Document:

INVESTOR REGISTRATION RIGHTS AGREEMENT

         THIS  REGISTRATION  RIGHTS  AGREEMENT (this  "Agreement"),  dated as of
September  7, 2006,  by and among  HOME  ENERGY  SAVINGS  CORP,  INC.,  a Nevada
corporation (the "Company"),  and the undersigned investors listed on Schedule I
attached hereto (each, an "Investor" and collectively, the "Investors").

         WHEREAS:

         A. In connection  with the Securities  Purchase  Agreement by and among
the parties hereto of even date herewith (the "Securities Purchase  Agreement"),
the  Company has agreed,  upon the terms and  subject to the  conditions  of the
Securities  Purchase  Agreement,  to  issue  and sell to the  Investors  secured
convertible debentures (the "Convertible Debentures") which shall be convertible
into that number of shares of the Company's  common stock,  par value $0.001 per
share (the "Common  Stock"),  pursuant to the terms of the  Securities  Purchase
Agreement for an aggregate  purchase price of up to Two Hundred Thousand Dollars
($200,000). Capitalized terms not defined herein shall have the meaning ascribed
to them in the Securities Purchase Agreement.

         B. To induce  the  Investors  to execute  and  deliver  the  Securities
Purchase  Agreement,  the  Company  has agreed to provide  certain  registration
rights  under  the  Securities  Act of  1933,  as  amended,  and the  rules  and
regulations  thereunder,  or any similar  successor statute  (collectively,  the
"Securities Act"), and applicable state securities laws.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the Company and the
Investors hereby agree as follows:

         1.       DEFINITIONS.

         As used in this Agreement, the following terms shall have the following
meanings:

           (a) "Person" means a corporation,  a limited  liability  company,  an
association,  a partnership,  an  organization,  a business,  an  individual,  a
governmental or political subdivision thereof or a governmental agency.

           (b)  "Register,"   "registered,"  and   "registration"   refer  to  a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements (as defined below) in compliance with the Securities Act and pursuant
to Rule 415  under  the  Securities  Act or any  successor  rule  providing  for
offering  securities  on a continuous  or delayed  basis ("Rule  415"),  and the
declaration or ordering of  effectiveness of such  Registration  Statement(s) by
the United States Securities and Exchange Commission (the "SEC").

           (c)  "Registrable  Securities"  means  the  shares  of  Common  Stock
issuable to the Investors upon conversion of the Convertible Debentures pursuant
to the Securities  Purchase  Agreement and the Warrant  Shares,  as this term is
defined in the Securities Purchase Agreement.

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           (d) "Registration Statement" means a registration statement under the
Securities Act which covers the Registrable Securities.

         2. REGISTRATION.

           (a)  Subject  to the  terms and  conditions  of this  Agreement,  the
Company  shall  prepare  and file,  no later than thirty (30) days from the date
demanded by the  Investor  (the  "Scheduled  Filing  Deadline"),  with the SEC a
registration statement on Form S-1 or SB-2 (or, if the Company is then eligible,
on Form S-3) under the Securities Act (the "Initial Registration Statement") for
the resale by the Investors of the  Registrable  Securities,  which  includes at
least  62,500,000  shares of Common  Stock to be issued upon  conversion  of the
Convertible  Debentures and 100,000,000  Warrant Shares. The Company shall cause
the  Registration  Statement to remain  effective  until all of the  Registrable
Securities  have been sold.  Prior to the filing of the  Registration  Statement
with the SEC,  the  Company  shall  furnish a copy of the  Initial  Registration
Statement to the  Investors for their review and comment.  The  Investors  shall
furnish  comments on the Initial  Registration  Statement to the Company  within
twenty-four (24) hours of the receipt thereof from the Company.

           (b) Effectiveness of the Initial Registration Statement.  The Company
shall  use its best  efforts  (i) to have  the  Initial  Registration  Statement
declared  effective by the SEC no later than ninety (90) days from the Scheduled
Filing Deadline (the "Scheduled Effective Deadline") and (ii) to insure that the
Initial Registration Statement and any subsequent Registration Statement remains
in effect until all of the Registrable Securities have been sold, subject to the
terms and conditions of this Agreement.

           (c)  Failure  to File or  Obtain  Effectiveness  of the  Registration
Statement. In the event the Registration Statement is not filed by the Scheduled
Filing  Deadline  or is not  declared  effective  by the  SEC on or  before  the
Scheduled  Effective  Date,  or if after  the  Registration  Statement  has been
declared effective by the SEC, sales cannot be made pursuant to the Registration
Statement  (whether  because  of a failure  to keep the  Registration  Statement
effective,  failure to disclose such information as is necessary for sales to be
made  pursuant to the  Registration  Statement,  failure to register  sufficient
shares of Common Stock or otherwise)  then as partial  relief for the damages to
any holder of Registrable Securities by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
not be  exclusive of any other  remedies at law or in equity),  the Company will
pay as  liquidated  damages (the  "Liquidated  Damages")  to the holder,  at the
holder's  option,  either a cash amount or shares of the Company's  Common Stock
within three (3) business  days,  after demand  therefore,  equal to two percent
(2%) of the  liquidated  value  of the  Convertible  Debentures  outstanding  as
Liquidated  Damages for each thirty (30) day period after the  Scheduled  Filing
Deadline or the  Scheduled  Effective  Date as the case may be.  Notwithstanding
anything  herein to the contrary,  in no event shall  Liquidated  Damages exceed
twenty percent (20%) of the aggregate Purchase Price for all Investors.

           (d)  Liquidated   Damages.   The  Company  and  the  Investor  hereto
acknowledge  and agree that the sums payable under  subsection  2(c) above shall
constitute liquidated damages and not penalties and are in addition to all other
rights of the  Investor,  including  the right to call a  default.  The  parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to precisely  estimate,  (ii) the amounts specified
in such  subsections  bear a reasonable  relationship to, and are not plainly or
grossly  disproportionate  to,  the  probable  loss  likely  to be  incurred  in
connection   with  any  failure  by  the  Company  to  obtain  or  maintain  the
effectiveness  of a  Registration  Statement,  (iii) one of the  reasons for the
Company  and the  Investor  reaching  an  agreement  as to such  amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Investor are  sophisticated  business  parties and have
been  represented by  sophisticated  and able legal counsel and negotiated  this
Agreement at arm's length.

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         3. RELATED OBLIGATIONS.

           (a) The  Company  shall  keep the  Registration  Statement  effective
pursuant  to Rule 415 at all times  until the date on which the  Investor  shall
have sold all the Registrable  Securities covered by such Registration Statement
(the  "Registration  Period"),   which  Registration  Statement  (including  any
amendments or supplements thereto and prospectuses  contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein,  or necessary to make the statements  therein, in
light of the circumstances in which they were made, not misleading.

           (b) The Company shall  prepare and file with the SEC such  amendments
(including   post-effective   amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used  in  connection  with  such   Registration
Statement,  which  prospectus  is to be filed  pursuant to Rule 424  promulgated
under  the  Securities  Act,  as may be  necessary  to  keep  such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such period,  comply with the  provisions of the  Securities Act with respect to
the  disposition of all  Registrable  Securities of the Company  covered by such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section  3(b)) by reason of the  Company's  filing a report on Form 10-KSB,
Form 10-QSB or Form 8-K or any analogous  report under the  Securities  Exchange
Act of 1934, as amended (the "Exchange Act"), the Company shall incorporate such
report by reference into the  Registration  Statement,  if applicable,  or shall
file such  amendments or  supplements  with the SEC on the same day on which the
Exchange Act report is filed which  created the  requirement  for the Company to
amend or supplement the Registration Statement.

           (c) The Company  shall  furnish to each  Investor  whose  Registrable
Securities are included in any Registration  Statement,  without charge,  (i) at
least one (1) copy of such Registration  Statement as declared  effective by the
SEC and any amendment(s) thereto,  including financial statements and schedules,
all  documents  incorporated  therein  by  reference,   all  exhibits  and  each
preliminary prospectus, (ii) ten (10) copies of the final prospectus included in
such Registration  Statement and all amendments and supplements thereto (or such
other number of copies as such Investor may  reasonably  request) and (iii) such
other  documents as such  Investor may  reasonably  request from time to time in
order to facilitate the disposition of the Registrable  Securities owned by such
Investor.

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<PAGE>

           (d) The  Company  shall  use its best  efforts  to (i)  register  and
qualify the  Registrable  Securities  covered by a Registration  Statement under
such other  securities  or "blue sky" laws of such  jurisdictions  in the United
States as any  Investor  reasonably  requests,  (ii)  prepare  and file in those
jurisdictions,   such  amendments  (including  post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition
thereto to (w) make any change to its articles of incorporation or by-laws,  (x)
qualify to do  business  in any  jurisdiction  where it would not  otherwise  be
required to qualify but for this  Section  3(d),  (y) subject  itself to general
taxation in any such  jurisdiction,  or (z) file a general consent to service of
process  in any such  jurisdiction.  The  Company  shall  promptly  notify  each
Investor who holds  Registrable  Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.

           (e) As promptly as practicable  after becoming aware of such event or
development,  the Company shall notify each Investor in writing of the happening
of any event as a result  of which the  prospectus  included  in a  Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated  therein or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading  (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such  supplement or amendment to each  Investor.  The
Company  shall  also  promptly  notify  each  Investor  in  writing  (i)  when a
prospectus or any  prospectus  supplement or  post-effective  amendment has been
filed,  and when a Registration  Statement or any  post-effective  amendment has
become effective  (notification of such effectiveness shall be delivered to each
Investor  by  facsimile  on the  same  day of such  effectiveness),  (ii) of any
request by the SEC for amendments or supplements to a Registration  Statement or
related prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective  amendment to a Registration Statement would
be appropriate.

           (f) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable  Securities for
sale in any  jurisdiction  within the United  States of America  and, if such an
order or  suspension  is  issued,  to obtain  the  withdrawal  of such  order or
suspension at the earliest possible moment and to notify each Investor who holds
Registrable  Securities  being  sold  of the  issuance  of  such  order  and the
resolution  thereof or its receipt of actual notice of the  initiation or threat
of any proceeding for such purpose.

           (g) At the  reasonable  request of any  Investor,  the Company  shall
furnish to such Investor,  on the date of the  effectiveness of the Registration
Statement  and  thereafter  from time to time on such dates as an  Investor  may
reasonably request (i) a letter, dated such date, from the Company's independent
certified  public  accountants in form and substance as is customarily  given by
independent  certified  public  accountants to  underwriters  in an underwritten
public  offering,  and  (ii) an  opinion,  dated  as of such  date,  of  counsel
representing the Company for purposes of such Registration  Statement,  in form,
scope and substance as is customarily given in an underwritten  public offering,
addressed to the Investors.

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<PAGE>

           (h) The  Company  shall  make  available  for  inspection  by (i) any
Investor and (ii) one (1) firm of  accountants  or other agents  retained by the
Investors  (collectively,  the "Inspectors")  all pertinent  financial and other
records,  and  pertinent  corporate  documents  and  properties  of the  Company
(collectively,  the "Records"),  as shall be reasonably deemed necessary by each
Inspector,  and cause the Company's officers,  directors and employees to supply
all information which any Inspector may reasonably request;  provided,  however,
that each Inspector  shall agree,  and each Investor  hereby agrees,  to hold in
strict  confidence and shall not make any disclosure  (except to an Investor) or
use any Record or other information  which the Company  determines in good faith
to be confidential,  and of which  determination the Inspectors are so notified,
unless (a) the  disclosure  of such  Records is  necessary to avoid or correct a
misstatement or omission in any Registration  Statement or is otherwise required
under the Securities Act, (b) the release of such Records is ordered pursuant to
a final,  non-appealable  subpoena or order from a court or  government  body of
competent  jurisdiction,  or (c) the  information  in such Records has been made
generally  available to the public other than by disclosure in violation of this
or any other  agreement of which the Inspector  and the Investor has  knowledge.
Each  Investor  agrees that it shall,  upon  learning  that  disclosure  of such
Records  is  sought  in  or  by  a  court  or  governmental  body  of  competent
jurisdiction or through other means, give prompt notice to the Company and allow
the  Company,  at its  expense,  to  undertake  appropriate  action  to  prevent
disclosure  of,  or to  obtain  a  protective  order  for,  the  Records  deemed
confidential.

           (i) The Company shall hold in confidence  and not make any disclosure
of  information  concerning  an  Investor  provided  to the  Company  unless (i)
disclosure  of such  information  is  necessary  to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by  disclosure  in  violation  of this  Agreement or any other
agreement.  The Company agrees that it shall,  upon learning that  disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by a  court  or
governmental body of competent  jurisdiction or through other means, give prompt
written  notice to such  Investor  and allow such  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

           (j) The Company  shall use its best  efforts  either to cause all the
Registrable  Securities covered by a Registration  Statement (i) to be listed on
each securities  exchange on which securities of the same class or series issued
by the Company  are then  listed,  if any,  if the  listing of such  Registrable
Securities  is then  permitted  under  the  rules of such  exchange  or (ii) the
inclusion for quotation on the National Association of Securities Dealers,  Inc.
OTC Bulletin Board for such  Registrable  Securities.  The Company shall pay all
fees and  expenses in  connection  with  satisfying  its  obligation  under this
Section 3(j).

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<PAGE>

           (k)  The  Company  shall   cooperate  with  the  Investors  who  hold
Registrable  Securities  being  offered  and,  to  the  extent  applicable,   to
facilitate the timely  preparation and delivery of certificates (not bearing any
restrictive  legend)  representing  the  Registrable  Securities  to be  offered
pursuant to a Registration  Statement and enable such certificates to be in such
denominations  or amounts,  as the case may be, as the Investors may  reasonably
request and registered in such names as the Investors may request.

           (l) The Company  shall use its best efforts to cause the  Registrable
Securities  covered by the  applicable  Registration  Statement to be registered
with or approved by such other  governmental  agencies or  authorities as may be
necessary to consummate the disposition of such Registrable Securities.

           (m) The  Company  shall  make  generally  available  to its  security
holders  as soon as  practical,  but not later than  ninety  (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a twelve (12)
month  period  beginning  not later than the first day of the  Company's  fiscal
quarter next following the effective date of the Registration Statement.

           (n) The Company  shall  otherwise use its best efforts to comply with
all  applicable  rules  and  regulations  of the  SEC  in  connection  with  any
registration hereunder.

           (o) Within two (2) business days after a Registration Statement which
covers  Registrable  Securities  is declared  effective  by the SEC, the Company
shall deliver,  and shall cause legal counsel for the Company to deliver, to the
transfer  agent for such  Registrable  Securities  (with copies to the Investors
whose  Registrable  Securities  are  included  in such  Registration  Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

           (p) The Company shall take all other reasonable  actions necessary to
expedite and facilitate  disposition by the Investors of Registrable  Securities
pursuant to a Registration Statement.

         4. OBLIGATIONS OF THE INVESTORS.

         Each Investor  agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e),  such Investor will  immediately  discontinue  disposition  of
Registrable  Securities pursuant to any Registration  Statement(s) covering such
Registrable  Securities  until  such  Investor's  receipt  of the  copies of the
supplemented  or amended  prospectus  contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required.  Notwithstanding anything to
the contrary,  the Company shall cause its transfer agent to deliver  unlegended
certificates  for  shares of Common  Stock to a  transferee  of an  Investor  in
accordance  with the terms of the  Securities  Purchase  Agreement in connection
with any sale of  Registrable  Securities  with respect to which an Investor has
entered  into a contract  for sale prior to the  Investor's  receipt of a notice
from the Company of the happening of any event of the kind  described in Section
3(f) or the  first  sentence  of 3(e) and for  which  the  Investor  has not yet
settled.

         5. EXPENSES OF REGISTRATION.

         All expenses  incurred in  connection  with  registrations,  filings or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration,  listing and qualifications fees,  printers,  legal and accounting
fees shall be paid by the Company.

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<PAGE>

         6. INDEMNIFICATION.

         With  respect  to  Registrable  Securities  which  are  included  in  a
Registration Statement under this Agreement:

           (a) To the fullest  extent  permitted by law, the Company  will,  and
hereby does, indemnify,  hold harmless and defend each Investor,  the directors,
officers, partners,  employees, agents,  representatives of, and each Person, if
any, who controls any Investor  within the meaning of the  Securities Act or the
Exchange  Act (each,  an  "Indemnified  Person"),  against any  losses,  claims,
damages,  liabilities,  judgments, fines, penalties,  charges, costs, reasonable
attorneys'  fees,  amounts  paid in  settlement  or  expenses,  joint or several
(collectively,  "Claims") incurred in investigating,  preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing  by or  before  any  court or  governmental,  administrative  or other
regulatory  agency,  body or the SEC, whether pending or threatened,  whether or
not an indemnified party is or may be a party thereto  ("Indemnified  Damages"),
to which any of them may become  subject  insofar as such  Claims (or actions or
proceedings,  whether commenced or threatened,  in respect thereof) arise out of
or are based upon:  (i) any untrue  statement or alleged  untrue  statement of a
material  fact  in a  Registration  Statement  or any  post-effective  amendment
thereto  or in any  filing  made in  connection  with the  qualification  of the
offering  under the securities or other "blue sky" laws of any  jurisdiction  in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged  omission  to state a material  fact  required  to be stated  therein or
necessary  to make the  statements  therein  not  misleading;  (ii)  any  untrue
statement or alleged untrue  statement of a material fact contained in any final
prospectus  (as  amended or  supplemented,  if the Company  files any  amendment
thereof or supplement  thereto with the SEC) or the omission or alleged omission
to state  therein  any  material  fact  necessary  to make the  statements  made
therein,  in light of the circumstances  under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the  Securities  Act, the Exchange  Act,  any other law,  including,  without
limitation,  any state  securities  law, or any rule or  regulation  there under
relating  to the  offer  or sale of the  Registrable  Securities  pursuant  to a
Registration  Statement (the matters in the foregoing  clauses (i) through (iii)
being,  collectively,  "Violations").  The Company shall reimburse the Investors
and each such controlling  person promptly as such expenses are incurred and are
due and  payable,  for any  legal  fees or  disbursements  or  other  reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.   Notwithstanding   anything  to  the  contrary   contained  herein,  the
indemnification agreement contained in this Section 6(a): (x) shall not apply to
a Claim by an Indemnified  Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information  furnished in writing
to the Company by such  Indemnified  Person expressly for use in connection with
the preparation of the Registration  Statement or any such amendment  thereof or
supplement thereto; (y) shall not be available to the extent such Claim is based
on a  failure  of the  Investor  to  deliver  or to  cause to be  delivered  the
prospectus  made  available by the Company,  if such  prospectus was timely made
available by the Company  pursuant to Section  3(c);  and (z) shall not apply to
amounts paid in settlement of any Claim if such  settlement is effected  without
the  prior  written  consent  of  the  Company,   which  consent  shall  not  be
unreasonably  withheld.  Such  indemnity  shall  remain in full force and effect
regardless of any investigation  made by or on behalf of the Indemnified  Person
and shall  survive the transfer of the  Registrable  Securities by the Investors
pursuant to Section 9 hereof.

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<PAGE>

           (b) In connection with a Registration Statement, each Investor agrees
to severally and not jointly  indemnify,  hold harmless and defend,  to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers,  employees,  representatives,  or agents
and each Person,  if any,  who  controls  the Company  within the meaning of the
Securities Act or the Exchange Act (each an  "Indemnified  Party"),  against any
Claim or Indemnified Damages to which any of them may become subject,  under the
Securities  Act,  the  Exchange  Act or  otherwise,  insofar  as such  Claim  or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the extent, and only to the extent,  that such Violation occurs in reliance upon
and in  conformity  with  written  information  furnished to the Company by such
Investor expressly for use in connection with such Registration Statement;  and,
subject  to  Section  6(d),  such  Investor  will  reimburse  any legal or other
expenses  reasonably  incurred  by  them in  connection  with  investigating  or
defending  any such  Claim;  provided,  however,  that the  indemnity  agreement
contained in this Section 6(b) and the  agreement  with respect to  contribution
contained  in Section 7 shall not apply to  amounts  paid in  settlement  of any
Claim if such  settlement is effected  without the prior written consent of such
Investor, which consent shall not be unreasonably withheld;  provided,  further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified  Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration  Statement.  Such  indemnity  shall remain in full force and effect
regardless of any  investigation  made by or on behalf of such Indemnified Party
and shall  survive the transfer of the  Registrable  Securities by the Investors
pursuant  to Section  9.  Notwithstanding  anything  to the  contrary  contained
herein,  the  indemnification  agreement  contained  in this  Section  6(b) with
respect to any  prospectus  shall not inure to the  benefit  of any  Indemnified
Party if the untrue  statement  or omission of material  fact  contained  in the
prospectus  was corrected and such new prospectus was delivered to each Investor
prior to such Investor's use of the prospectus to which the Claim relates.

           (c) Promptly  after receipt by an  Indemnified  Person or Indemnified
Party  under  this  Section  6 of notice of the  commencement  of any  action or
proceeding  (including any governmental action or proceeding) involving a Claim,
such  Indemnified  Person or  Indemnified  Party  shall,  if a Claim in  respect
thereof is to be made  against  any  indemnifying  party  under this  Section 6,
deliver to the indemnifying party a written notice of the commencement  thereof,
and the  indemnifying  party shall have the right to participate in, and, to the
extent the indemnifying  party so desires,  jointly with any other  indemnifying
party similarly  noticed,  to assume control of the defense thereof with counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel  with the fees and  expenses  of not more than one (1)  counsel for such
Indemnified  Person or Indemnified  Party to be paid by the indemnifying  party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented  by such counsel in such  proceeding.  The  Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection  with any  negotiation  or defense of any such action or claim by the
indemnifying  party and shall furnish to the indemnifying  party all information
reasonably  available  to the  Indemnified  Party or  Indemnified  Person  which
relates  to such  action  or  claim.  The  indemnifying  party  shall  keep  the
Indemnified  Party or  Indemnified  Person fully apprised at all times as to the
status of the defense or any settlement  negotiations  with respect thereto.  No
indemnifying  party shall be liable for any  settlement of any action,  claim or
proceeding effected without its prior written consent;  provided,  however, that
the indemnifying party shall not unreasonably  withhold,  delay or condition its
consent.  No indemnifying party shall,  without the prior written consent of the
Indemnified  Party or  Indemnified  Person,  consent to entry of any judgment or
enter into any  settlement  or other  compromise  which  does not  include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party or  Indemnified  Person of a release  from all  liability  in
respect to such claim or litigation.  Following  indemnification as provided for
hereunder,  the  indemnifying  party  shall be  subrogated  to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations  relating to the matter for which indemnification has been made.
The  failure  to  deliver  written  notice to the  indemnifying  party  within a
reasonable  time of the  commencement  of any such action shall not relieve such
indemnifying  party of any liability to the  Indemnified  Person or  Indemnified
Party under this Section 6, except to the extent that the indemnifying  party is
prejudiced in its ability to defend such action.

                                       8
<PAGE>

           (d) The  indemnification  required by this Section 6 shall be made by
periodic  payments of the amount thereof during the course of the  investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

           (e) The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the  indemnifying  party or others,  and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

         7. CONTRIBUTION.

         To  the  extent  any   indemnification  by  an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable  Securities guilty of fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  from any seller of  Registrable  Securities  who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds  received by
such seller from the sale of such Registrable Securities.

         8. REPORTS UNDER THE EXCHANGE ACT.

         With a view to making  available to the  Investors the benefits of Rule
144  promulgated  under the  Securities Act or any similar rule or regulation of
the SEC that may at any time  permit the  Investors  to sell  securities  of the
Company to the public without registration ("Rule 144") the Company agrees to:

                                       9
<PAGE>

           (a) make and keep public  information  available,  as those terms are
understood and defined in Rule 144;

           (b) file  with the SEC in a  timely  manner  all  reports  and  other
documents  required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company's  obligations under Section 4(c) of
the  Securities  Purchase  Agreement)  and the filing of such  reports and other
documents as are required by the applicable provisions of Rule 144; and

           (c)  furnish  to  each   Investor  so  long  as  such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied  with the reporting  requirements  of Rule 144, the
Securities  Act and the Exchange  Act,  (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company,  and (iii) such other information as may be reasonably requested to
permit  the  Investors  to sell such  securities  pursuant  to Rule 144  without
registration.

         9. AMENDMENT OF REGISTRATION RIGHTS.

         Provisions of this Agreement may be amended and the observance  thereof
may  be  waived  (either  generally  or  in a  particular  instance  and  either
retroactively  or  prospectively),  only with the written consent of the Company
and  Investors  who then  hold at  least  two-thirds  (2/3)  of the  Registrable
Securities.  Any amendment or waiver  effected in accordance with this Section 9
shall be binding upon each Investor and the Company.  No such amendment shall be
effective  to the extent that it applies to fewer than all of the holders of the
Registrable Securities.  No consideration shall be offered or paid to any Person
to amend or consent to a waiver or  modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.

         10. MISCELLANEOUS.

           (a) A Person  is  deemed  to be a holder  of  Registrable  Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities  or owns the right to  receive  the  Registrable  Securities.  If the
Company receives conflicting instructions,  notices or elections from two (2) or
more Persons with respect to the same Registrable Securities,  the Company shall
act upon  the  basis of  instructions,  notice  or  election  received  from the
registered owner of such Registrable Securities.

           (b) Any notices,  consents,  waivers or other communications required
or  permitted to be given under the terms of this  Agreement  must be in writing
and will be deemed to have been  delivered:  (i) upon  receipt,  when  delivered
personally;  (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending  party);  or (iii) one (1) business day after  deposit with a nationally
recognized  overnight  delivery service,  in each case properly addressed to the
party to  receive  the  same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

                                       10
<PAGE>

If to the Company, to:              Home Energy Savings Corp, Inc.
                                    133 Salem Avenue  - Suite 300
                                    Roanoke, VA 24011
                                    Attention:     Bruce Edwards
                                    Telephone:     (540) 345-3358
                                    Facsimile:     (540) 343-3370

With Copy to:                       Kirkpatrick & Lockhart Nicholson Graham LLP
                                    201 South Biscayne Boulevard - Suite 2000
                                    Miami, FL  33131-2399
                                    Attention:        Clayton E. Parker, Esq.
                                    Telephone:        (305) 539-3300
                                    Facsimile:        (305) 358-7095

If to an  Investor,  to its  address  and  facsimile  number on the  Schedule of
Investors attached hereto, with copies to such Investor's representatives as set
forth on the  Schedule of Investors or to such other  address  and/or  facsimile
number and/or to the  attention of such other person as the recipient  party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written  confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,   waiver  or  other  communication,   (B)
mechanically  or  electronically  generated  by the sender's  facsimile  machine
containing the time, date,  recipient facsimile number and an image of the first
page of such  transmission  or (C)  provided by a courier or  overnight  courier
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

           (c) Failure of any party to exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

           (d) The laws of the  State of New  Jersey  shall  govern  all  issues
concerning  the  relative  rights  of  the  Company  and  the  Investors  as its
stockholders.  All  other  questions  concerning  the  construction,   validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by the
internal laws of the State of New Jersey, without giving effect to any choice of
law or conflict of law  provision or rule (whether of the State of New Jersey or
any other  jurisdiction)  that would  cause the  application  of the laws of any
jurisdiction  other than the State of New Jersey.  Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the Superior Courts of the State of
New Jersey,  sitting in Hudson  County,  New Jersey and  federal  courts for the
District of New Jersey sitting Newark,  New Jersey,  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.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or  proceeding  by mailing a copy  thereof to such party at the address for such
notices to it under this 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. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or the  validity  or  enforceability  of  any  provision  of  this
Agreement in any other  jurisdiction.  EACH PARTY 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  HEREWITH  OR ARISING  OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                                       11
<PAGE>

           (e) This Agreement, the Irrevocable Transfer Agent Instructions,  the
Securities  Purchase  Agreement and related documents  including the Convertible
Debenture  and the  Security  Agreement  dated the date  hereof  (the  "Security
Agreement")  constitute  the entire  agreement  among the  parties  hereto  with
respect to the subject  matter  hereof and thereof.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein and therein. This Agreement, the Irrevocable Transfer Agent Instructions,
the  Securities   Purchase   Agreement  and  related  documents   including  the
Convertible Debenture, and the Security Agreement supersede all prior agreements
and  understandings  among the parties hereto with respect to the subject matter
hereof and thereof.

           (f) This Agreement  shall inure to the benefit of and be binding upon
the permitted successors and assigns of each of the parties hereto.

           (g) The headings in this  Agreement are for  convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

           (h) This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall  constitute one and the
same agreement.  This Agreement,  once executed by a party,  may be delivered to
the other party hereto by  facsimile  transmission  of a copy of this  Agreement
bearing the signature of the party so delivering this Agreement.

           (i)  Each  party  shall  do and  perform,  or  cause  to be done  and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

The language used in this Agreement will be deemed to be the language  chosen by
the parties to express their mutual  intent and no rules of strict  construction
will be applied against any party.

           (j) This  Agreement is intended for the benefit of the parties hereto
and  their  respective  permitted  successors  and  assigns,  and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Investor  Registration
Rights Agreement to be duly executed as of day and year first above written.

                                                  COMPANY:
                                                  HOME ENERGY SAVINGS CORP, INC.

                                                  By:   /s/ Bruce Edwards
                                                     ---------------------------
                                                  Name:   Bruce Edwards
                                                  Title:  President

                                       13
<PAGE>

                                   SCHEDULE I

                              SCHEDULE OF INVESTORS

<TABLE>
<CAPTION>

                                                                                         Address/Facsimile
           Name                              Signature                                  Number of Investors
----------------------------       --------------------------------                ------------------------------
<S>                                <C>                                             <C>

Cornell Capital Partners, LP       By:      Yorkville Advisors, LLC                101 Hudson Street - Suite 3700
                                   Its:     General Partner                        Jersey City, NJ  07303
                                                                                   Facsimile:   (201) 985-8266

                                   By:   /s/ Mark Angelo
                                      --------------------------
                                   Name:    Mark Angelo
                                   Its:     Portfolio Manager

With a copy to:                    David Gonzalez, Esq.                            101 Hudson Street - Suite 3700
                                                                                   Jersey City, NJ 07302
                                                                                   Facsimile:   (201) 985-8266

</TABLE>

<PAGE>

                                    EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

Attention:

        Re: HOME ENERGY SAVINGS CORP, INC.

Ladies and Gentlemen:

         We are counsel to Home Energy Savings Corp,  Inc. a Nevada  corporation
(the  "Company"),  and have  represented  the  Company in  connection  with that
certain  Securities  Purchase  Agreement (the "Securities  Purchase  Agreement")
entered  into  by  and  among  the  Company  and  the  investors  named  therein
(collectively,  the  "Investors")  pursuant to which the  Company  issued to the
Investors  shares of its Common  Stock,  par value $0.001 per share (the "Common
Stock"). Pursuant to the Purchase Agreement, the Company also has entered into a
Registration  Rights  Agreement with the Investors  (the "Investor  Registration
Rights Agreement")  pursuant to which the Company agreed, among other things, to
register  the  Registrable  Securities  (as defined in the  Registration  Rights
Agreement) under the Securities Act of 1933, as amended (the "Securities  Act").
In  connection  with the Company's  obligations  under the  Registration  Rights
Agreement,  on ____________ ____, the Company filed a Registration  Statement on
Form ________ (File No.  333-_____________) (the "Registration  Statement") with
the  Securities  and  Exchange  SEC  (the  "SEC")  relating  to the  Registrable
Securities  which names each of the  Investors  as a selling  stockholder  there
under.

         In connection  with the  foregoing,  we advise you that a member of the
SEC's  staff has  advised  us by  telephone  that the SEC has  entered  an order
declaring the  Registration  Statement  effective  under the  Securities  Act at
[ENTER TIME OF EFFECTIVENESS]  on [ENTER DATE OF  EFFECTIVENESS]  and we have no
knowledge,  after  telephonic  inquiry of a member of the SEC's staff,  that any
stop order suspending its  effectiveness has been issued or that any proceedings
for  that  purpose  are  pending  before,  or  threatened  by,  the  SEC and the
Registrable  Securities  are  available  for  resale  under the  Securities  Act
pursuant to the Registration Statement.

                                                     Very truly yours,

                                                     [Law Firm]

                                                     By:
                                                        ------------------------

cc:      [LIST NAMES OF INVESTORS]SECURITY AGREEMENT

         THIS SECURITY  AGREEMENT  (the  "Agreement"),  is entered into and made
effective  as of September 7, 2006,  by and between  HOME ENERGY  SAVINGS  CORP,
INC., a Nevada  corporation  with its principal place of business located at 133
Salem Avenue - Suite 300  Roanoke,  VA 24011 (the  "Company"),  and the BUYER(S)
(the "Secured  Party") listed on Schedule I attached to the Securities  Purchase
Agreement (the "Securities  Purchase  Agreement")  dated the date hereof between
the Company and the Secured Party.

         WHEREAS,  the Company  shall issue and sell to the  Secured  Party,  as
provided in the Securities  Purchase Agreement of even date herewith between the
Company and the Secured Party (the  "Securities  Purchase  Agreement"),  and the
Secured Party shall purchase up to Two Hundred  Thousand  Dollars  ($200,000) of
secured convertible  debentures (the "Convertible  Debentures"),  which shall be
convertible  into shares of the Company's  common  stock,  par value $0.001 (the
"Common  Stock") (as  converted,  the  "Conversion  Shares")  in the  respective
amounts  set forth  opposite  each  Buyer(s)  name on Schedule I attached to the
Securities Purchase Agreement;

         WHEREAS,  to induce the  Secured  Party to enter  into the  transaction
contemplated by the Securities  Purchase Agreement of even date herewith between
the Company and the Secured Party (the  "Securities  Purchase  Agreement"),  the
Convertible Debentures of even date herewith between the Company and the Secured
Party (the "Convertible Debentures"), the Investor Registration Rights Agreement
of even date herewith  between the Company and the Secured Party (the  "Investor
Registration Rights Agreement"), and the Irrevocable Transfer Agent Instructions
among the Company,  the Secured Party,  Executive  Registrar & Transfer  Agency,
Inc., and David Gonzalez, Esq. (the "Transfer Agent Instructions") (collectively
referred to as the  "Transaction  Documents"),  the Company hereby grants to the
Secured Party a security  interest in and to the pledged property  identified on
Exhibit A hereto (collectively  referred to as the "Pledged Property") until the
satisfaction of the Obligations, as defined herein below.

         NOW,  THEREFORE,  in  consideration  of the  promises  and  the  mutual
covenants herein contained,  and for other good and valuable consideration,  the
adequacy and receipt of which are hereby acknowledged, the parties hereto hereby
agree as follows:

                                   ARTICLE 1.

                         DEFINITIONS AND INTERPRETATIONS

         Section 1.1.      Recitals.

         The above recitals are true and correct and are incorporated herein, in
their entirety, by this reference.

<PAGE>

         Section 1.2.      Interpretations.

         Nothing  herein  expressed or implied is intended or shall be construed
to confer  upon any person  other than the  Secured  Party any right,  remedy or
claim under or by reason hereof.

         Section 1.3.      Obligations Secured.

         The  obligations  secured  hereby  are any and all  obligations  of the
Company now existing or hereinafter  incurred to the Secured Party, whether oral
or written and whether  arising before,  on or after the date hereof  including,
without limitation,  those obligations of the Company to the Secured Party under
this  Agreement,  the  Transaction  Documents,  and  any  other  amounts  now or
hereafter  owed to the Secured  Party by the  Company  thereunder  or  hereunder
(collectively, the "Obligations").

                                   ARTICLE 2.

                 PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL
                      AND TERMINATION OF SECURITY INTEREST

         Section 2.1.      Pledged Property.

                  (a) Company hereby  pledges to the Secured Party,  and creates
in the Secured  Party for its benefit,  a security  interest for such time until
the  Obligations  are paid in full, in and to all of the property of the Company
as set forth in Exhibit "A"  attached  hereto and the  products  thereof and the
proceeds of all such items (collectively, the "Pledged Property"):

                  (b)  Simultaneously  with the  execution  and delivery of this
Agreement,  the  Company  shall make,  execute,  acknowledge,  file,  record and
deliver to the Secured Party any documents  reasonably  requested by the Secured
Party to perfect its security interest in the Pledged  Property.  Simultaneously
with the  execution  and  delivery of this  Agreement,  the Company  shall make,
execute,  acknowledge  and  deliver  to the  Secured  Party such  documents  and
instruments, including, without limitation, financing statements,  certificates,
affidavits  and forms as may, in the Secured  Party's  reasonable  judgment,  be
necessary to effectuate,  complete or perfect, or to continue and preserve,  the
security interest of the Secured Party in the Pledged Property,  and the Secured
Party shall hold such documents and instruments as secured party, subject to the
terms and conditions contained herein.

         Section 2.2.      Rights; Interests; Etc.

                  (a) So long as no Event of Default  (as  hereinafter  defined)
shall have occurred and be continuing:

                           (i) the Company shall be entitled to exercise any and
all rights pertaining  to  the  Pledged  Property  or  any part  thereof for any
purpose not inconsistent with the terms hereof; and

                           (ii) the  Company  shall be  entitled  to receive and
retain any and all payments paid or made in respect of the Pledged Property.

                                       2
<PAGE>

                  (b) Upon the occurrence and during the continuance of an Event
of Default:

                           (i) All rights of the Company to exercise  the rights
which it would otherwise be entitled  to  exercise pursuant  to  Section  2.2(a)
(i)  hereof  and to receive payments which it would  otherwise be authorized to
receive and retain  pursuant to Section  2.2(a)(ii)  hereof  shall be suspended,
and all such rights  shall thereupon  become  vested  in the  Secured Party  who
shall  thereupon have the sole right to exercise  such rights and to receive and
hold as Pledged  Property such payments; provided, however, that if  the Secured
Party shall become entitled and shall elect to exercise its right to  realize on
the Pledged Property pursuant to Article 5 hereof,  then all cash sums  received
by the Secured Party,  or held by Company for the benefit of the Secured  Party
and paid over  pursuant to Section 2.2(b)(ii) hereof, shall  be applied  against
any outstanding Obligations; and

                           (ii)  All  interest,   dividends,  income  and  other
payments and distributions which are received by the  Company  contrary  to  the
provisions of Section 2.2(b) (i) hereof  shall  be  received in  trust  for  the
benefit  of the  Secured  Party,  shall  be  segregated  from other  property of
the Company and shall be forthwith paid over to the Secured Party; or

                           (iii) The Secured Party in its sole discretion  shall
be authorized to sell any or all of the Pledged  Property at public  or  private
sale in order to recoup all of the outstanding  principal  plus accrued interest
owed pursuant to the Convertible Debenture as described herein

                  (c) An "Event  of  Default"  shall be deemed to have  occurred
under this Agreement upon an Event of Default under the Convertible Debentures.

                                   ARTICLE 3.

                          ATTORNEY-IN-FACT; PERFORMANCE

         Section 3.1.      Secured Party Appointed Attorney-In-Fact.

         Upon the occurrence of an Event of Default, the Company hereby appoints
the Secured Party as its attorney-in-fact,  with full authority in the place and
stead of the Company and in the name of the Company or  otherwise,  from time to
time in the  Secured  Party's  discretion  to take any action and to execute any
instrument  which the Secured Party may reasonably  deem necessary to accomplish
the purposes of this Agreement,  including,  without limitation,  to receive and
collect all instruments made payable to the Company representing any payments in
respect of the Pledged  Property or any part thereof and to give full  discharge
for the same.  The  Secured  Party may demand,  collect,  receipt  for,  settle,
compromise,  adjust, sue for,  foreclose,  or realize on the Pledged Property as
and when the Secured Party may determine. To facilitate collection,  the Secured
Party may notify  account  debtors and obligors on any Pledged  Property to make
payments directly to the Secured Party.

         Section 3.2.      Secured Party May Perform.

         If the Company fails to perform any  agreement  contained  herein,  the
Secured Party, at its option, may itself perform,  or cause performance of, such
agreement,  and  the  expenses  of the  Secured  Party  incurred  in  connection
therewith shall be included in the Obligations secured hereby and payable by the
Company under Section 8.3.

                                       3
<PAGE>

                                   ARTICLE 4.

                         REPRESENTATIONS AND WARRANTIES

         Section 4.1.      Authorization; Enforceability.

         Each of the parties  hereto  represents  and warrants that it has taken
all action  necessary to authorize the  execution,  delivery and  performance of
this Agreement and the transactions  contemplated hereby; and upon execution and
delivery,  this Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency,  reorganization,
moratorium  and similar laws  affecting  creditors'  rights or by the principles
governing the availability of equitable remedies.

         Section 4.2.      Ownership of Pledged Property.

         The Company warrants and represents that it is the legal and beneficial
owner of the Pledged  Property  free and clear of any lien,  security  interest,
option or other charge or encumbrance  except for the security  interest created
by this Agreement.

                                   ARTICLE 5.

                    DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

         Section 5.1.      Default and Remedies.

                  (a) If an Event of Default occurs,  then in each such case the
Secured Party may declare the Obligations to be due and payable immediately,  by
a  notice  in  writing  to the  Company,  and upon  any  such  declaration,  the
Obligations shall become immediately due and payable.

                  (b) Upon the  occurrence  of an Event of Default,  the Secured
Party shall:  (i) be entitled to receive all  distributions  with respect to the
Pledged Property,  (ii) to cause the Pledged Property to be transferred into the
name of the  Secured  Party or its  nominee,  (iii) to  dispose  of the  Pledged
Property,  and (iv) to realize  upon any and all rights in the Pledged  Property
then held by the Secured Party.

         Section 5.2.      Method of Realizing Upon  the Pledged Property: Other
                           Remedies.

         Upon the  occurrence of an Event of Default,  in addition to any rights
and  remedies  available at law or in equity,  the  following  provisions  shall
govern the Secured Party's right to realize upon the Pledged Property:

                  (a) Any item of the Pledged  Property  may be sold for cash or
other value in any number of lots at brokers  board,  public  auction or private
sale and may be sold without  demand,  advertisement  or notice (except that the
Secured Party shall give the Company ten (10) days' prior written  notice of the
time and place or of the time after which a private  sale may be made (the "Sale
Notice")),  which notice period is hereby agreed to be commercially  reasonable.
At any  sale or sales  of the  Pledged  Property,  the  Company  may bid for and
purchase the whole or any part of the Pledged Property and, upon compliance with
the terms of such  sale,  may hold,  exploit  and  dispose  of the same  without
further  accountability  to the  Secured  Party.  The Company  will  execute and
deliver,  or cause to be executed and delivered,  such  instruments,  documents,
assignments,  waivers,  certificates,  and  affidavits and supply or cause to be
supplied such further  information  and take such further  action as the Secured
Party reasonably shall require in connection with any such sale.

                                       4
<PAGE>

                  (b) Any  cash  being  held by the  Secured  Party  as  Pledged
Property and all cash proceeds received by the Secured Party in respect of, sale
of,  collection  from, or other  realization upon all or any part of the Pledged
Property shall be applied as follows:

                           (i) to the  payment of all  amounts  due the  Secured
Party for the expenses reimbursable  to  it  hereunder or owed to it pursuant to
Section 8.3 hereof;

                           (ii) to the payment of the  Obligations  then due and
unpaid.

                           (iii) the  balance,  if any, to the person or persons
entitled thereto, including, without limitation, the Company.

                  (c) In  addition to all of the rights and  remedies  which the
Secured Party may have pursuant to this Agreement,  the Secured Party shall have
all of the rights and remedies provided by law,  including,  without limitation,
those under the Uniform Commercial Code.

                           (i) If the Company fails to pay such amounts due upon
the  occurrence  of  an  Event  of   Default  which  is  continuing,  then   the
Secured Party may institute a judicial proceeding for the collection of the sums
so due and unpaid,  may prosecute such proceeding  to  judgment or final  decree
and may  enforce the same  against the Company and  collect the monies  adjudged
or decreed to be payable in the manner  provided  by la w out of the property of
Company, wherever situated.

                           (ii) The  Company  agrees that it shall be liable for
any reasonable fees,  expenses  and  costs  incurred  by  the  Secured  Party in
connection  with  enforcement, collection and  preservation of  the  Transaction
Documents,  including,  without limitation, reasonable legal fees  and expenses,
and such amounts shall  be deemed  included  as  Obligations  secured hereby and
payable as set forth in Section 8.3 hereof.

         Section 5.3.      Proofs of Claim.

                  In  case  of the  pendency  of any  receivership,  insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relating to the Company or the property of the Company
or of such other obligor or its creditors,  the Secured Party  (irrespective  of
whether the Obligations shall then be due and payable as therein expressed or by
declaration  or otherwise  and  irrespective  of whether the Secured Party shall
have made any demand on the Company for the payment of the Obligations), subject
to the rights of Previous Security Holders, shall be entitled and empowered,  by
intervention in such proceeding or otherwise:

                                       5
<PAGE>

                           (i) to file and prove a claim for the whole amount of
the Obligations and to file such other papers or documents as  may be  necessary
or advisable in order to have the claims of  the  Secured  Party  (including any
claim for the  reasonable  legal fees and  expenses  and other  expenses paid or
incurred  by the Secured  Party permitted   hereunder  and  of the Secured Party
allowed  in  such  judicial proceeding), and

                           (ii) to  collect  and  receive  any  monies  or other
property payable or deliverable on any such  claims and to distribute the  same;
and any  custodian,  receiver, assignee,  trustee,  liquidator,  sequestrator or
other similar  official in any such judicial  proceeding is hereby authorized by
the Secured Party to make such payments  to the Secured  Party and, in the event
that the Secured  Party shall consent to the making of such payments directed to
the Secured Party, to pay to the Secured Party any amounts for  expenses  due it
hereunder.

         Section 5.4.      Duties Regarding Pledged Property.

         The Secured Party shall have no duty as to the collection or protection
of the Pledged  Property or any income thereon or as to the  preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the Pledged Property actually in the Secured Party's possession.

                                   ARTICLE 6.

                              AFFIRMATIVE COVENANTS

         The Company  covenants and agrees that,  from the date hereof and until
the  Obligations  have been fully paid and  satisfied,  unless the Secured Party
shall consent otherwise in writing (as provided in Section 8.4 hereof):

         Section 6.1.      Existence, Properties, Etc.

                  (a) The Company shall do, or cause to be done, all things,  or
proceed with due  diligence  with any actions or courses of action,  that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and good  standing  under  the laws of its state of  incorporation,  and (ii) to
preserve  and keep in full  force and effect all  qualifications,  licenses  and
registrations in those  jurisdictions in which the failure to do so could have a
Material Adverse Effect (as defined below); and (b) the Company shall not do, or
cause to be done, any act impairing the Company's  corporate  power or authority
(i) to carry on the Company's business as now conducted,  and (ii) to execute or
deliver this Agreement or any other document  delivered in connection  herewith,
including,  without limitation,  any UCC-1 Financing  Statements required by the
Secured  Party  to  which  it is or  will  be a  party,  or  perform  any of its
obligations  hereunder or thereunder.  For purpose of this  Agreement,  the term
"Material  Adverse  Effect"  shall  mean any  material  and  adverse  affect  as
determined by Secured Party in its sole discretion,  whether  individually or in
the aggregate, upon (a) the Company's assets, business,  operations,  properties
or condition,  financial or otherwise;  (b) the Company's to make payment as and
when due of all or any part of the Obligations; or (c) the Pledged Property.

                                       6
<PAGE>

         Section 6.2.      Financial Statements and Reports.

         The Company shall furnish to the Secured Party within a reasonable time
such  financial  data as the Secured Party may  reasonably  request,  including,
without limitation, the following:

                  (a) The  balance  sheet of the Company as of the close of each
fiscal year,  the statement of earnings and retained  earnings of the Company as
of the close of such fiscal  year,  and  statement of cash flows for the Company
for such fiscal year,  all in reasonable  detail,  prepared in  accordance  with
generally accepted accounting principles consistently applied,  certified by the
chief  executive and chief  financial  officers of the Company as being true and
correct  and  accompanied  by a  certificate  of the chief  executive  and chief
financial officers of the Company,  stating that the Company has kept, observed,
performed  and fulfilled  each  covenant,  term and condition of this  Agreement
during such fiscal year and that no Event of Default  hereunder has occurred and
is  continuing,  or if an Event  of  Default  has  occurred  and is  continuing,
specifying  the nature of same,  the period of  existence of same and the action
the Company proposes to take in connection therewith;

                  (b) A  balance  sheet of the  Company  as of the close of each
month, and statement of earnings and retained  earnings of the Company as of the
close of such month,  all in reasonable  detail,  and prepared  substantially in
accordance with generally accepted accounting  principles  consistently applied,
certified by the chief executive and chief financial  officers of the Company as
being true and correct; and

                  (c)  Copies  of  all  accountants'  reports  and  accompanying
financial  reports  submitted  to the  Company  by  independent  accountants  in
connection with each annual examination of the Company.

         Section 6.3.      Accounts and Reports.

         The  Company  shall  maintain  a  standard   system  of  accounting  in
accordance with generally accepted accounting  principles  consistently  applied
and provide, at its sole expense, to the Secured Party the following:

                  (a) as  soon  as  available,  a copy of any  notice  or  other
communication  alleging any nonpayment or other material  breach or default,  or
any  foreclosure or other action  respecting any material  portion of its assets
and properties,  received  respecting any of the  indebtedness of the Company in
excess of $15,000 (other than the  Obligations),  or any demand or other request
for  payment  under any  guaranty,  assumption,  purchase  agreement  or similar
agreement or arrangement respecting the indebtedness or obligations of others in
excess of $15,000,  including  any received  from any person acting on behalf of
the Secured Party or beneficiary thereof; and

                  (b)  within  fifteen  (15)  days  after  the  making  of  each
submission or filing, a copy of any report, financial statement, notice or other
document,  whether  periodic or otherwise,  submitted to the shareholders of the
Company, or submitted to or filed by the Company with any governmental authority
involving  or  affecting  (i) the  Company  that could  have a Material  Adverse
Effect;  (ii) the Obligations;  (iii) any part of the Pledged Property;  or (iv)
any of the transactions contemplated in this Agreement or the Loan Instruments.

                                       7
<PAGE>

         Section 6.4.      Maintenance of Books and Records; Inspection.

         The  Company  shall  maintain  its  books,   accounts  and  records  in
accordance with generally accepted accounting  principles  consistently applied,
and permit the Secured Party,  its officers and employees and any  professionals
designated by the Secured Party in writing, at any time to visit and inspect any
of  its  properties  (including  but  not  limited  to the  collateral  security
described in the Transaction  Documents and/or the Loan Instruments),  corporate
books and financial records,  and to discuss its accounts,  affairs and finances
with any employee, officer or director thereof.

         Section 6.5.      Maintenance and Insurance.

                  (a) The Company shall maintain or cause to be  maintained,  at
its own expense,  all of its assets and  properties  in good  working  order and
condition,  making all necessary  repairs thereto and renewals and  replacements
thereof.

                  (b) The Company shall maintain or cause to be  maintained,  at
its  own  expense,   insurance  in  form,   substance  and  amounts   (including
deductibles),  which the Company  deems  reasonably  necessary to the  Company's
business, (i) adequate to insure all assets and properties of the Company, which
assets and properties are of a character  usually  insured by persons engaged in
the same or similar business against loss or damage resulting from fire or other
risks included in an extended coverage policy; (ii) against public liability and
other tort claims that may be incurred by the Company;  (iii) as may be required
by the Transaction Documents and/or applicable law and (iv) as may be reasonably
requested by Secured Party, all with adequate,  financially  sound and reputable
insurers.

         Section 6.6.      Contracts and Other Collateral.

         The Company shall perform all of its obligations  under or with respect
to each instrument,  receivable,  contract and other intangible  included in the
Pledged  Property  to which the Company is now or  hereafter  will be party on a
timely basis and in the manner therein required,  including, without limitation,
this Agreement.

         Section 6.7.      Defense of Collateral, Etc.

         The Company  shall defend and enforce its right,  title and interest in
and to any part of: (a) the Pledged Property; and (b) if not included within the
Pledged  Property,  those assets and properties whose loss could have a Material
Adverse Effect,  the Company shall defend the Secured  Party's right,  title and
interest in and to each and every part of the Pledged Property, each against all
manner of claims and demands on a timely  basis to the full extent  permitted by
applicable law.

         Section 6.8.      Payment of Debts, Taxes, Etc.

         The Company shall pay, or cause to be paid, all of its indebtedness and
other liabilities and perform, or cause to be performed,  all of its obligations
in accordance with the respective terms thereof, and pay and discharge, or cause
to be paid or discharged,  all taxes, assessments and other governmental charges
and levies  imposed upon it, upon any of its assets and  properties on or before
the last day on which the same may be paid without  penalty,  as well as pay all
other  lawful  claims  (whether  for  services,  labor,  materials,  supplies or
otherwise) as and when due

                                       8
<PAGE>

         Section 6.9.      Taxes and Assessments; Tax Indemnity.

         The Company  shall (a) file all tax returns and  appropriate  schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency,  (b) pay and  discharge  all taxes,  assessments  and  governmental
charges or levies imposed upon the Company,  upon its income and profits or upon
any  properties  belonging  to it, prior to the date on which  penalties  attach
thereto,  and (c) pay all taxes,  assessments and governmental charges or levies
that,  if  unpaid,  might  become a lien or charge  upon any of its  properties;
provided,  however,  that the  Company in good faith may  contest  any such tax,
assessment,  governmental  charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect thereto.

         Section 6.10.     Compliance with Law and Other Agreements.

         The Company shall  maintain its business  operations and property owned
or used in connection  therewith in compliance with (a) all applicable  federal,
state and  local  laws,  regulations  and  ordinances  governing  such  business
operations and the use and ownership of such property,  and (b) all  agreements,
licenses,  franchises,  indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound.  Without limiting the
foregoing,  the Company shall pay all of its indebtedness promptly in accordance
with the terms thereof.

         Section 6.11.     Notice of Default.

         The  Company  shall give  written  notice to the  Secured  Party of the
occurrence  of any  default  or Event  of  Default  under  this  Agreement,  the
Transaction  Documents or any other Loan  Instrument  or any other  agreement of
Company for the payment of money, promptly upon the occurrence thereof.

         Section 6.12.     Notice of Litigation.

         The Company shall give notice, in writing,  to the Secured Party of (a)
any actions,  suits or  proceedings  wherein the amount at issue is in excess of
$50,000,  instituted by any persons against the Company, or affecting any of the
assets of the Company,  and (b) any dispute,  not resolved  within  fifteen (15)
days of the  commencement  thereof,  between the Company on the one hand and any
governmental  or regulatory  body on the other hand,  which might  reasonably be
expected  to have a  Material  Adverse  Effect  on the  business  operations  or
financial condition of the Company.

                                       9
<PAGE>

                                   ARTICLE 7.

                               NEGATIVE COVENANTS

         The Company  covenants and agrees that,  from the date hereof until the
Obligations  have been fully paid and satisfied,  the Company shall not,  unless
the Secured Party shall consent otherwise in writing:

         Section 7.1.      Indebtedness.

         The Company shall not directly or  indirectly  permit,  create,  incur,
assume, permit to exist,  increase,  renew or extend on or after the date hereof
any indebtedness on its part,  including  commitments,  contingencies and credit
availabilities, or apply for or offer or agree to do any of the foregoing.

         Section 7.2.      Liens and Encumbrances.

         The Company  shall not  directly or  indirectly  make,  create,  incur,
assume or permit to exist any assignment,  transfer, pledge, mortgage,  security
interest or other lien or  encumbrance  of any nature in, to or against any part
of the Pledged Property or of the Company's  capital stock, or offer or agree to
do so,  or own or  acquire  or agree to  acquire  any asset or  property  of any
character  subject  to  any  of  the  foregoing   encumbrances   (including  any
conditional sale contract or other title retention agreement), or assign, pledge
or in any way  transfer  or  encumber  its right to receive  any income or other
distribution or proceeds from any part of the Pledged  Property or the Company's
capital stock; or enter into any sale-leaseback financing respecting any part of
the Pledged Property as lessee, or cause or assist the inception or continuation
of any of the foregoing.

         Section 7.3.      Certificate  of   Incorporation,   By-Laws,  Mergers,
                           Consolidations, Acquisitions and Sales.

         Without the prior express  written  consent of the Secured  Party,  the
Company shall not: (a) Amend its Certificate of  Incorporation  or By-Laws;  (b)
issue  or sell its  stock,  stock  options,  bonds,  notes  or  other  corporate
securities  or  obligations;  (c) be a party  to any  merger,  consolidation  or
corporate reorganization, (d) purchase or otherwise acquire all or substantially
all of the assets or stock of, or any partnership or joint venture  interest in,
any other person, firm or entity, (e) sell,  transfer,  convey, grant a security
interest in or lease all or any substantial  part of its assets,  nor (f) create
any subsidiaries nor convey any of its assets to any subsidiary.

         Section 7.4.      Management, Ownership.

         The Company shall not materially change its ownership,  executive staff
or  management  without  the prior  written  consent of the Secured  Party.  The
ownership, executive staff and management of the Company are material factors in
the Secured Party's willingness to institute and maintain a lending relationship
with the Company.

                                       10
<PAGE>

         Section 7.5.      Dividends, Etc.

         The Company  shall not declare or pay any dividend of any kind, in cash
or in property, on any class of its capital stock, nor purchase,  redeem, retire
or  otherwise  acquire  for  value  any  shares  of such  stock,  nor  make  any
distribution of any kind in respect  thereof,  nor make any return of capital to
shareholders,  nor make any payments in respect of any pension,  profit sharing,
retirement,  stock option, stock bonus,  incentive  compensation or similar plan
(except as required or permitted  hereunder),  without the prior written consent
of the Secured Party.

         Section 7.6.      Guaranties; Loans.

         The Company shall not  guarantee  nor be liable in any manner,  whether
directly or  indirectly,  or become  contingently  liable after the date of this
Agreement in connection  with the  obligations or  indebtedness of any person or
persons,  except  for  (i)  the  indebtedness  currently  secured  by the  liens
identified on the Pledged  Property  identified on Exhibit A hereto and (ii) the
endorsement  of  negotiable  instruments  payable to the  Company for deposit or
collection  in the ordinary  course of business.  The Company shall not make any
loan,  advance or  extension  of credit to any  person  other than in the normal
course of its business.

         Section 7.7.      Debt.

         The  Company  shall not  create,  incur,  assume or suffer to exist any
additional  indebtedness of any description whatsoever in an aggregate amount in
excess of $25,000  (excluding  any  indebtedness  of the  Company to the Secured
Party,  trade  accounts  payable and accrued  expenses  incurred in the ordinary
course of business and the endorsement of negotiable  instruments payable to the
Company,  respectively  for  deposit or  collection  in the  ordinary  course of
business).

         Section 7.8.      Conduct of Business.

         The Company will  continue to engage,  in an efficient  and  economical
manner, in a business of the same general type as conducted by it on the date of
this Agreement.

         Section 7.9.      Places of Business.

         The  location  of the  Company's  chief  place of business is 133 Salem
Avenue - Suite 300, Roanoke, VA 24011. The Company shall not change the location
of its chief place of business,  chief executive office or any place of business
disclosed  to the  Secured  Party or move any of the Pledged  Property  from its
current  location  without thirty (30) days' prior written notice to the Secured
Party in each instance.

                                   ARTICLE 8.

                                  MISCELLANEOUS

         Section 8.1.      Notices.

         All notices or other  communications  required or permitted to be given
pursuant to this  Agreement  shall be in writing and shall be considered as duly
given on:  (a) the date of  delivery,  if  delivered  in person,  by  nationally
recognized  overnight  delivery  service or (b) five (5) days  after  mailing if
mailed from within the  continental  United  States by  certified  mail,  return
receipt requested to the party entitled to receive the same:

                                       11
<PAGE>

If to the Secured Party:        Cornell Capital Partners, LP
                                101 Hudson Street-Suite 3700
                                Jersey City, New Jersey 07302
                                Attention: Mark Angelo
                                           Portfolio Manager
                                Telephone: (201) 986-8300
                                Facsimile: (201) 985-8266

With a copy to:                 David Gonzalez, Esq.
                                101 Hudson Street, Suite 3700
                                Jersey City, NJ 07302
                                Telephone: (201) 985-8300
                                Facsimile: (201) 985-8266

And if to the Company:          Home Energy Savings Corp, Inc.
                                133 Salem Avenue - Suite 300
                                Roanoke, VA 24011
                                Attention:  Bruce Edwards
                                Telephone:  (540) 345-3358
                                Facsimile:  (540) 343-3370

With a copy to:                 Kirkpatrick & Lockhart Nicholson Graham, LLP
                                201 South Biscayne Boulevard, Suite 2000
                                Miami, Florida 33131
                                Attention:  Clayton E. Parker, Esq.
                                Telephone:  (305) 539-3306
                                Facsimile:  (305) 328-7095

         Any party may change its  address by giving  notice to the other  party
stating its new address.  Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement.

         Section 8.2.      Severability.

         If  any  provision  of  this   Agreement   shall  be  held  invalid  or
unenforceable,  such  invalidity or  unenforceability  shall attach only to such
provision and shall not in any manner affect or render invalid or  unenforceable
any other  severable  provision of this  Agreement,  and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.

                                       12
<PAGE>

         Section 8.3.      Expenses.

         In the  event of an  Event  of  Default,  the  Company  will pay to the
Secured  Party the  amount of any and all  reasonable  expenses,  including  the
reasonable  fees and expenses of its counsel,  which the Secured Party may incur
in connection with: (i) the custody or preservation of, or the sale,  collection
from, or other realization upon, any of the Pledged Property;  (ii) the exercise
or enforcement of any of the rights of the Secured Party  hereunder or (iii) the
failure by the Company to perform or observe any of the provisions hereof.

         Section 8.4.      Waivers, Amendments, Etc.

         The Secured  Party's delay or failure at any time or times hereafter to
require  strict  performance  by  Company  of any  undertakings,  agreements  or
covenants shall not waiver,  affect,  or diminish any right of the Secured Party
under this Agreement to demand strict compliance and performance  herewith.  Any
waiver by the  Secured  Party of any Event of Default  shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto and whether of the same or a different type.  None of the  undertakings,
agreements  and  covenants of the Company  contained in this  Agreement,  and no
Event of Default,  shall be deemed to have been waived by the Secured Party, nor
may this  Agreement  be  amended,  changed  or  modified,  unless  such  waiver,
amendment,  change or  modification  is  evidenced by an  instrument  in writing
specifying  such waiver,  amendment,  change or  modification  and signed by the
Secured Party.

         Section 8.5.      Continuing Security Interest.

         This  Agreement  shall  create a  continuing  security  interest in the
Pledged Property and shall: (i) remain in full force and effect until payment in
full of the Obligations; and (ii) be binding upon the Company and its successors
and heirs and (iii) inure to the benefit of the Secured Party and its successors
and assigns.  Upon the payment or satisfaction in full of the  Obligations,  the
Company shall be entitled to the return, at its expense,  of such of the Pledged
Property as shall not have been sold in  accordance  with  Section 5.2 hereof or
otherwise applied pursuant to the terms hereof.

         Section 8.6.      Independent Representation.

         Each party hereto  acknowledges  and agrees that it has received or has
had the opportunity to receive  independent  legal counsel of its own choice and
that it has been sufficiently  apprised of its rights and responsibilities  with
regard to the substance of this Agreement.

         Section 8.7.      Applicable Law:  Jurisdiction.

         This Agreement  shall be governed by and interpreted in accordance with
the laws of the State of New Jersey without regard to the principles of conflict
of laws.  The parties  further agree that any action between them shall be heard
in Hudson County,  New Jersey,  and expressly  consent to the  jurisdiction  and
venue of the  Superior  Court of New  Jersey,  sitting in Hudson  County and the
United States  District  Court for the District of New Jersey sitting in Newark,
New Jersey for the  adjudication of any civil action  asserted  pursuant to this
Paragraph.

                                       13
<PAGE>

         Section 8.8.      Waiver of Jury Trial.

         AS A  FURTHER  INDUCEMENT  FOR THE  SECURED  PARTY TO ENTER  INTO  THIS
AGREEMENT AND TO MAKE THE FINANCIAL  ACCOMMODATIONS TO THE COMPANY,  THE COMPANY
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING  RELATED IN ANY
WAY TO THIS  AGREEMENT  AND/OR  ANY  AND ALL  OTHER  DOCUMENTS  RELATED  TO THIS
TRANSACTION.

         Section 8.9.      Entire Agreement.

         This Agreement  constitutes the entire  agreement among the parties and
supersedes any prior agreement or  understanding  among them with respect to the
subject matter hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

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

                                                COMPANY:
                                                HOME ENERGY SAVINGS CORP, INC.

                                                By:  /s/ Bruce Edwards
                                                   -----------------------------
                                                Name:   Bruce Edwards
                                                Title:  President

                                                SECURED PARTY:
                                                CORNELL CAPITAL PARTNERS, LP

                                                By:      Yorkville Advisors, LLC
                                                Its:     General Partner

                                                By:  /s/ Mark Angelo
                                                   -----------------------------
                                                Name:   Mark Angelo
                                                Title:  Portfolio Manager

                                       15
<PAGE>

                                    EXHIBIT A
                         DEFINITION OF PLEDGED PROPERTY

         For the purpose of securing prompt and complete payment and performance
by the  Company  of all of the  Obligations,  the  Company  unconditionally  and
irrevocably hereby grants to the Secured Party a continuing security interest in
and to, and lien upon, the following Pledged Property of the Company:

                  (a) all goods of the Company,  including,  without limitation,
machinery,  equipment, furniture,  furnishings,  fixtures, signs, lights, tools,
parts,  supplies  and  motor  vehicles  of every  kind and  description,  now or
hereafter owned by the Company or in which the Company may have or may hereafter
acquire any interest, and all replacements, additions, accessions, substitutions
and proceeds thereof,  arising from the sale or disposition  thereof,  and where
applicable,  the proceeds of insurance  and of any tort claims  involving any of
the foregoing;

                  (b) all inventory of the Company,  including,  but not limited
to, all goods, wares,  merchandise,  parts, supplies,  finished products,  other
tangible  personal  property,  including such inventory as is temporarily out of
Company's  custody or possession  and including any returns upon any accounts or
other  proceeds,  including  insurance  proceeds,  resulting  from  the  sale or
disposition of any of the foregoing;

                  (c)  all  contract  rights  and  general  intangibles  of  the
Company,  including,  without limitation,  goodwill,  trademarks,  trade styles,
trade  names,  leasehold  interests,  partnership  or joint  venture  interests,
patents and patent applications,  copyrights, deposit accounts whether now owned
or hereafter created" including;

                  (d) all documents, warehouse receipts, instruments and chattel
paper of the Company whether now owned or hereafter created;

                  (e) all accounts and other  receivables,  instruments or other
forms of obligations and rights to payment of the Company  (herein  collectively
referred  to as  "Accounts"),  together  with the  proceeds  thereof,  all goods
represented  by such  Accounts  and all such goods that may be  returned  by the
Company's  customers,  and  all  proceeds  of any  insurance  thereon,  and  all
guarantees,  securities  and liens which the Company may hold for the payment of
any such  Accounts  including,  without  limitation,  all rights of  stoppage in
transit,  replevin and reclamation and as an unpaid vendor and/or lienor, all of
which  the  Company  represents  and  warrants  will be bona  fide and  existing
obligations of its respective customers, arising out of the sale of goods by the
Company in the ordinary course of business;

                  (f) to the  extent  assignable,  all of the  Company's  rights
under all present and future  authorizations,  permits,  licenses and franchises
issued or granted in connection with the operations of any of its facilities;

                  (g) all equity  interests,  securities or other instruments in
other companies, including, without limitation, any subsidiaries, investments or
other entities (whether or not controlled); and

                  (h) all products and proceeds (including,  without limitation,
insurance proceeds) from the above-described Pledged Property.

                                      A-1

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