Document:

EXHIBIT
      4.2

    

    [FORM
      OF
      SENIOR SECURED NOTE]

    

    NEITHER
      THE ISSUANCE AND SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE
      IS
      CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR
      SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (I) AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED, OR (II) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO
      THE
      COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.  NOTWITHSTANDING
      THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS NOTE.  ANY
      TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
      INCLUDING SECTIONS 3(c)(iii) AND 20(a) HEREOF.  THE PRINCIPAL AMOUNT
      REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
      CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
      PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

    

    NESCO
      INDUSTRIES, INC.

    SENIOR
      SECURED CONVERTIBLE NOTE

    

    
      	
               

            	
               

            
	
              Issuance
                Date:  February [__], 2007

            	
              Original
                Principal Amount: U.S. 

            

    

    

    FOR
      VALUE
      RECEIVED, Nesco Industries, Inc., a Nevada corporation (the "Company"),
      hereby promises to pay to [_________] or registered assigns ("Holder")
      the
      amount set out above as the Original Principal Amount (as reduced pursuant
      to
      the terms hereof pursuant to redemption, conversion or otherwise, the
      "Principal")
      when
      due, whether upon the Maturity Date (as defined below), on any Installment
      Date
      with respect to the Installment Amount due on such Installment Date,
      acceleration, redemption or otherwise (in each case in accordance with the
      terms
      hereof) and to pay interest ("Interest")
      on any
      outstanding Principal at a rate per annum equal to the Interest Rate (as defined
      below), from the date set out above as the Issuance Date (the "Issuance
      Date")
      until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below), any Installment Date, or the Maturity Date, acceleration, conversion,
      redemption or otherwise (in each case in accordance with the terms hereof).
       This Senior Secured Convertible Note (including all Senior Secured
      Convertible Notes issued in exchange, transfer or replacement hereof, this
      "Note")
      is one
      of an issue of Senior Secured Convertible Notes issued pursuant to the
      Securities Purchase Agreement (as defined below) (collectively, the
      "Notes"
      and
      such other Senior Secured Convertible Notes, the "Other
      Notes").
       Certain capitalized terms are defined in Section 28.

    

    1. PAYMENTS
      OF PRINCIPAL; MATURITY.
       On each Installment Date commencing April 1, 2008, the Company shall pay
      to the Holder an amount equal to the Installment Amount due on such Installment
      Date in cash by wire transfer of immediately available funds.  The
      "Maturity
      Date"
      shall
      be February 15,
      2009, as
      may be extended at the option of the Holder (i) in the event that, and for
      so
      long as, an Event of Default (as defined in Section 4(a)) shall have occurred
      and be continuing or any event shall have occurred and be continuing which
      with
      the passage of time and the failure to cure would result in an Event of Default
      and (ii) through the date that is ten (10) days after the consummation of a
      Change of Control in the event that a Change of Control is publicly announced
      or
      a Change of Control Notice (as defined in Section 5(b)) is delivered prior
      to
      the Maturity Date.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. INTEREST;
      INTEREST RATE.

    

    (a) Interest
      on any outstanding Principal payable pursuant to this Note shall commence
      accruing on the Issuance Date and shall be computed on the basis of a 360-day
      year and actual days elapsed and shall be payable in arrears for each Calendar
      Month during the period beginning on the Issuance Date and ending on, and
      including, the Maturity Date (each, an "Interest
      Date")
      with
      the first Interest Date being March 1, 2007.  Interest shall be payable on
      each Interest Date, to the record holder of this Note on the applicable Interest
      Date.

    

    (b) From
      and
      after the occurrence of an Event of Default, the Interest Rate shall be
      increased to eighteen percent (18%).  In the event that such Event of
      Default is subsequently cured, the adjustment referred to in the preceding
      sentence shall cease to be effective as of the date of such cure; provided
      that
      the Interest as calculated at such increased rate during the continuance of
      such
      Event of Default shall continue to apply to the extent relating to the days
      after the occurrence of such Event of Default through and including the date
      of
      cure of such Event of Default.  

    

    3. CONVERSION
      OF NOTES.
       This Note shall be convertible into shares of common stock of the Company,
      par value $0.001 per share (the "Common
      Stock"),
      on
      the terms and conditions set forth in this Section 3.

    

    (a) Conversion
      Right.
       Subject to the provisions of Section 3(d), at any time or times on or
      after the Issuance Date (and following the Share Increase Authorization (as
      defined in the Securities Purchase Agreement)), the Holder shall be entitled
      to
      convert any portion of the outstanding and unpaid Conversion Amount (as defined
      below) into fully paid and nonassessable shares of Common Stock in accordance
      with Section 3(c), at the Conversion Rate (as defined below). The Company shall
      not issue any fraction of a share of Common Stock upon any conversion.  If
      the issuance would result in the issuance of a fraction of a share of Common
      Stock, the Company shall round such fraction of a share of Common Stock up
      to
      the nearest whole share.  The Company shall pay any and all taxes that may
      be payable with respect to the issuance and delivery of Common Stock upon
      conversion of any Conversion Amount.

    

    (b) Conversion
      Rate.
       The number of shares of Common Stock issuable upon conversion of any
      Conversion Amount pursuant to Section 3(a) shall be determined by dividing
      (x)
      such Conversion Amount by (y) the Conversion Price (the "Conversion
      Rate").

    

    (i) "Conversion
      Amount"
      means
      the portion of the Principal to be converted, redeemed or otherwise with respect
      to which this determination is being made.

    

    
      
        
        

      

      
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    (ii) "Conversion
      Price"
      means,
      as of any Conversion Date (as defined below) or other date of determination,
      $0.00464 (appropriately adjusted for any stock split (including the Reverse
      Stock Split as defined in the Securities Purchase Agreement), stock dividend,
      stock combination or other similar transaction that proportionately decreases
      or
      increases the Common Stock or as otherwise provided in this
      Note).

    

    (c) Mechanics
      of Conversion.

    

    (i) Optional
      Conversion.
       To convert any Conversion Amount into shares of Common Stock on any date
      (a "Conversion
      Date"),
      the
      Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or
      prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice
      of conversion in the form attached hereto as Exhibit
      I
      (the
      "Conversion
      Notice")
      to the
      Company and (B) if required by Section 3(c)(iii), surrender this Note (or an
      indemnification undertaking and such other documentation as may be reasonably
      required by the Company with respect to this Note in the case of its loss,
      theft
      or destruction) to a nationally recognized overnight delivery service for
      delivery to the Company.  On or before the next Trading Day following the
      date of receipt of a Conversion Notice, the Company shall transmit by facsimile
      a confirmation of receipt of such Conversion Notice to the Holder and the
      Transfer Agent.  On or before the second (2nd)
      Trading
      Day following the date of receipt of a Conversion Notice (the "Share
      Delivery Date"),
      the
      Company shall (1) (X) provided that (i) the Conversion Shares are eligible
      for
      transfer through DTC and (2) the Transfer Agent is participating in the Fast
      Automated Securities Transfer Program of DTC, cause the Transfer Agent to credit
      such aggregate number of shares of Common Stock to which the Holder shall be
      entitled to the Holder's or its designee's balance account with DTC through
      its
      Deposit Withdrawal Agent Commission system or (Y) if the Conversion Shares
      are
      not eligible for transfer through DTC or the Transfer Agent is not participating
      in the DTC Fast Automated Securities Transfer Program, cause the Transfer Agent
      to issue and deliver to the address as specified in the Conversion Notice,
      a
      certificate, registered in the name of the Holder or its designee, for the
      number of shares of Common Stock to which the Holder shall be entitled, and
      (2)
      pay to the Holder in cash an amount equal to the accrued and unpaid Interest
      on
      the Conversion Amount up to and including the Conversion Date.  If this
      Note is physically surrendered for conversion as required by Section 3(c)(iii)
      and the outstanding Principal of this Note is greater than the Principal portion
      of the Conversion Amount being converted, then the Company shall as soon as
      practicable and in no event later than two Business Days after receipt of this
      Note and at its own expense, cause the Transfer Agent to issue and deliver
      to
      the holder a new Note (in accordance with Section 18(d)) representing the
      outstanding Principal not converted.  The Person or Persons entitled to
      receive the shares of Common
      Stock
      issuable upon a conversion of this Note shall be treated for all purposes as
      the
      record holder or holders of such shares of Common Stock on the Conversion Date.
      In the event of a partial conversion of this Note pursuant hereto, the principal
      amount converted shall be deducted from the Installment Amounts relating to
      the
      Installment Dates as set forth in the Conversion Notice.

    

    
      
        
        

      

      
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    (ii) Company's
      Failure to Timely Convert.
       If within five (5) Trading Days after the Company's receipt of the
      facsimile copy of a Conversion Notice, the Company shall fail to issue and
      deliver a certificate to the Holder or credit the Holder's balance account
      with
      DTC for the number of shares of Common Stock to which the Holder is entitled
      upon such holder's conversion of any Conversion Amount (a "Conversion
      Failure"),
      and
      if on or after such Trading Day, but prior to delivery of such shares of Common
      Stock, the Holder purchases (in an open market transaction or otherwise) a
      number of shares of Common Stock equal to the number of shares subject to the
      Conversion Failure in order to deliver same in satisfaction of a sale by the
      Holder of the number of shares of Common Stock issuable upon such conversion
      that the Holder anticipated receiving from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Business Days after the Holder's request
      and
      provision of trade confirmations and in the Holder's discretion, either (i)
      pay
      cash to the Holder in an amount equal to the Holder's total purchase price
      (including brokerage commissions and other out-of-pocket expenses, if any)
      for
      the shares of Common Stock so purchased (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to the Holder a certificate or certificates representing such Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the Closing Bid Price on the Conversion Date.

    

    (iii) Registration;
      Book-Entry.
      The
      Company shall maintain a register (the "Register")
      for
      the recordation of the names and addresses of the holders of each Note and
      the
      principal amount of the Notes held by such holders (the "Registered
      Notes").
      The
      entries in the Register shall be conclusive and binding for all purposes absent
      manifest error. The Company and the holders of the Notes shall treat each Person
      whose name is recorded in the Register as the owner of a Note for all purposes,
      including, without limitation, the right to receive payments of principal and
      interest hereunder. A Registered Note may be assigned or sold in whole or in
      part only by registration of such assignment or sale on the Register. Upon
      its
      receipt of a request to assign or sell all or part of any Registered Note by
      a
      Holder, the Company shall record the information contained therein in the
      Register and issue one or more new Registered Notes in the same aggregate
      principal amount as the principal amount of the surrendered Registered Note
      to
      the designated assignee or transferee pursuant to Section 17. Notwithstanding
      anything to the contrary set forth herein, upon conversion of any portion of
      this Note in accordance with the terms hereof, the Holder shall not be required
      to physically surrender this Note to the Company unless (A) the full Conversion
      Amount represented by this Note is being converted or (B) the Holder has
      provided the Company with prior written notice (which notice may be included
      in
      a Conversion Notice) requesting physical surrender and reissue of this Note.
       The Holder and the Company shall maintain records showing the Principal,
      Interest and Late Charges converted and the dates of such conversions or shall
      use such other method, reasonably satisfactory to the Holder and the Company,
      so
      as not to require physical surrender of this Note upon conversion.

    

    (iv) Disputes.
       In
      the event of a dispute as to the number of shares of Common Stock issuable
      to
      the Holder in connection with a conversion of this Note, the Company shall
      issue
      to the Holder the number of shares of Common Stock not in dispute and resolve
      such dispute in accordance with Section 23.

    

    (d) Limitations
      on Conversions. 

    

    
      
        
        

      

      
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    (i) Beneficial
      Ownership.
       The Holder of this Note (including any successor, transferee or assignee)
      shall not have the right to convert any portion of this Note pursuant to Section
      3(a) to the extent that, after giving effect to such conversion, the Holder
      (together with the Holder's Affiliates) would beneficially own in excess of
      4.99% (as may be adjusted in the manner described below, the "Maximum
      Percentage")
      of the
      number of shares of Common Stock outstanding immediately after giving effect
      to
      such conversion.  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
      Note with respect to which the determination of such sentence is being made,
      but
      shall exclude the number of shares of Common Stock which would be issuable
      upon
      (A) conversion of the remaining, nonconverted portion of this Note beneficially
      owned by the Holder or any of its Affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any Other Notes or Warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its Affiliates.  Except
      as set forth in the preceding sentence, for purposes of this Section 3(d)(i),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended.  For purposes of this Section
      3(d)(i), in determining the number of outstanding shares of Common Stock, the
      Holder may rely on the number of outstanding shares of Common Stock as reflected
      in the most recently filed document among: (x) the Company's most recent public
      filing with the Securities and Exchange Commission containing such information,
      (y) a more recent public announcement by the Company or (z) any other notice
      by
      the Company or the Transfer Agent setting forth the number of shares of Common
      Stock outstanding.  For any reason at any time, during regular business
      hours of the Company and upon the written request of the Holder, the Company
      shall within two (2) Business Days confirm 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 Note,
      by
      the Holder or its Affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported.  By written notice to the
      Company, the Holder may increase or decrease the Maximum Percentage to any
      other
      percentage specified in such notice; provided that (i) any such increase will
      not be effective until the sixty-first (61st
      ) day
      after such notice is delivered to the Company, (ii) any such increase or
      decrease will apply only to the Holder and not to any other holder of Notes,
      and
      (iii) such Maximum Percentage shall not, in any event, exceed
      19.99%.

     

    4. RIGHTS
      UPON EVENT OF DEFAULT.

    

    (a) Event
      of Default.
       Each of the following events shall constitute an "Event of
      Default":

    

    (i) the
      failure of the applicable Registration Statement required to be filed pursuant
      to the Registration Rights Agreement to be declared effective by the SEC on
      or
      prior to the date that is thirty (30) days after the applicable Effectiveness
      Deadline (as defined in the Registration Rights Agreement), or, while the
      applicable Registration Statement is required to be maintained effective
      pursuant to the terms of the Registration
      Rights Agreement, the effectiveness of the applicable Registration Statement
      lapses for any reason (including, without limitation, the issuance of a stop
      order) or is unavailable to any holder of the Notes for sale of all of such
      holder's Registrable Securities (as defined in the Registration Rights
      Agreement) in accordance with the terms of the Registration Rights Agreement,
      and such lapse or unavailability continues for a period of ten (10) consecutive
      days or for more than an aggregate of thirty (30) days in any 365-day period
      (other than days during an Allowable Grace Period (as defined in the
      Registration Rights Agreement));

    

    
      
        
        

      

      
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    (ii) the
      suspension from trading or failure of the Common Stock to be listed on the
      Principal Market or on an Eligible Market for a period of ten (10) consecutive
      Trading Days or for more than an aggregate of twenty (20) Trading Days in any
      365-day period;

     

    (iii) the
      Company's (A) failure to cure a Conversion Failure by delivery of the required
      number of shares of Common Stock within five (5) Business Days after the
      applicable Conversion Date or (B) written notice to any holder of the Notes,
      including by way of public announcement or through any of its authorized agents,
      at any time, of its intention not to comply with a request for conversion of
      any
      Notes into shares of Common Stock that is tendered in accordance with the
      provisions of the Notes;

     

    (iv) after
      the
      Share Increase Authorization, at any time following the tenth (10th)
      consecutive Business Day that the authorized number of shares is less than
      the
      number of shares of Common Stock that the Holder would be entitled to receive
      upon a conversion of three hundred percent (300%) of the full Conversion Amount
      of this Note (without regard to any limitations on conversion set forth in
      Section 3(d) or otherwise);

     

    (v) the
      Company's failure to pay to the Holder any amount of Principal (including,
      without limitation, any redemption payment), Interest, Late Charges or other
      amounts when and as due under this Note or any other Transaction Document (as
      defined in the Securities Purchase Agreement) or any other agreement, document,
      certificate or other instrument delivered in connection with the transactions
      contemplated hereby and thereby to which the Holder is a party, except, in
      the
      case of a failure to pay Interest and Late Charges when and as due, in which
      case only if such failure continues for a period of at least five (5) Business
      Days;

     

    (vi) any
      default under, redemption of or acceleration prior to maturity of any
      Indebtedness in excess of $100,000, in the aggregate, of the Company or any
      of
      its Subsidiaries (as defined in Section 3(a) of the Securities Purchase
      Agreement);

     

    (vii) the
      Company or any of its Subsidiaries, pursuant to or within the meaning of Title
      11, U.S. Code, or any similar Federal, foreign or state law for the relief
      of
      debtors (collectively, "Bankruptcy
      Law"),
      (A)
      commences a voluntary case, (B) consents to the entry of an order for relief
      against it in an involuntary case, (C) consents to the appointment of a
      receiver, trustee, assignee, liquidator or similar official
      (a
      "Custodian"),
      (D)
      makes a general assignment for the benefit of its creditors or (E) admits in
      writing that it is generally unable to pay its debts as they become
      due;

     

    
      
        
        

      

      
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    (viii) a
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that (A) is for relief against the Company or any of its Subsidiaries in an
      involuntary case, (B) appoints a Custodian of the Company or any of its
      Subsidiaries or (C) orders the liquidation of the Company or any of its
      Subsidiaries and such order or decree is not dismissed within sixty (60)
      days;

     

    (ix) a
      final
      judgment or judgments for the payment of money aggregating in excess of $500,000
      are rendered against the Company or any of its Subsidiaries and which judgments
      are not, within sixty (60) days after the entry thereof, bonded, discharged
      or
      stayed pending appeal, or are not discharged within sixty (60) days after the
      expiration of such stay; provided, however, that any judgment which is covered
      by insurance or an indemnity from a credit worthy party shall not be included
      in
      calculating the $500,000 amount set forth above so long as the Company provides
      the Holder a written statement from such insurer or indemnity provider (which
      written statement shall be reasonably satisfactory to the Holder) to the effect
      that such judgment is covered by insurance or an indemnity and the Company
      will
      receive the proceeds of such insurance or indemnity within thirty (30) days
      of
      the issuance of such judgment;

     

    (x) the
      Company materially breaches any representation, warranty, covenant or other
      term
      or condition of any Transaction Document (provided that any Securities Breach
      (as defined herein) shall be deemed material), specifically including but not
      limited to Section 4(d) of the Securities Purchase Agreement, except, in the
      case of a material breach of a covenant which is curable, only if such material
      breach continues beyond the applicable cure period allowed for in such
      Transaction Document or, if no such cure period is otherwise specified in such
      Transaction Document, for a period of at least ten (10) consecutive Business
      Days, provided that an Event of Default under another sub-section of Section
      4(a) shall not be covered by this sub-section 4(a)(x); or

     

    (xi) any
      breach or failure in any respect to comply with (x) Section 15 of this Note
      or
      (y) any of the Potential Partner Conditions;

     

    (xii) the
      inability of the Common Stock to be transferred with DTC through the Deposit
      Withdrawal at Custodian system;

     

    (xiii) the
      Company performs or the Common Stock becomes subject to a reverse stock split
      other than the Reverse Stock Split as set out in the Securities Purchase
      Agreement;

     

    (xiv) notwithstanding
      anything to the contrary herein, either the Share Increase Authorization or
      the
      Reverse Stock Split is not approved by the Company’s Shareholders and Board of
      Directors and executed by May 31, 2007; or

     

    (xv) the
      Company (A) defaults under any of the agreements or arrangements with respect
      to
      the Company’s indebtedness described in Schedule 3(s) to the Securities Purchase
      Agreement, except with respect to any payment obligation that is being satisfied
      by a payment from the escrow by the Escrow Agent or (B) after five (5) days
      of
      the Closing a Lien (as defined in the Security Agreement) exists against the
      Company or its subsidiaries, excluding (i) any Lien arising under or disclosed
      in the schedules to the Security Agreement, (ii) any Lien arising under the
      agreements and arrangements set out in Schedule 3(s) or (iii) any Permitted
      Lien.

     

    
      
        
        

      

      
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    (b) Redemption
      Right.
       Upon the occurrence of an Event of Default with respect to this Note, the
      Company shall within two (2) Business Days after the day on which the Company
      is
      aware of the Event of Default deliver written notice thereof via facsimile
      and
      overnight courier (an "Event
      of Default Notice")
      to the
      Holder. After an Event of Default occurs, the Conversion Price shall be
      permanently decreased (but not increased) on the first Trading Day of each
      calendar month thereafter (each a “Default
      Adjustment Date”)
      until
      the Default Amount is paid in full or such Event of Default is cured to a price
      equal to the lesser of (i) the Conversion Price then in effect or (ii) the
      lowest Market Price on any Default Adjustment Date since such Event of Default
      began.

     

    At
      any
      time after the earlier of the Holder's receipt of an Event of Default Notice
      and
      the Holder becoming aware of an Event of Default, the Holder may require the
      Company to redeem all or any portion of this Note by delivering written notice
      thereof (the "Event
      of Default Redemption Notice")
      to the
      Company, which Event of Default Redemption Notice shall indicate the portion
      of
      this Note the Holder is electing to redeem.  Each portion of this Note
      subject to redemption by the Company pursuant to this Section 4(b) shall be
      redeemed by the Company at a price equal to the greater of (i) the product
      of
      (x) the Conversion Amount to be redeemed together with accrued and unpaid
      Interest with respect to such Conversion Amount and accrued and unpaid Late
      Charges with respect to such Conversion Amount and Interest and (y) the
      Redemption Premium and (ii) the product of (A) the greatest Conversion Rate
      with
      respect to such Conversion Amount in effect from such time as the Holder
      delivers an Event of Default Redemption Notice until the date that the Company
      pays the amounts due under the Event of Default Redemption Notice to the Holder
      (for the purposes of clarification, the “greatest Conversion Rate” is that which
      yields the greatest number of Conversion Shares) and (B) the greater of the
      Closing Sale Price of the Common Stock on the date immediately preceding such
      Event of Default, the date the Event of Default Redemption Price is paid or
      the
      day before the Event of Default Redemption Notice is delivered (the
      "Event
      of Default Redemption Price").
       Redemptions required by this Section 4(b) shall be made in accordance with
      the provisions of
      Section
      12.  To the extent redemptions required by this Section 4(b) are deemed or
      determined by a court of competent jurisdiction to be prepayments of the Note
      by
      the Company, such redemptions shall be deemed to be voluntary prepayments.
       The parties hereto agree that in the event of the Company's redemption of
      any portion of the Note under this Section 4(b), the Holder's damages would
      be
      uncertain and difficult to estimate because of the parties' inability to predict
      future interest rates and the uncertainty of the availability of a suitable
      substitute investment opportunity for the Holder.  Accordingly, any
      Redemption Premium due under this Section 4(b) is intended by the parties to
      be,
      and shall be deemed, a reasonable estimate of the Holder's actual loss of its
      investment opportunity and not as a penalty. 

     

    (c) Posting
      of Bond.
      In the
      event that any Event of Default occurs hereunder or under any of the other
      Transaction Documents (as defined in the Securities Purchase
      Agreement) relating
      to the failure of the Company to (i) deliver shares of Common Stock upon
      conversion of a Note or exercise of a Warrant, (ii) remove restrictive legends
      or (iii) provide for the registration of shares of Common Stock, in each case
      in
      a manner consistent with the Company's obligations under the Transaction
      Documents (each, a "Securities
      Breach"),
      the
      Company may not raise as a legal defense in any Lawsuit (as defined below)
      or
      justification to such Event of Default any claim that such Holder or anyone
      associated or affiliated with such Holder has been engaged in any violation
      of
      law, unless the Company has posted a surety bond (a “Surety
      Bond”)
      for
      the benefit of such Holder in an amount equal to the aggregate Surety Bond
      Value
      (as defined below) of all of the Holder’s Note and Warrants (the “Bond
      Amount”),
      which
      Surety Bond shall remain in effect until the completion of the Lawsuit and
      the
      proceeds of which shall be payable to such Holder to the extent Holder obtains
      judgment. 

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    For
      purposes hereof, a “Lawsuit”
shall
      mean any lawsuit, arbitration or other dispute resolution filed by either party
      herein pertaining to any of the Transaction Documents (as defined in the
      Securities Purchase Agreement). 

    

    “Note
      Market Value”
shall
      mean the outstanding principal amount of this Note, plus any accrued and unpaid
      Interest, fees and penalties, divided by the lowest Conversion Price in effect
      at any time during the period between the applicable Event of Default and the
      filing of the Surety Bond required by this subsection (the “Surety
      Bond Pricing Period”),
      all
      multiplied by the highest Closing Sale Price during the Surety Bond Pricing
      Period.

    

    “Surety
      Bond Value”
for
      each Note, shall mean 130% of the highest Note Market Value (as defined above)
      of each of the Holder’s Note and for each Warrant, shall mean 130% of the
      highest Black Scholes value (as computed in Section 4(c) of the Warrants) of
      each of the Holder’s Warrants (where, in each case, such highest market value
      represents the highest value determined during the period from the date of
      the
      subject Event of Default through the Trading Day preceding the date that such
      Surety Bond goes into effect).

    

    (d) Injunction
      and Posting of Bond.
      In the
      event that the Event of Default referred to in subsection 4(c) above pertains
      to
      the Company’s failure to deliver unlegended shares of Common Stock to the Holder
      pursuant to a Note conversion, Warrant exercise, legend removal request, or
      otherwise, the Company may not refuse such unlegended share delivery based
      on
      any claim that such Holder or any one associated or affiliated with such Holder
      has been engaged in any violation of law, unless an injunction from a court,
      on
      prior notice to Holder, restraining and or enjoining conversion of all or part
      of said Note shall have been sought and obtained by the Company and the Company
      has posted a Surety Bond for the benefit of such Holder in the amount of the
      Bond Amount (as described above), which bond shall remain in effect until the
      completion of the Lawsuit and the proceeds of which shall be payable to such
      Holder to the extent Holder obtains judgment. 

     

    5. RIGHTS
      UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

    

    (a) Assumption.
       The Company shall not enter into or be party to a Fundamental Transaction
      unless (i)  the Successor Entity assumes in writing all of the obligations
      of the Company under this Note and the other Transaction Documents in accordance
      with the provisions of this Section 5(a) pursuant to written agreements in
      form
      and substance satisfactory to the Required Holders and approved by the Required
      Holders prior to such Fundamental Transaction, including agreements to deliver
      to each holder of Notes in exchange for such Notes a security of the Successor
      Entity evidenced by a written instrument substantially similar in form and
      substance to the Notes, including, without limitation, having a principal amount
      and interest rate equal to the principal amounts and the interest rates of
      the
      Notes held by such holder, having similar conversion rights as the Notes and
      having similar ranking to the Notes, and satisfactory to the Required Holders
      and (ii) the Successor Entity (including its Parent Entity) is a publicly
      traded corporation whose common stock is quoted on or listed for trading on
      an
      Eligible Market.  Upon the occurrence of any Fundamental Transaction, the
      Successor Entity shall succeed to, and be substituted for (so that from and
      after the date of such Fundamental Transaction, the provisions of this Note
      referring to the "Company" shall refer instead to the Successor Entity), and
      may
      exercise every right and power of the Company and shall assume all of the
      obligations of the Company under this Note with the same effect as if such
      Successor Entity had been named as the Company herein.  Upon consummation
      of the Fundamental Transaction, the Successor Entity shall deliver to the Holder
      confirmation that there shall be issued upon conversion or redemption of this
      Note at any time after the consummation of the Fundamental Transaction, in
      lieu
      of the shares of Common Stock (or other securities, cash, assets or other
      property) issuable upon the conversion of the Notes prior to such Fundamental
      Transaction, such shares of publicly traded common stock (or their equivalent)
      of the Successor Entity, as adjusted in accordance with the provisions of this
      Note.  The provisions of this Section shall apply similarly and equally to
      successive Fundamental Transactions and shall be applied without regard to
      any
      limitations on the conversion of this Note.

     

    
      
        
        

      

      
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    (b) Change
      of Control; Redemption Right.
       As soon as reasonably practicable prior to the consummation of a Change of
      Control, but not prior to the public announcement of such Change of Control,
      the
      Company shall deliver written notice thereof via facsimile and overnight courier
      to the Holder (a "Change
      of Control Notice").
       At any time during the period beginning after the Holder's receipt of a
      Change of Control Notice and ending with the consummation of such Change of
      Control, the Holder may require the Company to redeem all or any portion of
      this
      Note by delivering written notice thereof
      ("Change
      of Control Redemption Notice")
      to the
      Company, which Change of Control Redemption Notice shall indicate the Conversion
      Amount the Holder is electing to redeem.  The portion of this Note subject
      to redemption pursuant to this Section 5(b) shall be redeemed by the Company
      in
      cash at a price equal to the greater of (i) the product of the Change of Control
      Premium and the product of (x) the sum of the Conversion Amount being redeemed
      and any accrued and unpaid Interest with respect to such Conversion Amount
      and
      accrued and unpaid Late Charges with respect to such Conversion Amount and
      Interest and (y) the quotient determined by dividing (A) the average Closing
      Sale Price of the Common Stock for the ten (10) Trading Days immediately
      following the public announcement of such proposed Change of Control by (B)
      the
      Conversion Price and (ii) 150% of the sum of the Conversion Amount being
      redeemed and any accrued and unpaid Interest with respect to such Conversion
      Amount subject to such Change of Control Redemption and accrued and unpaid
      Late
      Charges with respect to such Conversion Amount and Interest (the "Change
      of Control Redemption Price").
       Redemptions required by this Section 5 shall be made in accordance with
      the provisions of Section 12 and shall have priority to payments to shareholders
      in connection with a Change of Control.  To the extent redemptions required
      by this Section 5(b) are deemed or determined by a court of competent
      jurisdiction to be prepayments of the Note by the Company, such redemptions
      shall be deemed to be voluntary prepayments.  Notwithstanding anything to
      the contrary in this Section 5, until the Change of Control Redemption Price
      (together with any interest thereon) is paid in full, the Conversion Amount
      submitted for redemption under this Section 5(c) may be converted, in whole
      or
      in part, by the Holder into shares of Common Stock, or in the event the
      Conversion Date is after the consummation of the Change of Control, shares
      of
      publicly traded common stock (or their equivalent) of the Successor Entity
      pursuant to Section 3. The parties hereto agree that in the event of the
      Company's redemption of any portion of the Note under this Section 5(b), the
      Holder's damages would be uncertain and difficult to estimate because of the
      parties' inability to predict future interest rates and the uncertainty of
      the
      availability of a suitable substitute investment opportunity for the Holder.
       Accordingly, any redemption premium due under this Section 5(b) is
      intended by the parties to be, and shall be deemed, a reasonable estimate of
      the
      Holder's actual loss of its investment opportunity and not as a
      penalty.

     

    
      
        
        

      

      
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    6. RIGHTS
      UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

    

    (a) Purchase
      Rights.
       If at any time the Company grants, issues or sells any Options,
      Convertible Securities or rights to purchase stock, warrants, securities or
      other property pro rata to the record holders of any class of Common Stock
      (the
      "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete conversion of this Note (without taking into account any
      limitations or restrictions on the convertibility of this Note) immediately
      before the date on which a record is taken for the grant, issuance or sale
      of
      such Purchase Rights, or, if no such record is taken, the date as of which
      the
      record holders of Common Stock are to be determined for the grant, issue or
      sale
      of such Purchase Rights.

    

    (b) Other
      Corporate Events.
       In addition to and not in substitution for any other rights hereunder,
      prior to the consummation of any Fundamental Transaction pursuant to which
      holders of shares of Common Stock are entitled to receive securities or other
      assets with respect
      to or in exchange for shares of Common Stock (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon a conversion of this Note, at the
      Holder's option, (i) in addition to the shares of Common Stock receivable upon
      such conversion, such securities or other assets to which the Holder would
      have
      been entitled with respect to such shares of Common Stock had such shares of
      Common Stock been held by the Holder upon the consummation of such Corporate
      Event (without taking into account any limitations or restrictions on the
      convertibility of this Note) or (ii) in lieu of the shares of Common Stock
      otherwise receivable upon such conversion, such securities or other assets
      received by the holders of shares of Common Stock in connection with the
      consummation of such Corporate Event in such amounts as the Holder would have
      been entitled to receive had this Note initially been issued with conversion
      rights for the form of such consideration (as opposed to shares of Common Stock)
      at a conversion rate for such consideration commensurate with the Conversion
      Rate.  Provision made pursuant to the preceding sentence shall be in a form
      and substance reasonably satisfactory to the Required Holders.  The
      provisions of this Section shall apply similarly and equally to successive
      Corporate Events and shall be applied without regard to any limitations on
      the
      conversion or redemption of this Note.

    

    7. RIGHTS
      UPON ISSUANCE OF OTHER SECURITIES.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (a) Adjustment
      of Conversion Price upon Issuance of Common Stock.
       Except with respect to the transactions described in Schedule 4(o) to the
      Securities Purchase Agreement, if at any time after the Subscription Date the
      Company issues or sells, or in accordance with this Section 7(a) is deemed
      to
      have issued or sold, any shares of Common Stock (including the issuance or
      sale
      of shares of Common Stock owned or held by or for the account of the Company,
      but excluding shares of Common Stock deemed to have been issued or sold by
      the
      Company in connection with any Excluded Securities) for a consideration per
      share (the "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to Conversion Price in effect immediately prior to such issue or sale (the
      foregoing a "Dilutive
      Issuance"),
      then
      immediately after such Dilutive Issuance, the Conversion Price then in effect
      shall be reduced to the New Issuance Price.  For purposes of determining
      the adjusted Conversion Price under this Section 7(a), the following shall
      be
      applicable:

    

    (i) Issuance
      of Options.
       If the Company in any manner grants or sells any Options and the lowest
      price per share for which one share of Common Stock is issuable upon the
      exercise of any such Option or upon conversion or exchange or exercise of any
      Convertible Securities issuable upon exercise of such Option is less than the
      Applicable Price, then such share of Common Stock shall be deemed to be
      outstanding and to have been issued and sold by the Company at the time of
      the
      granting or sale of such Option for such price per share.  For purposes of
      this Section 7(a)(i), the "lowest price per share for which one share of Common
      Stock is issuable upon the exercise of any such Option or upon conversion or
      exchange or exercise of any Convertible Securities issuable upon exercise of
      such Option" shall be equal to the sum of the lowest amounts of consideration
      (if any) received or receivable by the Company with respect to any one share
      of
      Common Stock upon granting or sale of the Option, upon exercise of the Option
      and upon conversion or exchange or exercise of any Convertible Security issuable
      upon exercise of such Option.  No further adjustment of the Conversion
      Price shall be made upon the actual issuance of such share of Common Stock
      or of
      such Convertible Securities upon the exercise of such Options or upon the
      actual
      issuance
      of such Common Stock upon conversion or exchange or exercise of such Convertible
      Securities.

    

    (ii) Issuance
      of Convertible Securities.
       If the Company in any manner issues or sells any Convertible Securities
      and the lowest price per share for which one share of Common Stock is issuable
      upon such conversion or exchange or exercise thereof is less than the Applicable
      Price, then such share of Common Stock shall be deemed to be outstanding and
      to
      have been issued and sold by the Company at the time of the issuance or sale
      of
      such Convertible Securities for such price per share.  For the purposes of
      this Section 7(a)(ii), the "lowest price per share for which one share of Common
      Stock is issuable upon such conversion or exchange or exercise" shall be equal
      to the sum of the lowest amounts of consideration (if any) received or
      receivable by the Company with respect to any one share of Common Stock upon
      the
      issuance or sale of the Convertible Security and upon the conversion or exchange
      or exercise of such Convertible Security.  No further adjustment of the
      Conversion Price shall be made upon the actual issuance of such share of Common
      Stock upon conversion or exchange or exercise of such Convertible Securities,
      and if any such issue or sale of such Convertible Securities is made upon
      exercise of any Options for which adjustment of the Conversion Price had been
      or
      are to be made pursuant to other provisions of this Section 7(a), no further
      adjustment of the Conversion Price shall be made by reason of such issue or
      sale.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (iii) Change
      in Option Price or Rate of Conversion.
       If the purchase price provided for in any Options, the additional
      consideration, if any, payable upon the issue, conversion,  exchange or
      exercise of any Convertible Securities, or the rate at which any Convertible
      Securities are convertible into or exchangeable or exercisable for Common Stock
      changes at any time, the Conversion Price in effect at the time of such change
      shall be adjusted to the Conversion Price which would have been in effect at
      such time had such Options or Convertible Securities provided for such changed
      purchase price, additional consideration or changed conversion rate, as the
      case
      may be, at the time initially granted, issued or sold.  For purposes of
      this Section 7(a)(iii), if the terms of any Option or Convertible Security
      that
      was outstanding as of the Subscription Date are changed in the manner described
      in the immediately preceding sentence, then such Option or Convertible Security
      and the Common Stock deemed issuable upon exercise, conversion or exchange
      thereof shall be deemed to have been issued as of the date of such change.
       No adjustment shall be made if such adjustment would result in an increase
      of the Conversion Price then in effect.

    

    (iv) Calculation
      of Consideration Received.
       In case any Option is issued in connection with the issue or sale of other
      securities of the Company, together comprising one integrated transaction in
      which no specific consideration is allocated to such Options by the parties
      thereto, the Options will be deemed to have been issued for such consideration
      as determined in good faith by the Board of Directors of the Company.  If
      any Common Stock, Options or Convertible Securities are issued or sold or deemed
      to have been issued or sold for cash, the consideration received therefor will
      be deemed to be the net amount received by the Company therefor.  If any
      Common Stock, Options or Convertible Securities are issued or sold for a
      consideration other than cash, the amount of the consideration other than cash
      received by the Company will be the fair
      value of
      such consideration as determined in good faith by the Board of Directors of
      the
      Company, except where such consideration consists of securities, in which case
      the amount of consideration received by the Company will be the Closing Sale
      Price of such securities on the date of receipt.  If any Common Stock,
      Options or Convertible Securities are issued to the owners of the non-surviving
      entity in connection with any merger in which the Company is the surviving
      entity, the amount of consideration therefor will be deemed to be the fair
      value
      of such portion of the net assets and business of the non-surviving entity
      as is
      attributable to such Common Stock, Options or Convertible Securities, as the
      case may be.  Except as otherwise provided in this Section 7(a)(iv), the
      fair value of any consideration other than cash or securities will be determined
      jointly by the Company and the Required Holders.  If such parties are
      unable to reach agreement within ten (10) days after the occurrence of an event
      requiring valuation (the "Valuation
      Event"),
      the
      fair value of such consideration will be determined by an independent, reputable
      appraiser jointly selected by the Company and the Required Holders within five
      (5) Business Days after the tenth day following the Valuation Event.  The
      determination of such appraiser shall be deemed binding upon all parties absent
      manifest error and the fees and expenses of such appraiser shall be borne by
      the
      Company.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (v) Record
      Date.
       If the Company takes a record of the holders of Common Stock for the
      purpose of entitling them (A) to receive a dividend or other distribution
      payable in Common Stock, Options or in Convertible Securities or (B) to
      subscribe for or purchase Common Stock, Options or Convertible Securities,
      then
      such record date will be deemed to be the date of the issue or sale of the
      Common Stock deemed to have been issued or sold upon the declaration of such
      dividend or the making of such other distribution or the date of the granting
      of
      such right of subscription or purchase, as the case may be.

    

    (b) Adjustment
      of Conversion Price upon Subdivision or Combination of Common
      Stock.
       If the Company at any time on or after the Subscription Date subdivides
      (by any stock split, stock dividend, recapitalization or otherwise) one or
      more
      classes of its outstanding shares of Common Stock into a greater number of
      shares, the Conversion Price in effect immediately prior to such subdivision
      will be proportionately reduced.  If the Company at any time on or after
      the Subscription Date combines (by combination, reverse stock split or
      otherwise) one or more classes of its outstanding shares of Common Stock into
      a
      smaller number of shares, the Conversion Price in effect immediately prior
      to
      such combination will be proportionately increased.

    

    (c) Other
      Events.
       If any event occurs of the type contemplated by the provisions of this
      Section 7 but not expressly provided for by such provisions (including, without
      limitation, the granting of stock appreciation rights, phantom stock rights
      or
      other rights with equity features), then the Company's Board of Directors will
      make any adjustment in the Conversion Price it deems, in its sole discretion,
      to
      be necessary to protect the rights of the Holder under this Note; provided
      that
      no such adjustment will increase the Conversion Price as otherwise determined
      pursuant to this Section 7.

    

    8. COMPANY
      RIGHT OF REDEMPTION.
       

    

    [(a) General.
      The
      Company,
      at its
      option, shall have the right to redeem, with three (3) Business Days advance
      written notice (the "Company
      Redemption Notice"),
      a
      portion or all of the outstanding principal of the Note (the "Company
      Redemption Amount").
      The
      redemption price shall be the greater of (i) One Hundred and Twenty percent
      (120%) (One Hundred and Ten percent (110%) for the first six (6) months
      immediately following the Issuance Date) of the face amount redeemed; and (ii)
      the product of (x) the remaining Conversion Amount together
      with accrued and unpaid Interest with respect to such Conversion Amount and
      accrued and unpaid Late Charges with respect to such Conversion Amount and
      Interest and divided
      by the Conversion Price in effect on the Trading Day the Company Redemption
      Notice is sent or
      such
      following Trading Day if the Company Redemption Notice is not sent on a Trading
      Day and (y)
      the
      Weighted Average Price on the Trading Day the Company Redemption Notice is
      sent
      or such following Trading Day if the Company Redemption Notice is not sent
      on a
      Trading Day (the "Company
      Redemption Price"). The
      Company shall pay the Company Redemption Price plus accrued and unpaid interest
      on all redemption payments made pursuant to the Note, including payments made
      before, on, or after the Maturity Date. For all payments under this Note, the
      payment of the Company Redemption Price by the Company shall be in addition
      to
      any accrued interest due.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (b) Mechanics
      of Company Redemption.
       If the Company elects to redeem the Note in accordance with Section 8(a),
      then the Company Redemption Price plus accrued and unpaid interest, if any,
      which is to be paid to the Holder, shall be paid, by wire transfer of
      immediately available funds on the third Business Day following delivery of
      the
      Company Redemption Notice.  If the Company fails to deliver the Company
      Redemption Price on such date, then at the option of the Holder designated
      in
      writing to the Company (any such designation, a "Conversion
      Notice"
      for
      purposes of this Note), the Holder may require the Company to convert all or
      any
      part of the Company Redemption Amount at the Conversion Price.  Conversions
      required by this Section 8(b) shall be made in accordance with the provisions
      of
      Section 3(c). Notwithstanding anything to the contrary in this Section 8(b),
      but
      subject to Section 3(d), until the Company Redemption Price (together with
      any
      interest thereon) is paid in full, the Company Redemption Price (together with
      any interest thereon) may be converted, in whole or in part, by the Holder
      into
      Common Stock pursuant to Section 3. Any conversions initiated after the Holder’s
      receipt of its Company Redemption Notice through the day the Company Redemption
      Price is paid shall be credited against the amount redeemed.]

    

    OR

    

    [(a) General.
      Anytime
      after the Effective Date, if (i) the Equity Payment Conditions have all been
      met
      for each of the prior twenty (20) Trading Days, and (ii) the Market Price of
      the
      Common Stock for each of the prior twenty (20) Trading Days exceeds 200% of
      the
      initial Conversion Price for this Debenture, then the Company may provide to
      the
      Holders a twenty (20) Trading Day advance notice (a “Company
      Redemption Notice”)
      stating that the Company has elected to Redeem all or any portion of the
      outstanding Debenture (the “Company
      Redemption Amount”)
      on the
      date that is twenty (20) Trading Days after the date of such notice (the
“Target
      Redemption Date”),
      and
      certifying that the Company has set aside available cash in the amount of the
      aggregate projected Company Redemption Amount (as defined below) for use in
      effecting the redemption. If the Equity Payment Conditions are met during each
      Trading Day of the twenty (20) consecutive Trading Day period immediately
      preceding the Target Redemption Date (the “Threshold
      Period”)
      and
      the daily VWAP for the Common Stock exceeds 200% of the Initial Conversion
      Price
      of this Debenture during each Trading Day of such Threshold Period, then the
      Company shall, within five (5) Trading Days after such Threshold Period, deliver
      the Company Redemption Amount (as defined below) to each Holder (a “Company
      Redemption”).
      If
      any one or more of the Equity Payment Conditions are not met on any Trading
      Day
      during the Threshold Period, then the Company shall not be entitled to redeem
      the portion of the Debenture described in the Company Redemption Notice. Any
      Company Redemption shall be applied ratably to all of the Holders in proportion
      to each Holder’s initial purchase of its Debenture under the Securities Purchase
      Agreement, provided that any voluntary Conversions by a Holder during the
      Threshold Period shall be applied against such Holder’s pro-rata allocation
      thereby decreasing the aggregate amount forcibly converted hereunder. The
      Holder, at its option, may continue to convert its Debenture in accordance
      with
      the terms hereof after the receipt of Company Redemption Notice until the Holder
      receives payment of the Company Redemption Amount, and the amount of this
      Debenture to be redeemed shall not exceed the amount which remains outstanding
      as of the date of Payment of the Company Redemption Amount. Once the Company
      delivers a Company Redemption Notice, the Company may not deliver another such
      notice for at least thirty (30) Trading Days. For the first six (6) months
      immediately following the Issuance Date, the “Company
      Redemption Price”
shall
      equal one hundred and ten percent (110%) of the outstanding principal amount
      of
      the Debenture being redeemed, plus any accrued and unpaid Interest, fees and
      penalties. Thereafter, the “Company
      Redemption Price”
shall
      equal one hundred and twenty percent (120%) of the outstanding principal amount
      of the Debenture being redeemed, plus any accrued and unpaid Interest, fees
      and
      penalties. 

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    A
      Company
      Redemption of the Debenture shall have not any effect on the Holder’s Warrants.
      Notwithstanding any Company Redemption of the Debenture, the Holder shall retain
      all of the outstanding Warrants which it received upon
      Closing.]

    

    (c)
      [(b)] Pro
      Rata Redemption Requirement.
      If the
      Company elects to redeem any Company Redemption Amount of this Note pursuant
      to
      Section 8(a) and (i) the Note to BridgePointe Master Fund Ltd. (“BridgePointe”)
      is
      eligible to be redeemed pursuant to Section 8 of such Note, then the Company
      must simultaneously take the same action in the same proportion with respect
      to
      the Other Notes or (ii) if the Note to BridgePointe is not eligible to be
      redeemed pursuant to Section 8 of such Note and the Company notifies the holders
      of the Other Notes of a redemption, upon sending the holders of the Other Notes
      notice of a redemption, the Company must provide BridgePointe notice of such
      redemption, and (A) if the Company receives notice from BridgePointe that it
      will participate in such redemption within two (2) Trading Days, the Company
      must simultaneously take the same action in the same proportion with respect
      to
      the Other Notes and (B) if the Company does not receive notice from BridgePointe
      that it will participate in such redemption within two (2) Trading Days, then
      the Company must simultaneously take the same action in the same proportion
      with
      respect to the Other Notes excluding the Note to BridgePointe.

    

    9. SECURITY.
       This Note is secured to the extent and in the manner set forth in the
      Security Documents (as defined in the Securities Purchase
      Agreement).

    

    10. NONCIRCUMVENTION.
       The Company hereby covenants and agrees that the Company will not, by
      amendment of its Articles of Incorporation, Bylaws or through any
      reorganization, transfer of assets, consolidation, merger, scheme of
      arrangement, dissolution, issue or sale of securities, or any other voluntary
      action, avoid or seek to avoid the observance or performance of any of the
      terms
      of this Note, and will at all times in good faith carry out all of the
      provisions of this Note and take all reasonable action as may be required to
      protect the rights of the Holder of this Note.

    

    11. RESERVATION
      OF AUTHORIZED SHARES.

    

    (a) Reservation.
       Following the Share Increase Authorization (as defined in the Securities
      Purchase Agreement), the Company shall initially reserve out of its authorized
      and unissued Common Stock a number of shares of Common Stock for each of the
      Notes equal to 300% of the Conversion Rate with respect to the Conversion Amount
      of each such Note as of the Issuance Date.  Following the Share Increase
      Authorization, so long as any of the Notes are outstanding, the Company shall
      take all action necessary to reserve and keep available out of its authorized
      and unissued Common Stock, solely for the purpose of effecting the conversion
      of
      the Notes, 300% of the number of shares of Common Stock as shall from time
      to
      time be necessary to effect the conversion of all of the Notes then outstanding;
      provided that at no time shall the number of shares of Common Stock so reserved
      be less than the number of shares required to be reserved of the previous
      sentence (without regard to any limitations on conversions) (the "Required
      Reserve Amount").
      The
      initial number of shares of Common Stock reserved for conversions of the Notes
      and each increase in the number of shares so reserved or increase in the number
      of reserved shares, as the case may be (the "Authorized
      Share Allocation")
      shall
      be allocated pro rata among the Holders of the Notes based on the principal
      amount of the Notes held by each holder at the Closing (as defined in the
      Securities Purchase Agreement). In the event that a holder shall sell or
      otherwise transfer any of such holder’s Notes, each transferee shall be
      allocated a pro rata portion of such holder’s Authorized Share Allocation. Any
      shares of Common Stock reserved and allocated to any Person which ceases to
      hold
      any Notes shall be allocated to the remaining holders of the Notes, pro rata
      based on the principal amount of the Notes then held by such holders.

    

    
      
        
        

      

      
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    (b) Insufficient
      Authorized Shares.
       If at any time while any of the Notes remain outstanding the Company does
      not have a sufficient number of authorized and unreserved shares of Common
      Stock
      to satisfy its obligation to reserve for issuance upon conversion of the Notes
      at least a number of shares of Common Stock equal to the Required Reserve Amount
      (an "Authorized
      Share Failure"),
      then
      the Company shall immediately take all action necessary to increase the
      Company's authorized shares of Common Stock to an amount sufficient to allow
      the
      Company to reserve the Required Reserve Amount for the Notes then outstanding.
       Without limiting the generality of the foregoing sentence, as soon as
      practicable after the date of the occurrence of an Authorized Share Failure,
      but
      in no event later than ninety (90) days after the occurrence of such Authorized
      Share Failure, the Company shall hold a meeting of its shareholders for the
      approval of an increase in the number of authorized shares of Common Stock.
       In connection with such meeting, the Company shall provide each
      shareholder with a proxy or information statement and shall use its reasonable
      best efforts to solicit its shareholders' approval of such increase in
      authorized shares of Common Stock and to cause its board of directors to
      recommend to the shareholders that they approve such proposal.

    

    12. HOLDER'S
      REDEMPTIONS.
       The Company shall deliver the applicable Event of Default Redemption Price
      to the Holder within five (5) Business Days after the Company's receipt of
      the
      Holder's Event of Default Redemption Notice.  If the Holder has submitted a
      Change of Control Redemption Notice in accordance with Section 5(b), the Company
      shall deliver the applicable Change of Control Redemption Price to the Holder
      concurrently with the consummation of such Change of Control. In the event
      of a
      redemption of less than all of the Conversion Amount of this Note, the Company
      shall promptly cause to be issued and delivered to the Holder a new Note (in
      accordance with Section 18(d)) representing the outstanding Principal which
      has
      not been redeemed.  In the event that the Company does not pay the
      applicable Redemption Price to the Holder within the time period required,
      at
      any time thereafter and until the Company pays such unpaid Redemption Price
      in
      full, the Holder shall have the option, in lieu of redemption, to require the
      Company to promptly return to the Holder all or any portion of this Note
      representing the Conversion Amount that was submitted for redemption and for
      which the applicable Redemption Price (together with any Late Charges thereon)
      has not been paid.  Upon the Company's receipt of such notice, (x) the
      applicable Redemption Notice shall be null and void with respect to such
      Conversion Amount, (y) the Company shall immediately return this Note, or issue
      a new Note (in accordance with Section 18(d)) to the Holder representing the
      sum
      of such Conversion Amount to be redeemed together with accrued and unpaid
      Interest with respect to such Conversion Amount and accrued and unpaid Late
      Charges with respect to such Conversion Amount and Interest and (z) the
      Conversion Price of this Note or such new Notes shall be adjusted to the lesser
      of (A) the Conversion Price as in effect on the date on which the applicable
      Redemption Notice is voided and (B) the lowest Closing Bid Price during the
      period beginning on and including the date on which the applicable Redemption
      Notice is delivered to the Company and ending on and including the date on
      which
      the applicable Redemption Notice is voided.  The Holder's delivery of a
      notice voiding a Redemption Notice and exercise of its rights following such
      notice shall not affect the Company's obligations to make any payments of Late
      Charges which have accrued prior to the date of such notice with respect to
      the
      Conversion Amount subject to such notice.

    

    
      
        
        

      

      
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    (b) Redemption
      by Other Holders.
      Upon
      the Company's receipt of notice from any of the holders of the Other Notes
      for
      redemption or repayment as a result of an event or occurrence substantially
      similar to the events or occurrences described in Section 4(b) or Section 5(b)
      (each, an "Other
      Redemption Notice"),
      the
      Company shall immediately, but no later than one (1) Business Day of its receipt
      thereof, forward to the Holder by facsimile a copy of such notice. If the
      Company receives a Redemption Notice and one or more Other Redemption Notices,
      during the seven (7) Business Day period beginning on and including the date
      which is three (3) Business Days prior to the Company's receipt of the Holder's
      Redemption Notice and ending on and including the date which is three (3)
      Business Days after the Company's receipt of the Holder's Redemption Notice
      and
      the Company is unable to redeem all principal, interest and other amounts
      designated in such Redemption Notice and such Other Redemption Notices received
      during such seven (7) Business Day period, then the Company shall redeem a
      pro
      rata amount from each holder of the Notes (including the Holder) based on the
      principal amount of the Notes submitted for redemption pursuant to such
      Redemption Notice and such Other Redemption Notices received by the Company
      during such seven (7) Business Day period.

    

    13. RESTRICTION
      ON REDEMPTION AND CASH DIVIDENDS.
       Until all of the Notes have been converted, redeemed or otherwise
      satisfied in accordance with their terms, the Company shall not, directly or
      indirectly, redeem, repurchase or declare or pay any cash dividend or
      distribution on its Common Stock without the prior express written consent
      of
      the Required Holders.

    

    14. VOTING
      RIGHTS.
       The Holder shall have no voting rights as the holder of this Note, except
      as required by law, including but not limited to Chapter 78 of the Nevada
      Revised Statutes, and as expressly provided in this Note.

    

    15. COVENANTS.
       

    

    (a) Rank.
      All
      payments due under this Note shall (i) rank pari
      passu with
      the
      Other Notes and (ii) be senior to all other Indebtedness of the Company and
      its
      Subsidiaries, other than Permitted Senior Indebtedness.

    

    
      
        
        

      

      
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    (b) Incurrence
      of Indebtedness.
       So long as this Note is outstanding, the Company shall not, and the
      Company shall not permit any of its Subsidiaries to, directly or indirectly,
      incur or guarantee, assume or suffer to exist any Indebtedness, other than
      (i)
      the Indebtedness evidenced by this Note and the Other Notes and (ii) Permitted
      Indebtedness.

    

    (c) Existence
      of Liens.
       So long as this Note is outstanding, the Company shall not, and the
      Company shall not permit any of its Subsidiaries to, directly or indirectly,
      allow or suffer to exist any mortgage, lien, pledge, charge, security interest
      or other encumbrance upon or in any property or assets (including accounts
      and
      contract rights) owned by the Company or any of its Subsidiaries (collectively,
      "Liens")
      other
      than Permitted Liens.

    

    (d) Restricted
      Payments.
       The Company shall not, and the Company shall not permit any of its
      Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay
      or
      make any payments in respect of, by the payment of cash or cash equivalents
      (in
      whole or in part, whether by way of open market purchases, tender offers,
      private transactions or otherwise), all or any portion of any Permitted
      Indebtedness, whether by way of payment in respect of principal of (or premium,
      if any) or interest on, such Indebtedness if at the time such payment is due
      or
      is otherwise made or, after giving effect to such payment, an event
      constituting, or that with the passage of time and without being cured would
      constitute, an Event of Default has occurred and is continuing.

    

    (e) Sales
      of Equity Securities.
       For so long as any interest or principal remains due under this Note,
      except for any issuance of Securities in accordance with the Transaction
      Documents, Excluded Offerings (as defined in the Securities Purchase Agreement)
      or as set forth on Schedule
      4(o)
      to the
      Securities Purchase Agreement, the Company will not, directly or indirectly,
      offer, sell, grant any option to purchase, or otherwise dispose of (or announce
      any offer, sale, grant or any option to purchase or other disposition of) any
      of
      its equity or Common Stock Equivalents (as defined in the Securities Purchase
      Agreement), including without limitation any debt, preferred stock or other
      instrument or security that is, at any time during its life and under any
      circumstances, convertible into or exchangeable or exercisable for shares of
      common equity of the Company, without the prior written consent of the Required
      Holders.

    

    (f) Subsidiary
      Internal Accounting Controls.
       So long as this Note is outstanding, the Company and each of its
      Subsidiaries shall maintain, in all material respects, a system
      of
      internal accounting controls consistent with the Internal Accounting Controls
      (as defined in the Securities Purchase Agreement).

    

    16. VOTE
      TO ISSUE, OR CHANGE THE TERMS OF, NOTES.
       The affirmative vote at a meeting duly called for such purpose or the
      written consent without a meeting of the Required Holders shall be required
      for
      any change or amendment to this Note or the Other Notes.

    

    17. TRANSFER.
       The Holder acknowledges and agrees that, unless otherwise consented to by
      the Company, this Note may only be offered, sold, assigned or transferred by
      the
      Holder if the provisions of Section 2(f) of the Securities Purchase Agreement
      are complied with in all respects.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    18. REISSUANCE
      OF THIS NOTE.

    

    (a) Transfer.
       If this Note is to be transferred, the Holder shall surrender this Note to
      the Company, whereupon the Company will issue, promptly following the
      satisfaction of the provisions of Section 2(f) of the Securities Purchase
      Agreement, and deliver upon the order of the Holder a new Note (in accordance
      with Section 18(d)), in the name of the validly registered assigns or
      transferee, representing the outstanding Principal being transferred by the
      Holder and, if less then the entire outstanding Principal is being transferred,
      a new Note (in accordance with Section 18(d)) to the Holder representing the
      outstanding Principal not being transferred.  The Holder and any assignee,
      by acceptance of this Note, acknowledge and agree that, by reason of the
      provisions of Section 3(c)(iii) and this Section 18(a), following conversion
      or
      redemption of any portion of this Note, the outstanding Principal represented
      by
      this Note may be less than the Principal stated on the face of this
      Note.

    

    (b) Lost,
      Stolen or Mutilated Note.
       Upon receipt by the Company of evidence reasonably satisfactory to the
      Company of the loss, theft, destruction or mutilation of this Note, and, in
      the
      case of loss, theft or destruction, of any indemnification undertaking by the
      Holder to the Company in customary form and, in the case of mutilation, upon
      surrender and cancellation of this Note, the Company shall execute and deliver
      to the Holder a new Note (in accordance with Section 18(d)) representing the
      outstanding Principal.

    

    (c) Note
      Exchangeable for Different Denominations.
       This Note is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Note or Notes (in accordance with
      Section 18(d) and in principal amounts of at least $100,000) representing in
      the
      aggregate the outstanding Principal of this Note, and each such new Note will
      represent such portion of such outstanding Principal as is designated by the
      Holder at the time of such surrender.

     

    (d) Issuance
      of New Notes.
       Whenever the Company is required to issue a new Note pursuant to the terms
      of this Note, such new Note (i) shall be of like tenor with this note,
      (ii)
      shall represent, as indicated on the face of such new Note, the Principal
      remaining outstanding (or in the case of a new Note being issued pursuant to
      Section 18(a) or Section 18(c), the Principal designated by the Holder which,
      when added to the principal represented by the other new Notes issued in
      connection with such issuance, does not exceed the Principal remaining
      outstanding under this Note immediately prior to such issuance of new Notes),
      (iii) shall have an issuance date, as indicated on the face of such new Note,
      which is the same as the Issuance Date of this Note, (iv) shall have the same
      rights and conditions as this Note, and (v) shall represent accrued Interest
      and
      Late Charges on the Principal and Interest of this Note, from the Issuance
      Date.

    

    (e) Registered
      Instrument.
      This
      Note is a registered instrument and is not a bearer instrument. The Note is
      registered as to both Principal and Interest with the Company and its Transfer
      Agent and all payments hereunder shall be made to the named Holder or, in the
      event of a transfer, to the transferee identified in the record of ownership
      of
      the Note maintained by the Holder on behalf of the Company and the Transfer
      Agent. Transfer of this Note may not be effected except in accordance with
      the
      provisions of the Note and the Securities Purchase Agreement.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    19. REMEDIES,
      CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
      RELIEF.
       The remedies provided in this Note shall be cumulative and in addition to
      all other remedies available under this Note and any of the other Transaction
      Documents at law or in equity (including a decree of specific performance and/or
      other injunctive relief), and nothing herein shall limit the Holder's right
      to
      pursue actual and consequential damages for any failure by the Company to comply
      with the terms of this Note.  Amounts set forth or provided for herein with
      respect to payments, conversion and the like (and the computation thereof)
      shall
      be the amounts to be received by the Holder and shall not, except as expressly
      provided herein, be subject to any other obligation of the Company (or the
      performance thereof).  The Company acknowledges that an Event of Default
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such Event of Default may be inadequate.  The Company therefore
      agrees that, in the event of any Event of Default under this Note, the Holder
      shall be entitled, in addition to all other available remedies, to an injunction
      restraining such Event of Default, without the necessity of showing economic
      loss and without any bond or other security being required.

    

    20. PAYMENT
      OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
       If (a) this Note is placed in the hands of an attorney for collection or
      enforcement or is collected or enforced through any legal proceeding or the
      Holder otherwise takes action to collect amounts due under this Note or to
      enforce the provisions of this Note or (b) there occurs any bankruptcy,
      reorganization, receivership of the Company or other proceedings affecting
      Company creditors' rights and involving a claim under this Note, then the
      Company shall pay the costs incurred by the Holder for such collection,
      enforcement or action or in connection with such bankruptcy, reorganization,
      receivership or other proceeding, including, but not limited to, attorneys'
      fees
      and disbursements.

    

    21. CONSTRUCTION;
      HEADINGS.
       This Note shall be deemed to be jointly drafted by the Company and all the
      Purchasers and shall not be construed against any person as the drafter hereof.
       The headings of this Note are for convenience of reference and shall not
      form part of, or affect the interpretation of, this Note.

    

    22. FAILURE
      OR INDULGENCE NOT WAIVER.
       No failure or delay on the part of the Holder in the exercise of any
      power, right or privilege hereunder shall operate as a waiver thereof, nor
      shall
      any single or partial exercise of any such power, right or privilege preclude
      other or further exercise thereof or of any other right, power or
      privilege.

    

    23. DISPUTE
      RESOLUTION.
       In the case of a dispute as to the determination of the Closing Bid Price,
      the Closing Sale Price, the Weighted Average Price or the Market Price or the
      arithmetic calculation of the Conversion Rate or any Redemption Price, the
      Company shall submit the disputed determinations or arithmetic calculations
      via
      facsimile within two (2) Business Days of receipt of the Conversion Notice
      or
      Redemption Notice or other event giving rise to such dispute, as the case may
      be, to the Holder.  If the Holder and the Company are unable to agree upon
      such determination or calculation within three (3) Business Days of such
      disputed determination or arithmetic calculation being submitted to the Holder,
      then the Company shall, within two (2) Business Days submit via facsimile (a)
      the disputed determination of the Closing Bid Price, the Closing Sale Price,
      the
      Weighted Average Price or the Market Price to an independent, reputable
      investment bank selected by the Company and approved by the Holder  (such
      approval not to be unreasonably withheld or delayed) or (b) the disputed
      arithmetic calculation of the Conversion Rate or any Redemption Price to the
      Company's independent, outside accountant.  The Company, at the Company's
      expense, shall cause the investment bank or the accountant, as the case may
      be,
      to perform the determinations or calculations and notify the Company and the
      Holder of the results no later than ten (10) Business Days from the time it
      receives the disputed determinations or calculations.  Such investment
      bank's or accountant's determination or calculation, as the case may be, shall
      be binding upon all parties absent demonstrable error.

    

    
      
        
        

      

      
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    24. NOTICES;
      PAYMENTS.

    

    (a) Notices.
       Whenever notice is required to be given under this Note, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement.  Unless a specific notice is otherwise
      required under this Note, the Company shall provide the Holder with prompt
      written notice of all actions taken pursuant to this Note, including in
      reasonable detail a description of such action and the reason therefore.
 Without limiting the generality of the foregoing, the Company will give
      written notice to the Holder (i) immediately upon any adjustment of the
      Conversion Price, setting forth in reasonable detail, and certifying, the
      calculation of such adjustment and (ii) at least ten  days prior to the
      date on which the Company closes its books or takes a record (A) with respect
      to
      any dividend or distribution upon the Common Stock, (B) with respect to any
      pro
      rata subscription offer to holders of Common Stock or (C) for determining rights
      to vote with respect to any Fundamental Transaction, dissolution or liquidation,
      provided in each case that such information shall be made known to the public
      prior to or in conjunction with such notice being provided to the
      Holder.

    

    (b) Payments.
       Except as otherwise provided in this Note, whenever any payment of cash is
      to be made by the Company to any Person pursuant to this Note, such payment
      shall be made in lawful money of the United States of America by a check drawn
      on the account of the Company and sent via overnight courier service to such
      Person at such address as previously provided to the Company in writing (which
      address, in the case of each of the Purchasers, shall initially be as set forth
      on the Schedule of Buyers attached to the Securities Purchase Agreement);
      provided that the Holder may elect to receive a payment of cash via wire
      transfer of immediately available funds by providing the Company with prior
      written notice setting out such request and the Holder's wire transfer
      instructions.  Whenever any amount expressed to be due by the terms of this
      Note is due on any day which is not a Business Day, the same shall instead
      be
      due on the next succeeding day which is a Business Day and, in the case of
      any
      Interest Date which is not the date on which
      this
      Note is paid in full, the extension of the due date thereof shall not be taken
      into account for purposes of determining the amount of Interest due on such
      date.  Any amount of Principal or other amounts due under the Transaction
      Documents, other than Interest, which is not paid when due shall result in
      a
      late charge being incurred and payable by the Company in an amount equal to
      interest on such amount at the rate of fifteen percent (15%) per annum from
      the
      date such amount was due until the same is paid in full ("Late
      Charge").

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    25. CANCELLATION.
       After all Principal, accrued Interest and other amounts at any time owed
      on this Note has been paid in full, or any redemption premium (including but
      not
      limited to those amounts due under Section 4 or 5 or 8) is paid in full, this
      Note shall automatically be deemed canceled, shall be surrendered to the Company
      for cancellation and shall not be reissued.

    

    26. WAIVER
      OF NOTICE.
       To the extent permitted by law, the Company hereby waives demand, notice,
      protest and all other demands and notices in connection with the delivery,
      acceptance, performance, default or enforcement of this Note and the Securities
      Purchase Agreement.

    

    27. GOVERNING
      LAW; JURISDICTION; JURY TRIAL.
       This Note shall be construed and enforced in accordance with, and all
      questions concerning the construction, validity, interpretation and performance
      of this Note shall be governed by, the internal laws of the State of New York,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New York or any other jurisdictions) that would cause
      the application of the laws of any jurisdictions other than the State of New
      York.  The Company hereby irrevocably submits to the exclusive jurisdiction
      of the state and federal courts sitting in The City of New York, Borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper.  The Company hereby irrevocably waives personal service of
      process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof to such party at the address set forth
      in
      Section 9(f) of the Securities Purchase Agreement and agrees that such service
      shall constitute good and sufficient service of process and notice thereof.
      Nothing contained herein shall be deemed to limit in any way any right to serve
      process in any manner permitted by law.  In the event that any provision of
      this Note is invalid or unenforceable under any applicable statute or rule
      of
      law, then such provision shall be deemed inoperative to the extent that it
      may
      conflict therewith and shall be deemed modified to conform with such statute
      or
      rule of law.  Any such provision which may prove invalid or unenforceable
      under any law shall not affect the validity or enforceability of any other
      provision of this Note.  Nothing contained herein shall be deemed or
      operate to preclude the Holder from bringing suit or taking other legal action
      against the Company in any other jurisdiction to collect on the Company's
      obligations to the Holder, to realize on any collateral or any other security
      for such obligations, or to enforce a judgment or other court ruling in favor
      of
      the Holder.   THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
      AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

    

    28. CERTAIN
      DEFINITIONS.
       For purposes of this Note, the following terms shall have the following
      meanings:

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (a) "Approved
      Stock Plan"
      means
      any employee benefit plan which has been approved by the Board of Directors
      of
      the Company, pursuant to which the Company's securities may be issued to any
      employee, consultant, officer or director for services provided to the
      Company.

    

    (b) "Bloomberg"
      means
      Bloomberg Financial Markets.

    

    (c) "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

    

    (d) "Calendar
      Month"
      means
      the period beginning on and including the first of each calendar month and
      ending on and including the last day of such calendar month.

    

    (e) "Change
      of Control"
      means
      any Fundamental Transaction other than (i) any reorganization, recapitalization
      or reclassification of the Common Stock in which holders of the Company's voting
      power immediately prior to such reorganization, recapitalization or
      reclassification continue after such reorganization, recapitalization or
      reclassification to hold publicly traded securities and, directly or indirectly,
      the voting power of the surviving entity or entities necessary to elect a
      majority of the members of the board of directors (or their equivalent if other
      than a corporation) of such entity or entities, or (ii) pursuant to a migratory
      merger effected solely for the purpose of changing the jurisdiction of
      incorporation of the Company.

    

    (f) "Change
      of Control Premium"
      means
      (i) 130% or (ii) 120% in the event of a Change of Control involving
      consideration paid to holders of the Company's Common Stock where the
      consideration per share of the Company's Common Stock to be received by the
      holders thereof is greater (as to amounts other than cash, as determined
      reasonably and in good faith by the Board of Directors of the Company) than
      200%
      of the Conversion
      Price as of the Initial Issuance Date (as adjusted for stock splits, stock
      dividends, reverse stock splits, recapitalizations, reclassifications and
      similar events).

    

    (g) "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or last trade price,
      respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
      by Bloomberg, or, if the Principal Market is not the principal securities
      exchange or trading market for such security, the last closing bid price or
      last
      trade price, respectively, of such security on the principal securities exchange
      or trading market where such security is listed or traded as reported by
      Bloomberg, or if the foregoing do not apply, the last closing bid price or
      last
      trade price, respectively, of such security in the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg, or,
      if
      no closing bid price or last trade price, respectively, is reported for such
      security by Bloomberg, the average of the bid prices, or the ask prices,
      respectively, of any market makers for such security as reported in the "pink
      sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
       If the Closing Bid Price or the Closing Sale Price cannot be calculated
      for a security on a particular date on any of the foregoing bases, the Closing
      Bid Price or the Closing Sale Price, as the case may be, of such security on
      such date shall be the fair market value as mutually determined by the Company
      and the Holder.  If the Company and the Holder are unable to agree upon the
      fair market value of such security, then such dispute shall be resolved pursuant
      to Section 23.  All such determinations to be appropriately adjusted for
      any stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

    

    
      
        
        

      

      
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    (h) "Closing
      Date"
      shall
      have the meaning set forth in the Securities Purchase Agreement, which date
      is
      the date the Company initially issued Notes pursuant to the terms of the
      Securities Purchase Agreement.

    

    (i) "Contingent
      Obligation"
      means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto.

    

    (j) "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for Common Stock.

    

    (k) "Eligible
      Market"
      means,
      the Principal Market, The New York Stock Exchange, Inc., the Nasdaq Capital
      Market, the Nasdaq National Market or the American Stock Exchange.

    

    (l) ["Equity
      Payment Conditions"
      shall
      mean, during each Trading Day of the period in question, (i)
      the
      Company shall have duly honored all conversions scheduled to occur or occurring
      by virtue of one or more Notices of Conversion, if any, (ii) all required cash
      payments, fees and penalties to the Holder shall have been paid in a timely
      fashion; (iii) no Events of Default have occurred that have not been cured,
      (iv)
      there is an effective Registration Statement pursuant to which the Holder is
      permitted to utilize the prospectus thereunder to resell all of the Conversion
      Shares, Warrant Shares and other shares issued or issuable pursuant to the
      Transaction Documents (and the Company believes, in good faith, that such
      effectiveness will continue uninterrupted for the foreseeable future or such
      shares may be resold, without restriction, pursuant to Rule 144(k)), (v) the
      Common Stock is trading on the Eligible Market and all of the shares issuable
      pursuant to the Transaction Documents are listed for trading on a Principal
      Market (and the Company believes, in good faith, that trading of the Common
      Stock on a Principal Market will continue uninterrupted for the foreseeable
      future), (vi) there is a sufficient number of authorized but unissued and
      otherwise unreserved shares of Common Stock for the issuance of all of the
      shares issuable pursuant to the Transaction Documents, (vii) the Company has
      not
      been a party to a Fundmental Transaction or Change of Control Transaction,
      (viii) the daily trading volume of the Common Stock for each such Trading Day
      exceeds $100,000, and (ix)
      no
      public announcement of a pending or proposed Fundmental
      Transaction or Change of Control Transaction
      has
      occurred that has not been consummated."]

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (l) "Excluded
      Securities"
      means
      any Options or other securities issued in connection with any Approved Stock
      Plan and any Common Stock issued or issuable: (i) in connection with any
      Approved Stock Plan up to a maximum of ten percent (10%) of the outstanding
      Common Stock; (ii) upon conversion of, or in exchange for, the Notes or the
      exercise of the Warrants; (iii) in connection with any acquisition by the
      Company, whether through an acquisition of stock or a merger of any business,
      assets or technologies the primary purpose of which is not to raise equity
      capital; (iv) securities issued in connection with corporate partnering
      transactions on terms approved by the Board of Directors of the Company and
      the
      primary purpose of which is not to raise equity capital; and (v) upon conversion
      of any Options or Convertible Securities which are outstanding on the day
      immediately preceding the Subscription Date, provided that the terms of such
      Options or Convertible Securities are not amended, modified or changed on or
      after the Subscription Date.

    

    (m) "Fundamental
      Transaction"
      means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) allow another Person or
      Persons to make a purchase, tender or exchange offer that is accepted by the
      holders of more than 50% of the outstanding shares of Voting Stock (not
      including any shares of Voting Stock held by the Person or Persons making or
      party to, or associated or affiliated with the Person or Persons making or
      party
      to, such purchase, tender or exchange offer), (iv) consummate a stock purchase
      agreement or other business combination (including, without limitation, a
      reorganization, recapitalization, spin-off or scheme of arrangement) with
      another Person whereby such other Person acquires more than 50% of either the
      outstanding shares of Voting Stock (not including any shares of Voting Stock
      held by the other Person or other Persons making or party to, or associated
      or
      affiliated with the other Persons making or party to, such stock purchase
      agreement or other business combination), (v) reorganize, recapitalize or
      reclassify its Common Stock or (vi) any "person" or "group" (as these terms
      are
      used for purposes of Sections 13(d) and 14(d) of the Exchange Act)
      is or
      shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
      Act), directly or indirectly, of 50% of the aggregate Voting Stock of the
      Company. The Holder agrees that none of the actions taken by the Company in
      effecting the Share Increase Authorization shall constitutes a Fundamental
      Transaction.

    

    (n) "GAAP"
      means
      United States generally accepted accounting principles, consistently
      applied.

    

    (o) "Indebtedness"
      of any
      Person means, without duplication (i) all indebtedness for borrowed money,
      (ii)
      all obligations issued, undertaken or assumed as the deferred purchase price
      of
      property or services, including (without limitation) "capital leases" in
      accordance with generally accepted accounting principles (other than trade
      payables entered into in the ordinary course of business), (iii) all
      reimbursement or payment obligations with respect to letters of credit, surety
      bonds and other similar instruments, (iv) all obligations evidenced by notes,
      bonds, debentures or similar instruments, including obligations so evidenced
      incurred in connection with the acquisition of property, assets or businesses,
      (v) all indebtedness created or arising under any conditional sale or other
      title retention agreement, or incurred as financing, in either case with respect
      to any property or assets acquired with the proceeds of such indebtedness (even
      though the rights and remedies of the seller or bank under such agreement in
      the
      event of default are limited to repossession or sale of such property), (vi)
      all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (vii) all
      indebtedness referred to in clauses (i) through (vi) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, (viii) all obligations issued, undertaken or assumed as
      part
      of any financing facility with respect to accounts receivables of the Company
      and its Subsidiaries, including, without limitation, any factoring arrangement
      of such accounts receivables and (ix) all Contingent Obligations in respect
      of
      indebtedness or obligations of others of the kinds referred to in clauses (i)
      through (viii) above.

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (p) "Initial
      Issuance Date"
      means
      February [__], 2007.

    

    (q) "Installment
      Amount"
      means
      with respect to any Installment Date, the lesser of $[_____] or such other
      lesser amount calculated based on the remaining principal balance.  For the
      avoidance of doubt, any accrued and unpaid interest which may be paid pursuant
      to this definition shall be deducted from the total interest to be paid on
      any
      subsequent Interest Payment Date.  In the event the Holder shall sell or
      otherwise transfer any portion of this Note, the transferee shall be allocated
      a
      pro rata portion of the each unpaid Installment Amount hereunder.

    

    (r) "Installment
      Date"
      means
      the first day of each calendar month.

    

    (s) "Interest
      Rate"
      means
      nine percent (9%) per annum, subject to periodic adjustment pursuant to Section
      2.

    

    (t) "Market
      Price"
      means,
      for any given date, the arithmetic average of the Weighted Average Price of
      the
      Common Stock during the five (5) consecutive Trading Day period immediately
      prior to and including such given date; provided that if the Company issues
      a
      press release or files a Form 8-K at any point during such five Trading Day
      period, the "Market Price" shall mean the arithmetic average of the Weighted
      Average Price of the Common Stock during the five (5) consecutive Trading Day
      period beginning on the date that such press release is issued; provided
      further, that all such determinations shall be appropriately adjusted for any
      stock split, stock dividend, stock combination or other similar transaction
      that
      proportionately decreases or increases the Common Stock during such
      periods.

    

    (u) "Options"
      means
      any rights, warrants or options to subscribe for or purchase Common Stock or
      Convertible Securities.

    

    (v) "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (w) "Permitted
      Indebtedness"
      means
      (A) Indebtedness incurred by the Company that is made expressly subordinate
      in
      right of payment to the Indebtedness evidenced by this Note, as reflected in
      a
      written agreement acceptable to the Holder and approved by the Holder in writing
      (which approval shall not be unreasonably delayed), and which Indebtedness
      does
      not provide at any time for (1) the payment, prepayment, repayment, repurchase
      or defeasance, directly or indirectly, of any principal or premium, if any,
      thereon until ninety-one (91) days after the Maturity Date or later and (2)
      total interest and fees at a rate in excess of the Interest Rate hereunder,
      (B)
      Indebtedness secured by Permitted Liens, (C) Indebtedness to trade creditors
      incurred in the ordinary course of
      business, (D) extensions, refinancings and renewals of any items of Permitted
      Indebtedness, provided that the principal amount is not increased or the terms
      modified to impose more burdensome terms upon the Company or its Subsidiary,
      as
      the case may be, (E) Indebtedness detailed in Schedule 4(o) to the Securities
      Purchase Agreement and (F) Indebtedness incurred in an Excluded Offering (as
      defined in the Securities Purchase Agreement); provided that no such
      Indebtedness in clauses (A), (B), (C) or (D) shall include Indebtedness that
      is
      convertible into shares of the Company’s Common Stock or into securities
      ultimately convertible into shares of the Company’s Common
      Stock.

    

    (x) "Permitted
      Liens"
      means
      (i) any Lien for taxes not yet due or delinquent or being contested in good
      faith by appropriate proceedings for which adequate reserves have been
      established in accordance with GAAP, (ii) any statutory Lien arising in the
      ordinary course of business by operation of law with respect to a liability
      that
      is not yet due or delinquent, (iii) any Lien created by operation of law, such
      as materialmen's liens, mechanics' liens and other similar liens, arising in
      the
      ordinary course of business with respect to a liability that is not yet due
      or
      delinquent or that are being contested in good faith by appropriate proceedings,
      (iv) Liens securing the Company's obligations under the Notes, (v) Liens (A)
      upon or in any equipment (as defined in the Security Agreement) acquired or
      held
      by the Company or any of its Subsidiaries to secure the purchase price of such
      equipment or indebtedness incurred solely for the purpose of financing the
      acquisition or lease of such equipment, or (B) existing on such equipment at
      the
      time of its acquisition, provided that the Lien is confined solely to the
      property so acquired and improvements thereon, and the proceeds of such
      equipment, (vi) Liens incurred in connection with the extension, renewal or
      refinancing of the indebtedness secured by Liens of the type described in
      clauses (i) and (v) above, provided that any extension, renewal or replacement
      Lien shall be limited to the property encumbered by the existing Lien and the
      principal amount of the Indebtedness being extended, renewed or refinanced
      does
      not increase, (vii) leases or subleases and licenses and sublicenses granted
      to
      others in the ordinary course of the Company's business, not interfering in
      any
      material respect with the business of the Company and its Subsidiaries taken
      as
      a whole, (viii) Liens in favor of customs and revenue authorities arising as
      a
      matter of law to secure payments of custom duties in connection with the
      importation of goods; (ix) Liens arising from judgments, decrees or attachments
      in circumstances not constituting an Event of Default under Section 4(a)(ix)
      and
      (x) Liens with respect to Indebtedness not individually in excess of $25,000
      or
      in the aggregate in excess of $100,000, which individually and in aggregate
      are
      not material to the Company.

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (y) “Permitted
      Senior Indebtedness"
      means
      the Indebtedness secured by the UCC Financing Statements reflected on Schedule
      4(g) to the Security Agreement.

    

    (z) "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity  and
      a government or any department or agency thereof.

    

    (aa) "Potential
      Partner Conditions"
      means
      at any time during the period commencing on the date of the consummation of
      any
      material transaction between the Company and a Person and ending on the first
      anniversary of the Effective Date, there shall be no disclosure that any
      executive officer of such Person has (i) exhibited dishonesty in the performance
      of his or her duties, which is materially and demonstrably injurious to the
      Company;
      or (ii) been convicted of (x) a felony under the laws of the United States
      or
      any state thereof or (y) a misdemeanor involving moral turpitude, in each case,
      which is materially and demonstrably injurious to the Company.

    

    (bb) "Principal
      Market"
      means
      Over-the-Counter Bulletin Board.

    

    (cc) "Redemption
      Notices"
      means,
      collectively, the Event of Default Redemption Notices, Change of Control
      Redemption Notices, the Company Redemption Notice, and, each of the foregoing,
      individually, a Redemption Notice.

    

    (dd) "Redemption
      Premium"
      means
      125%.

    

    (ee) "Redemption
      Prices"
      means,
      collectively, the Event of Default Redemption Price, Change of Control
      Redemption Price, and the Company Redemption Amount, the Holder Optional
      Redemption Price and the Holder Partial Redemption Price and, each of the
      foregoing, individually, a Redemption Price.

    

    (ff) "Required
      Holders"
      means
      the holders of Notes representing at least two-thirds (2/3) of the aggregate
      principal amount of the Notes then outstanding.

     

    (gg) "SEC"
      means
      the United States Securities and Exchange Commission.

    

    (hh) "Securities
      Purchase Agreement"
      means
      that certain securities purchase agreement dated the Subscription Date by and
      among the Company and the initial holders of the Notes pursuant to which the
      Company issued the Notes.

    

    (ii) “Security
      Agreement”
means
      that certain Security Agreement dated the Subscription Date by and among the
      Company, three of its subsidiaries and the Collateral Agent (as defined
      therein).

    

    (jj) "Subscription
      Date"
      means
      February 15, 2007.

    

    (kk) "Successor
      Entity"
      means
      the Person, which may be the Company, formed by, resulting from or surviving
      any
      Fundamental Transaction or the Person with which such Fundamental Transaction
      shall have been made, provided that if such Person is not a publicly traded
      entity whose common stock or equivalent equity security is quoted or listed
      for
      trading on an Eligible Market, Successor Entity shall mean such Person's Parent
      Entity.

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (ll) "Trading
      Day"
      means
      any day on which the Common Stock are traded on the Principal Market, or, if
      the
      Principal Market is not the principal trading market for the Common Stock,
      then
      on the principal securities exchange or securities market on which the Common
      Stock are then traded; provided that "Trading Day" shall not include any day
      on
      which the Common Stock are scheduled to trade on such exchange or market for
      less than 4.5 hours or any day that the Common Stock are suspended from trading
      during the final hour of trading on such exchange or market (or if such exchange
      or market does not designate in advance the closing time of trading on such
      exchange or market, then during the hour ending at 4:00:00 p.m., New York
      Time).

    

    (mm) "Voting
      Stock"
      of a
      Person means capital stock of such Person of the class or classes pursuant
      to
      which the holders thereof have the general voting power to elect, or the general
      power to appoint, at least a majority of the board of directors, managers or
      trustees of such Person (irrespective of whether or not at the time capital
      stock of any other class or classes shall have or might have voting power by
      reason of the happening of any contingency).

    

    (nn) "Warrants"
      has the
      meaning ascribed to such term in the Securities Purchase Agreement, and shall
      include all warrants issued in exchange therefor or replacement
      thereof.

    

    (oo) "Weighted
      Average Price"
      means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market during the period beginning at 9:30:01
      a.m., New York Time (or such other time as the Principal Market publicly
      announces is the official open of trading), and ending at 4:00:00 p.m., New
      York
      Time (or such other time as the Principal Market publicly announces is the
      official close of trading) as reported by Bloomberg through its "Volume at
      Price" functions, or, if the foregoing does not apply, the dollar
      volume-weighted average price of such security in the over-the-counter market
      on
      the electronic bulletin board for such security during the period beginning
      at
      9:30:01 a.m., New York Time (or such other time as such market publicly
      announces is the official open of trading), and ending at 4:00:00 p.m., New
      York
      Time (or such other time as such market publicly announces is the official
      close
      of trading) as reported by Bloomberg, or, if no dollar volume-weighted average
      price is reported for such security by Bloomberg for such hours, the average
      of
      the highest closing bid price and the lowest closing ask price of any of the
      market makers for such security as reported in the "pink sheets" by Pink Sheets
      LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted
      Average Price cannot be calculated for a security on a particular date on any
      of
      the foregoing bases, the Weighted Average Price of such security on such date
      shall be the fair market value as mutually determined by the Company and the
      Holder.  If the Company and the Holder are unable to agree upon the fair
      market value of such security, then such dispute shall be resolved pursuant
      to
      Section 23.  All such determinations to be appropriately adjusted for any
      stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    29. DISCLOSURE.
      Upon
      receipt or delivery by the Company of any notice in accordance with the terms
      of
      this Note, unless the Company has in good faith determined that the matters
      relating to such notice do not constitute material, nonpublic information
      relating to the Company or its Subsidiaries, the Company shall within two (2)
      Business Days after any such receipt or delivery publicly disclose such
      material, nonpublic information on a Current Report on Form 8-K or otherwise.
      In
      the event that the Company believes that a notice contains material, nonpublic
      information, relating to the Company or its Subsidiaries, the Company shall
      indicate to the Holder within one (1) Business Day of the delivery of such
      notice, and in the absence of any such indication, the Holder shall be allowed
      to presume that all matters relating to such notice do not constitute material,
      nonpublic information relating to the Company or its Subsidiaries.

    

    [Signature
      Page Follows]

    
 

     

    
 

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
      the
      Issuance Date set out above.

    

    
      	 	 	 
	 	
              NESCO
                INDUSTRIES, INC.

            
	 
 	 
 	 
 
	 	By:  	
            
	 	
              

              Name: 
                Matthew Harriton

              Title:   
                President

            
	 	 

    

    
 

     

     

    
      
        
        

      

      
        32EXHIBIT
      4.3

    

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS WARRANT NOR THE
      SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
 THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (II) AN OPINION OF COUNSEL
      IN A
      FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
      UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
      PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES.

    

    NESCO
      INDUSTRIES, INC.

    

    WARRANT
      TO PURCHASE COMMON STOCK

    

    Warrant
      No.: 

    Number
      of
      Shares of Common Stock: [_______]

    Date
      of
      Issuance: February [__], 2007 ("Issuance
      Date")

    

    Nesco
      Industries, Inc., a Nevada corporation (the "Company"),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [_____] the registered holder
      hereof (the "Holder")
      or its
      permitted assigns, is entitled, subject to the terms set forth below, to
      purchase from the Company, at the Exercise Price (as defined below) then in
      effect, upon surrender of this Warrant to Purchase Common Stock (including
      any
      Warrants to Purchase Common Stock issued in exchange, transfer or replacement
      hereof, the "Warrant"),
      at
      any time or times on or after the date hereof, but not after 11:59 p.m., New
      York Time, on the Expiration Date (as defined below), [__________] ([______])
      fully paid nonassessable shares of Common Stock (as defined below) (the
      "Warrant
      Shares").
       Except as otherwise defined herein, capitalized terms in this Warrant
      shall have the meanings set forth in Section 15.  This Warrant is one of
      the Warrants to purchase Common Stock (the "SPA
      Warrants")
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      February 15, 2007 (the "Subscription
      Date"),
      by
      and among the Company and the investors (the "Buyers")
      referred to therein (the "Securities
      Purchase Agreement").

    

    1. EXERCISE
      OF WARRANT.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) Mechanics
      of Exercise.
       Subject to the terms and conditions hereof (including, without limitation,
      the limitations set forth in Section 1(f)), this Warrant may be exercised by
      the
      Holder on any day on or after the Share Increase Authorization (as defined
      in
      the Securities Purchase Agreement, the “Share
      Increase Authorization”)
      and
      before the Expiration Date, in whole or in part, by (i) delivery to the
      Company of a written notice, in the form attached hereto as Exhibit
      A
      (the
      "Exercise
      Notice"),
      of
      the Holder's election to exercise this Warrant and (ii) (A) payment to the
      Company of an amount equal to the applicable Exercise Price multiplied by the
      number of Warrant Shares as to which this Warrant is being exercised (the
      "Aggregate
      Exercise Price")
      in
      cash or by wire transfer of immediately available funds or (B) by notifying
      the
      Company that this Warrant is being exercised pursuant to a Cashless Exercise
      (as
      defined in Section 1(d)).  On or before the first (1st)
      Business Day following the date on which the Company has received each of the
      Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
      Exercise) (the "Exercise
      Delivery Documents"),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder. On or before the third (3rd)
      Business Day following the date on which the Company has received all of the
      Exercise Delivery Documents (the "Share
      Delivery Date"),
      the
      Company shall (X) provided that (1) the Warrant Shares are eligible for transfer
      through the Depository Trust Company ("DTC")
      and
      (2) the Company’s transfer agent (the "Transfer
      Agent")
      is
      participating in the DTC Fast Automated Securities Transfer Program, upon the
      request of the Holder, cause the Transfer Agent to credit such aggregate number
      of Warrant Shares to which the Holder is entitled pursuant to such exercise
      to
      the Holder's or its designee's balance account with DTC through its Deposit
      Withdrawal Agent Commission system, or (Y) if the Warrant Shares are not
      eligible for transfer through DTC or the Transfer Agent is not participating
      in
      the DTC Fast Automated Securities Transfer Program, cause the Transfer Agent
      to
      issue and dispatch by overnight courier to the address as specified in the
      Exercise Notice, a certificate, registered in the Company's share register
      in
      the name of the Holder or its designee, for the number of shares of Common
      Stock
      to which the Holder is entitled pursuant to such exercise.  Upon delivery
      of the Exercise Delivery Documents, the Holder shall be deemed for all corporate
      purposes to have become the holder of record of the Warrant Shares with respect
      to which this Warrant has been exercised, irrespective of the date such Warrant
      Shares are credited to the Holder's DTC account or the date of delivery of
      the
      certificates evidencing such Warrant Shares as the case may be. The Holder
      shall
      not be required to deliver the original Warrant in order to effect an exercise
      hereunder. Execution and delivery of the Exercise Notice with respect to less
      than all of the Warrant Shares shall have the same effect as cancellation of
      the
      original Warrant and issuance of a new Warrant evidencing the right to purchase
      the remaining number of Warrant Shares.  If, however, this Warrant is
      submitted in connection with any exercise pursuant to this Section 1(a) and
      the
      number of Warrant Shares represented by this Warrant submitted for exercise
      is
      greater than the number of Warrant Shares being acquired upon an exercise,
      then
      the Company shall as soon as practicable and in no event later than two Business
      Days after receipt of this Warrant and at its own expense, cause the Transfer
      Agent to issue a new Warrant (in accordance with Section 7(d)) representing
      the
      right to purchase the number of Warrant Shares purchasable immediately prior
      to
      such exercise under this Warrant, less the number of Warrant Shares with respect
      to which this Warrant is exercised.  No fractional shares of Common Stock
      are to be issued upon the exercise of this Warrant, but rather the number of
      shares of Common Stock to be issued shall be rounded up to the nearest whole
      number.  The Company shall pay any and all taxes which may be payable with
      respect to the issuance and delivery of Warrant Shares upon exercise of this
      Warrant.

    

    (b) Exercise
      Price.
       For purposes of this Warrant, "Exercise
      Price"
      means
      $0.00464 subject to adjustment as provided herein.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c) Company's
      Failure to Timely Deliver Securities.
       Following the Share Increase Authorization, if within three (3) Trading
      Days after the Company's receipt of the facsimile copy of the Exercise Delivery
      Documents the Company shall fail to issue and deliver a certificate to the
      Holder and register such shares of Common Stock on the Company's share register
      or credit the Holder's balance account with DTC for the number of shares of
      Common Stock to which the Holder is entitled upon the Holder's exercise
      hereunder, and if on or after such Trading Day, but prior to delivery of such
      shares of Common Stock, the Holder purchases (in an open market transaction
      or
      otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
      Holder of shares of Common Stock issuable upon such exercise that the Holder
      anticipated receiving from the Company (a "Buy-In"
      ), then
      the Company shall, within three (3) Business Days after the Holder's request
      and
      in the Holder's discretion, either (i) pay cash to the Holder in an amount
      equal
      to the Holder's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such certificate (and to issue
      such Warrant Shares) shall terminate and the number of Warrant Shares
      represented by this Warrant shall be reduced by the number of shares of Common
      Stock so purchased, or (ii) promptly honor its obligation to deliver to the
      Holder a certificate or certificates representing such Warrant Shares and pay
      cash to the Holder in an amount equal to the excess (if any) of the Buy-In
      Price
      over the product of (A) such number of shares of Common Stock that the Holder
      anticipated receiving from the Company upon delivery of the Exercise Delivery
      Documents, times (B) the Closing Bid Price on the date of exercise. Nothing
      herein shall limit the holder's right to pursue actual damages for the Company's
      failure to maintain a sufficient number of authorized shares of Common Stock
      or
      to otherwise issue shares of Common Stock upon exercise of this Warrant in
      accordance with the terms hereof, and the holder shall have the right to pursue
      all remedies available at law or in equity (including a decree of specific
      performance and/or injunctive relief).

    

    (d) Cashless
      Exercise. Notwithstanding
      anything contained herein to the contrary, the Holder may, in its sole
      discretion, exercise this Warrant in whole or in part and, in lieu of making
      the
      cash payment otherwise contemplated to be made to the Company upon such exercise
      in payment of the Aggregate Exercise Price, elect instead to receive upon such
      exercise the "Net Number" of shares of Common Stock determined according to
      the
      following formula (a "Cashless
      Exercise"):

    

    Net
      Number =
      (A x
      B) - (A x C)

                                        
      B

    

    For
      purposes of the foregoing formula:

    

    
      	 	
              A

            	
              =

            	
              the
                total number of shares with respect to which this Warrant is then
                being
                exercised.

            

    

    

    
      	 	
              B

            	
              =

            	
              the
                Closing Sale Price of the shares of Common Stock (as reported by
                Bloomberg) on the date immediately preceding the date of the Exercise
                Notice.

            

    

    

    
      	 	
              C

            	
              =

            	
              the
                Exercise Price then in effect for the applicable Warrant Shares at
                the
                time of such exercise.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    For
      purposes of Rule 144 and sub-section (d) thereof, it is intended, understood
      and
      acknowledged that the Common Stock issuable upon exercise of this Warrant in
      a
      cashless exercise transaction shall be deemed to have been acquired at the
      time
      this Warrant was issued. Moreover, it is intended, understood and acknowledged
      that the holding period for the Common Stock issuable upon exercise of this
      Warrant in a cashless exercise transaction shall be deemed to have commenced
      on
      the date this Warrant was issued. 

    

    (e) Disputes.
       In the case of a dispute as to the determination of the Exercise Price or
      the arithmetic calculation of the Warrant Shares, the Company shall promptly
      issue to the Holder the number of Warrant Shares that are not disputed and
      resolve such dispute in accordance with Section 12.

    

    (f) Limitations
      on Exercises.

    

    (1) The
      Holder shall not have the right to exercise this Warrant to the extent that,
      after giving effect to such exercise, such Holder (together with such Holder's
      Affiliates) would beneficially own (directly or indirectly through Warrant
      Shares or otherwise) in excess of 4.99% (as may be adjusted in the manner
      discussed below, the "Maximum
      Percentage")
      of the
      shares of Common Stock outstanding immediately after giving effect to such
      exercise.  For purposes of the foregoing sentence, the aggregate number of
      shares of Common Stock beneficially owned (directly or indirectly through
      Warrant Shares or otherwise) by such Holder and its Affiliates shall include
      the
      number of shares of Common Stock issuable upon exercise of this Warrant with
      respect to which the determination of such sentence is being made, but shall
      exclude shares of Common Stock which would be issuable upon (i) exercise of
      the
      remaining, unexercised portion of this Warrant beneficially owned by such Holder
      and its Affiliates and (ii) exercise or conversion of the unexercised or
      unconverted portion of any other securities of the Company beneficially owned
      by
      such Holder and its Affiliates (including, without limitation, any convertible
      notes or convertible preferred stock or warrants) subject to a limitation on
      conversion or exercise analogous to the limitation contained herein.
 Except as set forth in the preceding sentence, for purposes of this
      paragraph, beneficial ownership shall be calculated in accordance with Section
      13(d) of the Securities Exchange Act of 1934, as amended.  For purposes of
      this Warrant, in determining the number of outstanding shares of Common Stock,
      the Holder may rely on the number of outstanding shares of Common Stock as
      reflected in the more recently dated document among: (1) the Company's most
      recent public filing with the Securities and Exchange Commission containing
      such
      information (2) a more recent public announcement by the Company or (3) any
      other notice by the Company or the Transfer Agent setting forth the number
      of
      shares of Common Stock outstanding.  For any reason at any time, upon the
      written request of the Holder, the Company shall within two Business 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 the SPA Securities and the SPA Warrants,
      by
      the Holder and its Affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported.  By written notice to the
      Company, the Holder may from time to time increase or decrease the Maximum
      Percentage to the level specified in such notice; provided that (i) any such
      increase will not be effective until the
      sixty-first (61st)
      day
      after such notice is delivered to the Company, (ii) any such increase or
      decrease will apply only to the Holder and not to any other holder of SPA
      Warrants and (iii) such Maximum Percentage shall not, in any event, exceed
      19.99%.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (g) Insufficient
      Authorized Shares.
       If at any time following the Share Increase Authorization while any of the
      Warrants remain outstanding, the Company does not have a sufficient number
      of
      authorized and unreserved shares of Common Stock to satisfy its obligation
      to
      reserve for issuance upon exercise of the Warrants at least a number of shares
      of Common Stock equal to 300% of the number of shares of Common Stock as shall
      from time to time be necessary to effect the exercise of all of the Warrants
      then outstanding  (the "Required
      Reserve Amount")
      (an
      "Authorized
      Share Failure"),
      then
      the Company shall immediately take all action reasonably necessary to increase
      the Company's authorized shares of Common Stock to an amount sufficient to
      allow
      the Company to reserve the Required Reserve Amount.  Without limiting the
      generality of the foregoing sentence, as soon as practicable after the date
      of
      the occurrence of an Authorized Share Failure, but in no event later than ninety
      (90) days after the occurrence of such Authorized Share Failure, the Company
      shall hold a meeting of its stockholders for the approval of an increase in
      the
      number of authorized shares of Common Stock.  In connection with such
      meeting, the Company shall provide each stockholder with a proxy statement
      and
      shall use its commercially reasonable best efforts to solicit its stockholders'
      approval of such increase in authorized shares of Common Stock and to cause
      its
      board of directors to recommend to the stockholders that they approve such
      proposal.

    

    (h) If
      within
      six (6) Trading Days after the Company’s receipt of the facsimile copy of an
      Exercise Notice the Company shall fail to issue and deliver a certificate to
      the
      Holder and register such shares of Common Stock on the Company’s share register
      or credit the Holder’s balance account with DTC for the number of shares of
      Common Stock to which the Holder is entitled upon the Holder’s exercise
      hereunder, as compensation to the Holder for such loss, the Company agrees
      to
      pay (as liquidated damages and not as a penalty) to the Holder payments
      (“Failure
      Payments”)
      at a
      rate of 18% per annum (or the maximum rate permitted by applicable law,
      whichever is less) of the Black-Scholes value (as computed in Section 4(c)
      hereof) of the remaining unexercised portion of this Warrant on the date of
      such
      request (as recalculated on the first Business Day of each month thereafter
      for
      as long as Failure Payments shall continue to accrue), which shall accrue daily
      from the date of such event of failure through and including the date of payment
      in full. 

    

    (i) If
      any
      Events of Default under any of the Transaction Documents shall occur then,
      unless waived by the Holder, upon the occurrence and during the continuation
      of
      any Event of Default, at the option of the Holder, such option exercisable
      through the delivery of written notice to the Company by such Holder (the
      "Default
      Notice"),
      the
      outstanding amount of this Warrant shall be immediately redeemed by the Company
      and the Company shall pay to the Holder (a “Mandatory
      Redemption”),
      in
      full satisfaction of its obligations hereunder, an amount (the “Mandatory
      Redemption Amount”
or
      the
“Default
      Amount”)
      equal
      to the greater of (i) the Black-Scholes value (as computed in accordance with
      Section 4(c) hereof) of the remaining unexercised portion of this Warrant on
      the
      date of such Default Notice and (2) the Black-Scholes value (as computed in
      accordance with Section 4(c) hereof) of the remaining unexercised portion of
      this Warrant on the Trading Day immediately preceding the date that the
      Mandatory Redemption Amount is paid to the Holder.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    The
      Mandatory Redemption Amount shall be payable, in cash or cash equivalent, within
      five (5) Business Days of the date of the applicable Default
      Notice.

    

    2. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

    

    The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

    

    (a) Adjustment
      upon Issuance of Shares of Common Stock.
       If and whenever on or after the Subscription Date the Company issues or
      sells, or in accordance with this Section 2 is deemed to have issued or sold,
      any shares of Common Stock (including the issuance or sale of shares of Common
      Stock owned or held by or for the account of the Company, but excluding shares
      of Common Stock (1) issued by the Company in connection with transactions
      contemplated by Schedule 4(o) of the Securities Purchase Agreement or (2) deemed
      to have been issued by the Company in connection with any Excluded Securities
      (as defined in the SPA Securities) for a consideration per share (the
      "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Exercise Price in effect immediately prior to such issuance or sale
      or
      deemed issuance or sale (the foregoing a
      "Dilutive Issuance"),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the New Issuance Price.  Upon each
      such adjustment of the Exercise Price hereunder, the number of Warrant Shares
      shall be adjusted to the number of shares of Common Stock determined by
      multiplying the Exercise Price in effect immediately prior to such adjustment
      by
      the number of Warrant Shares acquirable upon exercise of this Warrant
      immediately prior to such adjustment and dividing the product thereof by the
      adjusted Exercise Price resulting from such adjustment.  For purposes of
      determining the adjusted Exercise Price under this Section 2(a), the following
      shall be applicable:

    

    
      	 	
              (i)

            	
              Issuance
                of Options.
                 If the Company in any manner grants any Options and the lowest price
                per share for which one share of Common Stock is issuable upon the
                exercise of any such Option or upon conversion, exercise or exchange
                of
                any Convertible Securities issuable upon exercise of any such Option
                is
                less than the Applicable Price, then such share of Common Stock shall
                be
                deemed to be outstanding and to have been issued and sold by the
                Company
                at the time of the granting or sale of such Option for such price
                per
                share.  For purposes of this Section 2(a)(i),
                the "lowest price per share for which one share of Common Stock is
                issuable upon exercise of such Options or upon conversion, exercise
                or
                exchange of such Convertible Securities" shall be equal to the sum
                of the
                lowest amounts of consideration (if any) received or receivable by
                the
                Company with respect to any one share of Common Stock upon the granting
                or
                sale of the Option, upon exercise of the Option and upon conversion,
                exercise or exchange of any Convertible Security issuable upon exercise
                of
                such Option.  No further adjustment of the Exercise Price or number
                of Warrant Shares shall be made upon the actual issuance of such
                shares of
                Common Stock or of such Convertible Securities upon the exercise
                of such
                Options or upon the actual issuance of such shares of Common Stock
                upon
                conversion, exercise or exchange of such Convertible
                Securities.

            

    

     

    
 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
    

     

    
      	 	
              (ii)

            	
              Issuance
                of Convertible Securities.
                 If the Company in any manner issues or sells any Convertible
                Securities and the lowest price per share for which one share of
                Common
                Stock is issuable upon the conversion, exercise or exchange thereof
                is
                less than the Applicable Price, then such share of Common Stock shall
                be
                deemed to be outstanding and to have been issued and sold by the
                Company
                at the time of the issuance or sale of such Convertible Securities
                for
                such price per share.  For the purposes of this Section 2(a)(ii), the
                "lowest price per share for which one share of Common Stock is issuable
                upon the conversion, exercise or exchange" shall be equal to the
                sum of
                the lowest amounts of consideration (if any) received or receivable
                by the
                Company with respect to one share of Common Stock upon the issuance
                or
                sale of the Convertible Security and upon conversion, exercise or
                exchange
                of such Convertible Security.  No further adjustment of the Exercise
                Price or number of Warrant Shares shall be made upon the actual issuance
                of such shares of Common Stock upon conversion, exercise or exchange
                of
                such Convertible Securities, and if any such issue or sale of such
                Convertible Securities is made upon exercise of any Options for which
                adjustment of this Warrant has been or is to be made pursuant to
                other
                provisions of this Section 2(a), no further adjustment of the Exercise
                Price or number of Warrant Shares shall be made by reason of such
                issue or
                sale.

            

    

    

    
      	 	
              (iii)

            	
              Change
                in Option Price or Rate of Conversion. If
                the purchase price provided for in any Options, the additional
                consideration, if any, payable upon the issue, conversion, exercise
                or
                exchange of any Convertible Securities, or the rate at which any
                Convertible Securities are convertible into or exercisable or exchangeable
                for shares of Common Stock increases or decreases at any time, the
                Exercise Price and the number of Warrant Shares in effect at the
                time of
                such increase or decrease shall be adjusted to the Exercise Price
                and the
                number of Warrant Shares which would have been in effect at such
                time had
                such Options or Convertible Securities provided for such increased
                or
                decreased purchase price,
                additional consideration or increased or decreased conversion rate,
                as the
                case may be, at the time initially granted, issued or sold.  For
                purposes of this Section 2(a)(iii), if the terms of any Option or
                Convertible Security that was outstanding as of the date of issuance
                of
                this Warrant are increased or decreased in the manner described in
                the
                immediately preceding sentence, then such Option or Convertible Security
                and the shares of Common Stock deemed issuable upon exercise, conversion
                or exchange thereof shall be deemed to have been issued as of the
                date of
                such increase or decrease.  No adjustment pursuant to this Section
                2(a) shall be made if such adjustment would result in an increase
                of the
                Exercise Price then in effect or a decrease in the number of Warrant
                Shares.

            

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)

            	
              Calculation
                of Consideration Received
                .
                 In case any Option is issued in connection with the issue or sale
                of
                other securities of the Company, together comprising one integrated
                transaction in which no specific consideration is allocated to such
                Options by the parties thereto, the Options will be deemed to have
                been
                issued for such consideration as determined in good faith by the
                Board of
                Directors of the Company.  If any shares of Common Stock, Options or
                Convertible Securities are issued or sold or deemed to have been
                issued or
                sold for cash, the consideration received therefor will be deemed
                to be
                the amount received by the Company therefor.  If any shares of Common
                Stock, Options or Convertible Securities are issued or sold for a
                consideration other than cash, the amount of such consideration received
                by the Company will be the fair value of such consideration as determined
                in good faith by the Board of Directors of the Company, except where
                such
                consideration consists of securities, in which case the amount of
                consideration received by the Company will be the Closing Sale Price
                of
                such security on the date of receipt.  If any shares of Common Stock,
                Options or Convertible Securities are issued to the owners of the
                non-surviving entity in connection with any merger in which the Company
                is
                the surviving entity, the amount of consideration therefor will be
                deemed
                to be the fair value of such portion of the net assets and business
                of the
                non-surviving entity as is attributable to such shares of Common
                Stock,
                Options or Convertible Securities, as the case may be.  Except as
                otherwise provided in this Section 2(a)(iv), the fair value of any
                consideration other than cash or securities will be determined jointly
                by
                the Company and the Required Holders.  If such parties are unable to
                reach agreement within ten (10) days after the occurrence of an event
                requiring valuation (the "Valuation
                Event"),
                the fair value of such consideration will be determined by an independent,
                reputable appraiser jointly selected by the Company and the Required
                Holders within five (5) Business Days after the tenth day following
                the
                Valuation Event.  The determination of such appraiser shall be final
                and binding upon all parties absent manifest error and the fees and
                expenses of such appraiser shall be borne by the
                Company.

            

    

    

    
      	 	
              (v)

            	
              Record
                Date.
                 If the Company takes a record of the holders of shares of Common
                Stock for the purpose of entitling them (A) to receive a dividend or
                other distribution payable in shares of Common Stock, Options or
                in
                Convertible Securities or (B) to subscribe for or purchase shares of
                Common Stock, Options or Convertible Securities, then such record
                date
                will be deemed to be the date of the issue or sale of the shares
                of Common
                Stock deemed to have been issued or sold upon the declaration of
                such
                dividend or the making of such other distribution or the date of
                the
                granting of such right of subscription or purchase, as the case may
                be.

            

    

    
 

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (b) Adjustment
      upon Subdivision or Combination of Common Stock.
       If the Company at any time on or after the Subscription Date subdivides
      (by any stock split, stock dividend, recapitalization or otherwise) one or
      more
      classes of its outstanding shares of Common Stock into a greater number of
      shares, the Exercise Price in effect immediately prior to such subdivision
      will
      be proportionately reduced and the number of Warrant Shares will be
      proportionately increased.  If the Company at any time on or after the
      Subscription Date  combines (by combination, reverse stock split or
      otherwise) one or more classes of its outstanding shares of Common Stock into
      a
      smaller number of shares, the Exercise Price in effect immediately prior to
      such
      combination will be proportionately increased and the number of Warrant Shares
      will be proportionately decreased.  Any adjustment under this Section 2(b)
      shall become effective at the close of business on the date the subdivision
      or
      combination becomes effective.

    

    (c) Other
      Events.
       If any event occurs of the type contemplated by the provisions of this
      Section 2 but not expressly provided for by such provisions (including, without
      limitation, the granting of stock appreciation rights, phantom stock rights
      or
      other rights with equity features), then the Company's Board of Directors will
      make any adjustment in the Exercise Price and the number of Warrant Shares
      it
      deems, in its sole discretion, to be necessary to protect the rights of the
      Holder; provided that no such adjustment pursuant to this Section 2(c) will
      increase the Exercise Price or decrease the number of Warrant Shares as
      otherwise determined pursuant to this Section 2.

    

    (d) Participation.
      The
      Holder, as the holder of this Warrant, shall be entitled to receive such
      dividends paid and distributions of any kind made to the holders of Common
      Stock
      of the Company to the same extent as if the Holder had Exercised this Warrant
      into Common Stock (without regard to any limitations on exercise herein or
      elsewhere and without regard to whether or not a sufficient number of shares
      are
      authorized and reserved to effect any such exercise and issuance) and had held
      such shares of Common Stock on the record date for such dividends and
      distributions. Payments under the preceding sentence shall be made concurrently
      with the dividend or distribution to the holders of Common Stock. 

    

    3. RIGHTS
      UPON DISTRIBUTION OF ASSETS.

    

    Except
      with respect to the transactions described in Schedule 4(o) of the Securities
      Purchase Agreement, if the Company shall declare or make any dividend or other
      distribution of its assets (or rights to acquire its assets) to holders of
      shares of Common Stock, by way of return of capital or otherwise (including,
      without limitation, any distribution of cash, stock or other securities,
      property or options by way of a dividend, spin off, reclassification, corporate
      rearrangement, scheme of arrangement or other similar transaction) (a
      "Distribution"),
      at
      any time after the issuance of this Warrant, then, in each such
      case:

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (a) any
      Exercise Price in effect immediately prior to the close of business on the
      record date fixed for the determination of holders of shares of Common Stock
      entitled to receive the Distribution shall be reduced, effective as of the
      close
      of business on such record date, to a price determined by multiplying such
      Exercise Price by a fraction of which (i) the numerator shall be the Closing
      Bid
      Price of the shares of Common Stock on the trading day immediately preceding
      such record date minus the value of the Distribution (as determined in good
      faith by the Company's Board of Directors) applicable to one share of Common
      Stock, and (ii)
      the
      denominator shall be the Closing Bid Price of the shares of Common Stock on
      the
      trading day immediately preceding such record date; and

    

    (b) the
      number of Warrant Shares shall be increased to a number of shares equal to
      the
      number of shares of Common Stock obtainable immediately prior to the close
      of
      business on the record date fixed for the determination of holders of shares
      of
      Common Stock entitled to receive the Distribution multiplied by the reciprocal
      of the fraction set forth in the immediately preceding paragraph (a);

    

    provided
      that in the event that the Distribution is of shares of Common Stock (or common
      stock) ("Other
      Shares of Common Stock")
      of a
      company whose common shares are traded on a national securities exchange or
      a
      national automated quotation system, then the Holder may elect to receive a
      warrant to purchase Other Shares of Common Stock in lieu of a decrease in the
      Exercise Price or an increase in the number of Warrant Shares, the terms of
      which shall be identical to those of this Warrant, except that such warrant
      shall be exercisable into the number of shares of Other Shares of Common Stock
      that would have been payable to the Holder pursuant to the Distribution had
      the
      Holder exercised this Warrant immediately prior to such record date and with
      an
      aggregate exercise price equal to the product of the amount by which the
      exercise price of this Warrant was decreased with respect to the Distribution
      pursuant to the terms of the immediately preceding paragraph (a) and the number
      of Warrant Shares calculated in accordance with the first part of this paragraph
      (b).

    

    4. PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

    

    (a) Purchase
      Rights.
       In addition to any adjustments pursuant to Section 2 or Section 3 above,
      if at any time the Company grants, issues or sells any Options, Convertible
      Securities or rights to purchase stock, warrants, securities or other property
      pro rata to the record holders of any class of shares of Common Stock (the
      "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the proportionate number of shares of Common
      Stock acquirable upon complete exercise of this Warrant (without regard to
      any
      limitations on the exercise of this Warrant) immediately before the date on
      which a record is taken for the grant, issuance or sale of such Purchase Rights,
      or, if no such record is taken, the date as of which the record holders of
      shares of Common Stock are to be determined for the grant, issue or sale of
      such
      Purchase Rights.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (b) Fundamental
      Transactions.
       The Company shall not enter into or be party to a Fundamental Transaction
      unless (i)  the Successor Entity assumes in writing all of the obligations
      of the Company under this Warrant and the other Transaction Documents in
      accordance with the provisions of this Section (4)(b) pursuant to written
      agreements in form and substance satisfactory to the Required Holders and
      approved by the Required Holders prior to such Fundamental Transaction,
      including agreements to deliver to each holder of Warrants in exchange for
      such
      Warrants a security of the Successor Entity evidenced by a written instrument
      substantially similar in form and substance to this Warrant, including, without
      limitation, an adjusted exercise price equal to the value for the shares of
      Common Stock reflected by the terms of such Fundamental Transaction, and
      exercisable for a corresponding number of shares of capital stock equivalent
      to
      the shares of Common Stock acquirable and receivable upon exercise of this
      Warrant (without regard to any limitations on the exercise of this Warrant)
      prior to such Fundamental
      Transaction, and satisfactory to the Required Holders and (ii) the
      Successor Entity (including its Parent Entity) is a publicly traded corporation
      whose common stock is quoted on or listed for trading on an Eligible Market.
       Upon the occurrence of any Fundamental Transaction, the Successor Entity
      shall succeed to, and be substituted for (so that from and after the date of
      such Fundamental Transaction, the provisions of this Warrant referring to the
      "Company" shall refer instead to the Successor Entity), and may exercise every
      right and power of the Company and shall assume all of the obligations of the
      Company under this Warrant with the same effect as if such Successor Entity
      had
      been named as the Company herein.  Upon consummation of the Fundamental
      Transaction, the Successor Entity shall deliver to the Holder confirmation
      that
      there shall be issued upon exercise of this Warrant at any time after the
      consummation of the Fundamental Transaction, in lieu of the shares of the Common
      Stock (or other securities, cash, assets or other property) issuable upon the
      exercise of the Warrant prior to such Fundamental Transaction, such shares
      of
      the publicly traded Common Stock (or its equivalent) of the Successor Entity
      (including its Parent Entity) which the Holder would have been entitled to
      receive upon the happening of such Fundamental Transaction had this Warrant
      been
      converted immediately prior to such Fundamental Transaction, as adjusted in
      accordance with the provisions of this Warrant.  In addition to and not in
      substitution for any other rights hereunder, prior to the consummation of any
      Fundamental Transaction pursuant to which holders of shares of Common Stock
      are
      entitled to receive securities or other assets with respect to or in exchange
      for shares of Common Stock (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant at any
      time after the consummation of the Fundamental Transaction but prior to the
      Expiration Date, in lieu of the shares of the Common Stock (or other securities,
      cash, assets or other property) issuable upon the exercise of the Warrant prior
      to such Fundamental Transaction, such shares of stock, securities, cash, assets
      or any other property whatsoever (including warrants or other purchase or
      subscription rights) which the Holder would have been entitled to receive upon
      the happening of such Fundamental Transaction had the Warrant been exercised
      immediately prior to such Fundamental Transaction. Provisions made pursuant
      to
      the preceding sentence shall be in the form and substance reasonably
      satisfactory to the Required Holders. The provisions of this Section shall
      apply
      similarly and equally to successive Fundamental Transactions and Corporate
      Events and shall be applied without regard to any limitations on the exercise
      of
      this Warrant.

    

    (c) As
      soon
      as reasonably practicable prior to the consummation of a Fundamental
      Transaction, but not prior to the public announcement of such Fundamental
      Transaction, the Company shall deliver written notice thereof via facsimile
      and
      overnight courier to the Holder (a "Fundamental Transaction Notice"). At any
      time during the period beginning after the Holder's receipt of a Fundamental
      Transaction Notice and ending with the consummation of such Fundamental
      Transaction, the Holder may require the Company to redeem all or any portion
      of
      this Warrant by delivering written notice thereof ("Fundamental Transaction
      Warrant Redemption Notice") to the Company, which Fundamental Transaction
      Warrant Redemption Notice shall indicate the portion of this Warrant that the
      Holder is electing to redeem. The portion of this Warrant subject to redemption
      pursuant to this Section 4(c) shall be redeemed by the Company, simultaneously
      with the consummation of the Fundamental Transaction, in cash at a price equal
      to the value of the remaining unexercised portion of this Warrant selected
      for
      such redemption, which value shall be determined as of the date of such
      consummation, by use of the Black Scholes Option Pricing Model reflecting (A)
      a
      risk-free interest rate corresponding to the U.S. Treasury rate for a period
      equal to the remaining term of this Warrant as of such date of request and
      (B)
      an expected volatility equal to the greater of 60% and the 100 day volatility
      obtained from the HVT function on Bloomberg. 

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    5. NONCIRCUMVENTION.

    

    The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Articles of Incorporation, Bylaws or through any reorganization, transfer
      of
      assets, consolidation, merger, scheme of arrangement, dissolution, issue
      or
      sale of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      reasonable action as may be required to protect the rights of the Holder.
 Without limiting the generality of the foregoing, the Company
      (i) shall not increase the par value of any shares of Common Stock
      receivable upon the exercise of this Warrant above the Exercise Price then
      in
      effect, (ii) shall take all reasonable actions as may be necessary or
      appropriate in order that the Company may validly and legally issue fully paid
      and nonassessable shares of Common Stock upon the exercise of this Warrant,
      and
      (iii) shall, following the Share Increase Authorization and so long as any
      of
      the SPA Warrants are outstanding, take all reasonable action necessary to
      reserve and keep available out of its authorized and unissued shares of Common
      Stock, solely for the purpose of effecting the exercise of the SPA Warrants,
      300% of the number of shares of Common Stock as shall from time to time be
      necessary to effect the exercise of the SPA Warrants then outstanding (without
      regard to any limitations on exercise).

    

    6. WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.

    

    Except
      as
      otherwise specifically provided herein, the Holder, solely in such Person's
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
      any of the rights of a shareholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant.  In addition, nothing contained in this Warrant shall be construed
      as imposing any liabilities on the Holder to purchase any securities (upon
      exercise of this Warrant or otherwise) or as a shareholder of the Company,
      whether such liabilities are asserted by the Company or by creditors at the
      Company.  Notwithstanding this Section 6, the Company shall provide the
      Holder with copies of the same notices and other information given to the
      shareholders of the Company generally, contemporaneously with the giving thereof
      to the shareholders.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    7. REISSUANCE
      OF WARRANTS.

    

    (a) Transfer
      of Warrant.
       If this Warrant is to be transferred, the Holder shall surrender this
      Warrant to the Company, whereupon the Company will issue promptly following
      satisfaction of the transfer provisions contained in the Securities Purchase
      Agreement and deliver upon the order of the Holder a new Warrant (in accordance
      with Section 7(d)), in the name of the validly registered assignee or
      transferee, representing the right to purchase the number of Warrant Shares
      being transferred by the Holder and, if less then the total number of Warrant
      Shares then underlying this Warrant is being transferred, a new Warrant (in
      accordance with Section 7(d)) to the Holder representing the right to purchase
      the number of Warrant Shares not being transferred.

    

    (b) Lost,
      Stolen or Mutilated Warrant.
       Upon receipt by the Company of evidence reasonably satisfactory to the
      Company of the loss, theft, destruction or mutilation of this Warrant, and,
      in
      the case of loss, theft or destruction, of any indemnification undertaking
      by
      the Holder to the Company in customary form and, in the case of mutilation,
      upon
      surrender and cancellation
      of this Warrant, the Company shall execute and deliver to the Holder a new
      Warrant (in accordance with Section 7(d)) representing the right to purchase
      the
      Warrant Shares then underlying this Warrant.

    

    (c) Exchangeable
      for Multiple Warrants.
       This Warrant is exchangeable, upon the surrender hereof by the Holder at
      the principal office of the Company, for a new Warrant or Warrants (in
      accordance with Section 7(d)) representing in the aggregate the right to
      purchase the number of Warrant Shares then underlying this Warrant, and each
      such new Warrant will represent the right to purchase such portion of such
      Warrant Shares as is designated by the Holder at the time of such surrender;
      provided, however, that no Warrants for fractional shares of Common Stock shall
      be given.

    

    (d) Issuance
      of New Warrants.
       Whenever the Company is required to issue a new Warrant pursuant to the
      terms of this Warrant, such new Warrant (i) shall be of like tenor with this
      Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
      the
      right to purchase the Warrant Shares then underlying this Warrant (or in the
      case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c),
      the
      Warrant Shares designated by the Holder which, when added to the number of
      shares of Common Stock underlying the other new Warrants issued in connection
      with such issuance, does not exceed the number of Warrant Shares then underlying
      this Warrant), (iii) shall have an issuance date, as indicated on the face
      of
      such new Warrant which is the same as the Issuance Date, and (iv) shall have
      the
      same rights and conditions as this Warrant.

    

    8. NOTICES.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    Whenever
      notice is required to be given under this Warrant, unless otherwise provided
      herein, such notice shall be given in accordance with Section 9(f) of the
      Securities Purchase Agreement.  Unless a specific notice is required
      herein, the Company shall provide the Holder with prompt written notice of
      all
      actions taken pursuant to this Warrant, including in reasonable detail a
      description of such action and the reason therefore.  Without limiting the
      generality of the foregoing, the Company will give written notice to the Holder
      (i) immediately upon any adjustment of the Exercise Price, setting forth in
      reasonable detail, and certifying, the calculation of such adjustment and (ii)
      at least ten days prior to the date on which the Company closes its books or
      takes a record (A) with respect to any dividend or distribution upon the shares
      of Common Stock, (B) with respect to any grants, issuances or sales of any
      Options, Convertible Securities or rights to purchase stock, warrants,
      securities or other property to holders of shares of Common Stock or (C) for
      determining rights to vote with respect to any Fundamental Transaction,
      dissolution or liquidation, provided in each case that such information shall
      be
      made known to the public prior to or in conjunction with such notice being
      provided to the Holder.

    

    9. AMENDMENT
      AND WAIVER.

    

    Except
      as
      otherwise provided herein, the provisions of this Warrant may be amended and
      the
      Company may take any action herein prohibited, or omit to perform any act herein
      required to be performed by it, only if the Company has obtained the written
      consent of the Required Holders; provided that no such action may increase
      the
      exercise price of any SPA Warrant or decrease the number of shares or class
      of
      stock obtainable upon exercise of any SPA Warrant without the written consent
      of
      the Holder.  No such amendment shall be effective to the extent that it
      applies to less than all of the holders of the SPA Warrants then
      outstanding.

    

    10. GOVERNING
      LAW.

    

    This
      Warrant shall be governed by and construed and enforced in accordance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant shall be governed by, the internal laws of the
      State
      of New York, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of New York or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of New York.

    

    11. CONSTRUCTION;
      HEADINGS.

    

    This
      Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
      and shall not be construed against any person as the drafter hereof.  The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant.

    

    12. DISPUTE
      RESOLUTION.

    

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder.  If the Holder and the Company are unable
      to agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two Business Days submit via facsimile (a) the disputed determination
      of
      the Exercise Price to an independent, reputable investment bank selected by
      the
      Company and approved by the Holder (such approval not to be unreasonably
      withheld or delayed) or (b) the disputed arithmetic calculation of the Warrant
      Shares to the Company's independent, outside accountant.  The Company shall
      cause at its expense the investment bank or the accountant, as the case may
      be,
      to perform the determinations or calculations and notify the Company and the
      Holder of the results no later than ten Business Days from the time it receives
      the disputed determinations or calculations.  Such investment bank's or
      accountant's determination or calculation, as the case may be, shall be binding
      upon all parties absent demonstrable error.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    13. REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.

    

    The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      to
      pursue actual damages for any failure by the Company to comply with the terms
      of
      this Warrant.  The Company acknowledges that a breach by it of its
      obligations hereunder will cause irreparable harm to the Holder and that the
      remedy at law for any such breach may be inadequate.  The Company therefore
      agrees that, in the event of any such breach or threatened breach, the holder
      of
      this Warrant shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach, without the
      necessity of showing economic loss and without any bond or other security being
      required.

    

    14. TRANSFER.

    

    This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2(f)
      of
      the Securities Purchase Agreement.

    

    15. CERTAIN
      DEFINITIONS.

    

    For
      purposes of this Warrant, the following terms shall have the following
      meanings:

    

    (a) "Affiliate"
      has the
      meaning set forth in the Securities Purchase Agreement.

    

    (b) "Bloomberg"
      means
      Bloomberg Financial Markets.

    

    (c) "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (d) "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or last trade price,
      respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
      by Bloomberg, or, if the Principal Market is not the principal securities
      exchange or trading market for such security, the last closing bid price or
      last
      trade price, respectively, of such security on the principal securities exchange
      or trading market where such security is listed or traded as reported by
      Bloomberg, or if the foregoing do not apply, the last closing bid price or
      last
      trade price, respectively, of such security in the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg, or,
      if
      no closing bid price or last trade price, respectively, is reported for such
      security by Bloomberg, the average of the bid prices, or the ask prices,
      respectively, of any market makers for such security as reported in the "pink
      sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
       If the Closing Bid Price or the Closing Sale Price cannot be calculated
      for a security on a particular date on any of the foregoing bases, the Closing
      Bid Price or the Closing Sale Price, as the case may be, of such security on
      such date shall be the fair market value as mutually determined by the Company
      and the Holder.  If the Company and the Holder are unable to agree upon the
      fair market value of such security, then such dispute shall be resolved pursuant
      to Section 12.  All such determinations to be appropriately adjusted for
      any stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

    

    (e) "Common
      Stock"
      means
      (i) the Company's shares of Common Stock, par value $0.001 per share, and
      (ii) any share capital into which such Common Stock shall have been changed
      or any share capital resulting from a reclassification of such Common
      Stock.

    

    (f) "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock, other than
      those
      issued in connection with the transactions contemplated by Schedule 4(o) of
      the
      Securities Purchase Agreement.

    

    (g) "Eligible
      Market"
      means
      the Principal Market, The New York Stock Exchange, Inc., the Nasdaq National
      Market, the Nasdaq Capital Market or the American Stock
      Exchange.

    

    (h) "Expiration
      Date"
      means
      the date sixty months after the Issuance Date or, if such date falls on a day
      other than a Business Day or on which quotation does not take place on the
      Principal Market (a "Holiday"),
      the
      next date that is not a Holiday.

    

    (i) "Fundamental
      Transaction"
      means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) allow another Person to make
      a
      purchase, tender or exchange offer that is accepted by the holders of more
      than
      the 50% of either the outstanding shares of Common Stock (not including any
      shares of Common Stock held by the Person or Persons making or party to, or
      associated or affiliated with the Persons making or party to, such purchase,
      tender or exchange offer), (iv) consummate a stock purchase agreement or other
      business combination (including, without limitation, a reorganization,
      recapitalization, spin-off or scheme of arrangement) with another Person whereby
      such other Person acquires more than the 50% of the outstanding shares of Common
      Stock (not including any shares of Common Stock held by the other Person or
      other Persons making or party to, or associated or affiliated with the other
      Persons making or party to, such stock purchase agreement or other business
      combination), (v) reorganize, recapitalize or reclassify its Common Stock (other
      than a forward or reverse stock split), or (vi) any "person" or "group" (as
      these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
      Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under
      the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary
      voting power represented by issued and outstanding Common Stock.

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (j) "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities, other than those issued in connection with
      the
      transactions contemplated by Schedule 4(o) of the Securities Purchase
      Agreement.

    

    (k) "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

    

    (l) "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

    

    (m) "Principal
      Market"
      means
      the Over-the-Counter Bulletin Board.

    

    (n) "Registration
      Rights Agreement"
      means
      that certain registration rights agreement by and among the Company and the
      Buyers.

    

    (o) "Required
      Holders"
      means
      the holders of the SPA Warrants representing at least two-thirds (2/3) of shares
      of Common Stock underlying the SPA Warrants then outstanding.

    

    (p) "SPA
      Securities"
      means
      the Notes issued pursuant to the Securities Purchase Agreement.

    

    (q) "Successor
      Entity"
      means
      the Person (or, if so elected by the Required Holders, the Parent Entity of
      such
      Person) formed by, resulting from or surviving any Fundamental Transaction
      or
      the Person (or, if so elected by the Required Holders, the Parent Entity of
      such
      Person) with which such Fundamental Transaction shall have been entered
      into.

    

    

    [Signature
      Page Follows]

    

     

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to Purchase Common Stock to be duly executed
      as
      of the Issuance Date set out above.

     

    
      	 	 	 
	 	NESCO
              INDUSTRIES, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name: Matthew
                Harriton

              Title:   
                President

            
	 	 

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    EXERCISE
      NOTICE

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    

    NESCO
      INDUSTRIES, INC.

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock ("Warrant
      Shares")
      of
      Nesco Industries, Inc., a Nevada corporation (the "Company"),
      evidenced by the attached Warrant to Purchase Common Stock (the "Warrant").
       Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    

    1.
       Form of Exercise Price.  The Holder intends that payment of the
      Exercise Price shall be made as:

    

    a
      "Cash
      Exercise"
      with
      respect to _________________ Warrant Shares; and/or

     

    a
      "Cashless Exercise"
      with
      respect to _______________ Warrant Shares.

     

    2.
       Payment of Exercise Price.  In the event that the holder has elected
      a Cash Exercise with respect to some or all of the Warrant Shares to be issued
      pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum
      of
      $___________________ to the Company in accordance with the terms of the
      Warrant.

    

    3.
       Delivery of Warrant Shares.  The Company shall deliver to the holder
      __________ Warrant Shares in accordance with the terms of the
      Warrant.

    

    4.
       Delivery of Warrant.  The Registered Holder shall deliver the Warrant
      to the Company.

    

    Date:
      _______________ __, ______

     

    

       Name
      of Registered Holder

    

    

    By:
      ___________________________    

    Name:

    Title:

    

    

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    ACKNOWLEDGMENT

    

    

    The
      Company hereby acknowledges this Exercise Notice and hereby directs [Transfer
      Agent] to issue the above indicated number of shares of Common Stock in
      accordance with the Transfer Agent Instructions dated _______ __, 2007 from
      the
      Company and acknowledged and agreed to by [Transfer Agent]

    

    NESCO
      INDUSTRIES, INC.

    

    

    

    By:
      _____________________________   

    Name:
       Matthew
      Harriton

    Title:  
       President

    

    

     

    
 

    
      
        
        

      

      
        20

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