder.  To effect conversions hereunder, the Holder
shall not be required to physically surrender this Debenture to the Company unless
the entire principal amount of this Debenture, plus all accrued and unpaid
interest thereon, has been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Debenture in an
amount equal to the applicable conversion. 
The Holder and the Company shall maintain records showing the principal
amount(s) converted and the date of such conversion(s).  The Company may deliver an objection to any
Notice of Conversion within 1 Business Day of delivery of such Notice of
Conversion.  In the event of any dispute
or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. The Holder,
and any assignee by acceptance of this Debenture, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of a
portion of this Debenture, the unpaid and unconverted principal amount of this
Debenture may be less than the amount stated on the face hereof.

 

b)                                     Conversion
Price.  The conversion price in effect
on any Conversion Date shall be equal to $0.50 (the “Conversion
Price”).

 

c)                                      Holder’s
Restriction on Conversion. The Company shall not effect any conversion
of this Debenture, and a Holder shall not have the right to convert any portion
of this Debenture, to the extent that after giving effect to the conversion set
forth on the applicable Notice of Conversion, the Holder (together with the
Holder’s Affiliates, and any other person or entity acting as a group together
with the Holder or any of the Holder’s Affiliates) would beneficially own in
excess of the Beneficial Ownership Limitation (as defined below).  For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon conversion of this Debenture with respect
to which such determination is being made, but shall exclude the number of
shares of Common Stock which are issuable upon (A) conversion of the
remaining, unconverted principal amount of this Debenture beneficially owned by
the Holder or any of its Affiliates and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company subject
to a limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Debentures or the Warrants)
beneficially owned by the Holder or any of its Affiliates.  Except as set
forth in the preceding sentence, for purposes of this Section 4(c),
beneficial ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder.  To the extent that the
limitation contained in this Section 4(c) applies, the determination
of whether this Debenture is 

 

8

 

convertible (in relation to other securities owned by the Holder
together with any Affiliates) and of which principal amount of this Debenture
is convertible shall be in the sole discretion of the Holder, and the submission
of a Notice of Conversion shall be deemed to be the Holder’s determination of
whether this Debenture may be converted (in relation to other securities owned
by the Holder together with any Affiliates) and which principal amount of this
Debenture is convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, the Holder will be
deemed to represent to the Company each time it delivers a Notice of Conversion
that such Notice of Conversion has not violated the restrictions set forth in
this paragraph and the Company shall have no obligation to verify or confirm
the accuracy of such determination.  In
addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder.  For purposes of this Section 4(c), in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated in the most
recent of the following: (A) the Company’s most recent periodic or annual
report, as the case may be; (B) a more recent public announcement by the
Company; or (C) a more recent notice by the Company or the Company’s transfer
agent setting forth the number of shares of Common Stock outstanding. 
Upon the written or oral request of a Holder, the Company shall within two
Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding.  In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Debenture,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of this Debenture held by the Holder.  The Holder, upon not less than 61 days’ prior
notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 4(c), provided that the Beneficial
Ownership Limitation in no event exceeds 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 Beneficial Ownership Limitation provisions of this Section 4(c) shall
continue to apply.  Any such increase or
decrease will not be effective until the 61st day after
such notice is delivered to the Company. 
The Beneficial Ownership Limitation provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 4(c) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation contained herein or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder
of this Debenture.

 

d)                                     Mechanics of
Conversion.

 

i.                                          Conversion Shares
Issuable Upon Conversion of Principal Amount.  The number of Conversion Shares issuable upon
a conversion 

 

9

 

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 five
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 representing the
number of Conversion Shares being acquired upon the conversion of this
Debenture and (B) a bank check in the amount of accrued and unpaid
interest.

 

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

 

iv.                                   Obligation
Absolute; Partial Liquidated Damages.  The Company’s obligations to issue and
deliver the Conversion Shares upon conversion of this Debenture in accordance
with the terms hereof are absolute and unconditional, irrespective of any
action or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such Conversion
Shares; provided, however, that such delivery shall not operate
as a waiver by the Company of any such action the Company may have against the
Holder.  In the event the Holder of this
Debenture shall elect to convert any or all of the outstanding principal amount
hereof, the Company may not refuse conversion based on any claim that the
Holder or anyone associated or affiliated with the Holder has been engaged in
any violation of law, agreement or for any other reason, unless an injunction
from a court, on notice to Holder, restraining and or enjoining conversion of
all or part of this Debenture shall have been sought and obtained, and the
Company posts a surety bond for the benefit of the Holder in the amount of 150%
of the outstanding principal amount of this Debenture, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds of which
shall be payable to the Holder to the extent it obtains judgment.  In the absence of such injunction, the
Company shall issue Conversion Shares or, if 

 

10

 

applicable, cash, upon a properly noticed conversion.  If the Company fails for any reason to
deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by
the third Trading Day after the Conversion Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of
principal amount being converted, $10 per Trading Day (increasing to $20 per
Trading Day on the fifth (5th) Trading Day after such liquidated damages begin
to accrue) for each Trading Day after such third (3th) 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 9 hereof for the Company’s failure to deliver Conversion Shares
within the period specified herein and the Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive
relief.  The exercise of any such rights
shall not prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.

 

v.                                      Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition
to any other rights available to the Holder, if the Company fails for any
reason to deliver to the Holder such certificate or certificates by the Share
Delivery Date pursuant to Section 4(d)(ii), and if after such Share
Delivery Date the Holder is required by its brokerage firm to purchase (in an
open market transaction or otherwise), or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Conversion Shares which the Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a “Buy-In”), then
the Company shall (A) pay in cash to the Holder (in addition to any other
remedies available to or elected by the Holder) the amount by which (x) the
Holder’s total purchase price (including any brokerage commissions) for the
Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that the Holder was entitled to
receive from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of
the Holder, either reissue (if surrendered) this Debenture in a principal
amount equal to the principal amount of the attempted conversion or deliver to
the Holder the number of shares of Common Stock that would have been issued if
the Company had timely complied with its delivery requirements under Section 4(d)(ii).  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 

 

11

 

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.  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.

 

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

 

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.

 

(e)  No Mandatory Conversion. 
Other than as specifically set forth herein, the Company may not
compel the Holder to convert this Debenture.

 

12

 

Section 5.                                            Certain
Adjustments.

 

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

 

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

 

13

 

to receive a number of Conversion Shares based upon the Base Conversion
Price on or after the date of such Dilutive Issuance, regardless of whether the
Holder accurately refers to the Base Conversion Price in the Notice of
Conversion.

 

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

 

d)                                     Pro Rata
Distributions. If the Company, at any time while this Debenture
is outstanding, distributes to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security
(other than the Common Stock, which shall be subject to Section 5(b)),
then in each such case the Conversion Price shall be adjusted by multiplying
such Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to 1
outstanding share of the Common Stock as determined by the Board of Directors
of the Company in good faith.  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, (i) the Company effects any merger or consolidation of the
Company with or into another Person, (ii) the Company effects any sale of
all or substantially all of its assets in one transaction or a series of
related transactions, (iii) 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 (iv) the Company effects any reclassification of the 

 

14

 

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.

 

f)                                        RESERVED.

 

g)                                     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.

 

h)                                     Notice to the
Holder.

 

i.                                          Adjustment to
Conversion Price.  Whenever
the Conversion Price is adjusted pursuant to any provision of this Section 5,
the Company shall promptly deliver to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.

 

ii.                                       Notice to Allow
Conversion by Holder.  If (A) the
Company shall declare a dividend (or any other distribution in whatever form)
on the Common 

 

15

 

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 twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action
required to be specified in such notice. 
The Holder is entitled to convert this Debenture during the 20-day period
commencing on the date of such notice through the effective date of the event
triggering such notice.

 

Section 6.                                            Reserved.

 

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

 

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

 

16

 

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

 

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

 

d)                                     repay,
repurchase or offer to repay, repurchase or otherwise acquire any of its
outstanding shares of its Common Stock or Common Stock Equivalents other than
as permitted or required under the Debenture or Warrant;

 

e)                                      repay, repurchase
or offer to repay, repurchase or otherwise acquire any Indebtedness, other than
Permitted Indebtedness and/or the Debentures if on a pro-rata basis, other than
regularly scheduled principal and interest payments as such terms are in effect
as of the Original Issue Date, provided that such payments shall not be
permitted if, at such time, or after giving effect to such payment, any Event
of Default exist or occur;

 

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

 

g)                                     enter into any
transaction with any Affiliate of the Company which would be required to be
disclosed in any public filing with the Securities and Exchange Commission,
unless such transaction is made on an arm’s-length basis and expressly approved
by a majority of the disinterested directors of the Company (even if less than
a quorum otherwise required for board approval);

 

h)                                     sell any of its
assets other than in the ordinary course of its business unless the proceeds
from such sale are used to repay the amount of any outstanding Debentures,
including all interest due thereon or

 

i)                                         enter into any
agreement with respect to any of the foregoing.

 

Section 8.                                            Holder’s Right
to Accelerate.

 

Upon the occurrence of a (i) Change of Control Transaction or (ii) Fundamental
Transaction, the Holder shall have the right, for a period of 90 days, at its
option, to declare the outstanding principal amount, together with unpaid
interest thereon, due and payable.

 

Section 9.                                            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 

 

17

 

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 clauses (A) and (B) above,
is not cured within 7 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 (vii) below) which failure is not cured, if possible
to cure, within the earlier to occur of (A) 5 Trading Days after notice of
such failure sent by the Holder or by any other Holder to the Company and (B) 10
Trading Days after the Company has become or should have become aware of such
failure;

 

iii.                                    a default or
event of default (subject to any grace or cure period provided in the
applicable agreement, document or instrument) shall occur under the
Subscription Agreement;

 

iv.                                   any
representation or warranty made in this Debenture or the Subscription
Agreement, 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 (as such term is defined in Rule 1-02(w) of
Regulation S-X) other than Enerwaste Europe shall be subject to a Bankruptcy
Event; or

 

vi.                                   the Company
shall fail for any reason to deliver certificates to a Holder prior to the
sixth 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.

 

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 

 

18

 

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 17% per
annum or the maximum rate permitted under applicable law.  Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Debenture to or as
directed by the Company.  In connection
with such acceleration described herein, the Holder need not provide, and the
Company hereby waives, any presentment, demand, protest or other notice of any
kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. 
Such acceleration may be rescinded and annulled by Holder at any time
prior to payment hereunder and the Holder shall have all rights as a holder of
the Debenture until such time, if any, as the Holder receives full payment
pursuant to this Section 9(b).  No
such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.

 

Section 10.                                      Miscellaneous.

 

a)                                      Notices.  Any and all notices or other communications
or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier
service, addressed to the Company, at the address set forth above, or such
other facsimile number or address as the Company may specify for such purpose
by notice to the Holder delivered in accordance with this Section 10(a).  Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile number or
address of the Holder appearing on the books of the Company, or if no such
facsimile number or address appears, at the principal place of business of the
Holder.  Any notice or other
communication or deliveries hereunder shall be deemed given and effective on
the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified on
the signature page 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 on the signature page 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.

 

19

 

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)                                     Jurisdiction.   This Debenture and all issues arising out of
this Debenture will be governed by and construed solely and exclusively under
and pursuant to the laws of the State of New York as applied to agreements
among New York residents entered into and to be performed entirely within
New York.  Each of the parties
hereto expressly and irrevocably (1) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement will be instituted
exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York,
(2) waives any objection which Company may have now or hereafter to the
venue of any such suit, action or proceeding, and (3)  consents to the
jurisdiction of either the New York State Supreme Court, County of
New York, or the United States District Court for the Southern District of
New York in any such suit, action or proceeding.  Each of the parties
hereto further agrees to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the New York
State Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agree that service of
process upon it mailed by certified mail to its address will be deemed in every
respect effective service of process upon it, in any such suit, action or
proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.  THE PARTY PREVAILING THEREIN SHALL BE
ENTITLED TO PAYMENT FROM THE OTHER PARTY HERETO OF ALL OF ITS REASONABLE
COUNSEL FEES AND DISBURSEMENTS.

 

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 

 

20

 

rate of interest due hereunder shall
automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Debenture as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this indenture, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede 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 Subscription Agreement
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 10(i) shall apply similarly and
equally to successive Fundamental Transactions and shall be applied without
regard to any limitations of this Debenture.

 

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

 

(Signature
Pages Follow)

 

21

 

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.

 

	
   

  	
  WASTE2ENERGY HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name: Craig L. Brown 

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  

 

22

 

ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned hereby elects
to convert principal under the 12%
Convertible Debenture due        2011 of Waste2Energy Holdings, Inc., a Delaware corporation (the “Company”), into shares of common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the date
written below.  If shares of Common Stock
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith.  No
fee will be charged to the holder for any conversion, except for such transfer
taxes, if any.

 

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

 

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

 

Conversion
calculations:

 

Date to Effect Conversion:

 

Principal Amount of
Debenture to be Converted:

 

Number of shares of Common
Stock to be issued:

 

 

Signature:

 

Name:

 

Address for Delivery of
Common Stock Certificates:

 

Or

 

DWAC Instructions:

 

Broker No:                 

Account No:                    

 

23

 

Schedule 1

 

CONVERSION SCHEDULE

 

The 12% Convertible
Debentures due on       , 2011 in the aggregate
principal amount of
$                        
are issued by Waste2Energy Holdings, Inc.,
a Delaware corporation.  This
Conversion Schedule reflects conversions made under Section 4 of the above
referenced Debenture.

 

Dated:

 

	
  Date of Conversion

  (or for first entry,

  Original Issue Date)

  	
   

  	
  Amount of

  Conversion

  	
   

  	
  Aggregate

  Principal

  Amount

  Remaining

  Subsequent to

  Conversion

  (or original

  Principal

  Amount)

  	
   

  	
  Company Attest

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

24Exhibit 4.2

 

NEITHER THIS SECURITY NOR ANY SECURITIES WHICH MAY BE ISSUED UPON
EXERCISE OF THIS SECURITY HAVE BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S.
STATE OR OTHER JURISDICTION OR ANY EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, AND SUCH OTHER LAWS AND REQUIREMENTS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR LISTING OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, SUCH REGISTRATION AND/OR LISTING
REQUIREMENTS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH WILL BE REASONABLY ACCEPTABLE TO THE
COMPANY.

 

WASTE2ENERGY HOLDINGS, INC.

 

COMMON STOCK WARRANT

 

	
  No.

  	
  2010

  

 

Waste2Energy Holdings, Inc.
, a Delaware corporation (the “Company”),
hereby certifies that
                            ,
its permissible transferees, designees, successors and assigns (collectively,
the “Holder”), for value received, is
entitled to purchase from the Company at any time and from time to time
commencing on the date first appearing above (the “Issuance
Date”), up to and through 12:01a.m. (EST) on the date three (3) years
from the Issuance Date (the “Termination Date”)
up to
                  
shares (each, a “Share” and
collectively the “Shares”) of
the Company’s common stock, at an exercise price per Share equal to $1.00 (the “Exercise Price”).  The number of Shares purchasable hereunder
and the Exercise Price are subject to adjustment as provided in Section 4
hereof.

 

This Warrant is being
issued by the Company in a private placement pursuant to the Company’s Amended
and Restated Confidential Private Placement Memorandum, dated as of February 15,
2010 as amended and/or supplemented.

 

1.                                       Method of Exercise; Payment.

 

(a)                                  Cash Exercise.  The purchase rights represented by this
Warrant may be exercised, for cash only, by the Holder, in whole or in part, at
any time, or from time to time, by the surrender of this Warrant (with the
notice of exercise form (the

 

1

 

“Notice of Exercise”) attached
hereto as Exhibit A duly executed) at the principal office of the
Company, and by payment to the Company of an amount equal to the Exercise Price
multiplied by the number of the Shares being purchased, which amount may be
paid, at the election of the Holder, by wire transfer or certified check
payable to the order of the Company. The person or persons in whose name(s) any
certificate(s) representing Shares shall be issuable upon exercise of this
Warrant shall be deemed to have become the holder(s) of record of, and
shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised.

 

(b)                             Stock
Certificates.  In the event
of any exercise of the rights represented by this Warrant, as promptly as
practicable after this Warrant is surrendered and delivered to the Company
along with all other appropriate documentation on or after the date of exercise
and in any event within ten (10) days thereafter, the Company at its
expense shall issue and deliver to the person or persons entitled to receive
the same a certificate or certificates for the number of Shares issuable upon
such exercise.  In the event this Warrant
is exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the number of Shares for which this
Warrant may then be exercised.

 

(c)                                  Taxes.  The issuance of the Shares upon the exercise
of this Warrant, and the delivery of certificates or other instruments
representing such Shares, shall be made without charge to the Holder for any
tax or other charge in respect of such issuance.

 

(d)                                 Call Provision.  At any time at which the Market Price of the
Company’s Common Stock exceeds $1.25 for sixty (60) Trading Days during any
sixty (60) consecutive Trading Days, as adjusted for stock splits,
combinations, recapitalizations and the like, the Company may elect to call
this Warrant; provided however, the Company may not call this Warrant unless a
registration statement is effective and the Common Stock is listed or quoted on
an Eligible Market (“Eligible Market”
means the OTC Bulletin Board, the Pink Sheets, the NYSE Amex, The New York
Stock Exchange, Inc., The NASDAQ Global Select Market, The NASDAQ Global
Market or The NASDAQ Capital Market); provided further, however, that in no
event shall the number of shares of Common Stock that may be acquired by the
Holder upon exercise pursuant to the terms of this Section 1(d) at any
time shall exceed a number that, when added to the total number of shares of
Common Stock deemed beneficially owned by the Holder (other than by virtue of
the ownership of securities or rights to acquire securities that have
limitations on the Holder’s right to convert, exercise or purchase similar to
the limitation set forth herein (the “Excluded Shares”), together with all
shares of Common Stock deemed beneficially owned at such time (other than by
virtue of the ownership of the Excluded Shares) by persons whose beneficial
ownership of Common Stock would be aggregated with the beneficial ownership by
the Holder for purposes of determining whether a group exists or for purposes
of determining the Holder’s beneficial

 

2

 

ownership,
in either such case for purposes of Section 13(d) of the 1934 Act and
Regulation 13D-G thereunder (including, without limitation, as the same is made
applicable to Section 16 of the 1934 Act and the rules promulgated
thereunder), would result in beneficial ownership by the Holder or such group
of more than 4.9% of the shares of Common Stock for purposes of Section 13(d) or
Section 16 of the 1934 Act and the rules promulgated
thereunder.  The Warrant shall remain outstanding with respect to Warrant
Shares that may not be issued to the Holder pursuant to the foregoing. In order
for the Company to exercise its call right hereunder, (i) it must exercise
the right by providing written notice (the “Call Notice”) to the Holder
within 3 Trading Days after the 60th Trading Day
in which the Market Price of the Company’s Common Stock exceeded $1.25, (ii) such
notice must indicate the date (the “Call Date”) on which the Warrant
shall be exercised, which date may not be sooner than 3 Trading Days, nor later
than 7 Trading Days, after delivery of the Call Notice, and (iii) the
closing price of the Common Stock on an Eligible Market on the Trading Day
immediately preceding the Call Date must exceed $1.25.

 

2.                                       Warrant.

 

(a)                                  Exchange, Transfer and Replacement. 
At any time prior to the exercise hereof, this Warrant may be exchanged
upon presentation and surrender to the Company, alone or with other warrants of
like tenor of different denominations registered in the name of the same
Holder, for another warrant or warrants of like tenor in the name of such
Holder exercisable for the aggregate number of Shares as the warrant or
warrants surrendered.

 

(b)                                 Replacement of Warrant. 
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of any
such loss, theft, or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company, or, in the case of any
such mutilation, upon surrender and cancellation of this Warrant, the Company,
at its expense, will execute and deliver in lieu thereof, a new Warrant of like
tenor.

 

(c)    Cancellation;
Payment of Expenses.  Upon the
surrender of this Warrant in connection with any transfer, exchange or
replacement as provided in this Section 2, this Warrant shall be
promptly canceled by the Company.  The
Holder shall pay all taxes and all other expenses (including legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this Section 2.

 

(d)   Warrant
Register.  The Company shall
maintain, at its principal executive offices (or at the offices of the transfer
agent for the Warrant or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant (the “Warrant Register”), in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

 

3

 

3.                                       Rights and Obligations of Holders of this
Warrant.  The Holder of this Warrant shall not, by
virtue hereof, be entitled to any rights of a stockholder in the Company,
either at law or in equity; provided, however, that in the event
any certificate representing shares of Common Stock or other securities is
issued to the holder hereof upon exercise of this Warrant, such holder shall,
for all purposes, be deemed to have become the holder of record of such Common
Stock on the date on which this Warrant, together with a duly executed Notice
of Exercise, was surrendered and payment of the aggregate Exercise Price was
made, irrespective of the date of delivery of such Common Stock certificate.

 

4.                                       Adjustments.

 

(a)                                  Stock Dividends, Reclassifications,
Recapitalizations, Etc.  While this Warrant is
outstanding, in the event the Company:  (i) pays
a dividend in Common Stock or makes a distribution in Common Stock, (ii) subdivides
its outstanding Common Stock into a greater number of shares, (iii) combines
its outstanding Common Stock into a smaller number of shares or (iv) increases
or decreases the number of shares of Common Stock outstanding by
reclassification of its Common Stock (including a recapitalization in
connection with a consolidation or merger in which the Company is the
continuing corporation), then (1) the Exercise Price on the record date of
such division or distribution or the effective date of such action shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately before
such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and (2) the number of shares of
Common Stock for which this Warrant may be exercised immediately before such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the Exercise Price immediately before such event and the
denominator of which is the Exercise Price immediately after such event.

 

(b)                             Combination: Liquidation. 
While this Warrant is outstanding, (i) In the event of a
Combination (as defined below), each Holder shall have the right to receive
upon exercise of the Warrant the kind and amount of shares of capital stock or
other securities or property which such Holder would have been entitled to
receive upon or as a result of such Combination had such Warrant been exercised
immediately prior to such event (subject to further adjustment in accordance
with the terms hereof).  Unless
paragraph (ii) is applicable to a Combination, the Company shall
provide that the surviving or acquiring Person (as defined below) (the “Successor Company”) in such
Combination will assume by written instrument the obligations under this Section 4
and the obligations to deliver to the Holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, the Holder may be
entitled to acquire. “Combination”
means an event in which the Company consolidates with, mergers with or into, or
sells all or substantially all of its assets to another Person, where “Person” means any individual,
corporation, partnership, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity; (ii) In
the event of (x) a Combination where consideration to the holders of
Common Stock in exchange for their

 

4

 

shares is payable solely in cash or (y) the dissolution,
liquidation or winding-up of the Company, the Holders shall be entitled to
receive, upon surrender of their Warrant, distributions on an equal basis with
the holders of Common Stock or other securities issuable upon exercise of the
Warrant, as if the Warrant had been exercised immediately prior to such event,
less the Exercise Price.  In case of any
Combination described in this Section 4, the surviving or acquiring
Person and, in the event of any dissolution, liquidation or winding-up of the
Company, the Company, shall deposit promptly with an agent or trustee for the
benefit of the Holders of the funds, if any, necessary to pay to the Holders
the amounts to which they are entitled as described above.  After such funds and the surrendered Warrant
are received, the Company is required to deliver a check in such amount as is
appropriate (or, in the case or consideration other than cash, such other
consideration as is appropriate) to such Person or Persons as it may be
directed in writing by the Holders surrendering such Warrant.

 

(c) Notice of Adjustment.  Whenever the Exercise Price or the number of
shares of Common Stock and other property, if any, issuable upon exercise of
the Warrant is adjusted, as provided in this Section 4, the Company
shall deliver to the holders of the Warrant in accordance with Section 10
a certificate of the Company’s Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which (i) the
Board of Directors determined the fair value of any evidences of indebtedness,
other securities or property or warrants, options or other subscription or
purchase rights and (ii) the Current Market Value (as defined below) of
the Common Stock was determined, if either of such determinations were required),
and specifying the Exercise Price and number of shares of Common Stock issuable
upon exercise of the Warrant after giving effect to such adjustment.

 

(d)  Notice of Certain Transactions.  While this Warrant is outstanding, in the
event that the Company shall propose (a) to pay any dividend payable in
securities of any class to the holders of its Common Stock or to make any other
non-cash dividend or distribution to the holders of its Common Stock, (b) to
offer the holders of its Common Stock rights to subscribe for or to purchase
any securities convertible into shares of Common Stock or shares of stock of
any class or any other securities, rights or options, (c) to effect any
capital reorganization, reclassification, consolidation or merger affecting the
class of Common Stock, as a whole, or (d) to effect the voluntary or
involuntary dissolution, liquidation or winding-up of the Company, the Company
shall, within the time limits specified below, send to each Holder a notice of
such proposed action or offer.  Such
notice shall be mailed to the Holders at their addresses as they appear in the
Warrant Register, which shall specify the record date for the purposes of such
dividend, distribution or rights, or the date such issuance or event is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall briefly indicate the effect of such
action on the Common Stock and on the number and kind of any other shares of
stock and on other property, if any, and the number of shares of Common Stock
and other property, if any, issuable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment pursuant to Section 4
which will be required as a result of such action.  Such notice shall be given as promptly

 

5

 

as possible and (x) in the case of any action covered by clause (a) or
(b) above, at least ten (10) days prior to the record date for
determining holders of the Common Stock for purposes of such action or (y) in
the case of any other such action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of Common Stock, whichever shall be the earlier.

 

(e)  Current Market Value.  The “Current Market Value”
per share of Common Stock or any other security at any date means (i) if
the security is not registered under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and/or traded
on a national securities exchange, quotation system or bulletin board, (a) the
value of the security, determined in good faith by the Board of Directors of
the Company and certified in a board resolution, based on the most recently
completed arm’s-length transaction between the Company and a Person other than
an affiliate of the Company or between any two such Persons and the closing of
which occurs on such date or shall have occurred within the six-month period
preceding such date, or (b) if no such transaction shall have occurred
within the six-month period, the value of the security as determined by an
independent financial expert or an agreed upon financial valuation model or (ii) if
the security is registered under the Exchange Act and/or traded on a national
securities exchange, quotation system or bulletin board, the average of the
daily closing bid prices (or the equivalent in an over-the-counter market) for
each day on which the Common Stock is traded for any period on the principal
securities exchange or other securities market on which the common Stock is
being traded (each, a “Trading Day”)
during the period commencing thirty (30) days before such date and ending on
the date one (1) day prior to such date.

 

5.                                       Registration Rights. 
The Holder shall, with respect to the Shares, have the resale
registration rights set forth in the Subscription Agreement by and between the
Company and the Holder.

 

6.                                       Fractional Shares. 
In lieu of issuance of a fractional share upon any exercise hereunder,
the Company will issue an additional whole share in lieu of that fractional
share, calculated on the basis of the Exercise Price.

 

7.                                       Legends.  Prior to
issuance of the shares of Common Stock underlying this Warrant, all such
certificates representing such shares shall bear a restrictive legend to the
effect that the Shares represented by such certificate have not been registered
under the Securities Act of 1933, as amended (the “Securities
Act”), and that the Shares may not be sold or transferred in the
absence of such registration or an exemption therefrom, such legend to be
substantially in the form of the bold-face language appearing at the top of Page 1
of this Warrant.

 

8.                                       Disposition of Warrants or Shares. 
The Holder of this Warrant, each transferee hereof and any holder and
transferee of any Shares, by his or its acceptance thereof, agrees that no
public distribution of Warrants or Shares will be made in violation of the
provisions of the Securities Act. 
Furthermore, it shall be a condition to the transfer of this Warrant
that any transferee thereof deliver to the Company his or its written

 

6

 

agreement to accept and be bound by all of the terms and conditions
contained in this Warrant.

 

9.                                       Merger or Consolidation.  The
Company will not merge or consolidate with or into any other corporation, or
sell or otherwise transfer its property, assets and business substantially as
an entirety to another corporation, unless the corporation resulting from such
merger or consolidation (if not the Company), or such transferee corporation,
as the case may be, shall expressly assume, by supplemental agreement
reasonably satisfactory in form and substance to the Holder, the due and
punctual performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.

 

10.                                 Notices.  Except as
otherwise specified herein to the contrary, all notices, requests, demands and
other communications required or desired to be given hereunder shall only be
effective if given in writing by certified or registered U.S. mail with return
receipt requested and postage prepaid; by private overnight delivery service
(e.g. Federal Express); by facsimile transmission (if no original documents or
instruments must accompany the notice); or by personal delivery.  Any such notice shall be deemed to have been
given (a) on the business day immediately following the mailing thereof,
if mailed by certified or registered U.S. mail as specified above; (b) on
the business day immediately following deposit with a private overnight
delivery service if sent by said service; (c) upon receipt of confirmation
of transmission if sent by facsimile transmission; or (d) upon personal
delivery of the notice.  All such notices
shall be sent to the following addresses (or to such other address or addresses
as a party may have advised the other in the manner provided in this Section 10):

 

	
  if to the
  Company:

  	
  Waste2Energy
  Holdings, Inc.

  
	
   

  	
  1 Chick Springs Road,
  Suite 218

  
	
   

  	
  Greenville, SC 29609

  
	
   

  	
  Attention: Craig Brown,
  CFO

  
	
   

  	
  Facsimile: 864-679-1627

  
	
   

  	
   

  
	
  with copy
  to:

  	
  Sichenzia Ross Friedman
  Ference LLP

  
	
   

  	
  61 Broadway, 32nd Floor

  
	
   

  	
  New York, NY 10006

  
	
   

  	
  Attention: Thomas A. Rose, Esq.

  
	
   

  	
  Facsimile: (212) 930-9725

  

 

Notwithstanding the time
of effectiveness of notices set forth in this Section 10, a Notice
of Exercise shall not be deemed effectively given until it has been duly
completed and submitted to the Company together with this original Warrant and
payment of the Exercise Price in a manner set forth in this Section 10.

 

11.                                 Limitation on
Exercise. Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited

 

7

 

to the extent necessary to
insure that, following such exercise (or other issuance), the total number of
shares of Common Stock then beneficially owned by such Holder and its affiliates
and any other persons whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the
Exchange Act, does not exceed 4.99% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. The
holder may waive the restriction in whole or in part upon and effective after
61 days prior written notice to the Company. This provision shall not restrict
the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or
other business combination or reclassification involving the Company.

 

12.                                 Governing Law. 
This Agreement shall be governed by and construed solely and exclusively
in accordance with and pursuant to the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The parties hereto
hereby expressly and irrevocably agree that any suit or proceeding arising
directly and/or indirectly pursuant to or under this Agreement shall be brought
solely in a federal or state court located in the City, County and State of New
York. By its execution hereof, the parties hereby covenant and irrevocably
submit to the in personam jurisdiction of the federal and
state courts located in the City, County and State of New York and agree that
any process in any such action may be served upon any of them personally, or by
certified mail or registered mail upon them or their agent, return receipt
requested, with the same full force and effect as if personally served upon
them in New York City. The parties hereto expressly and irrevocably waive any
claim that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in  personam jurisdiction
with respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto of
all of its reasonable counsel fees and disbursements.

 

13.                                 Successors and Assigns. 
This Warrant shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.

 

14.                                 Headings.  The headings
of various sections of this Warrant have been inserted for reference only and
shall not affect the meaning or construction of any of the provisions hereof.

 

15.                                 Severability. If any provision of this Warrant is
held to be unenforceable under applicable law, such provision shall be excluded
from this Warrant, and the balance hereof shall be interpreted as if such
provision were so excluded.

 

16.                                 Modification and Waiver. 
This Warrant and any provision hereof may be amended, waived, discharged
or terminated only by an instrument in writing signed by the Company and the
Holder.

 

8

 

17.                                 Specific Enforcement. 
The Company and the Holder acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Warrant were not
performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Warrant and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to
which either of them may be entitled by law or equity.

 

18.                                 Assignment.  This Warrant
may be transferred or assigned, in whole or in part, at any time and from time
to time by the then Holder by submitting this Warrant to the Company together
with a duly executed Assignment in substantially the form and substance of the Form of
Assignment which accompanies this Warrant as Exhibit B hereto, and, upon the Company’s receipt
thereof, and in any event, within five (5) business days thereafter, the
Company shall issue a Warrant to the Holder to evidence that portion of this
Warrant, if any as shall not have been so transferred or assigned.

 

(Signature Page Immediately Follows)

 

9

 

IN
WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed, manually or by
facsimile, by one of its officers thereunto duly authorized.

 

	
   

  	
  WASTE2ENERGY HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:
              ,
  2010

  	
  By:

  	
   

  
	
   

  	
  Name:
  Craig Brown

  
	
   

  	
  Title: Chief Financial Officer 

  

 

10

 

EXHIBIT A

TO

WARRANT

 

NOTICE OF EXERCISE

 

To Be Executed by the
Holder

in Order to Exercise the Warrant

 

The undersigned Holder
hereby elects to purchase
              
Shares pursuant to the attached Warrant, and requests that certificates for
securities be issued in the name of:

 

 

(Please type or
print name and address)

 

 

(Social Security
or Tax Identification Number)

 

and delivered

to:                                                                                                                                                                                                             

                                                                                                                                                                                                                      .

 

(Please type or
print name and address if different from above)

 

If such number of Shares
being purchased hereby shall not be all the Shares that may be purchased
pursuant to the attached Warrant, a new Warrant for the balance of such Shares
shall be registered in the name of, and delivered to, the Holder at the address
set forth below.

 

In full payment of the
purchase price with respect to the Shares purchased and transfer taxes, if any,
the undersigned hereby tenders payment of
$                    
by check, money order or wire transfer payable in United States currency to the
order of [                                ].

 

	
   

  	
   

  	
  HOLDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  

 

11

 

EXHIBIT B

TO

WARRANT

 

FORM OF
ASSIGNMENT

(To be signed only on transfer of Warrant)

 

For value received, the
undersigned hereby sells, assigns, and transfers unto
                          
the right represented by the within Warrant to purchase
             shares
of Common Stock of Waste2Energy Holdings, Inc., a Delaware corporation, to
which the within Warrant relates, and appoints
                                        
Attorney to transfer such right on the books of Waste2Energy Holdings, Inc.,
a Delaware corporation, with full power of substitution of premises.

 

 

	
  Dated:

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  (signature must conform to name of holder as specified on the fact of
  the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  

 

 

Signed in the presence of
:

 

 

Dated:

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]