Document:

Exhibit 10.1

                              EMPLOYMENT AGREEMENT

      ENPLOYMENT AGREEMENT, dated as of the day of February, 2004, between
AMAZING NUTRITIONALS, INC., a Delaware Corporation, with principal offices at 43
West 33rd Street, New York, New York 10001 (hereinafter referred to as the
"Company") and Mr. Barry Clare, residing at , NY herein referred to as "BC").

                                   WITNESSETH:

      WHEREAS, the Company desires to formalize its relationship with BC and BC
wishes to formalize his relationship with the Company; and

      WHEREAS, BC is willing to formalize his relationship with the Company on
the terms and subject to the conditions contained herein.

      NOW, THEREFORE, the parties have agreed to the following:

1. Employment. The Company agrees to appoint BC as President and CEO of the
Company.

2. No Breach of Obligations. BC represents and warrants to the Company that he
will use his best efforts to perform those duties attendant to the position for
which he is hired and that his entry into this Agreement with the Company does
not constitute a breach of any agreement with any other person, firm or
corporation, nor does any prior agreement between BC and any person, firm or
corporation contain any restriction or impediment to the ability of BC to
perform those duties for which he was hired, or which may be assigned to, or
reasonably expected of him.

3. Services. During the full term of this Agreement, BC shall perform to the
best of his abilities the following services and duties, in such manner and at
such times as necessary to benefit the Company.

4 Exclusivity. BC agrees that during the term of this Agreement he will impart
and devote the necessary time, energy, skill and attention to the performance of
his duties hereunder. This paragraph shall not exclude BC from devoting part of
his time to other firms, as long as they are in non-competitive fields of
endeavor, or making investments in business ventures outside the general area of
the Human Resources Industry.

5. Place of Performance. BC agrees to perform his duties hereunder and agrees to
the extent that it has been determined necessary and advisable, in his
discretion, to travel to any place in the United States, or to a foreign
country, where his presence is or may reasonably be required for the performance
of his duties hereunder.

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6. Compensation. The Company hereby agrees to compensate BC; and BC hereby
accepts for the performance of the services of Chairman of the Company, as
indicated below:

      a) Fees. Subject to review and upward adjustment from time to time by the
      Board of Directors, the Company shall pay to BC and annual salary of
      NINETY THOUSAND DOLLARS ($90,000.00), per annum of the duration of this
      Agreement, at a rate of SEVEN THOUSAND FIVE HUNDRED DOLLARS per month,
      this amount is to increase to an annual salary of ONE HUNDRED THOUSAND
      DOLLARS ($100,000.00), payable in equal monthly installments upon the
      Company reaching a total gross sales of $1,000,000, and to ONE HUNDRED
      TWENTY FIVE THOUSAND DOLLARS ($125,000.00), payable in equal monthly
      installments, upon the Company reaching a total gross sales of
      $2,000,0000;

      b) Vacation: BC shall be entitled to a total of four (4) weeks vacation in
      any calendar year

      c) Stock: The previous issuance of 1,200,000 shares of Common Stock of the
      Company, in consideration of the time and effort put forth by BC for the
      performance of his duties; and

      d) Bonus. BC shall be entitled to participation in any special incentive
      compensation plan approved by the Board of Directors.

      e) Insurance and Medical Benefits. The Company shall cover BC with Health
      benefits as approved by the Board of Directors and equal to those
      available to its executives;

      f) Directors and Officers' Insurance: The Company shall cover BC with an
      appropriate insurance policy for Directors and Officers

      g) Other. BC shall be entitled to any other benefits as approved by the
      Board of Directors for his position in the company

7. Representation and Warranties of BC. By virtue of his execution hereof, and
in order to induce the Company to enter into this Agreement, BC hereby
represents and warrants, as follows:

      a) BC is not presently actively engaged in any business, employment or
      venture, which is, or may be, in direct conflict with the business of the
      Company;

      b) BC has full power and authority to enter this Agreement with the
      Company and to perform in the time and manner contemplated; and

      c) BC's compliance with the terms and conditions of this Agreement, in the
      time and the manner contemplated herein, will not conflict with any
      instrument or agreement pertaining to the transaction contemplated herein,
      and will not conflict in, result in a breach or, or constitute a default
      under any instrument to which he is a party;

      d) BC represents that he shall devote his best efforts to the success of
      the Company.

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8. Representation and Warranties of the Company. By virtue of the execution of
this Agreement, the Company hereby represents and warrants to BC as follows:

      a) The Company and BC agree that BC shall receive reimbursement for all
      reasonable expenses incurred by BC in connection with the performance of
      his duties hereunder subject to compliance with the Company's procedures;
      and the Company shall pay to BC directly, or reimburse BC for all other
      reasonable necessary and proven expenses and disbursements incurred by BC
      for and on behalf of the Company in the performance of the BC's duties
      during the term of this Agreement; and

      b) The Company shall indemnify BC against any and all claims arising out
      of this Agreement, other than a breach of fiduciary duty or fraudulent
      actions of BC.

9. Proprietary Rights. BC shall at no time before or after the termination of
his employment hereunder use or divulge or make known to anyone without the
express written consent of the Board of Directors of the Company (except to
those duly authorized by the Company to have access thereto), any marketing
systems, programs or methods, customer or client lists, computer programs
configurations, systems or procedures, ideas, formulae, inventions, discoveries,
improvements, secrets, processes or technical, or other information of the
Company, or any accounts, customer or client lists, transactions or business
affairs of the Company. All ideas, marketing systems, computer programs,
configurations, system or procedures, program or methods, formulae, inventions,
discoveries, improvements, secrets or processes, whether or not patentable or
copyrightable, made or developed by BC during the term of this Agreement, or
within three (3) years after its expiration or termination, and relating to the
business of the Company, shall be the exclusive right of the Company, whether or
not any claim of BC to compensation under Paragraph 6 hereof has been, or will
be satisfied, and BC agrees to provide the Company at its request and expense
such instruments and evidence as it may reasonably request to perfect, enforce
and maintain the Company's right to such property. At the conclusion of his
employment by the Company, BC shall forthwith surrender to the Company all
letters, brochures, agreements and documents of every character relating to the
business affairs and properties of the Company then in his possession and shall
not, without the Company's prior written consent retain or disclose any copies
thereof.

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10. Competition. a) During the term of this Agreement, or upon the termination
of his employment, whichever event shall occur earlier, and for a period of
twelve (12) consecutive months thereafter, BC shall not, without the prior
written consent of the Company engage, either as a Consultant, Agent,
Proprietor, Officer, Director, Partner or majority stockholder in the business
directly related to that of the Company.

      b) BC further covenants that during the stated term of this agreement, and
for the twelve (12) month period thereafter, whichever shall occur earlier, he
will not solicit any clients or customers known by him to be clients or
customers of the Company for competitive business. The foregoing restrictions
shall not apply to a termination of BC's employment by the Company without
Cause, or a termination of the employment by BC because of a breach of the
Agreement by the Company or sale of the Company to an unrelated party.

11. Term and Termination. This Agreement shall be deemed to be effective as of
the date indicated above and shall continue in full force and effect until the
last day of December, 2005, unless sooner terminated as hereunder set forth.
This Agreement shall automatically be renewed for an additional period of one
(1) year, unless the Board of Directors determines not to renew this Agreement,
BC notifies the Board of Directors of his desire not to renew the Agreement, or
the Company reaches a new agreement with BC.

      a) Termination by the Company for Cause.

            1) The Company may terminate BC's employment for Cause. Upon such
      termination the Company shall have no further obligations to BC, except
      for compensation, or other benefits due, but not yet paid.

            2) "Cause" shall mean: (i) BC's willful and continued failure
      substantially to perform his duties with the Company (other than as a
      result of BC's incapacity due to illness or injury), if BC is not then
      acting in the best interests of the Company, as determined by the Board of
      Directors, or (ii) BC's willful engagement in misconduct which is
      materially injurious to the Company, monetary or otherwise.

            3) Termination for Cause shall be effectuated only if: (i) the
      Company has delivered to BC a copy of "Notice of Termination", which gives
      BC at least forty-five (45) business days prior notice, therefore,
      affording BC the opportunity, together with BC's counsel to be heard
      before the Board of Directors: and (ii) the Board of Directors (after such
      Notice and opportunity to be heard) adopts a resolution concurred in by
      not less than two-thirds of all directors of the Company then in office,
      that in the good faith opinion of the Board of Directors, BC was guilty of
      conduct set forth and specifying the particulars thereof in detail.

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      b) BC's Rights Upon Certain Terminations. If the Company terminates RS's
employment hereunder, otherwise than for Cause:

            1) The Company shall continue to pay BC his full base compensation
      at the rate in effect on the Date of Termination for the period (the "Post
      Termination Period") from the Date of Termination until the end of the
      term of this Agreement. Notwithstanding anything to the contrary, which
      may be contained herein, if BC shall have died prior to the termination of
      this agreement, then, and in such event, such payment of BC's full base
      compensation shall cease as of the time of death;

            2) BC shall be entitled to the full amount which would have been due
      him under any bonus or profit sharing plan, or similar arrangement, in
      which he was participating prior to the "Date of Termination", for the
      full term of this Agreement, without any proration or reduction, because
      of BC not being employed during the full term;

            3) BC shall also be entitled to the full amount of any contingent
      compensation benefit, which would have become vested, had his employment
      continued;

            4) The Company shall also pay to BC an amount equal to all legal
      fees and expenses incurred by BC as a result of such termination,
      including all fees and expenses, if any, incurred in contesting or
      disputing any such determination or seeking to obtain, or enforce, or
      retain any right or benefit provided by this Agreement. These payments
      shall be made promptly on a quarterly basis as submitted by BC;

            5) The Company shall maintain in full force and effect for BC's
      continued benefits (throughout the "Post-Termination Period"), all life
      and health insurance and other benefits plans in which RS was entitled to
      participate immediately prior to the "Date of Termination," provided that
      BC's continued participation is possible under the general terms and
      conditions of such plans. If BC's participation is any such plan is barred
      for any reason whatsoever, the Company shall arrange to provide BC with
      benefits substantially similar to those which he is entitled to receive
      under such plan until the expiration of the term of this Agreement; and

            6) BC shall not be required to mitigate the amount of any payment
      provided for in this Paragraph by seeking other employment or otherwise,
      nor shall the amount of any payment provided for in this Paragraph be
      reduced by any compensation earned by BC in any manner after the "Date of
      Termination".

12. Notice of Termination. Any purported termination of BC's employment shall be
communicated by written "Notice of Termination" from one party to the other
party hereto. For the purposes of this Agreement a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of BC's employment,
under the provision so indicated. No purported termination by the Company of
BC's employment shall be effective if it is not effected pursuant to a "Notice
of Termination" satisfying the requirements of this Paragraph.

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<PAGE>

13. Date of Termination. "Date of Termination" shall mean the date on which a
"Notice of Termination" is given.

14. Successors; Binding Agreement.

            a) The Company shall require any purchaser of all the business of
      the Company, by agreement or form and substance satisfactory to RS, to
      assume and agree to perform this Agreement in the same manner and to the
      same extent that the Company would be required to perform, if no such
      purchase had taken place. As used in this Agreement, "Company" shall mean
      the Company as hereinafter defined, and any successor to its business, or
      assets, which executes becomes bound by all the terms and provisions of
      this Agreement by operation of law.

            b) This Agreement shall inure to the benefit of and to be
      enforceable by BC's personal or legal representative, executors,
      administrators, successors, heirs, distributees, devisees and legates. If
      BC should die while any amount would still be payable to him hereunder if
      BC had continued to live, all such amounts, unless otherwise provided
      herein, shall be paid in accordance with the terms of this Agreement with
      the terms of this Agreement to BC's devisee, legatee or other designee, or
      if there be no designee, to his estate.

15. Governing Law. This Agreement is being delivered in the State of New York
and shall be construed and enforced in accordance with the Laws of the State of
New York, irrespective of the state of Incorporation of the Company and the
place of domicile of BC. BC consents to the jurisdiction of the Courts of the
State of New York.

16. Prohibition Against Assignment. Except as herein above otherwise expressly
provided, BC agrees on behalf of himself and of his executors and
administrators, heirs, legates, distributees, and any other person, or persons
claiming benefits under him by virtue of this Agreement and the rights,
interests and benefits hereunder, shall not be assigned, transferred, pledged or
hypothecated in any way by BC or any executor, administrator, heir, legatee,
distrubutee or other persons claiming under BC by virtue of the Agreement and
shall not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge or hypothecation, or other dispositions of this
Agreement of such rights, interests and benefits contrary to the foregoing
provisions, or the levy of any attachment or similar process thereupon shall be
null and void and without effect.

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<PAGE>

17. Final Agreement. This Agreement represents the Final Agreement between the
parties and supercedes all previously executed Agreements and all verbal
representations made by any of the parties or their agents or their employees.

18. Changes. The parties agree that no changes will be made to this executed
Agreement except in writing, initialed by both parties and attached to this
document.

      In Witness Whereof, the parties have executed this Agreement as of the Day
of February, 2004.

Dated as of the date first indicated above and is agreed to by:

AMAZING NUTRITIONALS, INC.                  Barry Clare

By: _________________________               _____________________
                           ,                Barry Clare
    For the Board of Directors

                                       67<PAGE>

                                   EXHIBIT 4.1

                                FORM OF DEBENTURE

        THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
        1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
        SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
        ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

No.     04-1- 1                                                 US $
        ------------                                                ------------

                               AMBIENT CORPORATION

6% CONVERTIBLE DEBENTURE SERIES 04-1 DUE __________,  200_2

        THIS DEBENTURE is one of a duly authorized issue of up to $_________3 in
Debentures of AMBIENT CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Company") designated as its 6%
Convertible Debentures Series 04-1.

        FOR VALUE RECEIVED, the Company promises to pay to _______________, the
registered holder hereof (the "Holder"), the principal sum of _______________
and 00/100 Dollars (US $ ) on ______________, 200_4 (the "Maturity Date") and to
pay interest, on a simple non-compound basis, on the principal sum outstanding
from time to time in arrears at the rate of 6% per annum, accruing from
______________, 200_5, the date of initial issuance of this Debenture (the
"Issue Date"), on the date (each, an "Interest Payment Date") which is the
earliest of (i) the last calendar day of June and December of each calendar year
(except that the first such date shall be June 30, 2005), (ii) a Conversion Date
or the relevant Mandatory Conversion Date (as those terms are defined below), as
the case may be, or (iii) the Maturity Date. Interest shall accrue semi-annually
(pro-rated on a daily basis for any period more or less than a half year from
the later of the Issue Date or the previous Interest Payment Date) and shall
continue to accrue on a daily basis until payment in full of the principal sum
has been made or duly provided for. Interest shall be payable in cash or, at the
Company's option but subject to the other provisions hereof, including but not
limited to Section 4(D) below (the terms of which shall govern as if this
sentence were not included in this Debenture), in shares of the Company's Common
Stock, $0.001 par value ("Common Stock").

--------------------

1       Insert unique Debenture number for each issuance.
2       Insert date which is third anniversary of the Closing Date
3       Insert Aggregate Purchase Price
4       See footnote 2
5       Insert the Closing Date.

<PAGE>

        This Debenture is being issued pursuant to the terms of the Securities
Purchase Agreement, dated as of December ______, 2004 (the "Securities Purchase
Agreement"), to which the Company and the Holder (or the Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Securities Purchase Agreement.

        This Debenture is subject to the following additional provisions:

        1.      The Debentures will initially be issued in denominations
determined by the Company, but are exchangeable for an equal aggregate principal
amount of Debentures of different denominations, as requested by the Holder
surrendering the same. No service charge will be made for such registration or
transfer or exchange.

        2.      The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.

        3.      This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"), and other applicable state and foreign securities laws and the terms of
the Securities Purchase Agreement. In the event of any proposed transfer of this
Debenture, the Company may require, prior to issuance of a new Debenture in the
name of such other person, that it receive reasonable transfer documentation
that is sufficient to evidence that such proposed transfer complies with the Act
and other applicable state and foreign securities laws and the terms of the
Securities Purchase Agreement. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.

        4.      A.      (i)    At any time on or after the Commencement Date (as
defined below) and prior to the time this Debenture is paid in full in
accordance with its terms (including, without limitation, after the occurrence
of an Event of Default, as those terms are defined below, or, if the Debenture
is not fully paid or converted after the Maturity Date), the Holder of this
Debenture is entitled, at its option, subject to the following provisions of
this Section 4, to convert this Debenture at any time into shares of Common
Stock at the Conversion Price (as defined below).

                        (ii)   The term "Conversion Price" means US $0.25
(which amount is subject to adjustment as provided herein).

                        (iii)  The term "Commencement Date" means the earlier of
(i) the date which is sixty-five (65) days after the Issue Date, or (ii) the
Effective Date.

                                                                               2
<PAGE>

                        (iv)   The term "Unconverted Debenture" means the
principal amount of this Debenture which has not been converted as of the
relevant date.

                        (v)    The term "Bid Price" shall mean the 4:00 P.M.
closing bid price of the Common Stock (in U.S. Dollars) on the Principal Trading
Market on the relevant Trading Day(s), as reported by the Reporting Service.

                        (vi)   The term "Closing Sale Price" means the 4:00 P.M.
closing sale price (in U.S. Dollars) of the Common Stock on the Principal
Trading Market on the relevant Trading Day(s), as reported by the Reporting
Service.

                        (vii)  "Reporting Service" means Bloomberg LP or if that
service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Holder and reasonably acceptable to the Company.

                B.      Conversion shall be effectuated either by delivery to
the Company or by facsimile transmission (as provided in Section 12 hereof) of a
completed and duly executed Notice of Conversion (as defined below) to the
address or facsimile number provided in the Notice of Exercise (as such address
or facsimile number may be revised by notice given by the Company as
contemplated by the Section headed "NOTICES" in the Securities Purchase
Agreement). The notice of conversion ("Notice of Conversion") shall be executed
by the Holder of this Debenture and shall evidence such Holder's intention to
convert this Debenture or a specified portion hereof in the form annexed hereto
as Exhibit A. If paid in Common Stock as contemplated hereby, interest accrued
or accruing from the Issue Date to the relevant Interest Payment Date shall be
paid in Common Stock at the Conversion Price applicable as of such Interest
Payment Date. No fractional shares of Common Stock or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. The date on which Notice
of Conversion is given (the "Conversion Date") shall be deemed to be the date on
which the Holder faxes or otherwise delivers the Notice of Conversion to the
Company so that it is received by the Company on or before such specified date,
provided that, if such conversion would convert the entire remaining principal
of this Debenture, the Holder shall deliver to the Company the original
Debentures being converted no later than five (5) Trading Days thereafter.
Delivery of the Notice of Conversion shall be accepted by the Company by hand,
mail or courier delivery at the address specified in said Exhibit A or at the
facsimile number specified in said Exhibit A (each of such address or facsimile
number may be changed by notice given to the Holder in the manner provided in
the Securities Purchase Agreement). Certificates representing Common Stock upon
conversion ("Conversion Certificates") will be delivered to the Holder at the
address specified in the Notice of Conversion (which may be the Holder's address
for notices as contemplated by the Securities Purchase Agreement or a different
address), via express courier, by electronic transfer or otherwise, within five
(5) Trading Days (such fifth Trading Day, a "Delivery Date") after the date on
which the Notice of Conversion is delivered to the Company as contemplated in
this paragraph B, and, if interest is paid by Common Stock, the Interest Payment
Date. The Holder shall be deemed to be the holder of the shares issuable to it
in accordance with the provisions of this Section 4(B) on the Conversion Date.

                                                                               3
<PAGE>

                C.      Notwithstanding any other provision hereof or of any of
the other Transaction Agreements, in no event (except (i) as specifically
provided herein as an exception to this provision, or (ii) while there is
outstanding a tender offer for any or all of the shares of the Company's Common
Stock) shall the Holder be entitled to convert any portion of this Debenture, or
shall the Company have the obligation to convert such Debenture (and the Company
shall not have the right to pay interest hereon in shares of Common Stock) to
the extent that, after such conversion or issuance of stock in payment of
interest, the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of
the Debentures or other convertible securities or of the unexercised portion of
warrants or other rights to purchase Common Stock), and (2) the number of shares
of Common Stock issuable upon the conversion of the Debentures with respect to
which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Holder upon such conversion). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, except as otherwise provided in clause (1) of such sentence. The
Holder, by its acceptance of this Debenture, further agrees that if the Holder
transfers or assigns any of the Debentures to a party who or which would not be
considered such an affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 4(C) as if such transferee or assignee were the original Holder
hereof. Nothing herein shall preclude the Holder from disposing of a sufficient
number of other shares of Common Stock beneficially owned by the Holder so as to
thereafter permit the continued conversion of this Debenture.

                D.      (i)    Subject to the terms of Section 4(C) and to the
other terms of this Section 4(D), interest on the principal amount of this
Debenture converted pursuant to a Notice of Conversion shall be due and payable,
at the option of the Company, in cash or Common Stock on the Interest Payment
Date.

                        (ii)   If the interest is to be paid in cash, the
Company shall make such payment within three (3) Trading Days of the Interest
Payment Date. If the interest is not paid by such third Trading Day, the
interest must be paid in Common Stock within five (5) Trading Days of the
Interest Payment Date (such fifth Trading Day, a "Delivery Date") in accordance
with the provisions of Section 4(D)(i) hereof, unless the Holder consents
otherwise in each specific instance.

                        (iii)  The number of shares of Common Stock to be issued
in payment of such interest shall be determined by dividing the dollar amount of
the interest to be so paid by (i) for interest accruing through and including
December 31, 2005, the Conversion Price on the Interest Payment Date, and (ii)
for interest accruing thereafter, ninety percent (90%) of the average Bid Price
for the ten (10) Trading Days ending on the Trading Day immediately before the
relevant Interest Payment Date. Such Common Stock shall be delivered to the
Holder to the Holder's address for notice provided in the Securities Purchase
Agreement, or per the latest instructions provided by the Holder, whether such
instructions are given pursuant to Section 4(B) hereof or otherwise.

                                                                               4
<PAGE>

                        (iv)   If the Company elects to have the interest paid
in cash in connection with a conversion, the Company shall make such payment
within three (3) Trading Days of the Interest Payment Date. If such payment is
not made in cash by such date, it shall be deemed that, subject to the
provisions of Section 4(C) hereof, the Company has elected to pay the interest
in stock.

                E.      (i)    Reference is made to the provisions of Section
4(g) of the Securities Purchase Agreement, the terms of which are incorporated
herein by reference. The Conversion Price and other provisions of this Debenture
shall be adjusted as provided in the applicable provisions of said Section 4(g)
of the Securities Purchase Agreement.

                        (ii)   Upon the occurrence of each adjustment or
readjustment of the Fixed Conversion Price pursuant to this Section 4(E), the
Company, at its expense, shall promptly compute such adjustment or readjustment
and prepare and furnish to the Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written request
at any time of the Holder, furnish to the Holder a like certificate setting
forth (i) such adjustment or readjustment, (ii) the Conversion Price in effect
at the time and (iii) the number of shares of Common Stock and the amount, if
any, of other securities or property which at the time would be received upon
conversion of $1,000 of principal of this Debenture.

                F.      (i)    The term "Mandatory Conversion Date" means either
(x) the Maturity Date or (y) an Elective Mandatory Conversion Date (as defined
below). On the Mandatory Conversion Date, without further action by the Holder,
the outstanding principal and accrued but unpaid interest on this Debenture
shall be deemed converted into Common Stock (x) with respect to such principal,
at the Conversion Price in effect on such Mandatory Conversion Date, and (y)
with respect to the interest at the applicable rate contemplated by the
provisions of Section 4(D)(iii) hereof on such Mandatory Conversion Date. The
Mandatory Conversion Date shall be a Conversion Date for all purposes of this
Debenture and the other Transaction Agreements, without the need for the Holder
to submit a Notice of Conversion. Any conversion contemplated by this Section
4(F) shall be subject to the following terms and conditions of this Section
4(F), to the extent relevant.

                        (ii)   So long as

        (x) there is an effective Registration Statement covering the resale of
        the shares issuable on conversion of this Debenture,

        (y) the Company is not in default of any material obligation under any
        of the Transaction Agreements, and

        (z) the Common Stock of the Company, including the Conversion Shares to
        be issued on the Mandatory Conversion Date, are eligible for trading on
        an Acceptable Trading Market (as defined below),

                                                                               5
<PAGE>

then, if the Bid Price for the Common Stock is more than the Target Price (as
defined below) for each of twenty (20) consecutive Trading Days (the twentieth
of such consecutive Trading Days, the "Target Trading Day"), then the Company
will have the right to give the Holder a written notice (an "Elective Mandatory
Conversion Notice") within five (5) Trading Days after the Target Trading Day.
The Elective Mandatory Conversion Notice shall state that the date specified in
such notice (the "Elective Mandatory Conversion Date"), which date shall not be
no earlier than twenty (20) Trading Days and no later than sixty (60) Trading
Days after the Target Trading Day, shall be deemed a Mandatory Conversion Date.

                        (iii)  The term "Target Price" means $1.00 per share,
subject to further adjustment in the same manner as adjustments to the
Conversion Price are made herein

                        (iv)   The term "Acceptable Trading Market" means any of
the following: (w) the Over the Counter Bulletin Board Market, (x) the
NASDAQ/SmallCap or National Market, (y) the American Stock Exchange or (z) the
New York Stock Exchange.

                        (v)    If the Company gives an Elective Mandatory
Conversion Notice, then, if, but only if, the conditions referred in clauses
(x), (y) and (z) of subparagraph (ii) above are satisfied on the Elective
Mandatory Conversion Date, the conversion contemplated by the Elective Mandatory
Conversion Notice will be effected, subject to the provisions of subparagraph
(vi) below. If any of these conditions is not true on the Elective Mandatory
Conversion Date, the Elective Mandatory Conversion Notice shall be deemed
canceled ab initio.

                        (vi)   The provisions of Section 4(C) shall apply on the
Mandatory Conversion Date. If, as a result of such provisions, the entire
Debenture is not converted on the Mandatory Conversion Date, either, as may be
relevant,

        (x) the Company, without further notice to the Holder, shall be deemed
        to have timely given one or more Elective Mandatory Conversion Notices
        providing for successive Mandatory Conversion Dates, or

        (y) the Maturity Date shall be deferred in whole or in part to one or
        more successive Maturity Dates,

each of which deferred date is ten (10) Trading Days after the immediately
preceding Mandatory Conversion Date, until this Debenture is fully converted or
paid in full (or some combination thereof).

                        (vii)  Prior to a Mandatory Conversion Date, including
after receiving an Elective Mandatory Conversion Notice, the Holder shall
continue to have the right to convert any outstanding portion of this Debenture
in accordance with its terms until it is fully converted.

                        (viii) If the Company timely pays in full any accrued
interest payable with respect to this Debenture as of the initial Mandatory
Conversion Date (including the shares then being converted), interest shall
cease to accrue on any remaining Unconverted Debenture. If such payment is not
made timely or is not made in full, interest shall continue to accrue until the
earliest date after the initial Mandatory Conversion Date on which all accrued
interest through the date of payment have in fact been paid, but cease to accrue
thereafter.

                                                                               6
<PAGE>

                G.      (i)    Anything in the other provisions of this
Debenture or any of the other Transaction Agreements to the contrary
notwithstanding, if, but only if, the conditions referred in clauses (x), (y)
and (z) of Section 4(F)(ii) are satisfied on the date of the issuance of the
Prepayment Notice and through the Prepayment Date (as those terms are defined
below), the Company shall have the right to prepay the outstanding principal of
this Debenture, together with all accrued interest thereon, in whole or in part,
on the terms and conditions provided in this Section 4(G).

                        (ii)   The Company may give the Holder a written notice
(the "Prepayment Notice") no earlier than the first anniversary of the Issue
Date. The Prepayment Notice shall specify (x) the principal amount of the
Debenture being prepaid by the Company (the "Prepayment Principal Amount"), (y)
the date (the "Prepayment Date"), which shall be not less than thirty (30)
Trading Days after the Prepayment Notice is received by the Holder, on which
such prepayment will be made, and (z) identify the bank (the "Prepayment Bank")
where the Prepayment Funds (as defined below) will be deposited prior to the
issuance of the Confirmation Notice (as defined below).

                        (iii)  No later than ten (10) Trading Days prior to the
Prepayment Date, the Company will send a notice (the "Confirmation Notice") to
the Holder that funds (the "Prepayment Funds") equal to the Prepayment Principal
Amount plus all accrued but unpaid interest thereon through the Prepayment Date
have been deposited with the Prepayment Bank, together with confirmation of such
deposit by the Prepayment Bank. The Confirmation Notice will also include
instructions for the method by which the Holder can provide instructions to the
Prepayment Bank to make payment by check or wire, as specified by the Holder, on
the Prepayment Date.

                        (iv)   Even after the issuance of a Prepayment Notice,
the Holder may continue to convert this Debenture as provided in the other
provisions of this Debenture until this Debenture is paid in full. If the Holder
converts any portion of this Debenture after the date of the Prepayment Notice
and prior to the payment of the Prepayment Funds to the Holder, so that the then
outstanding principal of this Debenture is less than the Prepayment Principal
Amount, the Holder shall notify the Prepayment Bank of the then outstanding
principal of this Debenture. The Prepayment Funds will then be adjusted to and
be deemed to be equal such outstanding principal plus all accrued but unpaid
interest thereon through the Prepayment Date.

                        (v)    If the Confirmation Notice is not timely given
or if the Prepayment Funds are not timely paid or made available to the Holder,
the Holder will have the option, exercisable at any time prior to the actual
payment of the Prepayment Funds (together with any additional interest accruing
on the Prepayment Principal Amount after the Prepayment Date) to effect either
or both of the following actions: (x) cancellation, ab initio, of the prepayment
contemplated by the Prepayment Notice and (y) cancellation of the Company's
prepayment right under this Section 4(G).

                H.      (i)    In the case of any dispute with respect to a
conversion, the Company shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with Section 4 hereof. If such dispute
involves the calculation of the Conversion

                                                                               7
<PAGE>

Price, the Company shall first discuss such discrepancy with the Holder. If the
Company and the Holder are unable to agree upon the Conversion Price
calculation, the Company shall promptly submit the disputed calculations to
independent auditors, which shall be a recognized accounting firm selected by
the Holder, with the consent of the Company, which consent shall not be
unreasonably be withheld or delayed. The auditors, at the expense of the party
or parties in error (as determined by the auditors), shall audit the
calculations and notify the Company and the Holder of the results within five
(5) Trading Days following the date it receives the disputed calculations. The
auditor's calculation shall be deemed conclusive, absent manifest error. The
Company shall then issue the appropriate number of shares of Common Stock in
accordance with this Debenture.

                        (ii)   If, at any time the Company challenges, disputes
or denies the right of a Holder of a Debenture to effect a conversion of the
Debenture into Common Stock or otherwise dishonors or rejects any Notice of
Conversion delivered in accordance with the terms of this Debenture (subject to
the provisions of Section 4(H)(i) and Section 4(C) hereof), then such Holder
shall have the right, by written notice to the Company, to require the Company
to redeem all or part of the Debenture for which a Notice of Conversion has been
refused pursuant to this Section 4(H)(ii) for cash in an amount equal to the
Holder Redemption Amount pursuant to the provisions of Section 4(I) hereof.

                I.      (i)    If at any time the actual number of shares
actually reserved is such that on any date, either it is less than the Reserved
Amount or were that date a Conversion Date, the Company would not be able to
honor in full the conversion submitted on that date of all Unconverted
Debentures of all Holders of this series of Debentures, then the Holder shall be
entitled to the remedies provided in this Section 4(I).

                        (ii)   The term "Redemption Event" means any one or
more of the following events:

        (a) the Company has not delivered Conversion Certificates to the Holder
        as contemplated by this Debenture for any reason within fifteen (15)
        Trading Days after the Conversion Date, the Holder thereafter gives
        written notice thereof to the Company and the Conversion Certificates
        are not received by the Holder within five (5) Trading Days after the
        Company's receipt of such notice (but the provisions of this clause (a)
        shall only apply until the delivery of Conversion Certificates and the
        payment of the accrued interest as contemplated by this Debenture), or

        (b) the Company admits in writing, or the Holder determines, based on
        most recent relevant filings or other disclosure made by the Company and
        available to the public on the SEC's EDGAR system, that the condition of
        Section 4(I)(i) has occurred (but the provisions of this clause (b)
        shall only apply until the Holder receives a written statement,
        certified by an officer of the Company, reflecting that the condition of
        Section 4(I)(i) is no longer true).

                        (iii)  Upon the occurrence of any Redemption Event and
for as long as a Redemption Event shall continue to exist, then, in addition to
the rights provided in Section 5(b)

                                                                               8
<PAGE>

of the Securities Purchase Agreement, then, with respect to the Holder's
Unconverted Debentures (or of Debentures for which a Notice of Conversion has
been submitted but the certificates representing the Conversion Shares have not
yet been delivered to the Holder), the Holder shall thereafter have the option,
exercisable in whole or in part (the amount of the Debenture so redeemed, the
"Redeemed Debenture") at any time and from time to time by delivery to the
Company of a notice (a "Holder Redemption Notice") requesting the redemption of
all or part of such Holder's Debentures for cash equal to the Holder Redemption
Amount in effect at the time of the redemption hereunder.

                        (iv)   The "Holder Redemption Amount" means an amount
payable in cash, equal to:

                               V              x              M
                        --------------
                              CP

        where:

                "V" means the outstanding principal of the Redeemed Debenture
        plus accrued but unpaid interest through the date of payment of the
        Redemption Amount for the Redeemed Debenture (the "Redemption Payment
        Date");

                "CP" means the Conversion Price in effect on the Redemption Date
        (as defined below);

                "Redemption Date" means the date on which the Company receives
        the Holder Redemption Notice; and

                "M" means the average of the Closing Sale Prices for any five
        (5) Trading Days (which need not be consecutive) selected by the Holder
        of the Unconverted Share being redeemed during the period beginning on
        the Redemption Date and ending on the Redemption Payment Date.

                        (v)    If the Company is obligated to pay the Holder
Redemption Amount, the Company shall give the Holder at least five (5) Trading
Days' notice of the Redemption Payment Date (provided that such date shall be no
earlier than the tenth Trading Day after the Redemption Date and no later than
the fifteenth Trading Day after the Redemption Date), and, no later than the
Trading Day prior to such designated date, the Holder shall, by notice to the
Company, identify the value of "M" to the Company, together with a report
derived from the Reporting Service supporting such value. If the Company does
not pay the Holder Redemption Amount on the Redemption Payment Date so
specified, the Holder shall have the right to recompute the value of "M" by
notice similarly given (but until such later notice is given, the computation in
the latest notice from the Holder shall continue to be determinative of the
value of "M" for purposes of determining the Holder Redemption Amount). The
determination of the value of "M" shall not affect the determination of the
value of "V" in determining the Holder Redemption Amount.

                        (vi)    If the Company fails to pay to the Holder the
Holder Redemption Amount with respect to any Redeemed Debenture on the
Redemption Date, then the Holder shall

                                                                               9
<PAGE>

be entitled to interest on the Holder Redemption Amount at a per annum rate
equal to the lower of 18% and the highest interest rate permitted by applicable
law from the Redemption Payment Date specified in the notice given pursuant to
the immediately preceding subparagraph (v) (and if no such notice is given, from
the tenth Trading Day after the Redemption Date) until the date of payment of
the Holder Redemption Amount hereunder. In the event the Company is not able to
redeem all of the Redeemed Debenture subject to Holder Redemption Notices
received from all Holders of this series of Debentures and delivered prior to
the date upon which such redemption is to be effected, the Company shall redeem
Redeemed Debentures from each such Holder pro rata, based on the total principal
of Redeemed Debentures outstanding at the time of redemption included by each
such Holder in all Holder Redemption Notices delivered prior to the date upon
which such redemption is to be effected relative to the total principal of
Redeemed Debentures outstanding at the time of redemption included in all of the
Holder Redemption Notices from all such Holders delivered prior to the date upon
which such redemption is to be effected.

        5.      Subject to the terms of the Securities Purchase Agreement and to
the specific provisions of Sections 4(D) and (F) hereof, if and to the extent
applicable, no provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.

        6.      No recourse shall be had for the payment of the principal of, or
the interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

        7.      All payments contemplated hereby to be made "in cash" shall be
made in immediately available good funds of United States of America currency by
wire transfer to an account designated in writing by the Holder to the Company
(which account may be changed by notice similarly given). All payments of cash
and each delivery of shares of Common Stock issuable to the Holder as
contemplated hereby shall be made to the Holder at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
from time to time; except that the Holder can designate, by notice to the
Company, a different delivery address for any one or more specific payments or
deliveries.

        8.      If, for as long as this Debenture remains outstanding, the
Company enters into a merger (other than where the Company is the surviving
entity) or consolidation with another corporation or other entity (collectively,
a "Sale"), the Company will require, in the agreements reflecting such
transaction, that the surviving entity expressly assume the obligations of the
Company hereunder. Notwithstanding the foregoing, if the Company enters into a
Sale and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then as a
condition of such Sale, the Company and any such successor, purchaser or
transferee will agree that the Debenture may thereafter be converted on the
terms and subject to the conditions set forth above into the kind and amount of
stock, securities or property receivable upon such merger, consolidation, sale
or transfer by a holder of

                                                                              10
<PAGE>

the number of shares of Common Stock into which this Debenture might have been
converted immediately before such merger, consolidation, sale or transfer,
subject to adjustments which shall be as nearly equivalent as may be
practicable. In the event of any such proposed Sale, (i) the Holder hereof shall
have the right to convert by delivering a Notice of Conversion to the Company
within fifteen (15) days of receipt of notice of such Sale from the Company,
except that Section 4(C) shall not apply to such conversion.

        9.      If, at any time while any portion of this Debenture remains
outstanding, the Company spins off or otherwise divests itself of a part of its
business or operations or disposes of all or of a part of its assets in a
transaction (the "Spin Off") in which the Company, in addition to or in lieu of
any other compensation received and retained by the Company for such business,
operations or assets, causes securities of another entity (the "Spin Off
Securities") to be issued to security holders of the Company, the Company shall
cause (i) to be reserved Spin Off Securities equal to the number thereof which
would have been issued to the Holder had all of the Holder's Debentures
outstanding on the record date (the "Record Date") for determining the amount
and number of Spin Off Securities to be issued to security holders of the
Company (the "Outstanding Debentures") been converted as of the close of
business on the Trading Day immediately before the Record Date (the "Reserved
Spin Off Shares"), and (ii) to be issued to the Holder on the conversion of all
or any of the Outstanding Debentures, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction,
of which (I) the numerator is the principal amount of the Outstanding Debentures
then being converted, and (II) the denominator is the principal amount of the
Outstanding Debentures.

        10.     If, at any time while any portion of this Debenture remains
outstanding, the Company effectuates a stock split or reverse stock split of its
Common Stock or issues a dividend on its Common Stock consisting of shares of
Common Stock, the Conversion Price and any other amounts calculated as
contemplated hereby or by any of the other Transaction Agreements shall be
equitably adjusted to reflect such action. By way of illustration, and not in
limitation, of the foregoing, (i) if the Company effectuates a 2:1 split of its
Common Stock, thereafter, with respect to any conversion for which the Company
issues shares after the record date of such split, the Conversion Price shall be
deemed to be one-half of what it had been immediately prior to such split; (ii)
if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter,
with respect to any conversion for which the Company issues shares after the
record date of such reverse split, the Conversion Price shall be deemed to be
ten times what it had been calculated to be immediately prior to such split; and
(iii) if the Company declares a stock dividend of one share of Common Stock for
every 10 shares outstanding, thereafter, with respect to any conversion for
which the Company issues shares after the record date of such dividend, the
Conversion Price shall be deemed to be such amount multiplied by a fraction, of
which the numerator is the number of shares (10 in the example) for which a
dividend share will be issued and the denominator is such number of shares plus
the dividend share(s) issuable or issued thereon (11 in the example).

        11.     The Holder of the Debenture, by acceptance hereof, agrees that
this Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.

                                                                              11
<PAGE>

        12.     Any notice required or permitted hereunder shall be given in
manner provided in the Section headed "NOTICES" in the Securities Purchase
Agreement, the terms of which are incorporated herein by reference.

        13.     A.      This Debenture shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
County of New York or the state courts of the State of New York sitting in the
County of New York in connection with any dispute arising under this Debenture
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on FORUM NON CONVENIENS, to the bringing of any
such proceeding in such jurisdictions. To the extent determined by such court,
the Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
its rights under this Debenture.

                B.      JURY TRIAL WAIVER. The Company and the Holder hereby
waive a trial by jury in any action, proceeding or counterclaim brought by
either of the Parties hereto against the other in respect of any matter arising
out of or in connection with this Debenture.

        14.     The Holder shall be entitled to exercise its conversion
privilege with respect to this Debenture notwithstanding the commencement of any
case under 11 U.S.C. ss.101 ET SEQ. (the "Bankruptcy Code"). In the event the
Company is a debtor under the Bankruptcy Code, the Company hereby waives, to the
fullest extent permitted, any rights to relief it may have under 11 U.S.C.
ss.362 in respect of such Holder's right to convert the Debenture. The Company
agrees, without cost or expense to such Holder, to take or to consent to any and
all action necessary to effectuate relief under 11 U.S.C. ss.362.

        15.     (i)     Prior to a Mandatory Conversion Date, the following
shall constitute an "Event of Default":

                a.      The Company shall default in the payment of principal or
                        interest on this Debenture or any other amount due
                        hereunder, and, in any such instance, the same shall
                        continue for a period of five (5) Trading Days after the
                        Company's receipt of written notice thereof from the
                        Holder; or

                b.      Any of the representations or warranties made by the
                        Company herein, in the Securities Purchase Agreement or
                        any of the other Transaction Agreements shall be false
                        or misleading in any material respect at the time made;
                        or

                c.      Subject to the terms of the Securities Purchase
                        Agreement, the Company fails to authorize or to cause
                        its Transfer Agent to issue shares of Common Stock upon
                        exercise by the Holder of the conversion rights of the
                        Holder in accordance with the terms of this Debenture
                        (provided, however, that for purposes of this provision,
                        such failure to cause the Transfer Agent to

                                                                              12
<PAGE>

                        issue such shares shall not be deemed to occur until two
                        (2) Trading Days after the Delivery Date), fails to
                        transfer or to cause its Transfer Agent to transfer any
                        certificate for shares of Common Stock issued to the
                        Holder upon conversion of this Debenture and when
                        required by this Debenture or any other Transaction
                        Agreement, and such transfer is otherwise lawful, or
                        fails to remove any restrictive legend on any
                        certificate or fails to cause its Transfer Agent to
                        remove such restricted legend, in each case where such
                        removal is lawful, as and when required by this
                        Debenture, or any other Transaction Agreement, and any
                        such failure shall continue uncured for ten (10) Trading
                        Days after the Company's receipt of written notice
                        thereof from the Holder; or

                d.      The Company shall fail to perform or observe, in any
                        material respect, any other covenant, term, provision,
                        condition, agreement or obligation of any Debenture in
                        this series and such failure shall continue uncured for
                        a period of thirty (30) days after the Company's receipt
                        of written notice thereof from the Holder; or

                e.      The Company shall fail to perform or observe, in any
                        material respect, any covenant, term, provision,
                        condition, agreement or obligation of the Company under
                        any of the Transaction Agreements and such failure shall
                        continue uncured for a period of thirty (30) days after
                        the Company's receipt of written notice thereof from the
                        Holder; or

                f.      The Company shall (1) admit in writing its inability to
                        pay its debts generally as they mature; (2) make an
                        assignment for the benefit of creditors or commence
                        proceedings for its dissolution; or (3) apply for or
                        consent to the appointment of a trustee, liquidator or
                        receiver for its or for a substantial part of its
                        property or business; or

                g.      A trustee, liquidator or receiver shall be appointed for
                        the Company or for a substantial part of its property or
                        business without its consent and shall not be discharged
                        within sixty (60) days after such appointment; or

                h.      Any governmental agency or any court of competent
                        jurisdiction at the instance of any governmental agency
                        shall assume custody or control of the whole or any
                        substantial portion of the properties or assets of the
                        Company and shall not be dismissed within sixty (60)
                        days thereafter; or

                i.      Any money judgment, writ or warrant of attachment, or
                        similar process in excess of Seven Hundred Fifty
                        Thousand ($750,000) Dollars in the aggregate shall be
                        entered or filed against the Company or any of its
                        properties or other assets and shall remain unpaid,
                        unvacated, unbonded or unstayed for a period of sixty
                        (60) days or in any event later than five (5) days prior
                        to the date of any proposed sale thereunder; or

                                                                              13
<PAGE>

                j.      Bankruptcy, reorganization, insolvency or liquidation
                        proceedings or other proceedings for relief under any
                        bankruptcy law or any law for the relief of debtors
                        shall be instituted by or against the Company and, if
                        instituted against the Company, shall not be dismissed
                        within sixty (60) days after such institution or the
                        Company shall by any action or answer approve of,
                        consent to, or acquiesce in any such proceedings or
                        admit the material allegations of, or default in
                        answering a petition filed in any such proceeding; or

                k.      The Company shall have its Common Stock suspended from
                        trading on, or delisted from, the Principal Trading
                        Market for in excess of twenty (20) Trading Days.

                (ii)    After a Mandatory Conversion Date, the term "Event of
Default" shall mean:

                a.      The Company shall default in the payment of principal or
                        interest on this Debenture or any other amount due
                        hereunder, and, in any such instance, the same shall
                        continue for a period of five (5) Trading Days after the
                        Company's receipt of written notice thereof from the
                        Holder; but only to the extent that the Company had an
                        obligation to pay such amount to the Holder prior to the
                        Mandatory Conversion Date or based on a notice given by
                        the Holder prior to the Mandatory Conversion Date; or

                b.      Subject to the terms of the Securities Purchase
                        Agreement, the Company fails to authorize or to cause
                        its Transfer Agent to issue shares of Common Stock upon
                        exercise by the Holder of the conversion rights of the
                        Holder in accordance with the terms of this Debenture
                        (provided, however, that for purposes of this provision,
                        such failure to cause the Transfer Agent to issue such
                        shares shall not be deemed to occur until two (2)
                        Trading Days after the Delivery Date), fails to transfer
                        or to cause its Transfer Agent to transfer any
                        certificate for shares of Common Stock issued to the
                        Holder upon conversion of this Debenture and when
                        required by this Debenture or any other Transaction
                        Agreement, and such transfer is otherwise lawful, or
                        fails to remove any restrictive legend on any
                        certificate or fails to cause its Transfer Agent to
                        remove such restricted legend, in each case where such
                        removal is lawful, as and when required by this
                        Debenture, or any other Transaction Agreement, and any
                        such failure shall continue uncured for ten (10) Trading
                        Days.

                (iii)   If an Event of Default shall have occurred and is
continuing, then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been cured or waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent
default), at the option of the Holder and in the Holder's sole discretion, the
Holder may consider this Debenture immediately due and payable (and the Maturity
Date shall be accelerated accordingly; provided, however, that such accelerated
Maturity Date [the "Default Maturity Date"] shall not be a Mandatory Conversion
Date), without presentment, demand,

                                                                              14
<PAGE>

protest or notice of any kinds, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately enforce any and all of the
Holder's rights and remedies provided herein or any other rights or remedies
afforded by law, including, but not necessarily limited to, the equitable remedy
of specific performance and injunctive relief. In furtherance of the foregoing
and not in limitation thereof, the Holder will be entitled to receive payment in
cash in full of the outstanding principal and accrued interest on the Debenture
on the Default Maturity Date.

        16.     Nothing contained in this Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.

                   [Balance of page intentionally left blank]

                                                                              15
<PAGE>

        17.     In the event for any reason, any payment by or act of the
Company or the Holder shall result in payment of interest which would exceed the
limit authorized by or be in violation of the law of the jurisdiction applicable
to this Debenture, then IPSO FACTO the obligation of the Company to pay interest
or perform such act or requirement shall be reduced to the limit authorized
under such law, so that in no event shall the Company be obligated to pay any
such interest, perform any such act or be bound by any requirement which would
result in the payment of interest in excess of the limit so authorized. In the
event any payment by or act of the Company shall result in the extraction of a
rate of interest in excess of a sum which is lawfully collectible as interest,
then such amount (to the extent of such excess not returned to the Company)
shall, without further agreement or notice between or by the Company or the
Holder, be deemed applied to the payment of principal, if any, hereunder
immediately upon receipt of such excess funds by the Holder, with the same force
and effect as though the Company had specifically designated such sums to be so
applied to principal and the Holder had agreed to accept such sums as an
interest-free prepayment of this Debenture. If any part of such excess remains
after the principal has been paid in full, whether by the provisions of the
preceding sentences of this Section or otherwise, such excess shall be deemed to
be an interest-free loan from the Company to the Holder, which loan shall be
payable immediately upon demand by the Company. The provisions of this Section
shall control every other provision of this Debenture.

        IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

Dated: December 23, 2004

                                               AMBIENT CORPORATION

                                               By:/s/ John J. Joyce

                                               John J. Joyce
                                               (Print Name)

                                               Chief Executive Officer
                                               (Title)

                                                                              16
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION
                                       OF
             6% CONVERTIBLE DEBENTURE SERIES 04-1 DUE ________, 200_
   (To be Executed by the Registered Holder in Order to Convert the Debenture)

TO:     AMBIENT CORPORATION.                        VIA TELECOPIER TO:
        79 Chapel Street                            (617) 332-7260
        Newton, Massachusetts 02458
        Attn: CEO

FROM: _________________________________________________________ ("Holder")

DATE: _______________________________________________ (the "Conversion Date")

RE:     Conversion of $_________________ principal amount (the "Converted
        Debenture") of the 6% Convertible Debenture Series 04-1-_ Due _________,
        200_ (the "Debenture") of AMBIENT CORPORATION (the "Company") into
        ________________________ shares (the "Conversion Shares") of Common
        Stock (defined below)

        The captioned Holder hereby gives notice to the Company, pursuant to the
Debenture of the Company that the Holder elects to convert the Converted
Debenture into fully paid and non-assessable shares of Common Stock, $0.001 par
value (the "Common Stock"), of the Company as of the Conversion Date specified
above. Said conversion shall be based on the following Conversion Price (CHECK
ONE):

         _   $________________, representing the original Conversion Price (as
             defined in the Debenture)

             $________________,  representing the original Conversion Price (as
             defined in the Debenture), adjusted in accordance with the
             provisions of the Debenture.

<PAGE>

             Based on this Conversion Price, the number of Conversion Shares
             indicated above should be issued in the following name(s):

             Name and Record Address                   Conversion Shares

             ______________________________            _________________
             ______________________________            _________________
             ______________________________            _________________

        It is the intention of the Holder to comply with the provisions of
Section 4(C) of the Debenture regarding certain limits on the Holder's right to
convert thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believe this conversion complies with the provisions of said Section
4(C). Nonetheless, to the extent that, pursuant to the conversion effected
hereby, the Holder would have more shares than permitted under said Section,
this notice should be amended and revised, ab initio, to refer to the conversion
which would result in the issuance of shares consistent with such provision. Any
conversion above such amount is hereby deemed void and revoked.

        As contemplated by the Debenture, this Notice of Conversion is being
sent by facsimile to the telecopier number and officer indicated above.

        If this Notice of Conversion represents the full conversion of the
outstanding balance of the Converted Debenture, the Holder either (1) has
previously surrendered the Converted Debenture, duly endorsed, to the Company or
(2) will surrender (or cause to be surrendered) the Converted Debenture, duly
endorsed, to the Company at the address indicated above by express courier
within five (5) Trading Days after delivery or facsimile transmission of this
Notice of Conversion.

                  The certificates representing the Conversion Shares should be
transmitted by the Company to the Holder (CHECK ONE)

             _    via express courier or

             _    by electronic transfer (DTC)

within the time contemplated by the Debenture and Securities Purchase Agreement
after receipt of this Notice of Conversion (by facsimile transmission or
otherwise) to:

             ___________________________________
             ___________________________________
             ___________________________________

<PAGE>

        The Holder has determined that accrued but unpaid interest on the
Converted Debenture through the Conversion Date is $____________________
(subject to further accrual if payment not timely made). As contemplated by the
Debenture, the Company should also pay all such accrued but unpaid interest on
the Converted Debenture to the Holder.

             --      If the Company elects to pay such interest in Common
        Stock, as contemplated by and subject to the provisions of the
        Debenture, such shares should be issued in the name of the Holder and
        delivered in the same manner as, and together with, the Conversion
        Shares.

             --      If the Company elects or is required to pay the interest
        in cash, such payment should be made by wire transfer as follows:

             ___________________________________

             ___________________________________

             ___________________________________

                                         _______________________________________
                                         (Print name of Holder)

                                         By: ___________________________________
                                               (Signature of Authorized Person)

                                         _______________________________________
                                         (Printed Name and Title)

<PAGE>

                              NOTICE OF CONVERSION
                               WORKSHEET SCHEDULE

1. Current Common Stock holdings of Holder and Affiliates         ____________
2. Shares to be issued on current conversion6                     ____________
3. Other shares to be issued on other current conversion(s) and
         other current exercise(s)7                               ____________
4. Other shares eligible to be acquired within next 60 days
         without restriction                                      ____________
5. Total [sum of Lines 1 through 4]                               ____________

6. Outstanding shares of Common Stock8                            ____________
7. Adjustments to Outstanding
         a. Shares known to Holder as previously issued
             to Holder or others but not included in Line 6       ____________
         b. Shares to be issued per Line(s) 2 and 3               ____________
         c. Total Adjustments [Lines 7a and 7b]                   ____________
8. Total Adjusted Outstanding [Lines 6 plus 7c]                   ____________

9. Holder's Percentage [Line 5 divided by Line 8]                 ____________%
[Note: Line 9 not to be above 4.99%]

-------------------------
6       Includes conversion of stated value and assumes interest will be paid in
Common Stock at the Conversion Price.
7       Includes shares issuable on conversion of convertible securities
(including assumed payment of interest or dividends) or exercise of other
rights, including other warrants or options
8       Based on latest SEC filing by Company or information provided by
executive officer of Company, counsel to Company or transfer agent.

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