Document:

SECURITIES PURCHASE AGREEMENT

         THIS  SECURITIES  PURCHASE  AGREEMENT (this  "Agreement"),  dated as of
September   7,   2006,  by and among HOME ENERGY  SAVINGS  CORP,  INC., a Nevada
corporation (the "Company"), and the Buyers listed on Schedule I attached hereto
(individually, a "Buyer" or collectively "Buyers").

                                   WITNESSETH

         WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act");

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein,  the Company shall issue and sell to the Buyer(s),
as provided  herein,  and the Buyer(s) 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")  which shall be funded on the fifth (5th)  business day  following  the
date hereof (the  "Closing"),  for a total  purchase  price of up to Two Hundred
Thousand Dollars  ($200,000),  (the "Purchase Price") in the respective  amounts
set forth opposite each Buyer(s) name on Schedule I (the "Subscription Amount");

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement (the "Investor  Registration Rights Agreement")  pursuant to which the
Company has agreed to provide certain  registration  rights under the Securities
Act and the rules and regulations  promulgated there under, and applicable state
securities laws;

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering a Security Agreement
(the "Security  Agreement")  pursuant to which the Company has agreed to provide
certain  registration  rights  under  the  Securities  Act  and  the  rules  and
regulations promulgated there under, and applicable state securities laws; and

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions (the "Irrevocable Transfer Agent Instructions")

         NOW,  THEREFORE,  in  consideration  of the mutual  covenants and other
agreements contained in this Agreement the Company and the Buyer(s) hereby agree
as follows:

            1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

               (a)   Purchase  of   Convertible   Debentures.   Subject  to  the
satisfaction  (or waiver) of the terms and  conditions of this  Agreement,  each
Buyer  agrees,  severally  and not  jointly,  to purchase at the Closing and the
Company  agrees to sell and issue to each Buyer,  severally and not jointly,  at
the  Closing,   Convertible   Debentures  in  amounts   corresponding  with  the
Subscription Amount set forth opposite each Buyer's name on Schedule I hereto.

<PAGE>

               (b) Closing  Date.  The Closing of the  purchase  and sale of the
Convertible  Debentures  shall take place at 10:00 a.m. Eastern Standard Time on
the fifth (5th) business day following the date hereof,  subject to notification
of  satisfaction  of the conditions to the First Closing set forth herein and in
Sections  6 and 7 below  (or such  later  date as is  mutually  agreed to by the
Company and the Buyer(s)) (the "Closing  Date").  The Closing shall occur on the
respective Closing Date at the offices of Yorkville  Advisors,  LLC, 3700 Hudson
Street,  Suite 3700,  Jersey  City,  New Jersey 07302 (or such other place as is
mutually agreed to by the Company and the Buyer(s)).

               (c) Form of Payment. Subject to the satisfaction of the terms and
conditions of this Agreement,  on the Closing Date, (i) the Buyers shall deliver
to the Company such  aggregate  proceeds for the  Convertible  Debentures  to be
issued and sold to such  Buyer(s),  minus the fees to be paid  directly from the
proceeds of the Closing as set forth herein,  and (ii) the Company shall deliver
to each Buyer,  Convertible  Debentures  which such  Buyer(s) is  purchasing  in
amounts  indicated  opposite  such Buyer's name on Schedule I, duly  executed on
behalf of the Company.

            2. BUYER'S REPRESENTATIONS AND WARRANTIES.

         Each Buyer represents and warrants, severally and not jointly, that:

               (a) Investment  Purpose.  Each Buyer is acquiring the Convertible
Debentures  and,  upon  conversion  of  Convertible  Debentures,  the Buyer will
acquire the Conversion Shares then issuable,  for its own account for investment
only and not with a view towards,  or for resale in connection  with, the public
sale or distribution  thereof,  except pursuant to sales  registered or exempted
under the Securities Act; provided,  however, that by making the representations
herein, such Buyer reserves the right to dispose of the Conversion Shares at any
time in  accordance  with or pursuant  to an  effective  registration  statement
covering such Conversion  Shares or an available  exemption under the Securities
Act.

               (b)  Accredited  Investor  Status.  Each Buyer is an  "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D.

               (c)  Reliance  on  Exemptions.  Each Buyer  understands  that the
Convertible  Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities  laws and that the  Company  is  relying  in part  upon the truth and
accuracy of, and such Buyer's compliance with, the representations,  warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the  availability  of such  exemptions and the eligibility of
such Buyer to acquire such securities.

               (d)  Information.  Each Buyer and its  advisors  (and his or, its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  Each  Buyer  and its  advisors,  if any,  have been  afforded  the
opportunity  to ask  questions of the Company and its  management.  Neither such
inquiries nor any other due diligence  investigations conducted by such Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain information from the Company in order to evaluate the merits and risks
of this investment. Each Buyer has sought such accounting, legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to its  acquisition  of the  Convertible  Debentures  and the Conversion
Shares.

                                       2
<PAGE>

               (e) No Governmental Review. Each Buyer understands that no United
States federal or state agency or any other  government or  governmental  agency
has  passed on or made any  recommendation  or  endorsement  of the  Convertible
Debentures  or the  Conversion  Shares,  or the fairness or  suitability  of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Convertible Debentures or the Conversion Shares.

               (f)  Transfer or Resale.  Each Buyer  understands  that except as
provided in the Investor  Registration  Rights  Agreement:  (i) the  Convertible
Debentures have not been and are not being  registered  under the Securities Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred  unless (A) subsequently  registered  thereunder,  or (B) such Buyer
shall have  delivered  to the  Company an opinion  of  counsel,  in a  generally
acceptable  form,  to the effect that such  securities  to be sold,  assigned or
transferred may be sold,  assigned or transferred  pursuant to an exemption from
such  registration  requirements;  (ii)  any  sale  of such  securities  made in
reliance  on Rule 144 under the  Securities  Act (or a successor  rule  thereto)
("Rule  144")  may be made  only in  accordance  with the  terms of Rule 144 and
further,  if Rule 144 is not  applicable,  any resale of such  securities  under
circumstances  in which the seller (or the person through whom the sale is made)
may be deemed to be an  underwriter  (as that term is defined in the  Securities
Act) may require  compliance  with some other exemption under the Securities Act
or the rules and  regulations  of the SEC  thereunder;  and  (iii)  neither  the
Company nor any other person is under any obligation to register such securities
under the  Securities  Act or any state  securities  laws or to comply  with the
terms and conditions of any exemption thereunder.

               (g) Legends.  Each Buyer  understands  that the  certificates  or
other instruments  representing the Convertible Debentures and or the Conversion
Shares shall bear a restrictive  legend in substantially the following form (and
a  stop  transfer   order  may  be  placed   against   transfer  of  such  stock
certificates):

       THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN
       REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
       APPLICABLE  STATE  SECURITIES  LAWS. THE SECURITIES  HAVE BEEN
       ACQUIRED  SOLELY FOR  INVESTMENT  PURPOSES AND NOT WITH A VIEW
       TOWARD  RESALE  AND  MAY  NOT  BE  OFFERED  FOR  SALE,   SOLD,
       TRANSFERRED  OR  ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE
       REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
       ACT OF 1933, AS AMENDED,  OR APPLICABLE STATE SECURITIES LAWS,
       OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
       REGISTRATION  IS NOT  REQUIRED  UNDER  SAID ACT OR  APPLICABLE
       STATE SECURITIES LAWS.

                                       3
<PAGE>

The  legend set forth  above  shall be removed  and the  Company  within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion  Shares upon which it is stamped,  if, unless  otherwise  required by
state securities laws, (i) in connection with a sale  transaction,  provided the
Conversion  Shares are registered under the Securities Act or (ii) in connection
with a sale transaction,  after such holder provides the Company with an opinion
of counsel,  which opinion shall be in form,  substance and scope  customary for
opinions  of counsel in  comparable  transactions,  to the effect  that a public
sale,  assignment  or  transfer  of the  Conversion  Shares may be made  without
registration under the Securities Act.

               (h) Authorization,  Enforcement. This Agreement has been duly and
validly  authorized,  executed  and  delivered  on behalf of such Buyer and is a
valid and binding  agreement of such Buyer  enforceable  in accordance  with its
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,  insolvency,   reorganization,   moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

               (i) Receipt of  Documents.  Each Buyer and his or its counsel has
received and read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein and the Transaction Documents (as defined
herein);  (ii) all due diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the  Company's  Form 10-KSB for the fiscal year ended  December  31, 2005;
(iv) the Company's  Form 10-QSB for the fiscal  quarter ended March 31, 2005 and
June 30,  2006 and (v)  answers to all  questions  each Buyer  submitted  to the
Company regarding an investment in the Company; and each Buyer has relied on the
information  contained  therein and has not been furnished any other  documents,
literature, memorandum or prospectus.

               (j) Due Formation of Corporate and Other Buyers.  If the Buyer(s)
is a corporation,  trust,  partnership or other entity that is not an individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Convertible  Debentures and is not prohibited
from doing so.

               (k) No Legal  Advice From the Company.  Each Buyer  acknowledges,
that it had the  opportunity  to  review  this  Agreement  and the  transactions
contemplated  by this Agreement with his or its own legal counsel and investment
and tax advisors.  Each Buyer is relying solely on such counsel and advisors and
not  on  any  statements  or  representations  of  the  Company  or  any  of its
representatives  or agents for legal,  tax or investment  advice with respect to
this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities laws of any jurisdiction.

                                       4
<PAGE>

            3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company  represents  and  warrants as of the date hereof to each of
the Buyers that, except as set forth in the SEC Documents (as defined herein) or
in the Disclosure Schedule attached hereto (the "Disclosure Schedule"):

               (a)   Organization  and   Qualification.   The  Company  and  its
subsidiaries  are  corporations  duly  organized  and  validly  existing in good
standing under the laws of the jurisdiction in which they are incorporated,  and
have the requisite corporate power to own their properties and to carry on their
business as now being  conducted.  Each of the Company and its  subsidiaries  is
duly  qualified as a foreign  corporation to do business and is in good standing
in every  jurisdiction in which the nature of the business conducted by it makes
such  qualification  necessary,  except to the extent  that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.

               (b)   Authorization,    Enforcement,    Compliance   with   Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform  this  Agreement,  the Security  Agreement,  the Investor
Registration Rights Agreement, the Irrevocable Transfer Agent Agreement, and any
related agreements  (collectively the "Transaction  Documents") and to issue the
Convertible  Debentures and the Conversion  Shares in accordance  with the terms
hereof and thereof, (ii) the execution and delivery of the Transaction Documents
by the  Company  and the  consummation  by it of the  transactions  contemplated
hereby  and  thereby,  including,   without  limitation,  the  issuance  of  the
Convertible  Debentures the Conversion  Shares and the  reservation for issuance
and the issuance of the Conversion  Shares  issuable upon conversion or exercise
thereof,  have been duly  authorized by the Company's  Board of Directors and no
further  consent or  authorization  is  required  by the  Company,  its Board of
Directors or its  stockholders,  (iii) the Transaction  Documents have been duly
executed and delivered by the Company, (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms,  except as such enforceability may be limited by
general   principles   of   equity   or   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement of creditors'  rights and remedies.  The
authorized  officer of the Company executing the Transaction  Documents knows of
no reason why the Company  cannot file the  registration  statement  as required
under the Investor Registration Rights Agreement or perform any of the Company's
other obligations under such documents.

               (c)  Capitalization.  The authorized capital stock of the Company
consists  of ______  shares of Common  Stock and  ________  shares of  Preferred
Stock, par value $0.001 ("Preferred Stock") of which  _______________  shares of
Common Stock and zero shares of Preferred Stock are issued and outstanding.  All
of such  outstanding  shares  have been  validly  issued  and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or  encumbrances  suffered or permitted by the
Company. As of the date of this Agreement, (i) there are no outstanding options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any of  its  subsidiaries,  or  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights Agreement) and (iv) there are no outstanding  registration statements and
there are no outstanding  comment  letters from the SEC or any other  regulatory
agency.  There are no  securities or  instruments  containing  anti-dilution  or
similar  provisions  that will be triggered  by the issuance of the  Convertible
Debentures  as described  in this  Agreement.  The Company has  furnished to the
Buyer true and correct  copies of the Company's  Articles of  Incorporation,  as
amended and as in effect on the date hereof (the  "Articles of  Incorporation"),
and the Company's By-laws, as in effect on the date hereof (the "By-laws"),  and
the terms of all securities convertible into or exercisable for Common Stock and
the material  rights of the holders  thereof in respect thereto other than stock
options issued to employees and consultants.

                                       5
<PAGE>

               (d) Issuance of Securities.  The Convertible  Debentures are duly
authorized and, upon issuance in accordance with the terms hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes, liens and charges
with  respect  to  the  issue  thereof.  The  Conversion  Shares  issuable  upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

               (e) No Conflicts. The execution,  delivery and performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated  hereby  will not (i)  result in a  violation  of the
Articles of  Incorporation,  any  certificate of designations of any outstanding
series of preferred stock of the Company or the By-laws or (ii) conflict with or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its subsidiaries is a party, or result
in a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree
(including  federal and state  securities laws and regulations and the rules and
regulations  of The  National  Association  of  Securities  Dealers  Inc.'s  OTC
Bulletin Board on which the Common Stock is quoted) applicable to the Company or
any of its  subsidiaries or by which any property or asset of the Company or any
of  its  subsidiaries  is  bound  or  affected.  Neither  the  Company  nor  its
subsidiaries  is in violation of any term of or in default under its Articles of
Incorporation   or  By-laws  or  their   organizational   charter  or   by-laws,
respectively,  or any  material  contract,  agreement,  mortgage,  indebtedness,
indenture,  instrument,  judgment,  decree  or  order  or any  statute,  rule or
regulation  applicable to the Company or its  subsidiaries.  The business of the
Company and its subsidiaries is not being conducted,  and shall not be conducted
in violation of any material law,  ordinance,  or regulation of any governmental
entity.  Except as  specifically  contemplated by this Agreement and as required
under the Securities Act and any applicable  state  securities laws, the Company
is not  required to obtain any consent,  authorization  or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement or the  Registration  Rights  Agreement in  accordance  with the terms
hereof  or  thereof.   All  consents,   authorizations,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have been  obtained or effected  on or prior to the date  hereof.  The
Company and its  subsidiaries  are unaware of any facts or  circumstance,  which
might give rise to any of the foregoing.

                                       6
<PAGE>

               (f) SEC  Documents:  Financial  Statements.  From January 1, 2003
through December 31, 2004, the Company has filed all reports,  schedules, forms,
statements and other documents required to be filed by it with the SEC under the
Securities  Exchange Act of 1934,  as amended (the  "Exchange  Act") (all of the
foregoing  filed prior to the date  hereof or amended  after the date hereof and
all exhibits included therein and financial statements and schedules thereto and
documents  incorporated by reference therein,  being hereinafter  referred to as
the "SEC  Documents").  The Company has not filed its Form 10-KSB for the fiscal
years ended June 30, 2005 and June 30, 2006.  In  addition,  the Company has not
filed its Form 10-QSBs for the periods ended March 31, 2005, September 30, 2005,
December  31,  2005,  March 31, 2006,  or  September  30, 2006.  The Company has
delivered to the Buyers or their representatives,  or made available through the
SEC's  website  at  http://www.sec.gov.,  true and  complete  copies  of the SEC
Documents. As of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "Financial  Statements") complied as to form
in all  material  respects  with  applicable  accounting  requirements  and  the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally  accepted  accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise  indicated in such Financial  Statements or the notes  thereto,  or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary  statements) and, fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Buyer  which  is not  included  in the SEC  Documents,  including,  without
limitation,  information  referred  to in this  Agreement,  contains  any untrue
statement of a material  fact or omits to state any material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.

               (g)  10(b)-5.  Neither  the  Transaction  Documents  nor  the SEC
Documents  include any untrue  statements of material  fact, nor do they omit to
state any  material  fact  required to be stated  therein  necessary to make the
statements made, in light of the  circumstances  under which they were made, not
misleading.

               (h) Absence of Litigation.  There is no action, suit, proceeding,
inquiry  or  investigation  before or by any  court,  public  board,  government
agency,  self-regulatory  organization  or body pending against or affecting the
Company,  the  Common  Stock or any of the  Company's  subsidiaries,  wherein an
unfavorable decision, ruling or finding would (i) have a material adverse effect
on the  transactions  contemplated  hereby (ii) adversely affect the validity or
enforceability  of, or the  authority  or ability of the  Company to perform its
obligations under, this Agreement or any of the documents  contemplated  herein,
or (iii) have a material adverse effect on the business, operations, properties,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole.

                                       7
<PAGE>

               (i) Acknowledgment  Regarding Buyer's Purchase of the Convertible
Debentures.  The Company  acknowledges  and agrees  that the  Buyer(s) is acting
solely  in the  capacity  of an arm's  length  purchaser  with  respect  to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

               (j) No General Solicitation.  Neither the Company, nor any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the Convertible Debentures or the Conversion Shares.

               (k) No Integrated  Offering.  Neither the Company, nor any of its
affiliates,  nor any  person  acting on its or their  behalf  has,  directly  or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security,  under  circumstances  that would require  registration of the
Convertible  Debentures or the  Conversion  Shares under the  Securities  Act or
cause this offering of the Convertible Debentures or the Conversion Shares to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act.

               (l)  Employee  Relations.  Neither  the  Company  nor  any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

               (m)   Intellectual   Property   Rights.   The   Company  and  its
subsidiaries  own or possess  adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations,  service names, patents,
patent  rights,  copyrights,   inventions,  licenses,  approvals,   governmental
authorizations,  trade secrets and rights  necessary to conduct their respective
businesses as now conducted.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  and, to the  knowledge  of the  Company  there is no
claim,  action or proceeding being made or brought against,  or to the Company's
knowledge,  being threatened against, the Company or its subsidiaries  regarding
trademark,  trade name, patents, patent rights, invention,  copyright,  license,
service names, service marks, service mark registrations,  trade secret or other
infringement;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

                                       8
<PAGE>

               (n) Environmental  Laws. The Company and its subsidiaries are (i)
in compliance with any and all applicable foreign, federal, state and local laws
and  regulations  relating to the  protection  of human  health and safety,  the
environment  or  hazardous  or  toxic   substances  or  wastes,   pollutants  or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable  Environmental Laws to conduct
their  respective  businesses  and  (iii) are in  compliance  with all terms and
conditions of any such permit, license or approval.

               (o) Title.  Any real property and facilities  held under lease by
the Company and its  subsidiaries  are held by them under valid,  subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such  property and buildings by the
Company and its subsidiaries.

               (p)  Insurance.  The  Company  and each of its  subsidiaries  are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

               (q) Regulatory Permits.  The Company and its subsidiaries possess
all material certificates,  authorizations and permits issued by the appropriate
federal,  state or foreign  regulatory  authorities  necessary to conduct  their
respective  businesses,  and neither the  Company  nor any such  subsidiary  has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

               (r)  Internal  Accounting  Controls.  The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  and (iii) the recorded  amounts for assets is compared with the
existing  assets at reasonable  intervals and  appropriate  action is taken with
respect to any differences.

               (s) No Material  Adverse  Breaches,  etc. Neither the Company nor
any of its  subsidiaries  is subject to any  charter,  corporate  or other legal
restriction,  or any judgment,  decree,  order,  rule or regulation which in the
judgment of the  Company's  officers  has or is expected in the future to have a
material  adverse  effect on the  business,  properties,  operations,  financial
condition,   results  of   operations   or  prospects  of  the  Company  or  its
subsidiaries.  Neither the Company nor any of its  subsidiaries  is in breach of
any  contract or  agreement  which  breach,  in the  judgment  of the  Company's
officers,  has or is expected to have a material adverse effect on the business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.

                                       9
<PAGE>

               (t) Tax Status. The Company and each of its subsidiaries has made
and filed all federal and state  income and all other tax  returns,  reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its  subsidiaries  has set aside
on its books  provisions  reasonably  adequate for the payment of all unpaid and
unreported  taxes)  has paid all taxes and other  governmental  assessments  and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company know of no basis for any such claim.

               (u) Certain  Transactions.  Except for arm's length  transactions
pursuant to which the Company makes payments in the ordinary  course of business
upon terms no less  favorable  than the Company  could obtain from third parties
and other than the grant of stock options  disclosed in the SEC Documents,  none
of the officers,  directors, or employees of the Company is presently a party to
any transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the  furnishing  of  services  to or by,  providing  for  rental  of real or
personal  property to or from,  or otherwise  requiring  payments to or from any
officer,  director or such  employee or, to the  knowledge  of the Company,  any
corporation,  partnership, trust or other entity in which any officer, director,
or any such  employee  has a  substantial  interest or is an officer,  director,
trustee or partner.

               (v)  Fees  and  Rights  of  First  Refusal.  The  Company  is not
obligated to offer the securities  offered hereunder on a right of first refusal
basis or otherwise to any third parties  including,  but not limited to, current
or former shareholders of the Company,  underwriters,  brokers,  agents or other
third parties.

            4. COVENANTS.

               (a) Best Efforts. Each party shall use its best efforts to timely
satisfy each of the  conditions  to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

               (b) Form D. The Company  agrees to file a Form D with  respect to
the  Conversion  Shares as  required  under  Regulation  D and to provide a copy
thereof to each Buyer  promptly  after such  filing.  The Company  shall,  on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine is necessary to qualify the Conversion  Shares, or obtain an exemption
for the Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement  under  applicable  securities or "Blue Sky" laws of the states of the
United  States,  and shall  provide  evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

                                       10
<PAGE>

               (c)  Reporting  Status.  Until the  earlier of (i) the date as of
which the Buyer(s) may sell all of the  Conversion  Shares  without  restriction
pursuant to Rule  144(k)  promulgated  under the  Securities  Act (or  successor
thereto),  or (ii) the date on which (A) the  Buyer(s)  shall  have sold all the
Conversion  Shares and (B) none of the  Convertible  Debentures are  outstanding
(the  "Registration  Period"),  the  Company  shall file in a timely  manner all
reports  required to be filed with the SEC  pursuant to the Exchange Act and the
regulations  of the SEC  thereunder,  and the Company  shall not  terminate  its
status as an issuer  required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would otherwise permit such
termination.

               (d) Use of Proceeds.  The Company will use the proceeds  from the
sale of the  Convertible  Debentures for general  corporate and working  capital
purposes.

               (e)  Reservation  of Shares.  The  Company  shall take all action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have  available  such  shares of Common  Stock as shall from time to time be
sufficient to effect the conversion of all of the Conversion Shares, the Company
shall call and hold a special  meeting of the  shareholders  within  thirty (30)
days of such occurrence, for the sole purpose of increasing the number of shares
authorized. The Company's management shall recommend to the shareholders to vote
in favor of  increasing  the  number  of  shares  of  Common  Stock  authorized.
Management  shall also vote all of its shares in favor of increasing  the number
of authorized shares of Common Stock.

               (f) Listings or Quotation.  The Company shall promptly secure the
listing or  quotation of the  Conversion  Shares upon each  national  securities
exchange,  automated quotation system or The National  Association of Securities
Dealers Inc.'s  Over-The-Counter  Bulletin Board  ("OTCBB") or other market,  if
any,  upon which  shares of Common  Stock are then listed or quoted  (subject to
official notice of issuance) and shall use its best efforts to maintain, so long
as any other  shares of Common  Stock  shall be so listed,  such  listing of all
Conversion  Shares from time to time issuable under the terms of this Agreement.
The Company shall maintain the Common Stock's authorization for quotation on the
OTCBB.

               (g) Fees and Expenses.

                  (i) The Company shall issue to the Buyer a warrant to purchase
twenty five  million  (25,000,000)  shares of the  Company's  Common Stock for a
period of three (3) years at an exercise prices of $0.01 per share, a warrant to
purchase twenty five million  (25,000,000)  shares of the Company's Common Stock
for a period of three (3) years at an  exercise  prices of $0.015 per  share,  a
warrant to purchase  twenty five million  (25,000,000)  shares of the  Company's
Common Stock for a period of three (3) years at an exercise  prices of $0.02 per
share and a warrant to purchase twenty five million  (25,000,000)  shares of the
Company's  Common Stock for a period of three (3) years at an exercise prices of
$0.025 per share  (collectively  referred to as the  "Warrants").  The shares of
Common Stock issuable under the Warrants  shall  collectively  be referred to as
the "Warrant Shares".

                                       11
<PAGE>

                  (ii) The Warrant  Shares  shall have "piggy-back"  and  demand
registration rights.

               (h)  Corporate  Existence.  So  long  as any  of the  Convertible
Debentures  remain  outstanding,  the Company  shall not directly or  indirectly
consummate  any  merger,  reorganization,  restructuring,  reverse  stock  split
consolidation,  sale of all or substantially  all of the Company's assets or any
similar  transaction  or  related   transactions  (each  such  transaction,   an
"Organizational  Change") unless,  prior to the  consummation an  Organizational
Change, the Company obtains the written consent of each Buyer. In any such case,
the Company will make appropriate provision with respect to such holders' rights
and interests to insure that the provisions of this Section 4(h) will thereafter
be applicable to the Convertible Debentures.

               (i)  Transactions  With  Affiliates.  So long as any  Convertible
Debentures are  outstanding,  the Company shall not, and shall cause each of its
subsidiaries  not to, enter into,  amend,  modify or  supplement,  or permit any
subsidiary  to  enter  into,   amend,   modify  or  supplement   any  agreement,
transaction,  commitment,  or  arrangement  with any of its or any  subsidiary's
officers,  directors,  person who were  officers or directors at any time during
the previous two (2) years,  stockholders who beneficially own five percent (5%)
or more of the  Common  Stock,  or  Affiliates  (as  defined  below) or with any
individual  related by blood,  marriage,  or adoption to any such  individual or
with any entity in which any such entity or individual  owns a five percent (5%)
or more beneficial  interest (each a "Related Party"),  except for (a) customary
employment  arrangements  and benefit  programs  on  reasonable  terms,  (b) any
investment  in an  Affiliate  of the Company,  (c) any  agreement,  transaction,
commitment,  or arrangement  on an arms-length  basis on terms no less favorable
than  terms  which  would  have been  obtainable  from a person  other than such
Related Party, (d) any agreement, transaction,  commitment, or arrangement which
is approved by a majority of the  disinterested  directors of the  Company;  for
purposes  hereof,  any  director  who is also an officer  of the  Company or any
subsidiary of the Company shall not be a disinterested  director with respect to
any such agreement,  transaction,  commitment,  or arrangement.  "Affiliate" for
purposes hereof means,  with respect to any person or entity,  another person or
entity that, directly or indirectly,  (i) has a ten percent (10%) or more equity
interest  in that person or entity,  (ii) has ten  percent  (10%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "Control" or "controls"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.

               (j) Transfer Agent. The Company covenants and agrees that, in the
event that the Company's agency  relationship  with the transfer agent should be
terminated  for any  reason  prior to a date  which is two (2)  years  after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

               (k)  Restriction on Issuance of the Capital Stock. So long as any
Convertible Debentures are outstanding, the Company shall not, without the prior
written  consent of the  Buyer(s),  (i) issue or sell shares of Common  Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price of the Common Stock determined  immediately prior to its issuance,
(ii) issue any preferred stock, warrant, option, right, contract, call, or other
security or instrument  granting the holder  thereof the right to acquire Common
Stock without consideration or for a consideration less than such Common Stock's
Bid Price determined  immediately  prior to it's issuance,  (iii) enter into any
security  instrument  granting  the  holder a security  interest  in any and all
assets of the Company, or (iv) file any registration statement on Form S-8.

                                       12
<PAGE>

               (l) Neither the Buyer(s) nor any of its  affiliates  have an open
short position in the Common Stock of the Company,  and the Buyer(s) agrees that
it shall not, and that it will cause its  affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock as long as any
Convertible Debentures shall remain outstanding.

               (m)  Rights  of  First  Refusal.   So  long  as  any  portion  of
Convertible  Debentures  are  outstanding,  if  the  Company  intends  to  raise
additional  capital by the  issuance  or sale of capital  stock of the  Company,
including  without  limitation shares of any class of common stock, any class of
preferred  stock,  options,  warrants  or any other  securities  convertible  or
exercisable  into shares of common  stock  (whether the offering is conducted by
the Company, underwriter,  placement agent or any third party) the Company shall
be obligated to offer to the Buyers such issuance or sale of capital  stock,  by
providing  in writing  the  principal  amount of capital it intends to raise and
outline of the material terms of such capital raise,  prior to the offering such
issuance  or sale of  capital  stock to any  third  parties  including,  but not
limited  to,  current  or  former  officers  or  directors,  current  or  former
shareholders and/or investors of the obligor,  underwriters,  brokers, agents or
other third  parties.  The Buyers shall have ten (10) business days from receipt
of such notice of the sale or issuance of capital  stock to accept or reject all
or a portion of such capital raising offer.

               (n) Lock Up  Agreements.  On the date hereof,  the Company  shall
obtain from each officer and  director a lock up agreement in the form  attached
hereto as Exhibit A.

               (o) In the event that the Company  recovers any amounts  pursuant
to the America Air Network  Alaska United States  Internal  Revenue  Service tax
credit or such amounts owed from Ford Motor  Corporation  the Company shall have
such  amounts  remitted  directly  to the  Buyers as  repayment  of  outstanding
principal pursuant to the Debentures.

            5. TRANSFER AGENT INSTRUCTIONS.

               (a) The  Company  shall  issue  the  Irrevocable  Transfer  Agent
Instructions to its transfer agent irrevocably  appointing David Gonzalez,  Esq.
as the Company's agent for purpose of having certificates issued,  registered in
the name of the Buyer(s) or its respective nominee(s), for the Conversion Shares
representing  such amounts of  Convertible  Debentures as specified from time to
time  by the  Buyer(s)  to  the  Company  upon  conversion  of  the  Convertible
Debentures, for interest owed pursuant to the Convertible Debenture, and for any
and all Liquidated Damages (as this term is defined in the Investor Registration
Rights  Agreement).  David  Gonzalez,  Esq.  shall  be paid a cash  fee of Fifty
Dollars ($50) for every occasion they act pursuant to the  Irrevocable  Transfer
Agent Instructions.  The Company shall not change its transfer agent without the
express written  consent of the Buyer(s),  which may be withheld by the Buyer(s)
in its sole discretion. Prior to registration of the Conversion Shares under the
Securities  Act,  all  such  certificates  shall  bear  the  restrictive  legend
specified  in Section  2(g) of this  Agreement.  The  Company  warrants  that no
instruction other than the Irrevocable  Transfer Agent Instructions  referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(g)
hereof  (in the case of the  Conversion  Shares  prior to  registration  of such
shares  under the  Securities  Act) will be given by the Company to its transfer
agent and that the Conversion  Shares shall otherwise be freely  transferable on
the books and  records  of the  Company as and to the  extent  provided  in this
Agreement  and the  Investor  Registration  Rights  Agreement.  Nothing  in this
Section 5 shall  affect in any way the  Buyer's  obligations  and  agreement  to
comply with all applicable  securities laws upon resale of Conversion Shares. If
the Buyer(s) provides the Company with an opinion of counsel, in form, scope and
substance  customary for opinions of counsel in comparable  transactions  to the
effect that  registration  of a resale by the Buyer(s) of any of the  Conversion
Shares is not required  under the  Securities  Act, the Company shall within two
(2) business days instruct its transfer agent to issue one or more  certificates
in such name and in such  denominations  as specified by the Buyer.  The Company
acknowledges  that  a  breach  by it of its  obligations  hereunder  will  cause
irreparable  harm to the  Buyer by  vitiating  the  intent  and  purpose  of the
transaction contemplated hereby. Accordingly,  the Company acknowledges that the
remedy  at law for a breach  of its  obligations  under  this  Section 5 will be
inadequate  and  agrees,  in the event of a breach or  threatened  breach by the
Company  of the  provisions  of this  Section  5,  that  the  Buyer(s)  shall be
entitled,  in  addition  to  all  other  available  remedies,  to an  injunction
restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

                                       13
<PAGE>

            6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The  obligation  of  the  Company  hereunder  to  issue  and  sell  the
Convertible  Debentures  to the  Buyer(s)  at the  Closings  is  subject  to the
satisfaction,  at or  before  the  Closing  Dates,  of  each  of  the  following
conditions,  provided that these  conditions  are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:

               (a) Each Buyer shall have executed the Transaction  Documents and
delivered them to the Company.

               (b) The Buyer(s) shall have delivered to the Company the Purchase
Price for Convertible Debentures in respective amounts as set forth next to each
Buyer as  outlined  on  Schedule  I attached  hereto,  minus any fees to be paid
directly from the proceeds the Closings as set forth herein, by wire transfer of
immediately  available U.S. funds pursuant to the wire instructions  provided by
the Company.

               (c) The  representations  and warranties of the Buyer(s) shall be
true and correct in all material respects as of the date when made and as of the
Closing  Dates as  though  made at that time  (except  for  representations  and
warranties  that  speak as of a  specific  date),  and the  Buyer(s)  shall have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Buyer(s) at or prior to the Closing Dates.

                                       14
<PAGE>

            7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

               (a) The  obligation  of the  Buyer(s)  hereunder  to purchase the
Convertible  Debentures  at the  Closing is subject to the  satisfaction,  at or
before the First Closing Date, of each of the following conditions:

                  (i) The Company shall  have executed the Transaction Documents
and delivered the same to the Buyer(s).

                  (ii) The Common Stock shall be authorized for quotation on the
OTCBB, trading in the Common Stock shall not have been suspended for any reason,
and all the Conversion  Shares  issuable upon the conversion of the  Convertible
Debentures shall be approved by the OTCBB.

                  (iii) The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent  that  any of
such representations and warranties is already qualified as  to  materiality  in
Section 3 above, in which case, such  representations  and  warranties  shall be
true and correct without further qualification)  as  of  the  date when made and
as  of  the First  Closing  Date  as  though  made  at  that  time  (except  for
representations and warranties that speak as of a specific date) and the Company
shall have performed,  satisfied and complied in all material  respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the First Closing Date

                  (iv)  The Company shall have  executed  and  delivered  to the
Buyer(s) the Convertible Debentures in the respective amounts set forth opposite
each Buyer(s) name on Schedule I attached hereto.

                  (v) The Buyer(s)  shall have  received  an opinion  of counsel
from counsel to the Company in a form satisfactory to the Buyer(s).

                  (vi)  The Company   shall  have   provided  to the Buyer(s)  a
certificate of good standing from the secretary of state from the state in which
the company is incorporated.

                  (vii) The  Company shall have filed a form UCC-1 or such other
forms as may be required to perfect the Buyer's interest in the Pledged Property
as detailed in the Security  Agreement  dated the date hereof and provided proof
of such filing to the Buyer(s).

                  (viii)  The  Company   shall  have  provided  to the Buyer  an
acknowledgement,   to  the  satisfaction  of  the  Buyer,   from  the  Company's
independent  certified  public  accountants  as to its  ability to  provide  all
consents  required in order to file a registration  statement in connection with
this transaction.

                  (ix) The Company shall have reserved out of its authorized and
unissued Common Stock, solely for the purpose of effecting the conversion of the
Convertible  Debentures,  shares of Common Stock to effect the conversion of all
of the Conversion Shares then outstanding.

                                       15
<PAGE>

                  (x) The  Irrevocable  Transfer Agent Instructions, in form and
substance   satisfactory  to  the  Buyer,  shall  have  been  delivered  to  and
acknowledged in writing by the Company's transfer agent.

            8. INDEMNIFICATION.

               (a) In  consideration  of the Buyer's  execution  and delivery of
this  Agreement and  acquiring the  Convertible  Debentures  and the  Conversion
Shares  hereunder,  and in addition to all of the  Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Buyer(s) and each other holder of the  Convertible  Debentures  and
the  Conversion  Shares,  and all of their  officers,  directors,  employees and
agents  (including,  without  limitation,  those retained in connection with the
transactions   contemplated  by  this  Agreement)   (collectively,   the  "Buyer
Indemnitees")  from and against any and all  actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith  (irrespective  of whether any such Buyer  Indemnitee is a
party  to the  action  for  which  indemnification  hereunder  is  sought),  and
including  reasonable   attorneys'  fees  and  disbursements  (the  "Indemnified
Liabilities"),  incurred by the Buyer Indemnitees or any of them as a result of,
or arising  out of, or relating  to (a) any  misrepresentation  or breach of any
representation  or  warranty  made  by  the  Company  in  this  Agreement,   the
Convertible  Debentures  or the Investor  Registration  Rights  Agreement or any
other certificate,  instrument or document  contemplated hereby or thereby,  (b)
any breach of any covenant,  agreement or obligation of the Company contained in
this  Agreement,  or the  Investor  Registration  Rights  Agreement or any other
certificate,  instrument or document  contemplated hereby or thereby, or (c) any
cause of action,  suit or claim  brought or made  against  such  Indemnitee  and
arising  out of or  resulting  from  the  execution,  delivery,  performance  or
enforcement  of this  Agreement or any other  instrument,  document or agreement
executed pursuant hereto by any of the parties hereto, any transaction  financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the  issuance  of the  Convertible  Debentures  or the status of the Buyer or
holder  of the  Convertible  Debentures  the  Conversion  Shares,  as a Buyer of
Convertible  Debentures  in  the  Company.  To the  extent  that  the  foregoing
undertaking  by the Company  may be  unenforceable  for any reason,  the Company
shall make the maximum  contribution to the payment and  satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.

               (b) In consideration  of the Company's  execution and delivery of
this Agreement,  and in addition to all of the Buyer's other  obligations  under
this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers,  directors,  employees  and agents  (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement)  (collectively,  the "Company Indemnitees") from
and against any and all Indemnified  Liabilities  incurred by the Indemnitees or
any of  them  as a  result  of,  or  arising  out  of,  or  relating  to (a) any
misrepresentation  or  breach  of any  representation  or  warranty  made by the
Buyer(s)  in this  Agreement,  instrument  or  document  contemplated  hereby or
thereby  executed by the Buyer,  (b) any breach of any  covenant,  agreement  or
obligation  of  the  Buyer(s)   contained  in  this   Agreement,   the  Investor
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby  executed  by the  Buyer,  or (c) any cause of
action,  suit or claim brought or made against such Company  Indemnitee based on
material  misrepresentations  or due to a material  breach and arising out of or
resulting  from the  execution,  delivery,  performance  or  enforcement of this
Agreement,  the Investor  Registration Rights Agreement or any other instrument,
document or agreement  executed pursuant hereto by any of the parties hereto. To
the extent that the foregoing undertaking by each Buyer may be unenforceable for
any reason,  each Buyer shall make the maximum  contribution  to the payment and
satisfaction of each of the Indemnified Liabilities,  which is permissible under
applicable law.

                                       16
<PAGE>

            9. GOVERNING LAW: MISCELLANEOUS.

               (a)  Governing  Law.  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.

               (b)  Counterparts.  This Agreement may be executed in two or more
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

               (c) Headings.  The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the  interpretation  of, this
Agreement.

               (d)  Severability.  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.

               (e) Entire Agreement,  Amendments.  This Agreement supersedes all
other prior oral or written agreements between the Buyer(s),  the Company, their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither the Company nor any Buyer makes any representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

               (f)  Notices.   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 confirmation of receipt, when sent
by  facsimile;  (iii)  three (3) days after being sent by U.S.  certified  mail,
return  receipt  requested,  or (iv) one (1) 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:

                                       17
<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 a 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 the Buyer(s),  to its address and facsimile number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

               (g) Successors and Assigns.  This Agreement shall be binding upon
and inure to the  benefit of the  parties and their  respective  successors  and
assigns.  Neither the Company nor any Buyer shall  assign this  Agreement or any
rights or obligations  hereunder  without the prior written consent of the other
party hereto.

               (h) No Third Party Beneficiaries.  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.

               (i) Survival.  Unless this Agreement is terminated  under Section
9(l),  the  representations  and  warranties  of the  Company  and the  Buyer(s)
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4, 5 and 9, and the indemnification  provisions set forth in Section 8,
shall  survive the Closing for a period of two (2) years  following  the date on
which the  Convertible  Debentures  are converted in full. The Buyer(s) shall be
responsible  only  for  its  own  representations,  warranties,  agreements  and
covenants hereunder.

               (j) Publicity.  The Company and the Buyer(s) shall have the right
to approve, before issuance any press release or any other public statement with
respect to the  transactions  contemplated  hereby made by any party;  provided,
however,  that the Company shall be entitled,  without the prior approval of the
Buyer(s),  to issue any press release or other public disclosure with respect to
such  transactions  required  under  applicable  securities  or  other  laws  or
regulations  (the Company  shall use its best efforts to consult the Buyer(s) in
connection with any such press release or other public  disclosure  prior to its
release  and  Buyer(s)  shall  be  provided  with a copy  thereof  upon  release
thereof).

                                       18
<PAGE>

               (k) Further Assurances. 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.

               (l)  Termination.  In the event that the First  Closing shall not
have  occurred  with respect to the Buyers on or before five (5)  business  days
from the date hereof due to the Company's or the Buyer's  failure to satisfy the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party;  provided,  however,  that if this  Agreement is  terminated by the
Company  pursuant to this Section 9(l),  the Company  shall remain  obligated to
reimburse  the  Buyer(s)  for the fees and  expenses of  Yorkville  Advisors LLC
described in Section 4(g) above.

               (m)  Brokerage.  The Company  represents  that no broker,  agent,
finder  or  other  party  has  been  retained  by  it  in  connection  with  the
transactions  contemplated  hereby and that no other fee or commission  has been
agreed  by the  Company  to be  paid  for  or on  account  of  the  transactions
contemplated hereby.

               (n) No Strict  Construction.  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.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

         IN WITNESS  WHEREOF,  the  Buyers  and the  Company  have  caused  this
Securities  Purchase  Agreement to be duly executed as of the date first written
above.

                                                  COMPANY:
                                                  HOME ENERGY SAVINGS CORP, INC.

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

                                       20
<PAGE>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>

                                                                         Address/Facsimile         Amount of
           Name                            Signature                      Number of Buyer         Subscription
----------------------------   --------------------------------   -----------------------------   ------------
<C>                            <C>                                <C>                             <C>
Cornell Capital Partners, LP   By:   Yorkville Advisors, LLC      101 Hudson Street - Suite 3700      $200,000
                               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>

                               DISCLOSURE SCHEDULE

<PAGE>

                                    EXHIBIT A

                                LOCK UP AGREEMENT

         The  undersigned  hereby agrees that for a period  commencing on August
___,  2006 and  expiring  on the date  thirty  (30) days after the date that all
amounts owed to Cornell Capital Partners, LP (the "Investor"), under the Secured
Convertible  Debentures  issued  to the  Investor  pursuant  to  the  Securities
Purchase  Agreement  between Home Energy Savings Corp,  Inc. (the "Company") and
the Investor dated August ___, 2006 have been paid (the "Lock-up  Period"),  he,
she or it will not, directly or indirectly, without the prior written consent of
the Investor,  issue,  offer,  agree or offer to sell, sell, grant an option for
the purchase or sale of, transfer,  pledge, assign,  hypothecate,  distribute or
otherwise encumber or dispose of any securities of the Company, including common
stock or options,  rights, warrants or other securities underlying,  convertible
into,  exchangeable  or  exercisable  for or evidencing any right to purchase or
subscribe  for any  common  stock  (whether  or not  beneficially  owned  by the
undersigned),   or  any   beneficial   interest   therein   (collectively,   the
"Securities") except in accordance with the volume limitations set forth in Rule
144(e) of the General Rules and Regulations under the Securities Act of 1933, as
amended.

         In  order  to  enable  the  aforesaid  covenants  to be  enforced,  the
undersigned  hereby  consents  to the  placing of legends  and/or  stop-transfer
orders with the transfer agent of the Company's  securities  with respect to any
of the  Securities  registered in the name of the  undersigned  or  beneficially
owned by the undersigned,  and the undersigned hereby confirms the undersigned's
investment in the Company.

Dated:                , 2006
       ---------------
                                    Signature

                                    --------------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Address:
                                            ------------------------------------
                                    City, State, Zip Code:
                                                          ----------------------

                                    --------------------------------------------
                                    Print Social Security Number
                                    or Taxpayer I.D. NumberDated:  September   7,  2006

         NEITHER THIS DEBENTURE NOR THE SECURITIES  INTO WHICH THIS DEBENTURE IS
         CONVERTIBLE  HAVE BEEN  REGISTERED  WITH THE  SECURITIES  AND  EXCHANGE
         COMMISSION OR THE  SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON
         AN EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
         SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE
         SECURITIES  ACT OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM,  OR IN A
         TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

No. HESV-1                                                              $200,000

                         HOME ENERGY SAVINGS CORP, INC.

                          Secured Convertible Debenture

                              Due September 7, 2008

         This Secured Convertible  Debenture (the "Debenture") is issued by HOME
ENERGY SAVINGS CORP,  INC., a Nevada  corporation  (the  "Obligor"),  to CORNELL
CAPITAL  PARTNERS,  LP  (the  "Holder"),  pursuant  to that  certain  Securities
Purchase Agreement (the "Securities Purchase Agreement") of even date herewith.

         FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or
its  successors  and assigns the principal sum of Two Hundred  Thousand  Dollars
($200,000) together with accrued but unpaid interest on or before  September  7,
2008 (the "Maturity Date") in accordance with the following terms:

         Interest.  Interest shall accrue on the outstanding  principal  balance
hereof  at an  annual  rate  equal  to ten  percent  (10%).  Interest  shall  be
calculated on the basis of a 365-day year and the actual number of days elapsed,
to the extent  permitted by applicable law.  Interest  hereunder will be paid to
the  Holder  or its  assignee  (as  defined  in  Section  5) in whose  name this
Debenture is registered on the records of the Obligor regarding registration and
transfers of Debentures (the "Debenture Register").

         Right of Redemption.  The Obligor at its option shall have the right to
redeem a portion or all amounts  outstanding  under this Debenture  prior to the
Maturity Date provided that the Closing Bid Price of the of the Obligor's Common
Stock, as reported by Bloomberg,  LP, is less than the Fixed Conversion Price at
the time of the Redemption Notice (as defined herein).  The Obligor shall pay an
amount equal to the principal  amount being  redeemed plus a redemption  premium
("Redemption  Premium")  equal to twenty  percent (20%) of the principal  amount
being  redeemed,  and  accrued  interest,   (collectively  referred  to  as  the
"Redemption  Amount").  In order to make a  redemption,  the Obligor shall first
provide  written notice to the Holder of its intention to make a redemption (the
"Redemption Notice") setting forth the amount of principal it desires to redeem.
After receipt of the Redemption  Notice the Holder shall have three (3) business
days to elect  to make  conversions  of all or any  portion  of this  Debenture,
subject to the limitations set forth in Section 3(b)(i).  Upon the expiration of
this three (3) business day period,  the Obligor shall deliver to the Holder the
Redemption  Amount with respect to the principal  amount  redeemed  after giving
effect to conversions effected during the three (3) business day period.

                                       1
<PAGE>

         Security Agreements.  This Debenture is secured by a Security Agreement
(the  "Security  Agreement")  dated the date hereof  between the Obligor and the
Holder.

         Consent of Holder to Sell Capital Stock or Grant Security Interests. So
long as any of the principal amount or interest on this Debenture remains unpaid
and unconverted, the Obligor shall not, without the prior consent of the Holder,
(i)  issue  or sell any  shares  of  Common  Stock or  preferred  stock  without
consideration or for  consideration per share less than the Closing Bid Price of
the Common Stock  determined  immediately  prior to its issuance,  (ii) issue or
sell any preferred  stock,  warrant,  option,  right,  contract,  call, or other
security or instrument  granting the holder  thereof the right to acquire Common
Stock without consideration or for consideration per share less than the Closing
Bid Price of the Common  Stock  determined  immediately  prior to its  issuance,
(iii) enter into any security instrument granting the holder a security interest
in any of the assets of the Obligor, or (iv) file any registration statements on
Form S-8.

         Rights of First  Refusal.  So long as any portion of this  Debenture is
outstanding (including principal or accrued interest), if the Obligor intends to
raise  additional  capital  by the  issuance  or sale of  capital  stock  of the
Obligor,  including without  limitation shares of any class of Common Stock, any
class of preferred stock, options,  warrants or any other securities convertible
or exercisable into shares of Common Stock (whether the offering is conducted by
the Obligor, underwriter,  placement agent or any third party) the Obligor shall
be obligated to offer to the Holder such issuance or sale of capital  stock,  by
providing  in writing  the  principal  amount of capital it intends to raise and
outline of the material terms of such capital raise,  prior to the offering such
issuance  or sale of  capital  stock to any  third  parties  including,  but not
limited  to,  current  or  former  officers  or  directors,  current  or  former
shareholders and/or investors of the obligor,  underwriters,  brokers, agents or
other third  parties.  The Holder shall have ten (10) business days from receipt
of such notice of the sale or issuance of capital  stock to accept or reject all
or a portion of such capital raising offer.

         This Debenture is subject to the following additional provisions:

         Section  1.  This  Debenture  is  exchangeable  for an equal  aggregate
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested by the Holder  surrendering  the same. No service  charge will be made
for such registration of transfer or exchange.

         Section 2.        Events of Default.

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

                                       2
<PAGE>

                  (i) Any default in the payment of the principal  of,  interest
on or  other  charges  in  respect  of  this  Debenture,  free of any  claim  of
subordination,  as and when the same shall become due and payable  (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise);

                  (ii)  The  Obligor  or any  subsidiary  of the  Obligor  shall
commence,  or there shall be commenced  against the Obligor or any subsidiary of
the  Obligor  under  any  applicable  bankruptcy  or  insolvency  laws as now or
hereafter in effect or any successor  thereto,  or the Obligor or any subsidiary
of  the  Obligor  commences  any  other  proceeding  under  any  reorganization,
arrangement,  adjustment of debt, relief of debtors, dissolution,  insolvency or
liquidation  or similar  law of any  jurisdiction  whether now or  hereafter  in
effect  relating  to the  Obligor or any  subsidiary  of the Obligor or there is
commenced  against  the  Obligor  or any  subsidiary  of the  Obligor  any  such
bankruptcy,  insolvency  or other  proceeding  which remains  undismissed  for a
period  of 61  days;  or  the  Obligor  or any  subsidiary  of  the  Obligor  is
adjudicated  insolvent  or  bankrupt;  or any  order of  relief  or other  order
approving  any  such  case or  proceeding  is  entered;  or the  Obligor  or any
subsidiary of the Obligor suffers any  appointment of any custodian,  private or
court  appointed  receiver  or the  like for it or any  substantial  part of its
property which continues undischarged or unstayed for a period of sixty one (61)
days; or the Obligor or any subsidiary of the Obligor makes a general assignment
for the benefit of  creditors;  or the Obligor or any  subsidiary of the Obligor
shall fail to pay,  or shall  state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or the Obligor or any subsidiary
of the Obligor shall call a meeting of its creditors  with a view to arranging a
composition,  adjustment or  restructuring  of its debts;  or the Obligor or any
subsidiary of the Obligor shall by any act or failure to act expressly  indicate
its consent to,  approval of or  acquiescence  in any of the  foregoing;  or any
corporate  or other  action is taken by the  Obligor  or any  subsidiary  of the
Obligor for the purpose of effecting any of the foregoing;

                  (iii) The  Obligor  or any  subsidiary  of the  Obligor  shall
default in any of its  obligations  under any other  debenture or any  mortgage,
credit agreement or other facility, indenture agreement,  factoring agreement or
other  instrument  under  which  there may be issued,  or by which  there may be
secured or evidenced any  indebtedness for borrowed money or money due under any
long term leasing or factoring  arrangement  of the Obligor or any subsidiary of
the Obligor in an amount  exceeding  $100,000,  whether  such  indebtedness  now
exists or shall  hereafter  be created  and such  default  shall  result in such
indebtedness  becoming or being  declared  due and payable  prior to the date on
which it would otherwise become due and payable;

                  (iv) The Common  Stock shall cease to be quoted for trading or
listing  for trading on any of (a) the  American  Stock  Exchange,  (b) New York
Stock Exchange,  (c) the Nasdaq National Market,  (d) the Nasdaq Capital Market,
or (e) the Nasdaq OTC Bulletin Board ("OTC")  (each, a "Subsequent  Market") and
shall not again be quoted or listed for trading on any Subsequent  Market within
five (5) Trading Days of such delisting;

                  (v) The Obligor or any  subsidiary  of the Obligor  shall be a
party to any Change of Control Transaction (as defined in Section 5);

                  (vi) The  Obligor  shall  fail to file the  Underlying  Shares
Registration Statement (as defined in Section 5) with the Commission (as defined
in Section 5), or the Underlying  Shares  Registration  Statement shall not have
been declared effective by the Commission,  in each case within the time periods
set forth in the Investor  Registration Rights Agreement  ("Registration  Rights
Agreement") of even date herewith between the Obligor and the Holder;

                                       3
<PAGE>

                  (vii)  If  the   effectiveness   of  the   Underlying   Shares
Registration  Statement  lapses  for  any  reason  or the  Holder  shall  not be
permitted to resell the shares of Common Stock  underlying  this Debenture under
the Underlying Shares Registration Statement, in either case, for more than five
(5)  consecutive  Trading Days or an aggregate of eight Trading Days (which need
not be consecutive Trading Days);

                  (viii) The Obligor shall fail for any reason to deliver Common
Stock  certificates  to a Holder  prior to the fifth  (5th)  Trading Day after a
Conversion Date or the Obligor shall provide notice to the Holder,  including by
way of public  announcement,  at any time,  of its  intention not to comply with
requests for conversions of this Debenture in accordance with the terms hereof;

                  (ix) The  Obligor  shall fail for any  reason to  deliver  the
payment in cash pursuant to a Buy-In (as defined  herein)  within three (3) days
after notice is claimed delivered hereunder;

                  (x) The  Obligor  shall fail to  observe or perform  any other
covenant,  agreement or warranty contained in, or otherwise commit any breach or
default of any provision of this Debenture  (except as may be covered by Section
2(a)(i)  through  2(a)(ix)  hereof) or any  Transaction  Document (as defined in
Section 5) which is not cured with in the time prescribed;

          (b) During the time that any portion of this Debenture is outstanding,
if any  Event of  Default  has  occurred,  the  full  principal  amount  of this
Debenture, together with interest and other amounts owing in respect thereof, to
the date of acceleration shall become at the Holder's election,  immediately due
and payable in cash, provided however, the Holder may request (but shall have no
obligation  to request)  payment of such amounts in Common Stock of the Obligor.
In addition to any other remedies,  the Holder shall have the right (but not the
obligation)  to convert this Debenture at any time after (x) an Event of Default
or (y) the Maturity Date at the Conversion Price then in-effect. The Holder need
not provide and the Obligor hereby waives any  presentment,  demand,  protest or
other notice of any kind, and the Holder may immediately and without  expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such
rescission or annulment  shall affect any subsequent  Event of Default or impair
any right  consequent  thereon.  Upon an Event of Default,  notwithstanding  any
other provision of this Debenture or any Transaction Document,  the Holder shall
have no obligation to comply with or adhere to any  limitations,  if any, on the
conversion of this Debenture or the sale of the Underlying Shares.

         Section 3.        Conversion.

         (a) Conversion at Option of Holder.

                  (i) This Debenture shall be convertible  into shares of Common
Stock at the option of the Holder, in whole or in part at any time and from time
to time, after the Original Issue Date (as defined in Section 5) (subject to the
limitations  on  conversion  set forth in Section  3(b)  hereof).  The number of
shares of Common Stock issuable upon a conversion  hereunder equals the quotient
obtained  by  dividing  (x)  the  outstanding  amount  of this  Debenture  to be
converted  by (y) the  Conversion  Price (as  defined in Section  3(c)(i)).  The
Obligor shall deliver Common Stock certificates to the Holder prior to the Fifth
(5th) Trading Day after a Conversion Date.

                                       4
<PAGE>

                  (ii)  Notwithstanding   anything  to  the  contrary  contained
herein,  if on any Conversion  Date: (1) the number of shares of Common Stock at
the time  authorized,  unissued  and  unreserved  for all  purposes,  or held as
treasury  stock,  is  insufficient  to pay principal  and interest  hereunder in
shares of Common Stock; (2) the Common Stock is not listed or quoted for trading
on the OTC or on a  Subsequent  Market;  (3) the  Obligor  has  failed to timely
satisfy its conversion; or (4) the issuance of such shares of Common Stock would
result in a violation of Section 3(b),  then,  at the option of the Holder,  the
Obligor,  in lieu of  delivering  shares of Common  Stock  pursuant  to  Section
3(a)(i),  shall  deliver,  within  three  (3)  Trading  Days of each  applicable
Conversion  Date,  an amount in cash  equal to the  product  of the  outstanding
principal  amount to be converted  plus any interest due therein  divided by the
Conversion  Price,  chosen by the Holder,  and multiplied by the highest closing
price of the stock from date of the  conversion  notice  till the date that such
cash payment is made.

         Further,  if the  Obligor  shall  not  have  delivered  any cash due in
respect of conversion of this Debenture or as payment of interest thereon by the
fifth (5th) Trading Day after the Conversion  Date, the Holder may, by notice to
the Obligor,  require the Obligor to issue  shares of Common  Stock  pursuant to
Section  3(c),  except that for such  purpose the  Conversion  Price  applicable
thereto shall be the lesser of the Conversion  Price on the Conversion  Date and
the Conversion Price on the date of such Holder demand.  Any such shares will be
subject to the provisions of this Section.

                  (iii) The Holder shall effect conversions by delivering to the
Obligor  a  completed  notice  in the  form  attached  hereto  as  Exhibit  A (a
"Conversion Notice").  The date on which a Conversion Notice is delivered is the
"Conversion  Date." Unless the Holder is converting the entire  principal amount
outstanding  under this  Debenture,  the Holder is not  required  to  physically
surrender  this  Debenture  to the  Obligor  in  order  to  effect  conversions.
Conversions  hereunder  shall  have  the  effect  of  lowering  the  outstanding
principal  amount of this Debenture plus all accrued and unpaid interest thereon
in an amount  equal to the  applicable  conversion.  The Holder and the  Obligor
shall maintain  records showing the principal  amount  converted and the date of
such conversions. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error.

         (b) Certain Conversion Restrictions.

                  (i) A Holder may not convert this  Debenture or receive shares
of Common Stock as payment of interest  hereunder to the extent such  conversion
or receipt of such interest  payment  would result in the Holder,  together with
any affiliate  thereof,  beneficially  owning (as determined in accordance  with
Section  13(d) of the  Exchange  Act and the rules  promulgated  thereunder)  in
excess of 4.99% of the then  issued  and  outstanding  shares  of Common  Stock,
including  shares  issuable upon conversion of, and payment of interest on, this
Debenture  held by such Holder  after  application  of this  Section.  Since the
Holder  will not be  obligated  to report to the Obligor the number of shares of
Common  Stock it may  hold at the time of a  conversion  hereunder,  unless  the
conversion  at issue would  result in the  issuance of shares of Common Stock in
excess of 4.99% of the then outstanding shares of Common Stock without regard to
any other shares which may be  beneficially  owned by the Holder or an affiliate
thereof, the Holder shall have the authority and obligation to determine whether
the restriction  contained in this Section will limit any particular  conversion
hereunder  and to the extent  that the  Holder  determines  that the  limitation
contained in this Section  applies,  the  determination  of which portion of the
principal  amount of this Debenture is convertible  shall be the  responsibility
and  obligation of the Holder.  If the Holder has delivered a Conversion  Notice
for a  principal  amount of this  Debenture  that,  without  regard to any other
shares that the Holder or its affiliates may  beneficially  own, would result in
the issuance in excess of the  permitted  amount  hereunder,  the Obligor  shall
notify the Holder of this fact and shall  honor the  conversion  for the maximum
principal amount permitted to be converted on such Conversion Date in accordance
with the periods  described in Section 3(a)(i) and, at the option of the Holder,
either  retain any  principal  amount  tendered for  conversion in excess of the
permitted  amount  hereunder  for  future  conversions  or  return  such  excess
principal amount to the Holder.  The provisions of this Section may be waived by
a Holder (but only as to itself and not to any other  Holder) upon not less than
65 days prior notice to the Obligor.  Other  Holders  shall be unaffected by any
such waiver.

                                       5
<PAGE>

         (c) Conversion Price and Adjustments to Conversion Price.

                  (i) The  conversion  price in  effect on any  Conversion  Date
shall be equal to the lesser of (a) $0.044 [one hundred twenty percent (120%) of
the closing Bid Price on the date hereof] (the "Fixed Conversion  Price") or (b)
eighty  percent (80%) of the lowest closing Bid Price of the Common Stock during
the ten (10) trading days immediately preceding the Conversion Date as quoted by
Bloomberg,  LP (the "Market Conversion  Price").  The Fixed Conversion Price and
the Market  Conversion  Price are  collectively  referred to as the  "Conversion
Price",  provided  however in no event shall the  Conversion  Price be less than
$0.001. The Conversion Price may be adjusted pursuant to the other terms of this
Debenture.

                   (ii) If the  Obligor,  at any time  while this  Debenture  is
outstanding,  shall (a) pay a stock dividend or otherwise make a distribution or
distributions  on  shares  of its  Common  Stock or any  other  equity or equity
equivalent   securities  payable  in  shares  of  Common  Stock,  (b)  subdivide
outstanding  shares of Common Stock into a larger number of shares,  (c) combine
(including  by way of reverse  stock split)  outstanding  shares of Common Stock
into a smaller number of shares, or (d) issue by  reclassification  of shares of
the  Common  Stock any shares of capital  stock of the  Obligor,  then the Fixed
Conversion  Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common  Stock  (excluding  treasury  shares,  if any)
outstanding  before such event and of which the denominator  shall be the number
of shares of Common Stock  outstanding  after such event.  Any  adjustment  made
pursuant to this Section  shall become  effective  immediately  after the record
date for the determination of stockholders  entitled to receive such dividend or
distribution and shall become effective  immediately after the effective date in
the case of a subdivision, combination or re-classification.

                  (iii) If the  Obligor,  at any time  while this  Debenture  is
outstanding,  shall issue  rights,  options or warrants to all holders of Common
Stock (and not to the Holder) entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the Fixed Conversion  Price, then
the Fixed  Conversion  Price shall be  multiplied  by a  fraction,  of which the
denominator  shall be the  number  of  shares  of the  Common  Stock  (excluding
treasury  shares,  if any) outstanding on the date of issuance of such rights or
warrants  (plus the number of  additional  shares of Common  Stock  offered  for
subscription  or purchase),  and of which the  numerator  shall be the number of
shares of the Common Stock (excluding  treasury  shares,  if any) outstanding on
the date of issuance of such rights or warrants, plus the number of shares which
the  aggregate  offering  price of the total  number of shares so offered  would
purchase at the Fixed Conversion  Price.  Such adjustment shall be made whenever
such rights or warrants are issued, and shall become effective immediately after
the record date for the  determination of stockholders  entitled to receive such
rights,  options or warrants.  However,  upon the  expiration of any such right,
option or warrant to purchase  shares of the Common  Stock the issuance of which
resulted  in an  adjustment  in the  Fixed  Conversion  Price  pursuant  to this
Section,  if any such right,  option or warrant  shall expire and shall not have
been  exercised,   the  Fixed  Conversion  Price  shall  immediately  upon  such
expiration  be  recomputed  and effective  immediately  upon such  expiration be
increased  to the  price  which it would  have been  (but  reflecting  any other
adjustments  in the Fixed  Conversion  Price made pursuant to the  provisions of
this Section after the issuance of such rights or warrants)  had the  adjustment
of the Fixed Conversion Price made upon the issuance of such rights,  options or
warrants  been made on the basis of offering for  subscription  or purchase only
that number of shares of the Common Stock  actually  purchased upon the exercise
of such rights, options or warrants actually exercised.

                                       6
<PAGE>

                  (iv) If the Obligor or any subsidiary  thereof, as applicable,
at any time while this  Debenture is  outstanding,  shall issue shares of Common
Stock  or  rights,  warrants,  options  or  other  securities  or debt  that are
convertible  into or  exchangeable  for shares of Common  Stock  ("Common  Stock
Equivalents") entitling any Person to acquire shares of Common Stock, at a price
per share  less than the Fixed  Conversion  Price (if the  holder of the  Common
Stock or Common  Stock  Equivalent  so  issued  shall at any  time,  whether  by
operation of purchase price adjustments, reset provisions,  floating conversion,
exercise or exchange prices or otherwise, or due to warrants,  options or rights
per share  which is issued in  connection  with such  issuance,  be  entitled to
receive shares of Common Stock at a price per share which is less than the Fixed
Conversion  Price,  such issuance shall be deemed to have occurred for less than
the Fixed Conversion  Price),  then, at the sole option of the Holder, the Fixed
Conversion  Price  shall be  adjusted  to mirror  the  conversion,  exchange  or
purchase price for such Common Stock or Common Stock Equivalents  (including any
reset provisions  thereof) at issue. Such adjustment shall be made whenever such
Common Stock or Common Stock  Equivalents  are issued.  The Obligor shall notify
the Holder in writing, no later than one (1) business day following the issuance
of any  Common  Stock  or  Common  Stock  Equivalent  subject  to this  Section,
indicating therein the applicable  issuance price, or of applicable reset price,
exchange price,  conversion  price and other pricing terms. No adjustment  under
this Section  shall be made as a result of issuances and exercises of options to
purchase shares of Common Stock issued for compensatory purposes pursuant to any
of the Obligor's stock option or stock purchase plans.

                  (v) If the  Obligor,  at any  time  while  this  Debenture  is
outstanding,  shall  distribute  to all holders of Common  Stock (and not to the
Holder)  evidences  of its  indebtedness  or assets or  rights  or  warrants  to
subscribe  for or  purchase  any  security,  then in each  such  case the  Fixed
Conversion Price at which this Debenture shall  thereafter be convertible  shall
be determined by multiplying the Fixed  Conversion  Price in effect  immediately
prior to the record date fixed for  determination  of  stockholders  entitled to
receive such  distribution by a fraction of which the  denominator  shall be the
Closing Bid Price determined as of the record date mentioned above, and of which
the numerator  shall be such Closing Bid Price on such record date less the then
fair market  value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith.  In either case the
adjustments  shall be  described  in a  statement  provided to the Holder of the
portion  of  assets  or  evidences  of   indebtedness  so  distributed  or  such
subscription  rights  applicable to one share of Common Stock.  Such  adjustment
shall be made whenever any such  distribution is made and shall become effective
immediately after the record date mentioned above.

                                       7
<PAGE>

                  (vi) In case of any  reclassification  of the Common  Stock or
any compulsory  share  exchange  pursuant to which the Common Stock is converted
into  other  securities,  cash or  property,  the  Holder  shall  have the right
thereafter to, at its option, (A) convert the then outstanding principal amount,
together  with all accrued but unpaid  interest and any other amounts then owing
hereunder  in  respect  of this  Debenture  into the  shares  of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
the Common Stock  following such  reclassification  or share  exchange,  and the
Holder of this  Debenture  shall be  entitled  upon such event to  receive  such
amount of securities,  cash or property as the shares of the Common Stock of the
Obligor into which the then  outstanding  principal  amount,  together  with all
accrued  but unpaid  interest  and any other  amounts  then owing  hereunder  in
respect of this Debenture  could have been converted  immediately  prior to such
reclassification or share exchange would have been entitled,  or (B) require the
Obligor to prepay the outstanding  principal amount of this Debenture,  plus all
interest and other amounts due and payable thereon.  The entire prepayment price
shall  be paid in cash.  This  provision  shall  similarly  apply to  successive
reclassifications or share exchanges.

                  (vii)  The  Obligor  shall  at  all  times  reserve  and  keep
available out of its authorized Common Stock the full number of shares of Common
Stock issuable upon conversion of all outstanding  amounts under this Debenture;
and within three (3)  Business  Days  following  the receipt by the Obligor of a
Holder's  notice  that  such  minimum  number  of  Underlying  Shares  is not so
reserved,  the Obligor shall promptly  reserve a sufficient  number of shares of
Common Stock to comply with such requirement.

                  (viii) All calculations  under this Section 3 shall be rounded
to the nearest $0.0001 or whole share.

                  (ix)  Whenever the  Conversion  Price is adjusted  pursuant to
Section 3 hereof, the Obligor shall promptly mail to the Holder a notice setting
forth the  Conversion  Price after such  adjustment  and  setting  forth a brief
statement of the facts requiring such adjustment.

                  (x) If (A) the Obligor  shall declare a dividend (or any other
distribution)  on the Common  Stock;  (B) the  Obligor  shall  declare a special
nonrecurring  cash  dividend on or a  redemption  of the Common  Stock;  (C) the
Obligor  shall  authorize the granting to all holders of the Common Stock rights
or warrants to  subscribe  for or  purchase  any shares of capital  stock of any
class or of any  rights;  (D) the  approval of any  stockholders  of the Obligor
shall be required in connection with any  reclassification  of the Common Stock,
any  consolidation  or  merger  to which  the  Obligor  is a party,  any sale or
transfer  of all or  substantially  all of the  assets  of the  Obligor,  of any
compulsory  share  exchange  whereby the Common  Stock is  converted  into other
securities,  cash or property;  or (E) the Obligor shall authorize the voluntary
or  involuntary  dissolution,  liquidation  or winding up of the  affairs of the
Obligor;  then, in each case, the Obligor shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Debenture,  and shall
cause to be mailed to the Holder at its last address as it shall appear upon the
stock books of the  Obligor,  at least  twenty (20)  calendar  days prior to the
applicable record or effective date hereinafter  specified, a notice stating (x)
the date on which a record  is to be taken  for the  purpose  of such  dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such  dividend,  distributions,   redemption,  rights  or  warrants  are  to  be
determined  or (y)  the  date on  which  such  reclassification,  consolidation,
merger,  sale,  transfer or share  exchange is expected to become  effective  or
close,  and the date as of which it is expected that holders of the Common Stock
of record  shall be entitled to exchange  their  shares of the Common  Stock for
securities,  cash or other  property  deliverable  upon  such  reclassification,
consolidation,  merger,  sale,  transfer or share exchange,  provided,  that the
failure to mail such  notice or any defect  therein  or in the  mailing  thereof
shall not affect the validity of the corporate  action  required to be specified
in such  notice.  The Holder is entitled to convert  this  Debenture  during the
20-day calendar period  commencing the date of such notice to the effective date
of the event triggering such notice.

                                       8
<PAGE>

                  (xi) In case of any (1) merger or consolidation of the Obligor
or any subsidiary of the Obligor with or into another Person, or (2) sale by the
Obligor or any  subsidiary of the Obligor of more than one-half of the assets of
the Obligor in one or a series of related transactions,  a Holder shall have the
right to (A) exercise any rights under Section  2(b),  (B) convert the aggregate
amount of this  Debenture  then  outstanding  into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger, consolidation or sale, and such Holder shall
be entitled  upon such event or series of related  events to receive such amount
of  securities,  cash and property as the shares of Common Stock into which such
aggregate   principal  amount  of  this  Debenture  could  have  been  converted
immediately  prior to such  merger,  consolidation  or  sales  would  have  been
entitled, or (C) in the case of a merger or consolidation, require the surviving
entity to issue to the Holder a convertible  Debenture  with a principal  amount
equal to the  aggregate  principal  amount of this  Debenture  then held by such
Holder,  plus all accrued and unpaid  interest and other amounts owing  thereon,
which such  newly  issued  convertible  Debenture  shall  have  terms  identical
(including with respect to conversion) to the terms of this Debenture, and shall
be entitled to all of the rights and  privileges of the Holder of this Debenture
set forth  herein and the  agreements  pursuant  to which this  Debentures  were
issued. In the case of clause (C), the conversion price applicable for the newly
issued shares of convertible preferred stock or convertible  Debentures shall be
based upon the amount of securities, cash and property that each share of Common
Stock  would  receive in such  transaction  and the  Conversion  Price in effect
immediately prior to the effectiveness or closing date for such transaction. The
terms of any such merger,  sale or consolidation  shall include such terms so as
to  continue to give the Holder the right to receive  the  securities,  cash and
property set forth in this Section upon any  conversion or redemption  following
such event. This provision shall similarly apply to successive such events.

                                       9
<PAGE>

         (d)      Other Provisions.

                  (i) The Obligor  covenants  that it will at all times  reserve
and keep  available out of its  authorized  and unissued  shares of Common Stock
solely for the purpose of issuance upon conversion of this Debenture and payment
of interest on this  Debenture,  each as herein  provided,  free from preemptive
rights or any other actual contingent  purchase rights of persons other than the
Holder,  not less than  such  number  of  shares  of the  Common  Stock as shall
(subject to any additional requirements of the Obligor as to reservation of such
shares  set forth in this  Debenture)  be  issuable  (taking  into  account  the
adjustments  and  restrictions of Sections 2(b) and 3(c)) upon the conversion of
the  outstanding  principal  amount of this  Debenture  and  payment of interest
hereunder.  The Obligor  covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized,  issued and fully
paid,  nonassessable  and, if the Underlying Shares  Registration  Statement has
been declared effective under the Securities Act,  registered for public sale in
accordance with such Underlying Shares Registration Statement.

                  (ii) Upon a  conversion  hereunder  the  Obligor  shall not be
required to issue stock  certificates  representing  fractions  of shares of the
Common Stock, but may if otherwise permitted,  make a cash payment in respect of
any final  fraction of a share  based on the Closing Bid Price at such time.  If
the Obligor  elects not, or is unable,  to make such a cash payment,  the Holder
shall be  entitled  to receive,  in lieu of the final  fraction of a share,  one
whole share of Common Stock.

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

                  (iv)  Nothing  herein  shall limit a Holder's  right to pursue
actual  damages or declare an Event of Default  pursuant to Section 2 herein for
the  Obligor 's failure to deliver  certificates  representing  shares of Common
Stock upon conversion  within the period  specified herein and such Holder shall
have the  right to  pursue  all  remedies  available  to it at law or in  equity
including,   without  limitation,   a  decree  of  specific  performance  and/or
injunctive relief, in each case without the need to post a bond or provide other
security.  The  exercise of any such rights  shall not  prohibit the Holder from
seeking  to  enforce  damages  pursuant  to any  other  Section  hereof or under
applicable law.

                  (v) In addition to any other  rights  available to the Holder,
if the Obligor fails to deliver to the Holder such  certificate or  certificates
pursuant to Section  3(a)(i) by the fifth (5th) Trading Day after the Conversion
Date, and if after such fifth (5th) Trading Day the Holder purchases (in an open
market  transaction or otherwise)  Common Stock to deliver in  satisfaction of a
sale by such  Holder  of the  Underlying  Shares  which the  Holder  anticipated
receiving upon such  conversion (a "Buy-In"),  then the Obligor shall (A) pay in
cash to the Holder (in addition to any  remedies  available to or elected by the
Holder) the amount by which (x) the Holder's  total  purchase  price  (including
brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the
product of (1) the  aggregate  number of shares of Common Stock that such Holder
anticipated  receiving from the conversion at issue multiplied by (2) the market
price of the Common  Stock at the time of the sale giving rise to such  purchase
obligation  and (B) at the option of the Holder,  either  reissue a Debenture in
the principal amount equal to the principal  amount of the attempted  conversion
or deliver  to the  Holder the number of shares of Common  Stock that would have
been issued had the Obligor timely complied with its delivery requirements under
Section  3(a)(i).  For example,  if the Holder  purchases  Common Stock having a
total  purchase  price of $11,000 to cover a Buy-In with respect to an attempted
conversion  of  Debentures  with  respect  to  which  the  market  price  of the
Underlying  Shares on the date of conversion was a total of $10,000 under clause
(A) of the immediately preceding sentence,  the Obligor shall be required to pay
the  Holder  $1,000.  The  Holder  shall  provide  the  Obligor  written  notice
indicating the amounts payable to the Holder in respect of the Buy-In.

                                       10
<PAGE>

         Section  4.   Notices.   Any  notices,   consents,   waivers  or  other
communications  required or permitted to be given under the terms hereof 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) trading 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:

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 a 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 the Holder:              Cornell Capital Partners, LP
                               101 Hudson Street, Suite 3700
                               Jersey City, NJ 07303
                               Attention:   Mark Angelo
                               Telephone:   (201) 985-8300

                                       11
<PAGE>

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

or at 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 three (3)  business  days prior to the  effectiveness  of such
change.  Written  confirmation  of receipt  (i) given by the  recipient  of such
notice,   consent,   waiver  or  other   communication,   (ii)  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 (iii) provided by a nationally  recognized  overnight  delivery
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.

         Section 5.   Definitions. For the purposes hereof, the following  terms
shall have the  following meanings:

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

         "Change  of  Control  Transaction"  means  the  occurrence  of  (a)  an
acquisition  after the date hereof by an  individual  or legal entity or "group"
(as  described  in Rule  13d-5(b)(1)  promulgated  under  the  Exchange  Act) of
effective  control  (whether  through legal or  beneficial  ownership of capital
stock of the Obligor,  by contract or  otherwise)  of in excess of fifty percent
(50%) of the voting  securities of the Obligor  (except that the  acquisition of
voting  securities  by the  Holder  shall not  constitute  a Change  of  Control
Transaction for purposes hereof),  (b) a replacement at one time or over time of
more than one-half of the members of the board of directors of the Obligor which
is not approved by a majority of those  individuals who are members of the board
of  directors  on the date  hereof (or by those  individuals  who are serving as
members of the board of directors on any date whose  nomination  to the board of
directors  was  approved by a majority of the members of the board of  directors
who are members on the date hereof),  (c) the merger,  consolidation  or sale of
fifty  percent  (50%) or more of the assets of the Obligor or any  subsidiary of
the  Obligor in one or a series of  related  transactions  with or into  another
entity, or (d) the execution by the Obligor of an agreement to which the Obligor
is a party or by which it is bound,  providing  for any of the  events set forth
above in (a), (b) or (c).

         "Closing  Bid  Price"  means the  price per share in the last  reported
trade of the Common Stock on the OTC or on the  exchange  which the Common Stock
is then listed as quoted by Bloomberg, LP.

         "Commission" means the Securities and Exchange Commission.

                                       12
<PAGE>

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

         "Conversion  Date" shall mean the date upon which the Holder  gives the
Obligor  notice of their  intention to effectuate a conversion of this Debenture
into shares of the Company's Common Stock as outlined herein.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

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

         "Person"  means  a   corporation,   an   association,   a  partnership,
organization,  a business, an individual,  a government or political subdivision
thereof or a governmental agency.

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

         "Trading  Day"  means a day on which the  shares  of  Common  Stock are
quoted on the OTC or quoted  or  traded on such  Subsequent  Market on which the
shares of Common  Stock are then quoted or listed;  provided,  that in the event
that the shares of Common Stock are not listed or quoted, then Trading Day shall
mean a Business Day.

         "Transaction  Documents" means the Securities Purchase Agreement or any
other agreement  delivered in connection with the Securities Purchase Agreement,
including, without limitation, the Pledge Agreement, the Security Agreement, the
Insider Pledge Agreement,  the Irrevocable Transfer Agent Instructions,  and the
Registration Rights Agreement.

         "Underlying  Shares"  means the shares of Common  Stock  issuable  upon
conversion of this  Debenture or as payment of interest in  accordance  with the
terms hereof.

         "Underlying  Shares   Registration   Statement"  means  a  registration
statement  meeting  the  requirements  set  forth  in  the  Registration  Rights
Agreement,  covering among other things the resale of the Underlying  Shares and
naming the Holder as a "selling stockholder" thereunder.

         All capitalized  terms used herein and not otherwise defined shall have
the meaning ascribed to them in the Securities Purchase Agreement.

         Section 6. Except as expressly  provided  herein,  no provision of this
Debenture  shall  alter or impair  the  obligations  of the  Obligor,  which are
absolute and unconditional,  to pay the principal of, interest and other charges
(if any) on, this  Debenture at the time,  place,  and rate,  and in the coin or
currency,  herein  prescribed.  This  Debenture  is a direct  obligation  of the
Obligor.  This  Debenture  ranks  pari passu  with all other  Debentures  now or
hereafter issued under the terms set forth herein.  As long as this Debenture is
outstanding,  the Obligor shall not and shall cause their  subsidiaries  not to,
without the consent of the Holder,  (i) amend its certificate of  incorporation,
bylaws or other  charter  documents so as to adversely  affect any rights of the
Holder;  (ii)  repay,  repurchase  or offer to repay,  repurchase  or  otherwise
acquire shares of its Common Stock or other equity  securities  other than as to
the Underlying  Shares to the extent permitted or required under the Transaction
Documents;  or  (iii)  enter  into  any  agreement  with  respect  to any of the
foregoing.

                                       13
<PAGE>

         Section 7. This  Debenture  shall not  entitle the Holder to any of the
rights of a stockholder of the Obligor,  including without limitation, the right
to vote, to receive dividends and other distributions,  or to receive any notice
of, or to attend,  meetings  of  stockholders  or any other  proceedings  of the
Obligor,  unless  and to the extent  converted  into  shares of Common  Stock in
accordance with the terms hereof.

         Section 8. If this Debenture is mutilated,  lost,  stolen or destroyed,
the Obligor shall execute and deliver, in exchange and substitution for and upon
cancellation of the mutilated Debenture,  or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated,  lost, stolen or destroyed but only upon receipt of
evidence  of such  loss,  theft or  destruction  of such  Debenture,  and of the
ownership hereof, and indemnity,  if requested,  all reasonably  satisfactory to
the Obligor.

         Section 9. No  indebtedness  of the Obligor is senior to this Debenture
in  right  of  payment,  whether  with  respect  to  interest,  damages  or upon
liquidation  or  dissolution  or otherwise.  Without the Holder's  consent,  the
Obligor will not and will not permit any of their  subsidiaries  to, directly or
indirectly,   enter  into,  create,   incur,  assume  or  suffer  to  exist  any
indebtedness  of any kind,  on or with  respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
there from that is senior in any respect to the obligations of the Obligor under
this Debenture.

         Section  10. This  Debenture  shall be  governed  by and  construed  in
accordance  with the laws of the State of New Jersey,  without  giving effect to
conflicts of laws thereof.  Each of the parties  consents to the jurisdiction of
the Superior  Courts of the State of New Jersey  sitting in Hudson  County,  New
Jersey and the U.S.  District  Court for the  District of New Jersey  sitting in
Newark,  New Jersey 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.

         Section 11. If the Obligor  fails to strictly  comply with the terms of
this  Debenture,  then the Obligor shall  reimburse the Holder  promptly for all
fees, costs and expenses,  including,  without  limitation,  attorneys' fees and
expenses incurred by the Holder in any action in connection with this Debenture,
including, without limitation, those incurred: (i) during any workout, attempted
workout,  and/or in  connection  with the  rendering  of legal  advice as to the
Holder's rights, remedies and obligations, (ii) collecting any sums which become
due  to the  Holder,  (iii)  defending  or  prosecuting  any  proceeding  or any
counterclaim to any proceeding or appeal;  or (iv) the protection,  preservation
or enforcement of any rights or remedies of the Holder.

         Section  12. Any waiver by the Holder of a breach of any  provision  of
this Debenture  shall not operate as or be construed to be a waiver of any other
breach  of such  provision  or of any  breach  of any  other  provision  of this
Debenture. The failure of the Holder to insist upon strict adherence to any term
of this Debenture on one or more  occasions  shall not be considered a waiver or
deprive that party of the right  thereafter  to insist upon strict  adherence to
that term or any other term of this Debenture. Any waiver must be in writing.

                                       14
<PAGE>

         Section 13. If any provision of this  Debenture is invalid,  illegal or
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance,  it shall  nevertheless
remain applicable to all other persons and  circumstances.  If it shall be found
that any interest or other amount deemed  interest due  hereunder  shall violate
applicable laws governing  usury,  the applicable rate of interest due hereunder
shall  automatically be lowered to equal the maximum permitted rate of interest.
The Obligor  covenants  (to the extent that it may lawfully do so) that it shall
not at any time insist upon,  plead, or in any manner  whatsoever  claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would  prohibit  or forgive  the  Obligor  from paying all or any portion of the
principal of or interest on this  Debenture  as  contemplated  herein,  wherever
enacted,  now or at any time  hereafter  in  force,  or  which  may  affect  the
covenants or the performance of this  indenture,  and the Obligor (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

         Section 14. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding Business Day.

         Section 15. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE  THE  RIGHT  ANY OF THEM  MAY HAVE TO A TRIAL  BY JURY IN  RESPECT  OF ANY
LITIGATION  BASED  HEREON OR ARISING OUT OF,  UNDER OR IN  CONNECTION  WITH THIS
AGREEMENT  OR ANY  TRANSACTION  DOCUMENT  OR ANY  COURSE OF  CONDUCT,  COURSE OF
DEALING,  STATEMENTS  (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS
PROVISION  IS  A  MATERIAL  INDUCEMENT  FOR  THE  PARTIES'  ACCEPTANCE  OF  THIS
AGREEMENT.

                   [REMAINDER OF PAGE INTENTIONLLY LEFT BLANK]

                                       15
<PAGE>

         IN WITNESS  WHEREOF,  the Obligor has caused this  Secured  Convertible
Debenture to be duly  executed by a duly  authorized  officer as of the date set
forth above.

                                                 HOME ENERGY SAVINGS CORP., INC.

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

                                       16
<PAGE>

                                    EXHIBIT A

                                CONVERSION NOTICE

        (To be executed by the Holder in order to Convert the Debenture)

TO:

         The undersigned hereby irrevocably elects to convert $ of the principal
amount of the above Debenture into Shares of Common Stock of HOME ENERGY SAVINGS
CORP,  INC.,  according to the conditions  stated therein,  as of the Conversion
Date written below.

Conversion Date:
                         -------------------------------------------------
Amount to be converted: $
                         -------------------------------------------------
Conversion Price:       $
                         -------------------------------------------------
Number of  shares
of Common  Stock
to be issued:
                         -------------------------------------------------
Amount of Debenture
Unconverted:            $
                         -------------------------------------------------

Please issue the shares of Common  Stock  in  the  following  name  and  to  the
following address: Issue to:     Cornell Capital Partners, LP
                                 101 Hudson Street, Suite 3700
                                 Jersey City, NJ  07083
                                 Tel:  (201) 985-8300
                                 Fax:  (201) 985-8266

Authorized Signature:
                             ---------------------------------------------
Name:
                             ---------------------------------------------
Title:
                             ---------------------------------------------
Broker DTC Participant Code:    0158

Account Number:                 622 000 07

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